8-K - NGL - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 21, 2021

NGL ENERGY PARTNERS LP

(Exact name of registrant as specified in its charter)

Delaware	001-35172	27-3427920
(State or other jurisdiction of<br>incorporation or organization)	(Commission File Number)	(I.R.S. Employer<br>Identification No.)

6120 South Yale Avenue

Suite 805

Tulsa, Oklahoma 74136

(Address of principal executive offices) (Zip Code)

(918) 481-1119

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240-14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbols	Name of Each Exchange on Which Registered
Common units representing Limited Partner Interests	NGL	New York Stock Exchange
Fixed-to-floating rate cumulative redeemable perpetual preferred units	NGL-PB	New York Stock Exchange
Fixed-to-floating rate cumulative redeemable perpetual preferred units	NGL-PC	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02. Results of Operations and Financial Condition.

On January 21, 2021, in connection with the Notes Offering (as defined below), NGL Energy Partners LP (the “Partnership”) provided certain preliminary results of operations for the quarterly period ended December 31, 2020 in the preliminary offering memorandum. Those preliminary results are attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being “furnished” pursuant to Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any Partnership filing, whether made before or after the date hereof, regardless of any general incorporated language in such filing.

Item 8.01. Other Events.

On January 21, 2021, the Partnership issued a press release, a copy of which is attached hereto as Exhibit 99.2 and incorporated by reference herein, announcing that it intends to commence a private offering of $2.05 billion in aggregate principal amount of senior secured notes due 2026 (the “Notes Offering”). The Partnership expects to use the net proceeds of the Notes Offering, together with borrowings under a new $500.0 million asset-based revolving credit facility (the “ABL Facility”), to (i) repay all outstanding borrowings under and terminate the Partnership’s existing revolving credit facility, (ii) repay all outstanding borrowings under and terminate the Partnership’s $250.0 million term credit agreement and (iii) pay fees and expenses in connection therewith.

This Current Report on Form 8-K is neither an offer to sell nor a solicitation of an offer to buy any securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, any securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The securities to be offered have not been registered under the Securities Act of 1933 (the “Securities Act”) or any state securities laws; and unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The securities will be offered only to persons reasonably believed to be qualified institutional buyers under the Securities Act and to persons, other than U.S. persons, outside of the United States pursuant to Regulation S under the Securities Act.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Preliminary results of operations.
99.2	Press Release, dated January 21 , 2021.
101	Cover Page formatted as Inline XBRL.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NGL ENERGY PARTNERS LP
	By:	NGL Energy Holdings LLC,
		its general partner
Date: January 21, 2021		By:	/s/ Robert W. Karlovich III
			Robert W. Karlovich III
			Chief Financial Officer

Document

Exhibit 99.1

In the confidential preliminary offering memorandum to be used in connection with the private offering of $2.05 billion in aggregate principal amount of senior secured notes due 2026 commenced by NGL Energy Partners LP (the “Partnership”) on January 21, 2021, the Partnership provided the following information.

The Partnership provided the following Preliminary Financial Results for the Quarterly Period ended December 31, 2020:

Preliminary Financial Results for the Quarterly Period ended December 31, 2020

As of the date of this offering memorandum, we have not finalized our operational results nor completed our quarter-end closing for the quarterly period ended December 31, 2020, and our auditors have not reviewed the financial information for such period. The preliminary estimates presented below are derived from our internal records and are based on the most current information available to management. During the course of our review process of these preliminary estimates, we could identify items that would require us to make adjustments that could affect the final results. Any such adjustments could be material.

Based on our preliminary expectations, we estimate that Adjusted EBITDA for the three months ended December 31, 2020 was between $120 million and $130 million. In addition, we expect to recognize a non-cash impairment charge that could be in the range of $380 million to $400 million in the quarter ended December 31, 2020 associated with certain intangible assets and goodwill which had a net book value of approximately $768 million at September 30, 2020 in our Crude Oil Logistics segment because of the Extraction bankruptcy and settlement. Management does not expect to recognize any impairment of tangible assets in this segment related to this matter. Due to the impracticality of estimating certain amounts required by GAAP prior to completing our quarter-end closing, we are not able to estimate Net Income, the GAAP financial measure most directly comparable to the non-GAAP financial measure of Adjusted EBITDA.

For the three months ending March 31, 2021, our capital expenditures are expected to be between $10 million and $20 million, with about two-thirds allocated to maintenance capital expenditures and one-third allocated to growth capital expenditures. For the year ending March 31, 2022, our capital expenditures are expected to be between $100 million and $125 million, with about one-half allocated to maintenance capital expenditures and one-half allocated to growth capital expenditures.

As of January 20, 2021, we had $1,708.5 million of borrowings outstanding under our Existing Credit Agreement. We continue to target a capital structure with long-term total leverage of less than 4.00x.

The Partnership included the following additional risk factor:

The consent we entered into with the holder of a majority of our Class D Preferred Units in connection with the Transactions will restrict our current and future operations.

In connection with this offering, we were required to obtain a consent (the “Class D Preferred Consent”) from the holder of the majority of our Class D Preferred Units (the “Class D Preferred Majority”) to, among other things, enable us to consummate the Transactions. The Class D Preferred Consent modifies certain voting and approval rights granted to the Class D Preferred Majority under our Amended and Restated Partnership Agreement. Specifically, the Class D Preferred Consent requires us to obtain the approval of the Class D Preferred Majority for:

•incurrences of indebtedness, other than under the ABL Facility, the issuance of the notes and certain refinancing indebtedness for indebtedness outstanding as of the closing of the Transactions;

•acquiring or disposing of any assets with an aggregate purchase price of greater than $50.0 million during any fiscal year; and

•making investment capital expenditures or expansion capital expenditures in excess of $75.0 million in the aggregate during any fiscal year.

These approval rights supplement the existing approval rights in our Amended and Restated Partnership Agreement for the Class D Preferred Majority. They will become effective upon the closing of the Transactions and will remain in effect until we are no longer in arrears on the Class D Preferred Unit distributions. Because the notes and the ABL Facility will restrict our ability to pay distributions on our Class D Preferred Unit distributions until we can comply with certain leverage and liquidity covenants, we cannot predict when such actions will no longer be subject to the approval of the Class D Preferred Consent, and

there is no certainty that we will be able to obtain such consent. As with other restrictions in the notes and the ABL Facility, these restrictions may affect our ability to grow in accordance with our strategy.

The Partnership included the following disclosure regarding obtaining a consent from its Class D Preferred Unitholders:

Class D Preferred Consent

In connection with this offering, we were required to obtain the Class D Preferred Consent from the Class D Preferred Majority to, among other things, enable us to consummate the Transactions. The Class D Preferred Consent modifies certain voting and approval rights granted to the Class D Preferred Majority under our Amended and Restated Partnership Agreement. Specifically, the Class D Preferred Consent requires us to obtain the approval of the Class D Preferred Majority for:

•incurrences of indebtedness, other than under the ABL Facility, the issuance of the notes and certain refinancing indebtedness for indebtedness outstanding as of the closing of the Transactions;

•acquiring or disposing of any assets with an aggregate purchase price of greater than $50.0 million during any fiscal year; and

•making investment capital expenditures or expansion capital expenditures in excess of $75.0 million in the aggregate during any fiscal year.

In addition, the holders of our Class D Preferred Units, who are affiliates of the Partnership, will be purchasing notes in this offering.

Document

Exhibit 99.2

NGL Energy Partners LP Announces $2.05 Billion Offering of Senior Secured Notes

TULSA, Okla.--(BUSINESS WIRE)—January 21, 2021--NGL Energy Partners LP (NYSE: NGL) (“NGL”), through its wholly owned subsidiaries NGL Energy Operating LLC and NGL Energy Finance Corp., today announced that they intend to offer, subject to market and other conditions, $2.05 billion in aggregate principal amount of senior secured notes due 2026. NGL expects to use the net proceeds of the offering, together with borrowings under a new $500.0 million asset-based revolving credit facility (the “ABL Facility”), to (i) repay all outstanding borrowings under and terminate NGL’s existing revolving credit facility, (ii) repay all outstanding borrowings under and terminate NGL’s $250.0 million term credit agreement and (iii) to pay fees and expenses in connection therewith.

The notes will be offered and sold only to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons, other than U.S. persons, outside of the United States pursuant to Regulation S under the Securities Act.

The offer and sale of the notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. This press release shall not constitute an offer to sell or a solicitation of an offer to purchase the notes or any other securities, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

Forward Looking Statements

This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes such forward-looking statements are reasonable, NGL cannot assure they will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s annual report on Form 10-K, quarterly reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

About NGL Energy Partners LP

NGL Energy Partners LP, a Delaware limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports, treats and disposes of produced water generated as part of the oil and natural gas production process.

NGL Energy Partners LP

Trey Karlovich, 918.481.1119

Executive Vice President and Chief Financial Officer

Trey.Karlovich@nglep.com

Linda Bridges, 918.481.1119

Senior Vice President – Finance and Treasurer

Linda.Bridges@nglep.com

Source: NGL Energy Partners LP