Southcross Energy Parent Files for Bankruptcy
The parent of pipeline operator Southcross Energy Partners LP filed for bankruptcy Sunday after reaching a deal with its owners and the majority of its lenders that will erase $700 million in debt off the company’s books.
Parent company Southcross Holdings LP filed a so-called prepackaged chapter 11 plan after creditors voted to approve the company’s restructuring proposal. The plan calls for the holding company’s owners to pump up to $170 million into the pipeline operator in return for two-thirds of the equity in the reorganized company.
Half of that amount will come in the form of financing to fund the chapter 11 case in U.S. Bankruptcy Court in Corpus Christi, Texas.
Southcross Holdings owns 100% of Southcross Energy Partners GP LLC, the general partner of Southcross Energy. Neither Southcross Energy not the general partner is part of the holding company’s bankruptcy filing. The company said its trade creditors, suppliers and contractors will also continue to be paid and won’t be affected by the bankruptcy filing.
Affiliates of Charlesbank Capital Partners , EIG Global Energy Partners LLC and Tailwater Capital LLC each indirectly own about one-third of Southcross Holdings, according to court papers.
The so-called midstream sector of the oil and natural gas industry, which processes and transports oil and natural gas, is increasingly under pressure as stubbornly low oil prices have forced drillers to shut wells, sell assets or go out of business.