SemGroup Provides Update on Reorganization

Despite its bankruptcy SemGroup LP continues funding and construction of its White Cliffs pipeline, the company said in a release Wednesday.

SemGroup listed some “accomplishments” it has made since the company and 24 its North American subsidiaries filed voluntary petitions for reorganization under Chapter 11 on July 22.

The 580-mile pipeline is on schedule to be completed around Dec. 1. The pipeline will transport crude oil from Platteville, Colo., to the storage facility in Cushing. SemGroup continues to build crude oil storage tanks in Cushing.

Also, SemGroup completed negotiations with its joint-venture partner for funding and continued construction of its natural gas storage facility at Wyckoff, N.Y.

“This is a large and complex reorganization, yet we are making remarkable progress toward our ultimate goal of either selling or restructuring our assets for the benefit of our creditors,” said Lisa Donahue, SemGroup chief restructuring officer. “There is a great deal left to be done, but we have come a long way in the seven weeks since we initiated the reorganization.”

SemGroup’s accomplishments include:

— Securing court approval for an interim $150 million debtor-in-possession financing. A final hearing is pending for approval of the full $250 million requested DIP loan. The company has been using the DIP as collateral for letters of credit to ensure continuing supplies from vendors. The company has posted approximately $70 million of post-petition letters of credit so far. The company has been funding operations with cash flow generated from its businesses.
— Identifying, reviewing and analyzing a first wave of unprofitable contracts and filing a motion with the Bankruptcy Court to reject the contracts;
— Completing negotiations of a settlement with its public partner, SemGroup Energy Partners on agreements related to throughout, storage, terminalling and adequate assurance; and marketing several of its business units.
— SemGroup is also developing an extensive business plan to identify which assets will be sold and which could be reorganized and remain under SemGroup’s ownership.

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