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TPG Specialty Lending, PNC Bank Close $575MM Financing for Ferrellgas

May 08, 2018, 07:11 AM
Filed Under: Energy Services

Ferrellgas, L.P., the operating partnership of Ferrellgas Partners, L.P. announced an agreement with a lending group led by TPG Specialty Lending, Inc., the middle-market lending business of TPG Sixth Street Partners (TSSP), to provide Ferrellgas with a new senior secured credit facility. The five-year facility replaces the current $575 million senior secured revolving credit facility that was scheduled to mature in October 2018. The new facility includes a $300 million cash flow revolver supported by commitments from TPG Specialty Lending and PNC Bank, National Association (PNC), as well as a $275 million term loan. As of the closing date, the revolver will have no outstanding borrowings and provides for a transition of undrawn letters of credit issued and outstanding of approximately $100 million seamlessly to the new facility. The term loan will be used to repay the outstanding amounts on the Company’s terminating bank credit facility, fees, and expenses associated with the new facility, and will result in approximately $75 million of surplus cash on Ferrellgas’ balance sheet.

“We are pleased with this facility and our partnership with TPG Specialty Lending and PNC,” said James E. Ferrell, Interim Chief Executive Officer and President of Ferrellgas. “The facility provides us with substantial liquidity, a long-term source of competitively priced capital and reasonable covenants to run our business and take advantage of opportunities to continue our recent trend of EBITDA growth.” Ferrell added, “Through recent sales of non-core businesses, including Bridger Rail and Bridger Energy, along with stronger cash flows generated from our operations, we have reduced our debt levels and strengthened our credit metrics. Our new $575 million credit facility, coupled with our strengthened balance sheet, provides further momentum to our business.  The company has the operating discipline and strategic flexibility to continue to grow our customer base and safely provide those customers with best in class service.”

Further, Ferrellgas is working to close on a multi-year extension of its accounts receivable securitization facility and expects to announce the closing of that facility in the near term. The closing of that facility will provide the Company with additional liquidity to grow the business into the future. In addition, the Company is evaluating various options related to its near-dated outstanding unsecured bonds.  This includes refinancing, or a transaction to exchange for new bonds, some or all of its bonds due June 2020.

“We are grateful to the banks that have supported us in the past and, looking forward, we are excited about our relationship with TPG Specialty Lending and PNC,” said Doran Schwartz, Senior Vice President and Chief Financial Officer of Ferrellgas. “We have worked well together and structured an agreement that provides us with a foundation for growth, as well as flexibility to address upcoming maturities of our bonds over the next five years.”

“We are pleased to provide Ferrellgas with this strategic capital as it continues to successfully execute its business plan, serve customers and create value for all stakeholders,” TPG Specialty Lending management said in a statement. “The Ferrellgas leadership team is best-in-class and the organization has a proven track record of profitable growth, anchored by its national distribution density and differentiated logistics capabilities.”

Bracewell, LLP served as legal advisor and Durham Capital Corp. served as financial advisor to Ferrellgas. Schulte Roth & Zabel LLP served as legal advisor to the lending group.

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