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Vitol Inc., part of Rotterdam-based Vitol Group, purchased a 100 percent interest in the general partner, which controls management decisions, and 12.6 million subordinated units in SemGroup Energy Partners, also known as SGLP.
Vitol purchased the chunk of SGLP from Manchester Securities, a hedge fund that gained partial control of the company after a loan default by parent SemGroup LP in July 2008. SemGroup LP filed for Chapter 11 bankruptcy after losing $2.4 billion in margin calls on failed oil futures transactions, according to reports.
Financial terms were not disclosed in the agreement between Vitol and Manchester.
The deal would give Vitol about one-third of SGLP's outstanding units, according to reports.
"We want to express our thanks and appreciation to Manchester, which has provided us a tremendous amount of support and leadership through the past 15 months," SGLP CEO Kevin Foxx said in a statement. "We believe our assets can be a great fit into Vitol's U.S. business model."
The deal's closing is awaiting certain conditions, including consent of SGLP's lenders under its credit facility.
Tulsa-based SGLP owns and operates a fee-based oil and gas storage and transportation business, including
8.2 million barrels of crude oil storage in Oklahoma and Texas, 1,150 miles of oil pipeline, 46 asphalt and residual fuels terminals and more than 200 vehicles, according to reports.
"We are pleased to have reached agreement for the acquisition of SemGroup Energy partners GP," Vitol Inc. CEO Mike Loya said in his company's statement. "Pending SGLP's resolution of various outstanding legal matters, this acquisition makes an important addition to our expanding business in the USA, the world's largest energy market."
Vitol Group moves more than 5 million barrels of crude oil and other petroleum products around the world daily, according to company statistics. Revenue topped $191 billion last year.
SGLP spokesman Brian Cropper said the deal "partners us with a diverse energy company and helps us further separate."
Computer magnate Michael Dell's MSD Capital, Dallas-based Swank Capital and a Neuberger Berman fund also are high-profile holders of SGLP units, according to reports.
SemGroup LP spun off much of its pipeline, terminal and transportation assets to form SGLP and take it public in July 2007.
One year later, however, the subsidiary's trading units took a hit after news of the parent's financial collapse became public.
Manchester and Alerian Capital Management took control of SGLP's board after SemGroup defaulted on a $150 million loan last year. The two hedge funds kept Foxx on board as CEO despite his previous involvement with the parent SemGroup.
Manchester later bought out Alerian's stake in SGLP's board.
The SemGroup subsidiary has gained some independence from the troubled parent company and also avoided its own bankruptcy. Yet SGLP's revenues depended on more than $100 million in throughput agreements with SemGroup LP, so the bankruptcy contributed to the subsidiary's own credit default.
SGLP later was delisted from the Nasdaq stock exchange after missing numerous deadlines to file quarterly earnings reports. SGLP has since filed all of those reports dating to the second quarter of 2008, but its shares still are traded on the less stringent "Pink Sheets" electronic market.
The company second-quarter report showed a $3.5 million net loss. SGLP, however, has gained a long-term reprieve from creditors and also has found third-party customers to replace its throughput agreement.
Investors have sued SGLP and other company officials, including Foxx, in a class-action suit alleging that the public firm kept SemGroup's financial problems hidden. SemGroup LP itself is hoping to emerge from Chapter 11 bankruptcy protection in early November.
SGLP has said it plans to change its name later this year to further separate it from the identity of SemGroup LP.
Rod Walton 581-8457 rod.walton@tulsaworld.com
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