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SemGroup Bankrupt, Prepares Asset Sale
The oil trading company filed for Chapter 11 protection.
July 23, 2008
SemGroup, the privately-held US oil trading company that has diversified services in the North American crude oil and refined products industries, declared bankruptcy and will shed assets.
The company’s operations include hedging services and gathering, transporting and marketing energy; it owns and operates pipelines, trucks and stations in North America. Now, the drive to purge SemGroup properties could offer valuable integration opportunities for former competitors.
When the bankruptcy was announced, it was said that some of SemGroup’s affiliates would be unaffected. This includes SemGroup LP in Mexico, the UK and Asia and SemGroup Energy Partners LP, a NASDAQ-listed midstream energy asset portfolio.
It was reported that Alerian Capital Management and Elliot Associates exercised the terms of a secured loan over the general partnership interest in SemGroup Energy Partners LP once the company failed to meet debt calls.
“We have determined that the best way to maximize value for our creditors is to undertake a sales process that will transition our valuable businesses to well-established companies that can carry forward the mission we undertook,” said SemGroup chief executive and president Terry Ronan. “We believe there will be significant interest in our assets.”
SemGroup Energy Partners LP, the listed entity, rose slightly for the second straight day after it was announced the company would not sink with the larger, privately-held firm. News of the privately-held SemGroup’s bankruptcy comes barely a year following the formation of the traded partnership. Wednesday, in early trading, SemGroup Energy Partners LP shares rose about 3% to about $8.48 at one point; the 52-week high was as much as $30.79 per share.
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