Item 1.01. Entry into a Material Definitive Agreement.
On May 6, 2022, Cypress Environmental Partners, L.P. (the "Partnership") entered
into a Restructuring Support Agreement (the "Restructuring Support Agreement")
with APE V Cypress, LLC ("Argonaut"), a Tulsa-based private equity firm and the
sole senior secured lender of the Partnership, pursuant to which, among other
things, Argonaut agreed to vote in favor of a joint pre-packaged plan of
reorganization (the "Plan") of the Partnership, Cypress Environmental Partners
GP, LLC, the general partner of the Partnership, and certain subsidiaries of the
Partnership (the "Debtors") under Chapter 11 of the U.S. Bankruptcy Code (the
"Bankruptcy Code"). The Restructuring Support Agreement and the Plan contemplate
a debt-to-equity recapitalization transaction (the "Reorganization
Transaction"), whereby Argonaut will receive 100% of the new equity interests of
the reorganized partnership (the "Reorganized Partnership") in exchange for
extinguishing the obligations to Argonaut remaining under the Amended and
Restated Credit Agreement, dated as of May 29, 2018, by and among the
Partnership, certain of its affiliates as co-borrowers and guarantors, Deutsche
Bank AG, New York Branch, as lender, issuing bank, swing line lender and
collateral agent, the other lenders from time to time party thereto, and
Deutsche Bank Trust Company Americas, as the administrative agent., as amended
to date (the "Credit Agreement"). In addition, the Plan provides for the payment
in full of priority and trade claims and an equity commitment from Argonaut to
provide working capital to the Reorganized Partnership upon emergence. Argonaut
will also provide a debtor-in-possession loan (the "DIP Facility") to the
Partnership to fund operations, if necessary.
Item 1.03. Bankruptcy or Receivership.
On May 8, 2022, the Debtors filed voluntary petitions (the "Bankruptcy
Petitions") in the United States Bankruptcy Court for the Southern District of
Texas (the "Bankruptcy Court") with respect to the Plan under Chapter 11 of the
Bankruptcy Code. The Debtors have filed a motion with the Bankruptcy Court
seeking joint administration of their cases under Chapter 11 of the Bankruptcy
Code (collectively, the "Chapter 11 Cases") under the caption In re: Cypress
Environmental Partners, L.P., et al., Debtors, Case No. 22-90049. The Debtors
will continue to operate their businesses as "debtors-in-possession" under the
jurisdiction of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Bankruptcy Court.
Bankruptcy Court filings and other information related to the Bankruptcy
Petitions are available at a website administered by the Partnership at
http://www.kccllc.net/Cypress.
Item 2.04. Triggering Events that Accelerate or Increase a Direct Financial
Obligation or an Obligation Under an Off-Balance Sheet Arrangement.
The filing of the Bankruptcy Petitions described above in Item 1.03 constitutes
an event of default under the Credit Agreement, following which the principal
and interest due under the Credit Agreement would be immediately due and
payable. As previously disclosed, on April 22, 2022, an affiliate of Argonaut
Private Equity acquired 100% of the Partnership's senior secured debt from the
seven existing lenders under the Credit Agreement. Any efforts to enforce such
payment obligations under the Credit Agreement are automatically stayed as a
result of the Bankruptcy Petitions, and Argonaut's rights of enforcement in
respect of the Credit Agreement are subject to the applicable provisions of the
Bankruptcy Code.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
On May 9, 2022, the Partnership received a letter from the New York Stock
Exchange LLC ("NYSE") notifying the Partnership that, as a result of the Chapter
11 Cases, the NYSE had determined to commence proceedings to delist the
Partnership's common units ("Common Units"). While the Partnership has a right
to a review of this determination by a Committee of the Board of Directors of
the NYSE, the Partnership has already informed the NYSE that it does not intend
to request an appeal of this determination. Accordingly, trading of the Common
Units was suspended at the opening of business on May 9, 2022. The NYSE reached
its decision that the Partnership is no longer suitable for listing pursuant to
Listed Company Manual Section 802.01D because it is expected that the Common
Units will have no value following the completion of the Reorganization
Transaction. On May 9, 2022, the NYSE filed a Form 25-NSE with the Securities
and Exchange Commission to remove the Common Units from listing and withdraw
registration of the Common Units on the NYSE (the "Delisting").
Item 7.01. Regulation FD Disclosure.
In connection with the filing of the Bankruptcy Petitions and the Delisting, the
Partnership issued a press release on May 9, 2022 and a press release on May 11,
2022, copies of which are attached as Exhibit 99.1 and Exhibit 99.2 to this
Current Report on Form 8-K.
The information included in this Current Report on Form 8-K under this Item 7.01
and Exhibits 99.1 and 99.2 attached hereto is being furnished and shall not be
deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or otherwise subject to liabilities of
that Section, unless the registrant specifically states that the information is
to be considered "filed" under the Exchange Act or incorporates it by reference
into a filing under the Exchange Act or the Securities Act of 1933, as amended.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" related to
future events. Forward-looking statements contain words such as "expect,"
"anticipate," "could," "should," "intend," "plan," "believe," "seek," "see,"
"may," "will," "would," or "target." Forward-looking statements are based on
management's current expectations, beliefs, assumptions and estimates and may
include, for example, statements regarding the Partnership's proceedings under
the Chapter 11 Cases, the Partnership's ability to complete the Reorganization
Transaction and its ability to continue operating in the ordinary course while
the Chapter 11 Cases are pending. These statements are subject to significant
risks, uncertainties, and assumptions that are difficult to predict and could
cause actual results to differ materially and adversely from those expressed or
implied in the forward-looking statements, including risks and uncertainties
regarding the Partnership's ability to successfully complete a restructuring
under Chapter 11 of the Bankruptcy Code , including: consummation of the
Reorganization Transaction or an alternative restructuring; potential adverse
effects of the Chapter 11 Cases on the Partnership's liquidity and results of
operations; the Partnership's ability to obtain timely approval by the
Bankruptcy Court with respect to the motions filed in the Chapter 11 Cases;
objections to the recapitalization process or other pleadings filed that could
protract the Chapter 11 Cases; employee attrition and the Partnership's ability
to retain senior management and other key personnel due to the distractions and
uncertainties imposed in part by the Chapter 11 Cases; the Partnership's ability
to comply with financing arrangements, including the DIP Facility; the
Partnership's ability to maintain relationships with its tenants, suppliers,
customers, employees, sponsors, and other third parties and regulatory
authorities as a result of the Chapter 11 Cases; the effects of the Chapter 11
Cases on the Partnership and on the interests of various constituents, including
holders of the Partnership's common stock and other equity securities; the
Bankruptcy Court's rulings in the Chapter 11 Cases, including the approvals of
the terms and conditions of the Reorganization Transaction and the outcome of
the Chapter 11 Cases generally; the length of time that the Partnership will
operate under the protection of Chapter 11 of the Bankruptcy Code and the
continued availability of operating capital during the pendency of the Chapter
11 Cases; risks associated with third party motions in the Chapter 11 Cases,
which may interfere with the Partnership's ability to consummate the
Reorganization Transaction or an alternative restructuring; increased
administrative and legal costs related to the process under Chapter 11 of the
Bankruptcy Code; potential delays in the process under Chapter 11 of the
Bankruptcy Code due to the effects of the COVID-19 virus; and other litigation
and inherent risks involved in a bankruptcy process. Forward-looking statements
are also subject to the risk factors and cautionary language described from time
to time in the reports the Partnership files with the U.S. Securities and
Exchange Commission, including those in the Partnership's most recent Annual
Report on Form 10-K and any updates thereto in the Partnership's Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. These risks and
uncertainties may cause actual future results to be materially different than
those expressed in such forward-looking statements. The Partnership has no
obligation to update or revise these forward-looking statements and does not
undertake to do so.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Restructuring Support Agreement, dated May 6, 2022, by and between
Cypress Environmental Partners, L.P. and APE V Cypress, LLC
99.1 Press Release of Cypress Environmental Partners, L.P., dated May 9, 2022
99.2 Press Release of Cypress Environmental Partners, L.P., dated May 11,
2022
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