UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 16, 2019
NuStar Energy L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 001-16417 | 74-2956831 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
19003IH-10 West
San Antonio, Texas 78257
(Address of principal executive offices)
(210)918-2000
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17 CFR240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common units Fixed-to-floating rate cumulative redeemable perpetual preferred units | NS NSprA, NSprB and NSprC | New York Stock Exchange New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule12b-2 of the Securities Exchange Act of 1934(§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
Underwriting Agreement
On May 16, 2019, NuStar Logistics, L.P. (“NuStar Logistics”), NuStar Energy L.P. (“NuStar Energy”), NuStar Pipeline Operating Partnership L.P. (“NuPOP”), Riverwalk Logistics, L.P., the general partner of NuStar Energy (“General Partner”), NuStar GP, LLC, NuStar GP, Inc. and NuStar Pipeline Company, LLC (collectively, the “NuStar Parties”) entered into an underwriting agreement (the “Underwriting Agreement”) with RBC Capital Markets, LLC, as representative of the several underwriters named therein (collectively, the “Underwriters”), relating to the public offering (the “Offering”) by NuStar Logistics of $500.0 million aggregate principal amount of 6.00% Senior Notes due 2026 (the “Notes”). The Notes are being guaranteed on a full and unconditional basis by NuStar Energy and NuPOP. The aggregate net proceeds to NuStar Logistics for the Notes, after underwriting fees and commissions and estimated offering expenses, is approximately $491.5 million. The net proceeds of the Offering are expected to be used for general partnership purposes, including the funding of future capital expenditures and to repay amounts outstanding under NuStar Logistics’ revolving credit agreement.
The Offering has been registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to an automatically effective registration statement onForm S-3 (Registration No. 333-212338) (the “Registration Statement”), dated June 30, 2016, and the prospectus supplement dated May 16, 2019, filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the Securities Act.
The Underwriting Agreement provides that the obligations of the Underwriters to purchase the Notes are subject to approval of certain legal matters by counsel to the Underwriters and other customary conditions. The NuStar Parties have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the Underwriters may be required to make because of any of those liabilities.
Certain of the Underwriters or their affiliates are lenders under NuStar Logistics’ revolving credit agreement and, in that respect, may receive a portion of the proceeds from the Offering through the repayment of borrowings outstanding under NuStar Logistics’ revolving credit agreement.
Certain of the Underwriters and their related entities have engaged, and may in the future engage, in commercial and investment banking transactions with any of the NuStar Parties in the ordinary course of their business. They have received, and expect to receive, customary compensation and expense reimbursement for these commercial and investment banking transactions.
The foregoing description of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Underwriting Agreement, which is filed herewith as Exhibit 1.1 to this Current Report on Form8-K and is incorporated herein by reference.
Ninth Supplemental Indenture
On May 22, 2019, NuStar Logistics successfully completed the issuance and sale of the Notes. The Notes are governed by an Indenture dated as of July 15, 2002 (the “Original Indenture”), as amended and supplemented by the Third Supplemental Indenture, dated as of July 1, 2005 (the “Third Supplemental Indenture”), by and among NuStar Logistics, NuStar Energy, NuPOP and The Bank of New York Trust Company, N.A. as trustee (the Original Indenture, as so amended and supplemented by the Third Supplemental Indenture, the “Senior Indenture”), as further amended and supplemented by the Ninth Supplemental Indenture dated as of May 22, 2019 (the “Ninth Supplemental Indenture”) by and among NuStar Logistics, NuStar Energy, NuPOP and Wells Fargo Bank, National Association, as successor trustee (the “Trustee”). The Senior Indenture, as amended and supplemented by the Ninth Supplemental Indenture, is referred to herein as the “Indenture.”
Interest on the Notes will accrue from May 22, 2019 and is payable semi-annually on June 1 and December 1 of each year, beginning December 1, 2019. The Notes will mature on June 1, 2026.
Prior to March 1, 2026, NuStar Logistics may, at its option, redeem all or part of the Notes at any time at a price equal to the greater of 100% of the principal amount of the Notes then outstanding to be redeemed, or at a make-whole price, in each case plus accrued and unpaid interest to, but excluding, the date of redemption. In addition, on or after March 1, 2026, NuStar Logistics may redeem the Notes at a price equal to 100% of the principal amount of Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.
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The Indenture does not restrict NuStar Logistics or its subsidiaries from incurring additional indebtedness, paying distributions on its equity interests or purchasing or redeeming its equity interests, nor does it require the maintenance of any financial ratios or specified levels of net worth or liquidity.
The Notes are NuStar Logistics’ senior unsecured obligations and rank equally in right of payment with all of NuStar Logistics’ existing and future unsecured senior indebtedness and senior to its existing and future subordinated indebtedness. The Notes are irrevocably and unconditionally guaranteed on a senior unsecured basis by NuStar Energy and NuPOP, jointly and severally. Each guarantee by NuStar Energy and NuPOP ranks equally in right of payment to all of that guarantor’s existing and future unsecured and unsubordinated indebtedness and senior to its existing and future subordinated indebtedness.
The Indenture contains covenants that will limit the ability of NuStar Logistics, and its subsidiaries, to, among other things, create liens or enter into sale-leaseback transactions, consolidations, mergers or asset sales.
If a change of control (as described below) occurs, then each holder of the Notes will have the right to require NuStar Logistics to repurchase all or a portion of that holder’s Notes at a price equal to 101% of the aggregate principal amount of the Notes repurchased, plus any accrued and unpaid interest to the date of repurchase.
Under the Indenture, a change of control means an occurrence of one of the following events:
| • | the direct or indirect lease, sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of (i) all or substantially all of NuStar Logistics’ assets and the assets of its subsidiaries taken as a whole or (ii) all of the assets of NuStar Energy and its subsidiaries taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”)), other than to one or more of NuStar GP Holdings, LLC, NuStar Energy and each person which is a direct or indirect subsidiary of NuStar GP Holdings, LLC or NuStar Energy (collectively, the “NuStar Group”), which disposition is followed by a decrease in the rating of the Notes by both S&P Global Ratings, a division of S&P Global, Inc., and Moody’s Investors Service, Inc. by one or more gradations (a “Ratings Decline”) within 60 days thereafter; |
| • | the adoption of a plan relating to NuStar Logistics’ or NuStar Energy’s liquidation or dissolution, or the removal of (i) NuStar Logistics’ general partner by NuStar Logistics’ limited partners, (ii) the General Partner by NuStar Energy’s limited partners, or (iii) the general partner of the General Partner by the limited partners of the General Partner; or |
| • | the consummation of any transaction (including, without limitation, any merger or consolidation) which results in any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), other than one or members of the NuStar Group, becoming the beneficial owner, directly or indirectly, of more than 50% of the voting stock of NuStar Logistics, NuStar Logistics’ general partner, NuStar Energy, the General Partner or the general partner of the General Partner, in each case measured by voting power rather than number of shares, units or the like, which occurrence is followed by a Ratings Decline within 60 days thereafter. |
Notwithstanding the preceding, NuStar Logistics’ or NuStar Energy’s conversion from a limited partnership to a corporation, limited liability company or other form of entity or an exchange of all of the outstanding limited partnership interests for capital stock in a corporation, for member interests in a limited liability company or for equity interests in such other form of entity shall not constitute a change of control, so long as following such conversion or exchange, the NuStar Group beneficially owns, directly or indirectly, in the aggregate more than 50% of the voting stock of such entity, or continues to beneficially own, directly or indirectly, a sufficient percentage of voting stock of such entity to elect a majority of its directors, managers, trustees or other persons serving in a similar capacity for such entity.
Events of default under the Indenture include:
| • | failure to pay interest on the Notes for 30 days; |
| • | failure to pay the principal of or any premium on the Notes when due; |
| • | failure to perform any other covenant or warranty in the Indenture (other than a term, covenant or warranty a default in whose performance or whose breach is specifically dealt with in the Indenture or which has expressly been included in the Indenture solely for the benefit of another series of securities) that continues for 60 days after written notice is given to NuStar Logistics by the Trustee or to NuStar Logistics and the Trustee by the holders of at least 25% in principal amount of the outstanding Notes, specifying such default and requiring it to be remedied and stating that such notice is a “Notice of Default” under the Indenture; |
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| • | certain events of bankruptcy, insolvency or reorganization of NuStar Logistics; |
| • | failure to comply for 90 days with the repurchase provisions described in connection with a change of control; or |
| • | failure to pay any indebtedness of NuStar Logistics for borrowed money in excess of $50 million, whether at stated maturity (after the expiration of any applicable grace periods) or upon acceleration and maturity thereof, if such indebtedness is not discharged, or such acceleration is not annulled, within 30 days after written notice is given to NuStar Logistics by the Trustee or to NuStar Logistics and the Trustee by the holders of at least 25% in outstanding principal amount of the Notes, specifying such default and requiring it to be remedied, and stating that such notice is a “Notice of Default” under the Indenture. |
If an event of default occurs and is continuing, the Trustee or the holders of not less than 25% in aggregate principal amount of the Notes may declare the entire principal of, and accrued but unpaid interest, if any, on all the Notes to be due and payable immediately. If this happens, subject to certain conditions, the holders of a majority of the aggregate principal amount of the Notes can rescind the declaration. If an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs, the entire principal amount of the Notes shall be due and payable immediately without further action or notice.
The description of the Indenture contained in this Current Report on Form8-K does not purport to be complete and is qualified in its entirety by reference to the full text of the Original Indenture, the Third Supplemental Indenture and the Ninth Supplemental Indenture, incorporated by reference herein from Exhibits 4.1, 4.2 and 4.3, respectively.
| Item 9.01 | Finance Statements and Exhibits. |
(d) Exhibits
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NUSTAR ENERGY L.P. | ||||||
| By: | Riverwalk Logistics, L.P. | |||||
| its general partner | ||||||
| By: | NuStar GP, LLC | |||||
| its general partner | ||||||
| Date: May 22, 2019 | By: | /s/ Amy L. Perry | ||||
| Name: | Amy L. Perry | |||||
| Title: | Executive Vice President—M&A, Strategic Direction and Investor Relations and Corporate Secretary | |||||