SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 7, 2002
Date of Report (Date of earliest event reported)
INERGY, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 0-32453 43-1918951
(State or other (Commission File (IRS Employer
jurisdiction of incorporation) Number) Identification Number)
2 Brush Creek Blvd.
Kansas City, MO 64112
(Address of principal executive offices)
(816) 842-8181
(Registrant's telephone number, including area code)
Item 5. Other Events and Regulation FD Disclosure
On June 7, 2002, Inergy Propane, LLC ("Inergy Propane"), a wholly owned
subsidiary of Inergy, L.P. (the "Registrant") entered into a note purchase
agreement with a group of institutional lenders pursuant to which it issued
$85.0 million aggregate principal amount of senior secured notes with a weighted
average interest rate of 9.07% and a weighted average maturity of 5.9 years. The
senior secured notes consist of the following: $35.0 million principal amount of
8.85% senior secured notes with a 5-year maturity, $25.0 million principal
amount of 9.10% senior secured notes with a 6-year maturity, and $25.0 million
principal amount of 9.34% senior secured notes with a 7-year maturity.
The notes represent senior secured obligations of Inergy Propane and will
rank at least pari passu in right of payment with all other present and future
senior indebtedness of Inergy Propane. The notes are secured, on an equal and
ratable basis with the obligations of Inergy Propane under its existing bank
credit facility, by (i) a first priority lien on substantially all of the
existing and future assets of Inergy Propane and its current and future
subsidiaries, (ii) a lien on all of our existing and future equity and other
interests in Inergy Propane and (iii) a lien on all of Inergy Propane's existing
and future equity and other interests in each of its current and future
subsidiaries.
The senior secured notes are guaranteed by Inergy Propane's subsidiaries,
IPCH Acquisition Corp. and the Registrant. The IPCH Acquisition Corp. guaranty
is limited to $35 million.
The senior secured notes are redeemable, at Inergy Propane's option, at a
purchase price equal to 100% of the principal amount together with accrued
interest, plus a make-whole amount determined in accordance with the note
purchase agreement.
In addition, so long as any of the notes are outstanding or any amounts are
owed by Inergy Propane to any holder of the notes, the note purchase agreement
relating to the notes limits the ability of Inergy Propane and, in certain
cases, its subsidiaries to (subject to various exceptions), among other things:
. make restricted payments (as defined in the note purchase agreement);
. grant or incur liens;
. in the case of subsidiaries, incur debt;
. make investments, loans and acquisitions;
. enter into a merger, consolidation, sale of assets, acquisition or
similar transaction;
. make certain dispositions of assets;
. sell or discount receivables;
. enter into certain affiliate transactions;
. enter into sale-leaseback transactions involving a fair market value
exceeding $5.0 million;
. make any change in its principles and methods of accounting as currently
in effect, except as such changes are permitted by GAAP;
. enter into or engage in any business which is not substantially similar
to that which is currently existing;
. modify their respective organizational documents;
. enter into any agreement which would cause a default or an event of
default or conflict with the agreements governing the notes;
. in the case of subsidiaries, issue any equity interests;
. in the case of subsidiaries, permit the sale of or disposal of any equity
interests or debt;
. enter into any agreement which contains covenants more restrictive than
the note purchase agreement;
. enter into any commodity swap agreement other than in the ordinary course
of business with a term of less than 24 months; and
. enter into put agreements granting put rights with respect to the equity
interests of Inergy Propane or its subsidiaries.
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Furthermore, the note purchase agreement contains the following
financial covenants (subject to various exceptions):
. the ratio of total indebtedness to EBITDA (as defined in the note
purchase agreement) for the four fiscal quarters most recently ended may
generally not exceed 4.5 to 1.0; and
. the ratio of EBITDA to consolidated total interest expense (as defined in
the note purchase agreement) for the four fiscal quarters most recently
ended may not be less than 2.5 to 1.0.
Each of the following is an event of default under the note purchase
agreement:
. default in payment of principal or make-whole amounts on any senior
secured note when due;
. default in payment of any interest on any senior secured note within
three days of its due date;
. violation of specified affirmative and negative covenants;
. a default on any of the terms in the note purchase agreement or ancillary
agreements that is not timely cured;
. inaccuracy of representations and warranties made by Inergy Propane and
affiliated entities;
. an event that would cause Inergy Propane, its subsidiaries, IPCH
Acquisition Corp. or the Registrant to be in default or cause prepayment of
any of its indebtedness in excess of $1.0 million;
. bankruptcy and other insolvency events of Inergy Propane, its
subsidiaries, IPCH Acquisition Corp. or the Registrant;
. judgments exceeding $1.0 million against Inergy Propane, its
subsidiaries, IPCH Acquisition Corp. or the Registrant are not bonded,
discharged or stayed within specified time periods;
. any default and/or violation relating to any of our employee benefit
plans;
. the actual or asserted invalidity of a material provision in any of the
guarantees relating to the notes;
. the actual or asserted invalidity of a material provision in any of the
security documents relating to the senior secured notes; and
. any event of default under any ancillary agreement relating to the senior
secured notes.
If an event of default resulting from bankruptcy or other insolvency events
occurs, the senior secured notes will become immediately due and payable. If
any other event of default occurs and is continuing, holders of more than 33
1/3% in principal amount of the outstanding notes may at any time declare all
the notes then outstanding to be immediately due and payable. If an event of
default relating to nonpayment of principal, make-whole amounts or interest
occurs, any holder of outstanding notes affected by such event of default may
declare all the notes held by such holder to be immediately due and payable.
In connection with the execution of the note purchase agreement, Inergy
Propane, the lenders under its credit facility and the initial purchasers of the
senior secured notes entered into an Intercreditor and Collateral Agency
Agreement on June 7, 2002. This agreement appointed Wachovia Bank, N.A. to act
as collateral agent and authorized Wachovia Bank to execute various security
documents on behalf of the lenders under the credit facility and the initial
purchasers of the senior secured notes. This agreement specifies various rights
and obligations of Wachovia Bank and the other parties thereto in respect of the
collateral securing Inergy Propane's obligations under the credit facility and
the note purchase agreement.
The note purchase agreement relating to the senior secured notes, the
related guaranty agreements and the Intercreditor and Collateral Agency
Agreement and various ancillary documents are filed as exhibits hereto and are
incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
None.
(b) Pro forma financial information.
None.
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(c) Exhibits.
4.1 Note Purchase Agreement entered into as of June 7, 2002, by Inergy
Propane, LLC and the purchasers named therein (incorporated by reference
to Exhibit 4.4 of Inergy, L.P.'s Registration Statement on Form S-1/A
filed on June 13, 2002).
4.2 Parent Guaranty dated as of June 7, 2002, by Inergy, L.P. in favor of
the noteholders named therein (incorporated by reference to Exhibit
4.5 of Inergy, L.P.'s Registration Statement on Form S-1/A filed on
June 13, 2002).
4.3 Limited Guaranty dated as of June 7, 2002, by IPCH Acquisition Corp. in
favor of the noteholders named therein (incorporated by reference to
Exhibit 4.6 of Inergy, L.P.'s Registration Statement on Form S-1/A
filed on June 13, 2002).
4.4 Subsidiary Guaranty dated as of June 7, 2002, by the guarantors named
therein in favor of the noteholders named therein (incorporated by
reference to Exhibit 4.7 of Inergy, L.P.'s Registration Statement on
Form S-1/A filed on June 13, 2002).
99.1 Intercreditor and Collateral Agency Agreement entered into as of June 7,
2002, by and among Wachovia Bank, National Association, the lenders
named therein and the noteholders named therein (incorporated by
reference to Exhibit 10.19 of Inergy, L.P.'s Registration Statement on
Form S-1/A filed on June 13, 2002).
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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.
Inergy, L.P.
Date: June 13, 2002
By: /s/ R. Brooks Sherman, Jr.
------------------------------
Name: R. Brooks Sherman, Jr.
Title: Chief Financial Officer
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Exhibit Index
Exhibit
Number Description
------- -----------
4.1 Note Purchase Agreement entered into as of June 7, 2002, by Inergy
Propane, LLC and the purchasers named therein (incorporated by reference
to Exhibit 4.4 of Inergy, L.P.'s Registration Statement on Form S-1/A
filed on June 13, 2002).
4.2 Parent Guaranty dated as of June 7, 2002, by Inergy, L.P. in favor of
the noteholders named therein (incorporated by reference to Exhibit
4.5 of Inergy, L.P.'s Registration Statement on Form S-1/A filed on
June 13, 2002).
4.3 Limited Guaranty dated as of June 7, 2002, by IPCH Acquisition Corp. in
favor of the noteholders named therein (incorporated by reference to
Exhibit 4.6 of Inergy, L.P.'s Registration Statement on Form S-1/A
filed on June 13, 2002).
4.4 Subsidiary Guaranty dated as of June 7, 2002, by the guarantors named
therein in favor of the noteholders named therein (incorporated by
reference to Exhibit 4.7 of Inergy, L.P.'s Registration Statement on
Form S-1/A filed on June 13, 2002).
99.1 Intercreditor and Collateral Agency Agreement entered into as of June 7,
2002, by and among Wachovia Bank, National Association, the lenders
named therein and the noteholders named therein (incorporated by
reference to Exhibit 10.19 of Inergy, L.P.'s Registration Statement on
Form S-1/A filed on June 13, 2002).
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