UNITED STATES
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
Date of Earliest Event Reported: April 6, 2001
Date of Report: April 6, 2001
Ferrellgas Partners, L.P.
Ferrellgas Partners Finance Corp.
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(Exact name of registrants as specified in their charters)
Delaware 1-111331 43-1698480
Delaware 333-06693 43-1742520
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(States or other Commission file (I.R.S. Employer Identification
jurisdictions of numbers Nos.)
incorporation or
organization)
One Liberty Plaza, Liberty, Missouri 64068
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (816) 792-1600
ITEM 5. OTHER EVENTS
We announced on April 6, 2001, a series of transactions that increase the
cash distribution coverage to our public unitholders and modify the structure of
our outstanding senior units. In addition, we announced that Chief Executive
Officer James E. Ferrell purchased all our outstanding senior units from The
Williams Companies, Inc. We believe these changes are favorable to our public
investors.
Senior Unit Modifications
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As part of the announced transactions, James E. Ferrell purchased all
outstanding Ferrellgas senior units from Williams which were originally issued
as part of Ferrellgas' acquisition of Thermogas in December 1999. These senior
units have been modified to extend the prohibition on their sale or conversion
to common units until December 2005 with no applicable conversion premium. Prior
to this transaction, the senior units were convertible into common units on
February 1, 2002, with a 25 percent premium.
There are currently 4,888,233.89 senior units issued and outstanding. The
total liquidation value, based on the stated senior unit liquidation preference
as defined in our partnership agreement, is approximately $195.5 million plus
any accrued and unpaid distributions. Each senior unit entitles the holder to
quarterly distributions from us equivalent to ten percent per annum of the
liquidation value per senior unit, or $4.00 per year.
We may redeem all or a portion of the senior units at any time prior to the
date of conversion for cash at the senior unit redemption price. The senior unit
redemption price is $40.00 per outstanding senior unit, plus accrued but unpaid
distributions.
Ferrellgas, Inc. proposed amendments to the terms of the senior units and
on April 6, 2001, Williams executed a written consent to those amendments in its
capacity as the sole owner of the senior units.
Those amendments:
o extended the date of the prohibition of the potential conversion of the
senior units into common units until December 31, 2005;
o changed the senior unit to common unit conversion ratio from 125% to
100% of the senior unit liquidation preference, plus accrued but unpaid
distributions;
o allow us to use $20 million of proceeds from sales of our units to
reduce indebtedness after we have used the initial $40 million of those
proceeds to redeem senior units;
o removed provisions that previously would have caused a material event
related to the closing price of our common units and a cross default to
some of our debt instruments;
o removed the monetary penalty for not making a required senior unit
distribution but added failure to make that distribution as a material
event; and
o reduced the period in which we had the option to pay the senior unit
distributions with additional senior units rather than cash from
February 1, 2002, to February 1, 2001.
Ferrellgas, Inc. believes that these amendments to the terms of the senior
units eliminate the need to redeem all senior units prior to February 1, 2002,
and will allow us to redeem those units with the proceeds of more orderly
issuances of equity, the timing of which is controlled by us. For our common
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units, the changes to the terms of the senior units reduce the potential for
dilution in the near future. These amendments to the terms and provisions of the
senior units are reflected in our Third Amended and Restated Agreement of
Limited Partnership.
Cash Distribution Support
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Currently, Ferrell Companies, Inc. owns approximately 57% of our common
units. Our general partner proposed amendments to our partnership agreement that
would allow for the deferral of distributions on the common units held by
Ferrell Companies in an aggregate amount up to $36 million. This deferral means
that currently in the event that available cash were insufficient to pay all of
our common unitholders the minimum quarterly distribution during any fiscal
quarter, we would pay a distribution on the publicly held common units first and
then pay a distribution on the Ferrell Companies common units to the extent cash
was still available. If the cumulative amount not paid to Ferrell Companies were
to reach $36 million, the common units held by Ferrell Companies will be paid in
the same manner as the publicly held common units, just as they were prior to
the amendments. After payment of all required distributions, we will use
remaining available cash to reduce any amount previously deferred on the units
held by Ferrell Companies.
Our ability to defer the payment of a distribution on the Ferrell Companies
common units will end on the earlier of:
o December 31, 2005;
o a change of control as defined in our partnership agreement;
o our dissolution; or
o when Ferrell Companies no longer owns any common units.
After the end of the period described above, distributions will be made to
holders of all common units equally, including those owned by Ferrell Companies
in the same manner as we made distributions prior to the amendments. The
amendments also provide that Ferrellgas, Inc. may not change this period in a
manner adverse to holders of our common units without the consent of a majority
of the holders of our common units, not including those common units held by
Ferrell Companies.
The common units owned by Ferrell Companies will not be affected by the
amendments other than with respect to distributions. Those units will continue
to vote together with the publicly held common units in the same manner as they
are able to vote currently. Each common unit currently is allowed one vote on
each matter for which it may be entitled to vote under our partnership
agreement.
These amendments that created the deferral of distributions on the common
units held by Ferrell Companies in an aggregate amount up to $36 million
required the consent of a majority of our common unitholders. In addition, our
partnership agreement allows a consent to be executed by our common unitholders
in lieu of an actual meeting if the consent is executed by the holders of a
number of common units that otherwise would be able to approve that action at a
meeting. Because Ferrell Companies owns at least a majority of our common units,
the execution of a consent to these amendments by Ferrell Companies on April 6,
2001, means that the amendments have been approved in accordance with our
partnership agreement without the requirement to hold a meeting of our common
unitholders. Our partnership agreement and the Securities and Exchange
Commission rules require notifications of the consent executed by Ferrell
Companies. Under the Securities and Exchange Commission's rules, the amendments
approved by Ferrell Companies will not be effective until twenty days after
mailing this information statement to our common unitholders.
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Effects of the amendments on our common unitholders
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Because the amendments that provide for the deferral of distributions on
the common units held by Ferrell Companies apply solely to distributions to be
made to the units held by Ferrell Companies, there is no negative effect on the
publicly held common units. However, we will not be able to increase the amount
of the quarterly distributions on our common units if any amount is outstanding
that was not paid to Ferrell Companies as a result of the distribution deferral
provisions in our partnership agreement. The distributions that otherwise would
have been received on publicly held common units are now better protected due to
the possible deferral of the distributions to Ferrell Companies. Subject to the
amount of our available cash, the publicly held common units will continue to
receive distributions in the same manner as is currently done. We believe that
there are no federal income tax consequences to the holders of publicly held
common units as a result of these amendments.
Ferrellgas, Inc. believes that these amendments providing for the deferral
of distributions on the common units held by Ferrell Companies will allow for
better perception in the public markets of our ability to pay distributions on
our public common units. This perception may allow us better access to the
public markets for sales of our securities. However, there can be no assurance
that these amendments will provide this desired result.
These amendments to effect the deferral of distributions on the common
units held by Ferrell Companies are generally reflected in Sections 5.4(a), (b)
and (c) of our Third Amended and Restated Agreement of Limited Partnership.
Sale of the senior units to a related party
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Williams approved the amendments to our partnership agreement related to
the terms of the senior units and sold all of those senior units to an entity
owned by James E. Ferrell, Chairman and Chief Executive Officer of Ferrellgas,
Inc. That entity is now the holder of all senior units, and therefore Mr.
Ferrell has an interest in the terms of the senior units and the timing of our
redemption of those senior units. The senior units as owned by that entity have
all the same rights as when they were owned by Williams.
As a member of Ferrellgas, Inc.'s board of directors and the board of
directors of Ferrell Companies, Mr. Ferrell did not vote on the approval of the
amendments. All of the other members of those respective boards of directors
were independent and had no financial interest in the amendments and voted
unanimously in favor of the amendments.
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Other Information
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The amendments to our partnership agreement are reflected in the form of
our Third Amended and Restated Agreement of Limited Partnership, which is filed
as an exhibit to this Form 8-K filing.
Also on April 6, 2001, we filed with the Securities and Exchange Commission
a preliminary information statement to provide prompt notice of the actions
described above. The information statement will be mailed to holders of record
as of April 16, 2001, as soon as practicable and in accordance with the
Securities and Exchange Commission's rules.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The Exhibits listed in the Index to Exhibits are filed as part of this
Current Report on Form 8-K.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FERRELLGAS PARTNERS, L.P.
By Ferrellgas, Inc. (General Partner)
Date: April 6, 2001 By /s/ Kevin T. Kelly
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Kevin T. Kelly
Senior Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
FERRELLGAS PARTNERS FINANCE
CORP.
Date: April 6, 2001 By /s/ Kevin T. Kelly
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Kevin T. Kelly
Senior Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
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INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
3.1 Third Amended and Restated Agreement of Limited
Partnership of Ferrellgas Partners, L.P. dated as
of April 6, 2001.
10.1 Third Amendment to Purchase Agreement dated as of
April 6, 2001 by and among Ferrellgas Partners,
L.P., Ferrellgas L.P. and The Williams Companies,
Inc.
10.2 First Amendment to Representations Agreement dated
as of April 6, 2001 by and among Ferrellgas
Partners, L.P., Ferrellgas, Inc., Ferrellgas, L.P.
and The Williams Companies, Inc.
10.3 Second Amendment to Registration Rights Agreement
dated as of April 6, 2001 by and between Ferrellgas
Partners, L.P. and The Williams Companies, Inc.
99.1 Text of press release issued by Ferrellgas
Partners, L.P. on April 6, 2001.
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