To facilitate the first of two financings needed to complete a previously announced transaction with Marlin Midstream Partners LP, Azure Midstream Energy LLC entered into agreement with lenders to amend its $550 million senior secured term loan and senior secured revolving credit facility. The credit facility allows Azure to contribute its legacy gathering system to Marlin, as well as the acquisition of 100% of Marlin’s general partner interest, 90% of Marlin’s outstanding incentive distribution rights and an option to purchase up to 20% of Marlins sponsor, NuDevco Midstream Development LLC partnership units. The definitive agreements were executed and delivered by the administrative agent and the lenders party thereto on Feb. 3, and will be effective upon closing of the proposed transactions.

Pursuant to the amendment’s terms and lender receipt of $95 million in proceeds, Azure will receive greater flexibility for its ability to conduct drop-down asset sales and affiliate transactions with Marlin that will aid in Marlin’s distribution growth. Azure will be able to engage in the following:

  • Transfer additional assets to Marlin with a value up to $150 million if such transfer reduces leverage by 0.5X or more, subject to mandatory prepayment requirements;
  • Marlin and its subsidiaries will not be treated as subsidiaries for covenant, representation, financial calculations, guarantee and collateral purposes; and
  • The excess cash flow prepayment for 2014 will be waived to allow Azure to retain additional cash flow for growth capital opportunities.

J.P. Morgan Securities LLC acted as sole arranger and Latham & Watkins LLP acted as sole financing counsel to Azure.