Southcross Energy files for Chapter 11 bankruptcy protection

Southcross Energy Partners has filed for bankruptcy in the US Bankruptcy Court for the District of Delaware as it intends to explore a range of options, including a sale of the company.

The company noted that it expects to continue operations in the normal course and serve its customers during the court-monitored process.

As part of the restructuring process, apart from the sale of the entire business, the company will evaluate other options, including the sale of certain assets.

The company will also consider a standalone restructuring plan to boost its financial position and accelerate future growth.

Southcross Energy is in talks with its lenders and other stakeholders to expressly achieve a resolution regarding the terms of a financial restructuring plan.

Southcross Energy Partners chairman, president and CEO James Swent said: “Over the course of the last several years, Southcross has continued to adapt to the changing and challenging market environment in which we operate, but our strong underlying business has continued to labour under a heavier debt burden than most of our competitors.

“Our objective is to use the restructuring process to explore a range of strategic alternatives, including a potential sale of the company, while on a parallel track, we are working to restructure our balance sheet to reduce leverage, enhance flexibility and prepare for a potential emergence as a viable, more profitable company.”

The company’s existing lenders have offered a commitment to provide $255m in debtor-in-possession (DIP) financing.

Following the receipt of court approval, Southcross Energy will use the new financing and cash generated from its ongoing operations to support the business until the completion of the reorganisation and sale process.

The energy firm petitioned the court to allow it to continue payment of employee wages and pay vendors and suppliers for the goods and services purchased on or after the date of bankruptcy filing.

Southcross Energy specialises in natural gas gathering, processing, treating, compression and transportation services, as well as natural gas liquids fractionation and transportation services.

The company’s assets portfolio includes two cryogenic gas processing plants, a fractionation facility and 3,100 miles of pipeline network.