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September 8, 2022 – The Court hearing the Ruby Pipeline case issued an order: (i) approving the proposed bidding procedures for the sale of the Debtor’s assets, (ii) authorizing the Debtor to select one or more stalking horse(s), and offer (unspecified) bidder protections to any selected stalking horse, and (iii) adopting a proposed auction/sale timetable culminating in a December 13th auction and a December 28th sale hearing [Docket No. 354].
On March 31, 2022, Ruby Pipeline, LLC (“Ruby Pipeline” or the “Debtor”) filed for Chapter 11 protection with estimated assets between $500.0mn and $1.0bn; and estimated liabilities between $500.0mn and $1.0bn. At filing, the Debtor, a "midstream service provider and acts as a transporter of natural gas from the Rocky Mountain basins to the Pacific Northwest," noted that the "driving cause of the Debtor’s bankruptcy filing is the size of its outstanding obligations under the 2022 Unsecured Notes and its current cash position. On April 1, 2022, the 2022 Unsecured Notes mature, and the Debtor is obligated to repay the $475 million in outstanding principal thereunder, as well as interest in the amount of $19 million."
On July 19th, the Court hearing the Ruby Pipeline case extended the Debtor's exclusive Plan filing and solicitation periods after the Debtor reached a settlement with its Official Committee of Unsecured Creditors Creditors’ (the "Committee") further to which (i) the parties agreed to adjust case milestones, notably in respect of the sale process and the Debtor's stay in Chapter 11, each reduced by approximately a month (see Exhibit 1 to the exclusivity extension order) and (ii) the Committee withdrew its May 27th motion to terminate the Debtor’s exclusivity periods.
The Bidding Procedures and Sale Motion
The motion [Docket No. 333] states, “The Debtor, with the support of its key stakeholders, requests authorization to run a marketing process for the sale of (i) substantially all of the Debtor’s assets or (ii) the Debtor’s reorganized equity, in all cases excluding (a) cash and cash equivalents and (b) all estate causes of action, including any avoidance actions, and the proceeds derived therefrom (collectively, the ‘Company’). The Debtor has managed its restructuring with the oversight of a special committee (the ‘Special Committee’) composed solely of three (3) highly experienced and well-respected independent managers (the ‘Independent Managers’). The Independent Managers have been tasked with, among other things, directing and overseeing the Debtor’s restructuring process and this chapter 11 case, including all aspects of the sale and marketing process. In an exercise of its reasonable business judgment, the Special Committee has determined that pursuing a sale of the Company in accordance with the Bidding Procedures provides the best opportunity to maximize value for the Debtor, its estate, and its creditors
As the Court is aware, the Debtor was recently engaged in litigation with the Ad Hoc Group and Creditors’ Committee regarding, among other things, whether the Debtor’s exclusive periods to file and solicit acceptances of a chapter 11 plan (the ‘Exclusive Periods’) should be extended. Fortunately, on the eve of an exclusivity hearing, the parties were able to reach a settlement that included an agreed-upon Case Timeline. If the Debtor fails to adhere to the Case Timeline, it could jeopardize the agreement amongst the parties and lead to costly litigation once again.
The Bidding Procedures were designed with the objective of generating the greatest level of interest in, and highest or best value for, the Company while affording the Debtor maximum flexibility to execute a sale transaction as quickly and efficiently as possible. The Debtor is confident that the Bidding Procedures and the other relief requested herein will maximize recoveries for all stakeholders.”
Approved Key Dates (adopted as proposed)
- Deadline to file Notice of Stalking Horse Bidder: November 14, 2022
- Bid Deadline: December 7, 2022
- Deadline to file objections to Stalking Horse Bid Protection: No later than seven (7) calendar days after filing of Notice of Stalking Horse Bidder
- Auction, if necessary: December 13, 2022
- Deadline to file objections to Stalking Horse Sale Transaction (if no Auction held): December 7, 2022
- Deadline to file objections to Sale Transaction n (if an Auction is held): December 21, 2022
- Sale Hearing for Sale Transaction (if no Auction held): December 19, 2022
- Sale Hearing for Sale Transaction (if an Auction held) December 28, 2022
- Consummation of Sale Transaction (the “Target Closing Date”): No later than January 4, 2023.
The motion continues, “On March 30, 2022 (effective as of March 22, 2022), the Debtor engaged PJT Partners LP (‘PJT’) to serve as its investment banker and to assist in, among other things, a sale, refinancing, or restructuring of the Debtor, which retention was approved by the Court on July 19, 2022. Since its engagement, PJT has worked with the Debtor and its advisors to prepare for a marketing and sale process of the Company (the ‘Marketing and Sale Process’). Such efforts include, but are not limited to, the finalization of an initial buyer list, the continued population of a virtual data room, and the preparation of a teaser, process letter, and confidential information memorandum. On August 15, 2022, PJT commenced an initial outreach to over 150 potential strategic and financial buyers to garner interest in pursuing a transaction for the Company (the ‘Potential Interested Parties’).
Prior to the Court’s entry of the Exclusivity Order, the Debtor, Ad Hoc Group, and Creditors’ Committee engaged in months of litigation regarding, among other things, the speed at which the Debtor’s case was progressing. The parties resolved the litigation by agreeing to the settlement embodied in the Exclusivity Order, including the Case Timeline.
Pursuant to the Exclusivity Order, the Debtor has agreed to prosecute this chapter 11 case in earnest pursuant to the Case Timeline. The Case Timeline sets forth, among other things, various milestones for the Marketing and Sale Process, which have been incorporated into the Bidding Procedures (the ‘Milestones’). Failure to adhere to the Milestones could lead to additional litigation and delay this chapter 11 case.
The Debtor believes that the Milestones set forth in the Bidding Procedures are reasonable and will provide all potential bidders with sufficient time and information to submit a bid for the Company. In formulating the procedures and time periods set forth therein, the Debtor balanced the need to provide adequate and appropriate notice to parties in interest and potential bidders with the need to timely and efficiently run a competitive Marketing and Sale process. The Bidding Procedures are designed to encourage all prospective bidders to submit bids in accordance with an adequate timeline that aims to derive the highest or best value for the benefit of all of the Debtor’s stakeholders.”
About the Debtors
The Debtor owns and facilitates the operation of a 42-inch diameter, 683-mile-long natural gas pipeline (the “Ruby Pipeline”) originating at the Opal Hub in Opal, Wyoming and terminating at the Malin Hub in Malin, Oregon, near the California border. The Debtor is a midstream service provider and acts as a transporter of natural gas from the Rocky Mountain basins to the Pacific Northwest.
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