Item 1.01 Entry into a Material Definitive Agreement
On August 31, 2022, Sprague Resources LP, a Delaware limited partnership (the
"Partnership"), and its general partner, Sprague Resources GP LLC, a Delaware
limited liability company (the "Partnership GP"), Sprague HP Holdings, LLC, a
Delaware limited liability company and a wholly owned subsidiary of Hartree
Partners, LP ("Parent"), and Sparrow HP Merger Sub, LLC, a Delaware limited
liability company ("Merger Sub"), entered into Amendment No. 1 (the "Merger
Agreement Amendment") to the Agreement and Plan of Merger, dated June 2, 2022,
among the Partnership, Partnership GP, Parent and Merger Sub (the "Merger
Agreement").
The Merger Agreement Amendment, among other things, provides (i) that the
closing of the transactions contemplated by the Merger Agreement (the "Closing")
may not occur prior to November 28, 2022 (the "Inside Date"), unless otherwise
agreed to by Parent, (ii) that the Outside Date (as defined in the Merger
Agreement) shall be extended from December 2, 2022 to March 2, 2023, (iii) that
each common unit representing a limited partner interest (each, a "Common Unit")
in the Partnership (other than Common Units held by Parent or its permitted
transferees) issued and outstanding immediately prior to the Effective Time (as
defined in the Merger Agreement) will be converted into the right to receive (A)
$19.00 per Common Unit in cash without any interest thereon as merger
consideration and (B) an additional $1.00 per Common Unit in cash without any
interest thereon as consideration for the amendment to the Inside Date, (iv) for
the removal of the closing conditions in the Merger Agreement that are specific
to Parent, (v) that Partnership GP shall declare, and shall cause the
Partnership to pay, a cash distribution to holders of Common Units for the
calendar quarter ending September 30, 2022, in an amount not less than $0.4338
per common unit, regardless of whether the Closing occurs prior to September 30,
2022, and (vi) during the period from the date of the Merger Agreement Amendment
to the Effective Time, Parent and Merger Sub shall not cause, direct or permit
the Partnership GP or any of its affiliates to exercise the right to acquire
Limited Partner Interests (as defined in the Partnership's First Amended and
Restated Agreement of Limited Partnership, dated as of October 30, 2013 (as
amended, the "Partnership Agreement")) pursuant to Section 15.1 of the
Partnership Agreement.
The foregoing summary of the Merger Agreement Amendment does not purport to be
complete and is subject to, and is qualified in its entirety by, the full text
of the Merger Agreement Amendment, which is attached hereto as Exhibit 2.1 and
incorporated herein by reference.
Item 7.01 Regulation FD Disclosure
On August 31, 2022, the Partnership issued a press release announcing the entry
into the Merger Agreement Amendment. A copy of the press release covering such
announcement and certain other matters is attached hereto as Exhibit 99.1.
The information in this Item 7.01 (including the exhibits referenced therein)
shall not be deemed "filed" for the purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, except as specifically
identified therein as being incorporated by reference.
Item 8.01 Other Events
On August 4, 2022, the Partnership filed with the U.S. Securities and Exchange
Commission a Definitive Information Statement relating to the transactions
contemplated by the Merger Agreement (the "Information Statement"). Following
the filing of the Information Statement, the Partnership, Partnership GP, Parent
and Merger Sub entered into the Merger Agreement Amendment as described in Item
1.01 of this Current Report on Form 8-K.
SUPPLEMENT TO INFORMATION STATEMENT
The Partnership is supplementing the Information Statement with certain
additional information set forth below. These disclosures should be read in
connection with the Information Statement, which should be read in its entirety.
All page references are to pages in the Information Statement, and terms used
below, unless otherwise defined, have the meanings set forth in the Information
Statement.
The disclosure on page 23 of the Information Statement is hereby supplemented by
adding the following paragraphs at the end of the section entitled "Background
of the Merger":
In mid-August 2022, following the mailing of this information statement to the
Partnership's unitholders, the parties established a tentative closing date of
September 1, 2022. The parties began working towards closing on such date.
On August 25, 2022, as the anticipated closing date approached, Mr. Hendel
proposed to Ms. Bowman that the parties have additional time to close the
Merger. Mr. Hendel noted that V&E would be sending Latham a proposed amendment
to the Merger Agreement (the "Merger Agreement Amendment") extending the closing
timeline and providing the Partnership's
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unitholders with a cash distribution to holders of Common Units for the calendar
quarter ending September 30, 2022 in an amount not less than $0.4338 per common
unit.
Later on August 25, 2022, V&E delivered an initial draft of the Merger Agreement
Amendment to Latham. The initial draft of the Merger Agreement Amendment (1)
revised the date prior to which the merger may not close without Parent's
consent (the "Inside Date") from July 31, 2022 to November 28, 2022 and (2)
required the Partnership GP to declare, and to cause the Partnership to pay, a
cash distribution to holders of Common Units for the calendar quarter ending
September 30, 2022 in an amount not less than $0.4338 per common unit (the "Q3
Distribution").
Also on August 25, 2022, the Conflicts Committee held a telephonic meeting with
representatives of Jefferies and Latham. The parties discussed Hartree's
proposal. The Conflicts Committee and its advisors also discussed the options
available to the Partnership under the Merger Agreement, the potential economic
impact to unitholders, the applicable terms of the Merger Agreement and the
financial performance of the Partnership since the date of its entry into the
Merger Agreement. At the conclusion of the meeting, the Conflicts Committee
directed its advisors to analyze the benefit to the Unaffiliated Unitholders of
receipt of the Q3 Distribution as well as the appropriate terms for an amendment
to the Merger Agreement in the event the Conflicts Committee was to determine
such an amendment was in the best interests of the Partnership and the
Unaffiliated Unitholders.
On August 26, 2022, the Conflicts Committee held a telephonic meeting with
representatives of Jefferies and Latham. The parties further discussed all
options available to the Partnership under the Merger Agreement, and the
challenges associated with pursuing certain options. The parties also discussed
the terms and conditions of a potential counteroffer and how it would most
effectively be delivered to Hartree. The Conflicts Committee concluded that any
amendment to the merger agreement would need to (1) eliminate the conditions to
closing specific to Hartree and (2) compensate the Unaffiliated Unitholders for
the delayed receipt of the merger consideration.
On August 27, 2022, the Conflicts Committee held a telephonic meeting with
representatives of Jefferies and Latham. Representatives of Jefferies discussed
the financial implications of a delayed closing. Representatives of Latham
discussed with the Conflicts Committee the applicable provisions of the Merger
Agreement, the process and timeline for pursuing the options available to the
Partnership, and the duties of the members of the Conflicts Committee in the
circumstances presented. The parties discussed the forecasts of the
Partnership's operations and financial results and the need to consider the
Partnership's performance in the Conflicts Committee's decision-making process.
At the conclusion of the meeting, the Conflicts Committee directed its advisors
to (i) have further discussions with Hartree's advisors to obtain additional
information and (ii) prepare an amendment to the Merger Agreement for the
Conflicts Committee to consider.
On August 29, 2022, the Conflicts Committee held a telephonic meeting with
representatives of Jefferies and Latham. The parties considered additional
information received from a representative of V&E and Hartree. The parties also
considered the applicable provisions of the Merger Agreement and discussed
whether seeking an amendment to the merger amendment would be in the best
interests of the Partnership and the Unaffiliated Unitholders when compared to
alternative options. The Conflicts Committee, with the assistance of its
advisors, deliberated on terms for a counterproposal and its presentation to
Hartree.
On August 30, 2022, the Conflicts Committee held a telephonic meeting with
representatives of Jefferies and Latham, during which the parties deliberated
the terms and method of delivery of the Conflicts Committee's counterproposal to
Hartree. Specifically, the Conflicts Committee debated the amount of additional
consideration to seek for the Unaffiliated Unitholders and the appropriate
duration of the extension of the Inside Date. The Conflicts Committee directed
its advisors to draft a counterproposal that included a form of amendment to the
Merger Agreement and to send to the Conflicts Committee for its consideration
and transmittal to Hartree. Upon receipt of such draft counteroffer from Latham,
the members of the Conflicts Committee determined that the Partnership's entry
into such amendment to the Merger Agreement would be in the best interests of
the Partnership and the Unaffiliated Unitholders.
On August 30, 2022, Ms. Bowman, on behalf of the Conflicts Committee, delivered
a revised form of Merger Agreement Amendment to Hartree. The revised draft of
the Merger Agreement Amendment (1) revised the Inside Date to November 1, 2022,
(2) required the Partnership GP to declare, and to cause the Partnership to pay,
the Q3 Distribution, (3) provided that the Unaffiliated Unitholders would
receive an additional $1.25 per common unit at the Closing as additional
consideration for the extension of the Inside Date (the "Additional
Consideration"), (4) prohibited Hartree from causing the Partnership GP or any
of its affiliates to exercise its right to acquire limited partner interests
pursuant to the Partnership's agreement of limited partnership, (5) deleted the
conditions to closing in the Merger Agreement specific to Hartree, (6) revised
the date after which either party may terminate the Merger Agreement in the
event the merger has not closed to March 2, 2023, and (7) deleted Hartree's
right to terminate the Merger Agreement in the event the Partnership breaches or
fails to perform any of its representations, warranties, or covenants in the
Merger Agreement.
In the afternoon of August 30, 2022, representatives of V&E contacted
representatives of Latham to advise that the terms of the Merger Agreement
Amendment proposed by the Conflicts Committee were acceptable with the following
revised terms: (1) an
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Inside Date of November 28, 2022 rather than November 1, 2022 and (2) Additional
Consideration of $0.75 per common unit rather than $1.25 per common unit.
Later in the day on August 30, 2022, the Conflicts Committee held a telephonic
meeting with representatives of Jefferies and Latham to discuss the counteroffer
received from Hartree. Following that discussion, the Conflicts Committee
ultimately concluded that Additional Consideration in the amount of $1.00 per
Common Unit was, together with the Q3 Distribution, an appropriate amount of
compensation for the extension of the Inside Date to November 28, 2022. The
Conflicts Committee directed Latham to communicate to V&E the counteroffer
regarding the amount of Additional Consideration and the acceptance of an Inside
Date of November 28, 2022.
During the evening of August 30, 2022, representatives of V&E delivered a
revised draft of the Merger Agreement Amendment that reflected an Inside Date of
November 28, 2022 and provided for Additional Consideration in the amount of
$1.00 per Common Unit as requested by the Conflicts Committee.
Following a final review of the Merger Agreement Amendment by Latham, the
members of the Conflicts Committee unanimously determined that the Merger
Agreement Amendment was in the best interests of the Partnership and the
Unaffiliated Unitholders and approved the Partnership's entry into the Merger
Agreement Amendment.
On the morning of August 31, 2022, the parties executed the Merger Agreement
Amendment and the Partnership issued a press release announcing the execution of
the Merger Agreement Amendment.
The disclosure on page 57 of the Information Statement is hereby supplemented by
amending and restating the paragraph under the section entitled "Distributions
for Period Prior to the Merger" as follows:
Pursuant to the terms of the Merger Agreement Amendment, Partnership GP agreed
to declare, and cause the Partnership to pay, a cash distribution to unitholders
for each of the calendar quarters ending June 30, 2022 and September 30, 2022,
in an amount not less than $0.4338 per Common Unit (the "Q2 and Q3
Distributions"). Other than the Q2 and Q3 Distributions, the Partnership does
not expect to make any distributions on the Common Units prior to the completion
of the Merger, and the Partnership may not pay any other distribution without
the prior written consent of Sprague Holdings under the terms of the Merger
Agreement or Merger Agreement Amendment.
The disclosure on page 57 of the Information Statement is hereby supplemented by
adding the following paragraph at the end of the last paragraph on the page:
Amendment No. 1 to Merger Agreement
On August 31, 2022, the Partnership, Partnership GP, Sprague Holdings and Merger
Sub entered into Amendment No. 1 (the "Merger Agreement Amendment") to the
Merger Agreement. The Merger Agreement Amendment, among other things, provides
(i) that the closing may not occur prior to November 28, 2022 (the "Inside
Date"), unless otherwise agreed to by Sprague Holdings, (ii) that the Outside
Date shall be extended from December 2, 2022 to March 2, 2023, (iii) that each
Common Unit (other than the Sprague Holdings Units) issued and outstanding
immediately prior to the Effective Time will be converted into the right to
receive (A) $19.00 per Common Unit in cash without any interest thereon as
merger consideration and (B) an additional $1.00 per Common Unit in cash without
any interest thereon as consideration for the amendment to the Inside Date, (iv)
for the removal of the closing conditions in the Merger Agreement that are
specific to Sprague Holdings, (v) that Partnership GP shall declare, and shall
cause the Partnership to pay, a cash distribution to holders of Common Units for
the calendar quarter ending September 30, 2022, in an amount not less than
$0.4338 per Common Unit, regardless of whether the closing occurs prior to
September 30, 2022, and (vi) during the period from the date of the Merger
Agreement Amendment to the Effective Time, Sprague Holdings and Merger Sub shall
not cause, direct or permit the Partnership GP or any of its affiliates to
exercise the right to acquire Limited Partner Interests (as defined in the
Partnership Agreement) pursuant to Section 15.1 of the Partnership Agreement.
Annex A of the Information Statement is hereby supplemented by adding the full
text of the Merger Agreement Amendment at the end of Annex A.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act and Section 21E of the Exchange Act, including statements related
to the Partnership's expectations regarding the future. We have used the words
"expect," "intend," "may," "would," "plan" and similar terms and phrases to
identify forward-looking statements. Although we believe the assumptions upon
. . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
EXHIBIT DESCRIPTION
2.1 Amendment No. 1 to Agreement and Plan of Merger, dated August 31, 2022,
by and among Sprague Resources LP, Sprague Resources GP LLC, Sprague HP
Holdings, LLC, and Sparrow HP Merger Sub, LLC
99.1 Press Release, dated August 31, 2022
104 Cover Page Interactive Data File (formatted in Inline XBRL)
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