July 22, 2008
Dear SemGroup Vendor:
Since you are a valued vendor to SemGroup, we want you to know about important actions the Company has taken related to our financial position as we continue to serve the needs of our global customer base. To facilitate a financial restructuring, the Company and certain of its North American subsidiaries filed voluntary petitions for reorganization today under Chapter 11 of the U.S. Bankruptcy Code.
Chapter 11 gives the Company the ability to restructure its balance sheet while continuing day-to-day operations. Daily operations will continue as usual, and employees will continue to be paid without interruption.
The Company has taken steps to ensure continued supply of goods and services to its customers. In that regard, SemGroup has reached an agreement with its existing bank lenders to use cash collateral which, upon Court approval, will enable SemGroup to utilize existing cash and cash generated through normal business operations to fund post-petition trade and employee obligations. The Company also is in discussions with a group of banks led by one of its current lenders regarding a debtor-in-possession (DIP) financing facility, and we are hopeful that a DIP financing agreement will be finalized and presented to the Bankruptcy Court for approval in the next several days. Access to this financing, which requires Bankruptcy Court approval, means SemGroup will have the ability to pay suppliers in the ordinary course of business going forward.
With respect to our ongoing business relationship, the Bankruptcy Code provides priority status for post-petition orders and shipments (goods and services received after the Chapter 11 filing date) that you provide to us. Therefore, you can be assured that we can and will pay for the goods and services you provide to us after the July 22, 2008, filing date.
Unfortunately, federal law prohibits payment for goods and services received before the filing date except pursuant to a plan that is accepted by creditors and approved by the Bankruptcy Court, or other court orders. We sincerely regret any hardship this may cause. You will be receiving a claim form in the mail.
Management and the Board of Directors have actively been working on various alternatives to ensure the best outcome for all our constituencies. It was determined that a restructuring of the Company was the best alternative available to achieve these goals.
A complete list of creditors, including your company, is being prepared by our attorneys. Official notice of the filing and the first creditors’ meeting will be sent to all listed creditors. After the first creditors’ meeting, the Bankruptcy Court will set a deadline for filing proofs of claim and you will be mailed a notice telling you of the deadline, or bar date, along with a claim form.
You may also have heard by now that the Board of Directors made the decision to name me as acting CEO. Be assured that the Company will continue to do all it can to keep you fully informed of developments relating to its reorganization progress. If you have any further questions, please feel free to speak with your regular contact. In addition, the Company will provide updated restructuring information on its website, www.semgrouplp.com, and has established an information line to answer any questions you may have during our restructuring. The Restructuring Information Hotline can be reached at 866-721-4779 between the hours of 8 a.m. to 6 p.m. Central Time, Monday through Friday.
Thank you again for your continued support.
Sincerely,
Terry Ronan