DALLAS, March 8, 2016 /PRNewswire/ — Azure Midstream Partners, LP (NYSE: AZUR) (“Azure” or the “Partnership”), a leading midstream natural gas gathering and processing company based in Dallas, Texas, announced today that it plans to postpone the distribution of its 2015 fourth quarter results and related conference call and webcast, previously scheduled for Thursday, March 10, 2016.
Azure is a party to a credit facility, which, as of March 8, 2016, had borrowing capacity of $238.0 million with total borrowings of $231.7 million. While Azure expects to be in compliance with all of its financial covenants under its credit facility as of December 31, 2015, Azure anticipates that, due to the continuation of adverse industry conditions, it could exceed the permitted ratio of debt to adjusted EBITDA contained in its credit facility as early as the end of the first quarter of 2016. Upon any such default under the credit facility, indebtedness under the credit facility could, after the expiration of any grace period and at the election of a majority of the lenders under the credit facility, be accelerated and become immediately due and payable. As a result of this potential default and acceleration, the Partnership’s auditors have informed us that its opinion to be issued in connection with the Partnership’s consolidated financial statements to be included in the Partnership’s annual report on Form 10-K is expected to include an explanatory paragraph to the effect that these conditions raise substantial doubt about the Partnership’s ability to continue as a going concern.
As a result of the anticipated inclusion of this explanatory paragraph, absent an amendment or waiver, the Partnership will not be in compliance with its credit facility upon the filing of its Form 10-K, which could also result in acceleration of the Partnership’s obligations under the credit facility.
The Partnership is currently working with its lenders to waive or eliminate the requirement in the credit facility which states that the receipt of a going concern explanatory paragraph is considered an event of default. Likewise, the Partnership continues to pursue options to address the potential covenant violation that may occur as early as the end of the first quarter of 2016. As previously announced, the Partnership continues to pursue options to strengthen its balance sheet. These options include potential equity restructuring, capital raise and strategic alternatives that will provide visibility into stabilizing future distributions and providing excess liquidity to the Partnership.
The Board of Directors and management are in the process of evaluating strategic alternatives to help provide the Partnership with financial stability, but no assurance can be given as to the outcome or timing of this process.
The significant additional time required to evaluate the effects of and to address and mitigate the impact of the Partnership’s potential non-compliance with the covenants under its credit facility and potential defaults and events of default resulting therefrom and the going concern explanatory paragraph has resulted in the Partnership delaying its fourth quarter earnings release and conference call.
About Azure Midstream Partners, LP
Azure Midstream Partners, LP, headquartered in Dallas, Texas, is a fee-based, growth oriented limited partnership formed to develop, operate, and acquire midstream energy assets. The Partnership provides natural gas gathering, transportation, and processing services; as well as NGL transportation and crude oil logistics services. The Partnership’s assets include 1,002 miles of gathering lines in the Shelby Trough sub-play of the Haynesville Shale and the horizontal Cotton Valley play located in east Texas and north Louisiana that are capable of gathering 1.9 Bcf/d. The Partnership also has four natural gas processing facilities with 305 MMcf/d of cumulative processing capacity located in the Panola, San Augustine and Tyler Counties of Texas, two NGL transportation pipelines that connect its Panola County and Tyler County processing facilities to third party NGL pipelines capable of transporting 21,000 barrels per day, and three crude oil transloading facilities containing six crude oil transloaders with a combined capacity of 31,200 Bbls/d. www.azuremidstreampartners.com
SOURCE Azure Midstream Partners, LP