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Retail Suppliers To Undergo Change In Upstream Ownership

July 18, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Agera Energy LLC, Aequitas Energy Inc., and energy.me midwest LLC (Applicants) sought FERC approval for a transaction under which AGH Parent LLC will acquire a 95.01% voting equity interest in the parent of the Applicants, Agera Holdings LLC, which directly and indirectly owns all Class A Common Units of each Applicant, representing the controlling ownership interests in each of the Applicants

The transaction provides that certain debt interests will be converted to equity, in several steps. Those debt interests are memorialized in a Note between Agera Holdings and a third-party lender, which was purchased by and assigned to AGH Parent pursuant to a purchase agreement.

As a result of the proposed transaction, Applicants will become indirect subsidiaries of AGH Parent.

Currently, Agera Holdings’ equity interests are owned by two investors: AGH Supplemental LLC and Michael Joseph Nordlicht. AGH Supplemental LLC owns 4.99% of the equity interests in Agera Holdings, and Mr. Nordlicht owns 95.01% of the equity interests in Agera Holdings.

Nordlicht serves as the General Counsel of Agera Energy, Aequitas and energy.me

AGH Supplemental LLC is wholly-owned by one individual, Mark Feuer, who owns 100% of the membership interests in AGH Supplemental LLC

The acquirer, AGH Parent, is a Delaware limited liability company formed for the purpose of purchasing a convertible promissory note issued by Agera Holdings to a third-party lender. In May 2014, as amended in June and July 2014, and then amended and restated on June 9, 2016, Agera Holdings issued a convertible promissory note to that third-party lender. Under the Note, the lender did not have the right to manage and control Agera Holdings, but the lender had those rights and remedies that are customarily conferred on a lender to protect its economic interests. The Note permits the lender, subject to certain conditions, to convert the principal balance of the Note to a number of units of limited liability company interests in Agera Holdings. The Note provides that the exercise of the conversion right is subject to the procurement of all required regulatory approvals

On June 9, 2016, AGH Parent entered into a Purchase Agreement with the third-party lender under which AGH Parent purchased the Note. Under the Purchase Agreement and the Note, AGH Parent is permitted to convert the principal balance of the Note to limited liability company (equity) interests in Agera Holdings. Upon consummation of the proposed transaction, AGH Parent will hold 95.01% of the voting membership interests in Agera Holdings and, indirectly, in the Applicants.

Approximately 98% of the voting interests in AGH Parent are owned and controlled by upstream entities that are affiliated with one another (the 98% Investors) with complete day-today control being vested in a management services company, BAM Management Services LLC. The 98% Investors consist of Beechwood Re Investments LLC, which holds common voting units in AGH Parent, and several investment vehicles that own and control Class B-1 voting units in AGH Parent (B-1 Unit Investors).

The B-1 Unit Investors in AGH Parent are, for all purposes, considered to be passive under the FPA. The B-1 Unit Investors are not affiliated with Applicants for any FPA purpose and will not be involved in the management, direction or control of the Applicants, the Applicants said

Beechwood Re Investments LLC is a Delaware Series LLC that holds common voting units in AGH Parent. The common voting units held within the general account of Beechwood Re are managed by N Management LLC, which is owned and managed by Mr. Feuer.

The B-1 Unit Investors consist of the following five entities:

• Bre WNIC 2013 LTC Primary;

• BHLN-Agera Corp.;

• BOLN-Agera Corp.;

• BBIL ULICO 2014; and

• BBLN-Agera Corp.

Each of the B-1 Unit Investors is a special-purpose entity established by, and under the control of, Beechwood Bermuda International Ltd., Beechwood OMNIA Ltd., or Beechwood Re. Ltd.

BAM Management is the management services company that manages all investments into AGH Parent. BAM Management exercises day-to-day control over AGH Parent pursuant to contractual arrangement. BAM Management also exercises the voting rights of the B-1 Unit Investors. BAM Management is a wholly-owned subsidiary of B Asset Manager, LP. B Asset Manager, LP is a special-purpose entity; it is subject to 100 percent day-to-day control by Mr. Feuer

Once conditions to closing on the proposed transaction are satisfied, AGH Parent will at consummation own 95.01% of the equity interests in Agera Holdings, through the conversion of the entirety of the Note to equity in Agera Holdings. Agera Holdings will simultaneously redeem all of the equity interests in Agera Holdings held by Michael Nordlicht. Following consummation of the transaction, AGH Parent will hold the controlling equity interests in Agera Holdings and the Applicants will no longer be affiliated with Mr. Nordlicht (as the term is defined by FERC). AGH Parent will thus indirectly own 95.01% of the voting interests in the Applicants.

The transaction will not impact the ownership rights of AGH Supplemental LLC, which will retain its 4.99% interest in Agera Holdings

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