8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (date of earliest event reported): December 18, 2020

BLUEKNIGHT ENERGY PARTNERS, L.P.

(Exact name of Registrant as specified in its charter)

DELAWARE	001-33503	20-8536826
(State of incorporation or organization)	(Commission file number)	(I.R.S. employer identification number)

6060 American Plaza, Suite 600

Tulsa, Oklahoma 74135

(Address of principal executive offices and zip code)

(918) 237-4000

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Units	BKEP	The Nasdaq Global Market
Series A Preferred Units	BKEPP	The Nasdaq Global Market

Item 1.01 Entry into a Material Definitive Agreement

Terminal Transaction

On December 18, 2020, BKEP Crude, L.L.C. (“BKEP Crude”), a wholly-owned subsidiary of Blueknight Energy Partners, L.P. (the “Partnership”), entered into a Membership Interest Purchase Agreement (the “Terminal Purchase Agreement”) with Enbridge Storage (Cushing) L.L.C., a Delaware limited liability company (the “Terminal Buyer”). Upon the terms and subject to the conditions set forth in the Terminal Purchase Agreement, BKEP Crude agreed to sell the Partnership’s crude oil terminal business to the Terminal Buyer by means of a sale of all of the equity interests in a subsidiary of the Partnership (the “Terminal Transaction”) for a total purchase price of $132.0 million, subject to customary adjustments and excluding crude oil linefill and inventory.

The Terminal Purchase Agreement contains customary representations, warranties and covenants, termination rights, as well as indemnification provisions subject to specified limitations. In addition, the completion of the Terminal Transaction is subject to certain customary conditions.

Pipeline Transaction

On December 20, 2020, BKEP Crude and BKEP Supply and Marketing LLC, a wholly-owned subsidiary of the Partnership (collectively, the “BKEP Pipeline Sellers”), entered into a Membership Interest Purchase Agreement (the “Pipeline Purchase Agreement”) with Coffeyville Resources Crude Transportation, LLC and Coffeyville Resources Refining & Marketing, LLC (collectively, the “Pipeline Buyers”). Upon the terms and subject to the conditions set forth in the Pipeline Purchase Agreement, the BKEP Pipeline Sellers agreed to sell to the Pipeline Buyers (i) the Partnership’s crude oil pipeline business by means of a sale of all of the equity interests in certain subsidiaries of the Partnership and (ii) certain supply and marketing contracts (collectively, the “Pipeline Transaction”) for a total purchase price of $20.0 million, subject to customary adjustments and excluding crude oil linefill and inventory.

The Pipeline Purchase Agreement contains customary representations, warranties and covenants, termination rights, as well as indemnification provisions subject to specified limitations. In addition, the completion of the Pipeline Transaction is subject to certain customary conditions.

Item 7.01 Other Events

On December 21, 2020, the Partnership issued a press release announcing certain of the matters described in this Current Report on Form 8-K. A copy of this press release is attached hereto as Exhibit 99.1 to this Current Report. The information set forth in this item 7.01 and in Exhibit 99.1 shall not be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number	Description
99.1	Blueknight Energy Partners, L.P., Press Release issued on December 21, 2020

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BLUEKNIGHT ENERGY PARTNERS, L.P.
	By:	Blueknight Energy Partners G.P., L.L.C.
		its General Partner
Date: December 21, 2020	By:	/s/ D. Andrew Woodward
		D. Andrew Woodward Chief Executive Officer

EX-99.1

Exhibit 99.1

Blueknight Announces Transformational $162 Million Sale of Crude Oil Business

Transaction Highlights

● Strategically repositions Blueknight as a pure-play, downstream terminalling company focused on infrastructure and transportation end markets

● Materially improves financial flexibility and pro forma leverage to approximately 2.0 times

● Maintains annual coverage ratio of 1.2 times or greater on all distributions and strengthens stability of underlying cash flows

● Expected to generate $1.5 to $2.5 million in additional annual corporate savings and reduce annual maintenance capital expenditures to $5.5 to $6.5 million

TULSA, December 21, 2020 -- Blueknight Energy Partners, L.P. (“Blueknight” or the “Partnership”) (Nasdaq: BKEP and BKEPP) announced today that it has entered into multiple definitive agreements to sell its crude oil terminalling, pipeline, and trucking business segments for approximately $162 million in total cash consideration, including estimated crude oil linefill and inventory. Net proceeds, after transaction costs, will be used initially to reduce borrowings outstanding under the Partnership’s revolving credit facility and for general partnership purposes.

“This announcement represents a significant milestone as we transition Blueknight away from traditional oil and gas operations into a pure-play, downstream terminalling business focused on infrastructure and transportation end markets,” said Andrew Woodward, Chief Executive Officer. “We are excited about the financial flexibility to both materially improve our balance sheet and pursue future investment opportunities predicated on risk-adjusted returns while maintaining our long-term financial targets.”

“Pro forma for the transactions, Blueknight’s differentiated, asphalt terminalling business delivers an industry-leading, stable cash flow profile underpinned by long-term, take-or-pay contracts with a weighted average term of six years. Our leverage ratio is expected to be approximately 2.0 times initially, and our coverage ratio on all distributions is expected to be approximately 1.2 times or greater on an annual basis. We believe these transactions, coupled with our new and improved strategy, best position the Partnership for long-term growth and success,” added Woodward.

Woodward concluded, “I would also like to express my deepest thanks to all the employees who have supported these operations over the years and during this time of transition. On behalf of the entire organization, we sincerely appreciate all of your hard work and continued dedication.”

Transaction Details

Blueknight entered into a definitive agreement to sell its crude oil terminalling segment to Enbridge, Inc. (NYSE: ENB) for a purchase price of $132 million, subject to customary adjustments and excluding crude oil linefill and inventory. This segment includes approximately 6.6 million barrels of crude oil storage in Cushing, Oklahoma. The transaction is subject to Hart-Scott-Rodino review and closing is expected to occur within the next 60 days.

In addition, Blueknight entered into a separate definitive agreement to sell its crude oil pipeline business to subsidiaries of CVR Energy, Inc. (NYSE: CVI) for a purchase price of $20 million, subject to customary adjustments and excluding crude oil linefill and inventory. This business includes 604 miles of crude oil pipeline and approximately 0.3 million barrels of related crude oil storage located primarily in Oklahoma. The transaction is subject to customary terms and conditions and closing is expected to occur within the next 45 days.

Consideration for crude oil linefill and inventory is estimated in accordance with market-based valuation formulas set forth in each of the respective agreements and is subject to change at closing.

Lastly, Blueknight entered into a definitive agreement to sell its crude oil trucking business to an undisclosed buyer, subject to customary adjustments.   

Advisors

Simmons Energy | A Division Of Piper Sandler is serving as financial advisor and Gibson, Dunn & Crutcher LLP is serving as legal counsel to Blueknight. Sidley Austin LLP is serving as legal counsel to Enbridge, Inc. Baker Botts LLP is serving as legal counsel to CVR Energy, Inc.

Forward-Looking Statements

This release includes forward-looking statements. Statements included in this release that are not historical facts (including, without limitation, any statements about future financial and operating results, guidance, projected or forecasted financial results, objectives, project timing, expectations and intentions and other statements that are not historical facts) are forward-looking statements. Such forward-looking statements are subject to various risks and uncertainties. These risks and uncertainties include, among other things, uncertainties relating to the Partnership’s debt levels and restrictions in its credit agreement, its exposure to the credit risk of our third-party customers, the Partnership’s future cash flows and operations, future market conditions, current and future governmental regulation, future taxation and other factors discussed in the Partnership’s filings with the Securities and Exchange Commission. If any of these risks or uncertainties materializes, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those expected. The Partnership undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 About Blueknight

Blueknight owns and operates a diversified portfolio of complementary midstream energy assets consisting of:

• 8.8 million barrels of liquid asphalt storage located at 53 terminals in 26 states;

• 6.9 million barrels of above-ground crude oil storage capacity located primarily in Oklahoma, approximately 6.6 million barrels of which are located at the Cushing Interchange terminalling facility in Cushing, Oklahoma;

• 604 miles of crude oil pipeline located primarily in Oklahoma; and

• 63 crude oil transportation vehicles deployed in Oklahoma and Texas.

Blueknight provides integrated terminalling, gathering and transportation services for companies engaged in the production, distribution and marketing of liquid asphalt and crude oil. Blueknight is headquartered in Tulsa, Oklahoma. For more information, visit the Partnership’s website at www.bkep.com.

 Investor Contact:

Chase Jacobson, Blueknight Investor Relations

(918) 237-4032

investor@bkep.com