Heating Oil Partners Income Fund

Heating Oil Partners Income Fund

July 04, 2005 08:00 ET

Heating Oil Partners Income Fund Provides Update on Credit Facilities


Heating Oil Partners Income Fund (the "Fund") (TSX:HIF.UN) announced today that the Fund's operating subsidiary, Heating Oil Partners, L.P. ("HOP" or the "Company"), is still in discussions with its bank lending group regarding its working capital and term loan facilities as well as the additional US$15 million of working capital loans that were previously provided by the bank lending group (collectively, the "Credit Facilities") The Company has been in default under the terms of both the Credit Facilities and $50 million of senior secured notes (the "Senior Notes" and collectively, with the Credit Facilities, the "Loan Agreements" ) since the close of business on June 30, 2005. The default includes a failure to meet certain financial covenants as well as a failure to make certain payments due under the terms of the Credit Facilities. At this time, the Company is uncertain if it will be able to reach an agreement with its bank lending group or its Senior Note holders regarding a waiver of these defaults. The failure of the Company to reach such an agreement could have a material adverse impact on both the Company's and the Fund's financial condition.

The Company continues to explore a variety of alternative financing opportunities to provide a longer-term solution for its seasonal working capital requirements and other capital structuring objectives. HOP cautioned that there can be no assurance that any such alternative financing will ultimately be achieved, or that the Company's lenders will agree to the requested waiver or to an extension of HOP's payment obligations. HOP further cautioned that, to the extent the bank lending group and holders of the Senior Notes agree to the current request, the Company may continue to require further future amendments and waivers to the Loan Agreements. There is no assurance that such amendments, if required, will be ultimately approved by the various lenders. The failure to obtain an extension of its current payment obligations, or any other requested amendments, could have a material adverse impact on both the Company's and the Fund's financial condition.

The Fund indirectly owns approximately 88.1% of HOP, one of the largest residential heating oil distributors in the United States. HOP delivered over 229 million gallons of heating oil and other refined liquid petroleum products for the twelve months ended March 31, 2005 to approximately 137,00 residential and commercial customers, primarily in Connecticut, Delaware, Massachusetts, New Jersey, New York, Pennsylvania and Rhode Island. HOP's operations are conducted through 16 regional distribution and service centres. From these centres, HOP provides its customers with a full range of value-added services, including the delivery of heating oil and the installation, maintenance and service of furnaces, boilers, heating equipment and air conditioners on a 24 hours-a-day, 365 days-a-year basis.

This news release contains forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors outside of Management's control that could cause actual results to differ materially from those described in the forward-looking statements. The Fund does not assume responsibility for the accuracy and completeness of these forward-looking statements and does not undertake the obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

Additional information, including the Fund's complete financial statements for the fiscal year ended September 30, 2004 and the quarter ended March 31, 2005, can be found at www.sedar.com or on the Fundd's website at www.hif-un.com.

Contact Information

  • Heating Oil Partners, L.P.
    Carlos Rojas
    Chief Financial Officer
    (203) 655-8290