Business Context and Reporting Period
CrossAmerica Partners LP, a publicly traded Delaware limited partnership, filed this Form 8-K on April 1, 2019. The filing reports the entry into a new material definitive agreement and the termination of a prior credit facility.
Key Financial Metrics and Debt Structure
The filing details the establishment of a new senior secured revolving credit facility with the following terms:
- Facility Size: $750 million, with an accordion feature allowing an increase of up to an additional $300 million.
- Maturity: April 2024.
- Interest Rates: LIBOR plus a margin of 1.50% to 2.50% or Base Rate plus a margin of 0.50% to 1.50%, depending on the Consolidated Leverage Ratio. Initial margins are set at 2.25% (LIBOR) and 1.25% (Base Rate) until the June 30, 2019 compliance certificate is delivered.
- Commitment Fee: 0.25% to 0.45% per annum on the unused portion (initially 0.40%).
- Sub-facilities: Up to $35.0 million for swingline loans and up to $65.0 million for standby letters of credit.
- Collateral: Secured by substantially all assets of the Partnership and its guarantor subsidiaries.
Material Changes Versus Prior Period
On April 1, 2019, the Partnership terminated its Third Amended and Restated Credit Agreement (dated March 4, 2014). All outstanding borrowings under the existing agreement were repaid using proceeds from the new facility. The new agreement replaces the old one entirely, subject to the survival of specific provisions.
Guidance, Covenants, and Risks
The New Credit Agreement imposes strict financial covenants and operational restrictions:
- Consolidated Leverage Ratio: Must not exceed 5.00 to 1.00 for the quarter ending June 30, 2019, and 4.75 to 1.00 thereafter. This threshold increases to 5.50 to 1.00 during a Specified Acquisition Period.
- Senior Secured Leverage Ratio: Required upon a Qualified Note Offering, capped at 3.75 to 1.00 (4.00 to 1.00 during a Specified Acquisition Period).
- Interest Coverage Ratio: Must maintain a minimum of 2.50 to 1.00.
- Restrictions: The agreement limits the ability to grant liens, incur additional indebtedness, alter the business character, merge, liquidate, or make certain investments. Cash distributions to unitholders are prohibited if an event of default occurs or would result from the distribution.
- Events of Default: Include failure to pay principal or interest, breach of covenants, bankruptcy, ERISA violations, and judgments exceeding $35.0 million.
The filing text does not provide specific revenue, profit, or cash flow figures for the reporting period, as this is a transactional filing rather than a periodic financial report.
Investor Verification Checklist
- Verify the Partnership's current Consolidated Leverage Ratio to ensure compliance with the 5.00 to 1.00 threshold for the quarter ending June 30, 2019.
- Confirm the status of the "Qualified Note Offering" to determine if the Senior Secured Leverage Ratio covenant is currently active.
- Review the full text of the Credit Agreement (Exhibit 10.1) for specific definitions of "Specified Acquisition Period" and "Qualified Note Offering."
- Monitor the press release (Exhibit 99.1) for any additional management commentary regarding the strategic rationale for the refinancing.