Business Context and Reporting Period
This Form 8-K is filed by Lehigh Gas Partners LP (not Crossamerica Partners LP as indicated in metadata) with a report date of May 13, 2013. The filing primarily addresses an amendment to the company's credit agreement and the appointment of new corporate officers. It also references the release of operating results for the quarter ended March 31, 2013, though the specific financial figures are contained in an attached press release and not detailed within the text of this filing.
Key Financial Metrics and Debt
- Debt Capacity: The maximum borrowing amount under the Second Amended and Restated Credit Agreement was increased by $75 million, raising the total capacity from $249 million to $324 million.
- Expansion Option: Subject to lender consent, the company retains the ability to further increase borrowing capacity by $100 million, up to a total of $429 million.
- Financial Covenants: The Combined Leverage Ratio covenant was modified. The company must maintain a ratio of not greater than 4.75:1.00 through December 31, 2014, and 4.60:1.00 thereafter. This is an increase from the previous requirement of 4.40:1.00 through December 31, 2013.
- Revenue and Profit: The filing text does not provide specific values for revenue, profit, cash flow, or margins for the quarter ended March 31, 2013. These figures are referenced as being in an attached press release (Exhibit 99.1).
Material Changes
- Credit Facility Expansion: The primary material change is the amendment to the credit agreement dated May 10, 2013, executed on May 13, 2013, which significantly increased available liquidity and relaxed leverage ratio requirements.
- Management Changes: On May 9, 2013, the Board of Directors of Lehigh Gas GP LLC elected Tracy Derstine (Executive Vice President, Administration) and Frank Macerato (General Counsel, Secretary, and Chief Compliance Officer) as Corporate Officers.
Outlook, Risks, and Unusual Items
- Compensation Program: A new Performance-Based Equity Awards Program was adopted. Executive officers may receive a "Par Bonus" ranging from 40% to 100% of base salary, paid primarily in phantom units (vesting over three years) with up to 40% payable in cash at the Committee's discretion.
- Performance Targets: To earn the bonus, the Partnership must achieve at least 105% of its budgeted EBITDA and 110% of its Growth Target for 2013. Thresholds for partial payout begin at 95% of the EBITDA target and 90% of the Growth target.
- Risks: The company remains subject to financial covenants under the amended agreement. Failure to maintain the specified Combined Leverage Ratio could result in a default.
Investor Verification Checklist
- Verify the specific revenue, EBITDA, and cash flow figures for the quarter ended March 31, 2013, by reviewing the attached press release (Exhibit 99.1).
- Confirm the current outstanding debt balance to assess the utilization of the new $324 million credit facility.
- Review the full text of Amendment No. 2 to the Credit Agreement (Exhibit 10.1) for any additional terms or conditions not summarized in the filing.
- Monitor the company's progress toward the 2013 EBITDA and Growth targets to evaluate the potential payout of the new executive compensation program.