Business Context and Reporting Period
Company: Global Partners LP
Filing Type: Form 8-K (Current Report)
Date of Report: April 25, 2017
Event: Entry into a Material Definitive Agreement (Third Amended and Restated Credit Agreement) effective April 26, 2017.
Key Financial Metrics and Debt Structure
The filing details a new credit facility structure with the following terms:
- Total Aggregate Commitments: $1.3 billion.
- Maturity Date: April 30, 2020.
- Facility Components:
- Working Capital Revolver: Lesser of the borrowing base or $850.0 million.
- General Revolver: $450.0 million for acquisitions, joint ventures, capital expenditures, and general corporate purposes.
- Accordion Feature: Option to increase total commitments by up to $300.0 million (maximum total $1.6 billion) in increments of at least $5.0 million.
- Swing Line: Up to $75.0 million (sub-portion of the working capital facility).
- Currency: U.S. Dollars and Canadian Dollars (CAD loans capped at $200.0 million).
- Interest Rates (Working Capital): Eurocurrency/Cost of Funds + 2.00% to 2.50%, or Base Rate + 1.00% to 1.50%.
- Interest Rates (General Revolver): Eurocurrency/Cost of Funds + 2.00% to 3.00%, or Base Rate + 1.00% to 2.00% (rates reduced from prior agreement).
- Fees: Commitment fee on unused portions ranging from 0.350% to 0.50% per annum.
Material Changes Versus Prior Period
The new agreement introduces several material changes compared to the prior credit agreement:
- Interest Rate Reductions: Margins on the general revolving credit facility were reduced (e.g., Eurocurrency margin reduced from 2.25%-3.50% to 2.00%-3.00%).
- New Baskets: Added or increased flexibility for:
- $25.0 million general secured indebtedness.
- $25.0 million general investment.
- $75.0 million secured indebtedness for a Contango Facility.
- Sale/Leaseback basket increased from $75.0 million to $100.0 million.
- $50.0 million basket for purchasing common units over the life of the agreement.
- Junior Indebtedness: Added ability to repay junior indebtedness up to a $100.0 million cap.
Guidance, Risks, and Covenants
Covenants and Restrictions:
- Financial Covenants: Borrowers must maintain minimum working capital, minimum combined interest coverage ratio, maximum senior secured leverage ratio, and maximum total leverage ratio.
- Distribution Limitations: Distributions to unitholders are limited to "Available Cash." Distributions are prohibited if they would cause a default.
- Operational Restrictions: Limitations on granting liens, making loans/investments, incurring additional debt, fundamental changes, material dispositions, and capital expenditures exceeding specified levels.
Collateral: Secured by substantially all assets of the Partnership and its wholly-owned subsidiaries, with guarantees from specific subsidiaries including Bursaw Oil LLC and Global Partners Energy Canada ULC.
Outlook: The filing does not provide specific revenue or earnings guidance, focusing solely on the refinancing of debt capacity.
Key Facts for Investor Verification
- Verify the current utilization of the $1.3 billion facility and the specific borrowing base calculation for the working capital revolver.
- Confirm the Partnership's compliance with the new financial covenants (leverage and interest coverage ratios) as of the effective date.
- Monitor the impact of the reduced interest rate margins on future interest expense.
- Review the specific terms of the "Contango Facility" permitted under the new $75.0 million secured indebtedness basket.
- Check for any subsequent amendments regarding the accordion feature or the $50.0 million unit repurchase basket.