Business Context and Reporting Period
This Form 8-K Current Report was filed by Kimbell Royalty Partners, LP on November 3, 2022. The filing details the entry into a material definitive agreement regarding a public equity offering.
Key Financial Metrics and Transaction Details
- Offering Size: 6,000,000 common units representing limited partner interests.
- Offering Price: $17.75 per common unit.
- Over-Allotment Option: Underwriters granted a 30-day option to purchase up to an additional 900,000 common units.
- Expected Net Proceeds: Approximately $100.7 million (net of underwriting discount and offering expenses).
- Expected Closing Date: November 8, 2022.
Material Changes and Use of Proceeds
The Partnership intends to contribute the net proceeds to its Operating Company. The funds are designated for the following purposes:
- Funding the cash portion of the purchase price for the previously disclosed acquisition of mineral and royalty interests from Hatch Royalty LLC (the "Hatch Acquisition").
- Paying fees and expenses related to the Hatch Acquisition.
- Repaying a portion of outstanding borrowings under the Partnership's revolving credit facility pending the closing of the Hatch Acquisition.
The Offering is not conditioned on the consummation of the Hatch Acquisition.
Management Commentary, Risks, and Contingencies
The filing notes that affiliates of several underwriters (Citigroup, KeyBanc, RBC, Truist, and PNC) are also lenders under the Partnership's revolving credit facility. The transaction was conducted in compliance with FINRA Rule 5121. The filing includes standard representations that the description of the Underwriting Agreement is qualified by reference to the full text filed as Exhibit 1.1.
Investor Verification Checklist
- Verify the final closing date and actual net proceeds received, as the $100.7 million figure is an estimate.
- Confirm whether the underwriters exercised the 900,000 unit over-allotment option.
- Monitor the status of the Hatch Acquisition to determine if proceeds were used for the acquisition or debt repayment.
- Review the full Underwriting Agreement (Exhibit 1.1) for specific indemnification and termination provisions.