Business Context and Reporting Period
This Form 8-K filing by Natural Resource Partners L.P. (NRP) reports on events occurring on April 3, 2019. The filing details the entry into a material definitive agreement regarding the company's credit facilities.
Key Financial Metrics and Obligations
- Credit Facility Commitment: $100.0 million.
- Senior Notes Outstanding: $346 million (10.500% Senior Notes due 2022).
- Maximum Leverage Ratio: 4.0x (Consolidated indebtedness to EBITDDA).
- Fixed Charge Coverage Ratio: Minimum 3.5 to 1.0 (Consolidated EBITDDA to consolidated fixed charges).
- Special Tax Distribution Cap: Lesser of $0.85 per common unit or $11,000,000 total.
Material Changes and Agreements
On April 3, 2019, NRP Operating LLC entered into the Fourth Amendment to its Third Amended and Restated Credit Agreement. Key changes include:
- Term Extension: The Credit Facility term is extended to April 2023.
- Contingent Maturity: If NRP fails to redeem or refinance its $346 million Senior Notes due 2022 prior to September 2021, the Credit Facility will mature in September 2021.
- Lender Agreement: A New Lender Agreement dated April 8, 2019, maintains lender commitments at $100.0 million.
- Distribution Flexibility: NRP may make a one-time special tax distribution prior to October 18, 2019, to cover tax liabilities from the December 2018 sale of its construction aggregates business without triggering a permanent reduction in the maximum leverage ratio.
Guidance, Risks, and Contingencies
The filing highlights specific financial covenants and risks associated with the credit facility:
- Leverage Ratio Trigger: If NRP increases its quarterly distribution to common unitholders above $0.45 per unit, the maximum leverage ratio permanently decreases from 4.0x to 3.0x.
- Refinancing Risk: The maturity of the credit facility is contingent on the successful redemption or refinancing of the 2022 Senior Notes by September 2021.
- Discretionary Distribution: The special tax distribution is subject to the discretion of the Board of Directors.
The filing text does not provide specific revenue, profit, cash flow, or liquidity figures for the reporting period.
Investor Verification Checklist
- Verify the status of the $346 million Senior Notes due 2022 and the company's plan to redeem or refinance them before September 2021.
- Confirm whether the Board of Directors has declared the one-time special tax distribution and the specific amount per unit.
- Monitor quarterly distribution levels to ensure they do not exceed $0.45 per unit if the company wishes to maintain the 4.0x leverage ratio covenant.
- Review the full text of the Fourth Amendment (Exhibit 10.1) for additional covenants or conditions not summarized here.