CrossAmerica Partners LP - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed on July 16, 2021, by CrossAmerica Partners LP (CAPL). The filing discloses the entry into a material definitive agreement by CAPL JKM Partners LLC, an indirect wholly-owned subsidiary of CrossAmerica, to secure financing for a strategic acquisition.
Key Financial Metrics and Debt Structure
The company established a new $200 million senior secured credit facility. The filing does not provide current revenue, profit, cash flow, or margin data as this is a transactional report rather than a periodic financial statement.
- Total Facility Size: $200 million
- Term Loan Facility: $185 million (delayed draw)
- Revolving Credit Facility: $15 million (includes up to $7.5 million swingline borrowings and $5.0 million letters of credit)
- Maturity Date: July 16, 2026
- Interest Rates: Base rate + 0.50% to 1.50% OR LIBOR + 1.50% to 2.50% (margin based on leverage ratio)
- Amortization: 1.50% of unpaid principal quarterly, commencing April 16, 2022, or upon full drawdown/termination
- Commitment Fee: 0.25% to 0.375% per annum on unused portions (starting October 2021)
Material Changes and Purpose
The primary material change is the creation of a new direct financial obligation. The proceeds from this facility are intended to fund a portion of the previously announced acquisition of certain company-operated sites from 7-Eleven, Inc., located in the Northeast and Mid-Atlantic regions of the U.S. The obligations are nonrecourse to CrossAmerica and its subsidiaries other than Holdings, Borrower, and their respective subsidiaries.
Covenants, Risks, and Contingencies
The Credit Agreement includes standard restrictive covenants and financial maintenance requirements:
- Maximum Consolidated Leverage Ratio: 6.25 to 1.00, with step-downs to 6.00, 5.75, 5.50, and 5.25 to 1.00 on March 31 of 2022 through 2025, respectively.
- Minimum Fixed Charge Coverage Ratio: 1.10 to 1.00.
- Restrictions: Limits on incurring additional indebtedness, creating liens, making investments, and disposing of assets.
- Default Consequences: An event of default allows lenders to terminate commitments and declare all outstanding principal and accrued interest immediately due and payable.
Investor Verification Checklist
- Verify the closing status and funding timeline of the acquisition from 7-Eleven, Inc.
- Monitor the company's consolidated leverage ratio to ensure compliance with the 6.25:1.00 covenant starting December 31, 2021.
- Review the full Credit Agreement text when filed as an exhibit to the Form 10-Q for the quarter ending September 30, 2021.
- Assess the impact of the new debt service obligations on future cash flows and liquidity.