Business Context and Reporting Period
CrossAmerica Partners LP, a publicly traded Delaware limited partnership, filed this Form 8-K on December 13, 2016. The filing reports the entry into a material definitive agreement: the Fourth Amendment to its Third Amended and Restated Credit Agreement.
Key Financial Metrics and Debt Structure
The filing details the terms of the Partnership's senior secured revolving credit facility, which matures on March 4, 2019. The facility has a total borrowing capacity of $550.0 million and is secured by substantially all assets of the Partnership and its subsidiaries. The filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period.
- Total Borrowing Capacity: $550.0 million
- Maturity Date: March 4, 2019
- Swingline Loans Limit: Increased from $10 million to $25 million
Material Changes Versus Prior Period
The Amendment modifies several key terms of the Credit Agreement to accommodate the pending acquisition of CST Brands, Inc. by Alimentation Couche-Tard Inc. and to increase operational flexibility:
- Leverage Ratio Flexibility: The period permitted for an increased Total Leverage Ratio (from 4.50:1.00 to 5.00:1.00) following a Material Acquisition was extended from two quarters to three quarters.
- Material Acquisition Threshold: The threshold defining a "Material Acquisition" was reduced from $50 million to $30 million.
- Definitions Update: Terms including "Change of Control" were updated to reflect the pending acquisition of the general partner's owner.
- Sale-Leaseback Flexibility: Terms regarding "Asset Sales" were amended, and a new definition for "Excluded Real Property Assets" was added for real property acquired after the Amendment's effective date.
Guidance, Risks, and Covenants
The Credit Agreement contains strict covenants that limit the Partnership's ability to grant liens, incur additional indebtedness, or make material changes to its business, including mergers and acquisitions. Distributions to unitholders are prohibited if a default occurs or if the Partnership is not in compliance with financial covenants. The filing includes standard disclaimers that representations and warranties made in the Amendment are qualified by materiality and knowledge limitations and should not be relied upon as independent characterizations of facts.
Key Facts for Investor Verification
- Verify the impact of the reduced "Material Acquisition" threshold ($30 million) on future M&A flexibility.
- Confirm the status of the pending acquisition of CST Brands, Inc. by Alimentation Couche-Tard Inc. and its effect on the "Change of Control" definition.
- Review the full text of Exhibit 10.2 (Fourth Amendment) for specific details on the new "Excluded Real Property Assets" definition.
- Monitor compliance with the Total Leverage Ratio covenant, noting the extended grace period for acquisitions.