Business Context and Reporting Period
This Form 8-K was filed by Martin Midstream Partners L.P. on September 23, 2014. The report discloses the commencement of an underwritten public offering of 3,000,000 common units (plus an option for 450,000 additional units) under an existing shelf registration statement. The filing also provides pro forma capitalization data as of June 30, 2014, adjusted for the recent acquisition of Cardinal Gas Storage Partners LLC.
Key Financial Metrics
The filing presents a comparison of actual versus pro forma and as-adjusted financial positions as of June 30, 2014 (in thousands):
| Item | Actual | Pro Forma and as Adjusted |
|---|---|---|
| Cash and cash equivalents | $2,704 | $7,077 |
| Revolving credit facility | $290,000 | $630,929 |
| 7.250% Senior Notes due 2021 | $402,168 | $402,168 |
| Total long-term debt | $692,168 | $1,033,097 |
| Total partners' capital | $386,733 | $376,545 |
| Total capitalization | $1,078,901 | $1,409,642 |
As of September 22, 2014, actual borrowings under the revolving credit facility were $640.0 million.
Material Changes
- Capital Structure: Pro forma total debt increased significantly from $692.2 million to $1.033 billion, primarily due to the acquisition of Cardinal Gas Storage Partners LLC.
- Liquidity: Pro forma cash and cash equivalents are projected to increase from $2.7 million to $7.1 million following the offering and transaction adjustments.
- Equity: Total partners' capital decreased slightly on a pro forma basis from $386.7 million to $376.5 million due to purchase accounting adjustments.
Outlook, Risks, and Unusual Items
- Transaction Impact: The purchase of Cardinal Gas Storage Partners LLC closed on August 29, 2014. Purchase accounting resulted in a reduction of the investment's carrying value by approximately $30.4 million.
- Non-Cash Charge: The $30.4 million reduction will be recorded as a non-recurring, non-cash charge in the Partnership's income statement for the third quarter of 2014.
- Recent Activity: Since June 30, 2014, the Partnership sold 89,252 common units via an at-the-market program and issued 1,171,265 common units to Martin Product Sales LLC.
Investor Verification Checklist
- Verify the final closing price and total proceeds of the 3,000,000 common unit offering.
- Confirm the exact timing and magnitude of the $30.4 million non-cash charge in the Q3 2014 earnings report.
- Review the updated debt covenants and leverage ratios post-acquisition of Cardinal Gas Storage Partners LLC.
- Check the utilization rate of the revolving credit facility, which stood at $640.0 million as of September 22, 2014.