Business Context and Reporting Period
Company: Global Partners LP (Delaware limited partnership)
Filing Type: Form 8-K (Current Report)
Report Date: December 20, 2013 (Earliest event reported)
Event Date: December 23, 2013 (Closing of offering)
This filing reports the entry into a Material Definitive Agreement regarding a private placement of senior notes and the execution of a Second Supplemental Indenture to modify existing debt covenants.
Key Financial Metrics and Debt Structure
- New Debt Issuance: $80.0 million aggregate principal amount of unsecured 7.75% Senior Notes due 2018.
- Proceeds: $80.0 million (sold at face amount).
- Use of Proceeds: Pay outstanding indebtedness and general partnership purposes.
- Interest Payment Schedule: Semi-annually on December 23 and June 23, commencing June 23, 2014.
- Existing Debt Context: The filing references an existing $70.0 million aggregate principal amount of 8.00% Senior Notes due 2018 issued in February 2013.
- Financial Performance: The filing text does not provide revenue, profit, cash flow, or margin data.
Material Changes and Covenant Modifications
The filing details a Second Supplemental Indenture dated December 20, 2013, which modifies the terms of the February 2013 Indenture governing the $70.0 million 8.00% Senior Notes. Key changes include:
- Guarantor Addition: Global CNG LLC added as a guarantor.
- Share Repurchase Limit Increase: The annual limit for purchasing, redeeming, or acquiring Equity Interests increased from $5.0 million to $10.0 million.
- Debt Incurrence Flexibility: The Partnership and Restricted Subsidiaries are now permitted to incur Indebtedness represented by Capital Lease Obligations, mortgage financings, or purchase money obligations for construction/improvements up to the greater of $60.0 million or 5.5% of Consolidated Net Tangible Assets.
Outlook, Risks, and Contingencies
- Covenants: The new Indenture limits the Partnership's ability to incur additional indebtedness, make distributions to equity owners, make certain investments, create liens, enter into sale-leaseback transactions, sell assets, or merge.
- Events of Default: Include payment defaults, covenant breaches, bankruptcy, acceleration of indebtedness exceeding $15.0 million, and failure to pay uninsured final judgments exceeding $15.0 million within 60 days.
- Repurchase Rights: Holders may require repurchase following certain asset sales or a Change of Control.
- Significant Holders: Affiliates of Kayne Anderson beneficially owned 14.74% of common units as of January 10, 2013. FS Energy and Power Fund holds $70.0 million of the existing 8.00% Senior Notes.
Investor Verification Checklist
- Verify the exact amount of "outstanding indebtedness" paid down with the $80.0 million proceeds.
- Review the full text of the Indenture (Exhibit 4.1) and Second Supplemental Indenture (Exhibit 4.2) for specific definitions of "Consolidated Net Tangible Assets" and "Capital Lease Obligations."
- Confirm the impact of the new debt on the Partnership's leverage ratios and ability to meet future distribution requirements.
- Assess the concentration risk given that Kayne Anderson affiliates hold a significant equity stake and FS Energy and Power Fund holds a large portion of the existing debt.