Business Context and Reporting Period
Company: Suburban Propane Partners, L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: March 5, 2020
Event: Entry into a Third Amended and Restated Credit Agreement with Bank of America, N.A., and other lenders.
Key Financial Metrics and Credit Facility Terms
- Facility Size: $500 million revolving credit facility.
- Expansion Option: Borrowings may be increased to $850 million subject to additional lender commitments.
- Existing Borrowings Rolled Over: $183.9 million from the previous credit agreement.
- Maturity Date: March 5, 2025, or 91 days prior to the maturity of the 5.50% senior notes due 2024 (whichever is earlier), unless refinanced.
- Interest Rates:
- Base Rate Loans: Applicable Rate ranges from 0.50% to 1.50%.
- Eurodollar Rate Loans: Applicable Rate ranges from 1.50% to 2.50%.
- Penalty Rate: 2% above the applicable rate for late payments.
- Collateral: Liens on substantially all personal property and mortgages on specific facilities in California, New Jersey, and Oregon.
Material Changes Versus Prior Period
The new agreement amends and restates the Second Amended and Restated Credit Agreement dated March 3, 2016. While the base revolving facility remains at $500 million, the new agreement increases the potential expansion capacity from $350 million to $350 million (total potential $850 million) and updates the maturity timeline and interest rate structures. The $183.9 million outstanding under the prior facility was rolled into the new agreement.
Financial Covenants, Risks, and Contingencies
The Credit Agreement imposes the following financial covenants as of the end of any fiscal quarter:
- Consolidated Interest Coverage Ratio: Must not be less than 2.50 to 1.00.
- Total Consolidated Leverage Ratio: Must not exceed 5.75 to 1.00.
- Senior Secured Consolidated Leverage Ratio: Must not exceed 3.25 to 1.00.
Other Provisions:
- Prepayment: Allowed in whole or in part without penalty.
- Mandatory Prepayment: Required for Incremental Term Facilities upon certain asset dispositions.
- Events of Default: Include nonpayment, covenant violations, insolvency, change of control, and failure to create valid liens.
Management Commentary: The filing does not provide specific management commentary beyond the terms of the agreement and the issuance of a press release.
Investor Verification Checklist
- Verify the current Total Consolidated Leverage Ratio to ensure compliance with the 5.75 to 1.00 covenant.
- Confirm the status of the 5.50% senior notes due 2024 to determine the exact maturity date of the revolving facility.
- Review the press release (Exhibit 99.1) for any additional strategic context regarding the refinancing.
- Assess the impact of the $183.9 million rolled-over debt on current liquidity and working capital needs.