Business Context and Reporting Period
Company: Suburban Propane Partners, L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: June 26, 2009
Event: Entry into a new Credit Agreement and termination of a prior credit facility.
Key Financial Metrics and Debt Structure
- New Revolving Credit Facility: $250 million provided by Bank of America, N.A. and other lenders.
- Maturity Date: June 25, 2013.
- Incremental Capacity: Borrowings may be increased to $400 million subject to additional lender commitments.
- Interest Rates: Base Rate Loans or Eurodollar Loans plus an Applicable Rate determined by the Total Consolidated Leverage Ratio.
- Collateral: Liens on substantially all personal property and mortgages on specific facilities (Elk Grove, CA; NJ Headquarters; Oregon Tank Farm).
- Financial Covenants:
- Consolidated Interest Coverage Ratio: Minimum 2.50 to 1.00.
- Total Consolidated Leverage Ratio: Maximum 4.50 to 1.00.
- Senior Secured Consolidated Leverage Ratio: Maximum 3.00 to 1.00.
Material Changes Versus Prior Period
The Partnership terminated its Third Amended and Restated Credit Agreement with Wachovia Bank, National Association (the "Prior Credit Agreement").
- Prior Facility Details: Included a term loan and a working capital facility of up to $175 million, maturing in March 2010.
- Outstanding Debt Repaid: $108 million (entirely from the term loan) as of June 26, 2009.
- Refinancing Action: On June 26, 2009, the Partnership borrowed $100 million under the new Revolving Credit Facility and used cash on hand to fully repay the $108 million outstanding under the Prior Credit Agreement.
Guidance, Outlook, and Management Commentary
Use of Proceeds: Borrowings from the new facility are designated for general corporate purposes, including working capital, capital expenditures, and acquisitions. The facility may also be used to issue letters of credit.
Amendments: The Third Amended and Restated Partnership Agreement of the Operating Partnership was amended to permit the general partner to pledge its interest as security for the Credit Agreement obligations.
Risks and Contingencies: The agreement includes standard events of default, including nonpayment, covenant violations, insolvency proceedings, and change of control. The filing does not provide specific forward-looking revenue or earnings guidance.
Important Facts for Investor Verification
- Verify the current Total Consolidated Leverage Ratio to ensure compliance with the new 4.50 to 1.00 covenant limit.
- Confirm the status of the $100 million drawdown under the new facility and the remaining available capacity.
- Review the specific terms of the "Incremental Term Facility" to understand the conditions required to increase the credit line to $400 million.
- Monitor the interest rate spread (Applicable Rate) based on the Partnership's leverage ratio performance.