Business Context and Reporting Period
This Form 8-K Current Report was filed by Global Partners LP on July 19, 2011. The filing primarily addresses the entry into a material definitive agreement regarding the company's credit facilities and provides preliminary unaudited financial results for the second quarter ended June 30, 2011.
Key Financial Metrics and Agreements
Credit Agreement Amendments (Item 2.03)
On July 19, 2011, the Partnership entered into a Second Amendment to its Amended and Restated Credit Agreement. The amendment establishes specific financial covenants:
- Minimum Combined EBITDA:
- $75 million for four consecutive fiscal quarters (excluding Q3 and Q4 2011).
- $70 million for the four consecutive fiscal quarters ending September 30, 2011, and December 31, 2011.
- Combined Interest Coverage Ratio:
- 2.00:1.00 for the quarter ending June 30, 2011.
- 1.65:1.00 for quarters ending September 30, 2011, and December 31, 2011.
- 1.75:1.00 for the quarter ending March 31, 2012.
- 2.00:1.00 for the quarter ending June 30, 2012, and thereafter.
- Combined Senior Secured Leverage Ratio:
- 2.50:1.00 for the quarter ending June 30, 2011.
- 3.00:1.00 for quarters ending September 30, 2011, and December 31, 2011.
- 2.75:1.00 for the quarter ending March 31, 2012, and thereafter.
Dividend Declaration (Item 7.01)
The Board of Directors of Global GP LLC declared a quarterly cash distribution of $0.50 per unit ($2.00 per unit annualized) for the period April 1, 2011, through June 30, 2011. The payment date is August 12, 2011, for unitholders of record as of August 3, 2011.
Operational Results (Item 2.02)
The filing references a press release (Exhibit 99.1) containing preliminary unaudited results for net income and EBITDA for the second quarter ended June 30, 2011. The specific numerical values for revenue, profit, cash flow, or margins are not provided in the text of this Form 8-K.
Material Changes and Outlook
The primary material change is the modification of debt covenants to provide temporary flexibility in EBITDA requirements and leverage ratios for late 2011 and early 2012. The filing does not contain explicit forward-looking guidance, management commentary on future operations, or a discussion of specific risks beyond the covenant requirements.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for the specific Q2 2011 net income and EBITDA figures referenced but not detailed in this summary.
- Verify the company's ability to meet the reduced EBITDA threshold of $70 million for the quarters ending September 30 and December 31, 2011.
- Confirm the company's compliance with the temporary leverage ratio increase to 3.00:1.00 for late 2011.
- Check the record date (August 3, 2011) and payment date (August 12, 2011) for the $0.50 per unit distribution.