Business Context and Reporting Period
This Form 8-K Current Report was filed by Kimbell Royalty Partners, LP on January 9, 2020. The filing details the entry into a Material Definitive Agreement regarding a public equity offering.
Key Financial Metrics and Transaction Details
- Offering Size: 5,000,000 common units representing limited partner interests.
- Offering Price: $15.50 per Common Unit.
- Over-Allotment Option: Underwriters granted a 30-day option to purchase up to an additional 750,000 Common Units.
- Net Proceeds to Partnership: Approximately $73.3 million (net of underwriting discount and offering expenses).
- Proceeds from Selling Unitholders: The Partnership will not receive proceeds from the sale of units by EIGF Aggregator III LLC and TE Drilling Aggregator LLC.
Material Changes and Use of Proceeds
The primary material change is the execution of an Underwriting Agreement to raise capital. The Partnership intends to contribute the net proceeds to its Operating Company. These funds are designated for:
- Funding a portion of the cash purchase price for the acquisition of Springbok Energy Partners, LLC and Springbok Energy Partners II, LLC (the "Springbok Acquisition").
- Paying fees and expenses related to the Springbok Acquisition.
- Repaying a portion of outstanding borrowings under the Partnership's revolving credit facility pending the closing of the Springbok Acquisition.
The Offering is not conditioned on the consummation of the Springbok Acquisition.
Outlook, Risks, and Unusual Items
Closing Date: The Offering is expected to close on January 14, 2020, subject to customary closing conditions.
Conflict of Interest: Credit Suisse Securities (USA) LLC, RBC Capital Markets, LLC, and Wells Fargo Securities, LLC are lenders under the Partnership's revolving credit facility and are considered "Conflicted Underwriters" under FINRA Rule 5121. The Offering was conducted in compliance with this rule, and no qualified independent underwriter was required due to the existence of a bona fide public market for the Common Units.
Legal Opinions: An opinion of Baker Botts L.L.P. regarding the legality of the securities is filed as an exhibit.
Investor Verification Checklist
- Verify the final closing date of the Offering (expected January 14, 2020).
- Confirm the exact amount of net proceeds received after final underwriting discounts and expenses.
- Monitor the status of the Springbok Acquisition to determine if proceeds are used for the purchase price or debt repayment.
- Review the full text of the Underwriting Agreement (Exhibit 1.1) for specific indemnification and termination provisions.
- Check for the exercise of the 750,000 unit over-allotment option within the 30-day window.