Business Context and Reporting Period
This Form 8-K Current Report was filed by Kimbell Royalty Partners, LP on August 2, 2023. The filing discloses the entry into a Material Definitive Agreement regarding a public equity offering.
Key Financial Metrics and Transaction Details
- Offering Size: 7,250,000 common units representing limited partner interests.
- Offering Price: $14.00 per Common Unit.
- Over-Allotment Option: Underwriters granted a 30-day option to purchase up to an additional 1,087,500 Common Units.
- Net Proceeds: Approximately $95.9 million (net of underwriting discount and offering expenses).
- Use of Proceeds: Repayment of outstanding borrowings under the Partnership's revolving credit facility.
- Expected Closing Date: August 7, 2023.
Material Changes and Strategic Actions
The primary material change is the execution of an Underwriting Agreement with Citigroup Global Markets Inc. as representative. The Partnership intends to contribute the net proceeds to its Operating Company in exchange for common units. These funds will specifically reduce debt under the revolving credit facility. Future borrowings under this facility may fund general partnership purposes, including the recently announced acquisition of mineral and royalty interests from LongPoint Minerals II, LLC.
Guidance, Risks, and Contingencies
- Closing Conditions: The transaction is subject to customary closing conditions.
- Underwriter Relationships: Several underwriters (including affiliates of Citigroup, BofA Securities, Mizuho, PNC, Truist, and RBC) are also lenders under the revolving credit facility being repaid. The offering complies with FINRA Rule 5121.
- Legal Opinions: The filing includes an opinion of White & Case LLP regarding the legality of the securities.
- Future Outlook: Management indicated that freed-up capacity in the credit facility will support future acquisitions.
Key Facts for Investor Verification
- Verify the final closing date and whether the over-allotment option was exercised.
- Confirm the exact amount of debt repaid from the $95.9 million in net proceeds.
- Monitor the status of the acquisition of mineral and royalty interests from LongPoint Minerals II, LLC.
- Review the full text of the Underwriting Agreement (Exhibit 1.1) for specific indemnification and termination provisions.