Business Context and Reporting Period
Company: Suburban Propane Partners, L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: January 5, 2012
Event: Entry into an Amended and Restated Credit Agreement with Bank of America, N.A., and other lenders.
Key Financial Metrics and Debt Structure
- Revolving Credit Facility: $250 million available to the Operating Partnership.
- Incremental Capacity: Borrowings may be increased to $400 million subject to additional lender commitments.
- Existing Borrowings: $100 million outstanding under the prior agreement, rolled into the new facility.
- Maturity Date: January 4, 2017.
- 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 filing reports the amendment and restatement of the Original Credit Agreement dated June 26, 2009. While the facility size ($250 million) and incremental option ($400 million) remain consistent with the prior agreement, the terms, covenants, and interest rate structures have been updated. The $100 million in existing borrowings was seamlessly rolled over into the new agreement.
Guidance, Covenants, and Risks
Financial Covenants
- Consolidated Interest Coverage Ratio: Must not be less than 2.50 to 1.00.
- Total Consolidated Leverage Ratio: Must not exceed 4.75 to 1.00 (or 5.00 to 1.00 during an Acquisition Period).
- Senior Secured Consolidated Leverage Ratio: Must not exceed 3.00 to 1.00 for the Operating Partnership.
Other Covenants and Risks
- Use of Proceeds: General corporate purposes, working capital, capital expenditures, and acquisitions.
- Negative Covenants: Limitations on liens, indebtedness, investments, mergers, asset dispositions, and dividends.
- Events of Default: Include nonpayment, covenant violations, insolvency, change of control, and failure to maintain collateral liens.
- Prepayment: Allowed without penalty at any time prior to maturity.
Note: This filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period.
Key Facts for Investor Verification
- Verify the current Total Consolidated Leverage Ratio to ensure compliance with the 4.75 to 1.00 covenant limit.
- Confirm the Consolidated Interest Coverage Ratio meets the minimum 2.50 to 1.00 requirement.
- Review the specific terms of the "Acquisition Period" which allows a temporary leverage increase to 5.00 to 1.00.
- Assess the impact of the $100 million outstanding balance on the remaining $150 million available liquidity.
- Monitor the status of the incremental facility option to reach $400 million, which requires additional lender commitments.