Business Context and Reporting Period
This Form 8-K filing by Antero Midstream GP LP (AMGP) reports events occurring on May 9, 2018. The registrant is an emerging growth company incorporated in Delaware. The filing primarily details the entry into a new material definitive agreement and related amendments to organizational documents.
Key Financial Metrics and Obligations
- New Debt Facility: Entered into a senior secured credit facility with a commitment of $12 million.
- Lender: Wells Fargo Bank, National Association.
- Loan Type: Base rate loans.
- Repayment Terms: Borrowed amounts must be fully repaid at least once per fiscal quarter following AMGP's receipt of quarterly distributions from its indirect subsidiary, Antero Midstream Partners LP. Prepayments are permitted without penalty.
- Collateral: Secured by a first priority perfected security interest in certain assets of AMGP and subsidiary guarantors, including a pledge of AMGP's Series A Units of Antero IDR Holdings LLC.
- Guarantors: Obligations are guaranteed by Antero IDR Holdings LLC and certain future subsidiaries.
Material Changes and Agreements
The filing discloses the creation of a direct financial obligation through the new $12 million credit facility. Additionally, AMGP executed Amendment No. 1 to the Limited Liability Company Agreement of Antero IDR Holdings LLC. This amendment was necessary to permit AMGP to pledge its Series A Units of IDR Holdings as collateral under the new Credit Facility.
Management Commentary, Risks, and Covenants
The Credit Facility includes standard affirmative and negative covenants, including:
- Financial reporting requirements.
- Limitations on indebtedness, liens, mergers, consolidations, liquidations, and dissolutions.
- Restrictions on sales of assets, dividends, other restricted payments, investments, and transactions with affiliates.
Events of Default: The agreement defines customary events of default, including failure to comply with covenants, change of control, insolvency proceedings, or default under other material indebtedness. Upon default, lenders may declare the principal and accrued interest immediately due and payable and exercise remedies against collateral.
Outlook: The filing does not provide specific financial guidance or revenue projections. The full text of the Credit Facility is scheduled to be filed as an exhibit to the Form 10-Q for the quarter ended June 30, 2018.
Investor Verification Checklist
- Verify the full terms of the Credit Facility in the upcoming Form 10-Q for the quarter ended June 30, 2018.
- Review the Amendment No. 1 to the IDR Holdings LLC Agreement (Exhibit 3.1) to understand the specific restrictions on the pledged Series A Units.
- Monitor AMGP's ability to receive quarterly distributions from Antero Midstream Partners LP, as this triggers the mandatory repayment schedule for the new debt.
- Assess the impact of the new covenants on AMGP's operational flexibility regarding future indebtedness and asset sales.