Business Context and Reporting Period
This Form 8-K, filed on September 25, 2014, by Susser Petroleum Partners LP (the "Partnership"), reports the entry into material definitive agreements and the completion of an asset acquisition. The filing details the acquisition of Mid-Atlantic Convenience Stores, LLC ("MACS"), the agreement to acquire Aloha Petroleum, Ltd. ("Aloha"), and the establishment of a new credit facility.
Key Financial Metrics and Transaction Details
- MACS Acquisition (Completed Oct 1, 2014): Total consideration consisted of $556 million in cash and 3,983,540 common units. The cash portion was initially financed via a new revolving credit facility.
- Aloha Acquisition (Pending): Agreed purchase price is $240 million in cash, subject to a post-closing earn-out (50% of gross profits exceeding a threshold through 2022) and closing adjustments. Closing is expected in Q4 2014.
- Debt and Liquidity: The Partnership entered a new $1.25 billion revolving credit facility (expandable by $250 million) maturing in 2019. Interest margins range from 1.50% to 2.50% over LIBOR, with a commitment fee of 0.250% to 0.35% on unused portions.
- Covenants: The credit agreement requires a maximum Leverage Ratio of 5.50 to 1.00, with a temporary increase to 6.0 to 1.00 permitted for up to three fiscal quarters following specified acquisitions.
Material Changes Versus Prior Period
The filing does not provide comparative financial statements (revenue, profit, or cash flow) for the reporting period versus prior periods. The primary material change is the expansion of the Partnership's asset base through the MACS acquisition and the pending Aloha acquisition, alongside a refinancing of its debt structure to support these transactions.
Guidance, Outlook, Risks, and Unusual Items
- Financing Strategy: The Partnership plans to finance the cash consideration for both acquisitions using the new revolving credit facility, with longer-term financing to follow via debt and equity.
- Risks and Contingencies: There is no assurance that all closing conditions for the Aloha Acquisition will be satisfied or that anticipated benefits will be realized. The MACS cash consideration is subject to working capital adjustments.
- Equity Issuance: The 3,983,540 common units issued to ETC for the MACS transaction were sold in a private transaction exempt from registration under Section 4(2) of the Securities Act.
- Financial Statements: Required financial statements and pro forma information for the MACS transaction are not included in this filing and will be filed within 71 calendar days.
Investor Verification Checklist
- Verify the final purchase price for the MACS transaction after working capital adjustments.
- Confirm the closing date and final consideration for the Aloha Acquisition, including any earn-out payments.
- Review the upcoming filing (within 71 days) for MACS financial statements and pro forma information.
- Monitor the Partnership's Leverage Ratio to ensure compliance with the 5.50 to 1.00 covenant limit.
- Assess the impact of the new debt facility on the Partnership's interest expense and liquidity position.