Business Context and Reporting Period
Company: USA Compression Partners, LP
Filing Type: Form 8-K (Current Report)
Date of Report: March 18, 2016 (Event Date)
Reporting Period: Specific event date; not a periodic financial report.
Key Financial Metrics
- Outstanding Borrowings: Approximately $745.5 million as of March 18, 2016.
- Letters of Credit: No outstanding letters of credit under the Credit Agreement.
- Credit Facility Maturity: January 2020.
- Revenue, Profit, Cash Flow, Margins: The filing text does not provide a clear value for these metrics.
Material Changes
The Partnership entered into a Third Amendment to its Fifth Amended and Restated Credit Agreement. The primary material change involves the modification of the leverage ratio covenant to the following schedule:
- 5.95 to 1.0: Fiscal quarters ending June 30, 2016, and September 30, 2016.
- 5.75 to 1.0: Fiscal quarter ending December 31, 2016.
- 5.50 to 1.0: Fiscal quarters ending March 31, 2017, and June 30, 2017.
- 5.25 to 1.0: Fiscal quarters ending September 30, 2017, and December 31, 2017.
- 5.00 to 1.0: Thereafter.
The amendment also included certain other provisions and required the payment of amendment fees to lenders and an arrangement fee to the arranger.
Guidance, Outlook, and Management Commentary
On March 21, 2016, the Partnership issued a press release stating that the credit facility amendment provides "enhanced financial and operating flexibility." Management affirmed its 2016 outlook in connection with this announcement.
Investor Verification Checklist
- Verify the full text of the Third Amendment (Exhibit 10.1) for specific covenant definitions and other amended provisions.
- Confirm the total amount of fees paid to lenders and the arranger in connection with the amendment.
- Review the March 21, 2016 press release (Exhibit 99.1) for details on the affirmed 2016 outlook.
- Monitor future quarterly reports to ensure compliance with the new stepped-down leverage ratio covenants.