Business Context and Reporting Period
This Form 8-K is filed by Lehigh Gas Partners LP (not Crossamerica Partners LP as indicated in metadata) for the reporting period ending March 4, 2014. The filing primarily announces the entry into a new material definitive agreement regarding the company's credit facilities.
Key Financial Metrics and Credit Facility Details
The filing details a new Third Amended and Restated Credit Agreement establishing a senior secured revolving credit facility with the following terms:
- Facility Size: $450 million, with an accordion feature allowing an increase of up to an additional $100 million.
- Maturity: March 4, 2019.
- Interest Rates:
- LIBOR-based: LIBOR + 2.00% to 3.25% per annum.
- Base Rate-based: Base Rate + 1.00% to 2.25% per annum.
- Commitment Fee: 0.35% to 0.50% per annum on the unused portion.
- Swingline Loans: Up to $10.0 million available.
- Letters of Credit: Up to $45.0 million aggregate amount.
Financial Covenants:
- Total Leverage Ratio: Maximum 4.50 to 1.00 (increases to 5.00 to 1.00 for two quarters following a Material Acquisition or issuance of Qualified Senior Notes).
- Senior Leverage Ratio: Maximum 3.50 to 1.00 (pro forma) upon issuance of Qualified Senior Notes.
- Consolidated Interest Coverage Ratio: Minimum 2.75 to 1.00 (pro forma).
Note: This filing does not contain specific revenue, profit, cash flow, or liquidity figures for the company. It references a separate press release (Exhibit 99.1) for results of operations for the quarter and year ended December 31, 2013.
Material Changes Versus Prior Period
The primary material change is the replacement of the previous credit facility with the new $450 million revolving credit facility. The new agreement introduces specific financial covenants and interest rate margins tied to the Partnership's Total Leverage Ratio. The filing does not provide comparative financial performance data against prior periods within the text of this report.
Guidance, Risks, and Covenants
Management Commentary and Restrictions:
- Distributions: The agreement prohibits distributions to unitholders if a default exists or if the distribution would cause a default or covenant breach.
- Operational Restrictions: Covenants limit the ability to grant liens, incur additional indebtedness, materially alter the business character (including mergers or liquidations), and make certain investments or acquisitions.
Risks and Events of Default:
Events of default include failure to pay principal or interest, breach of representations or covenants, cross-defaults on indebtedness over $7.5 million, monetary judgments exceeding $20.0 million, bankruptcy, ERISA violations, or a Change of Control without waiver. Upon default, lenders may accelerate maturity and exercise remedies.
Investor Verification Checklist
- Verify the full text of the Third Amended and Restated Credit Agreement (Exhibit 10.1) for specific definitions of "Total Leverage Ratio" and "Material Acquisition."
- Review the Press Release dated March 6, 2014 (Exhibit 99.1) for actual revenue, profit, and cash flow figures for the quarter and year ended December 31, 2013, as they are not included in this 8-K text.
- Confirm the current Total Leverage Ratio to determine the applicable interest rate margin and commitment fee.
- Assess the impact of the distribution restrictions on the company's ability to pay unitholders if financial covenants are tightened.