| Item 1.01 | Entry into a Material Definitive Agreement. |
On May 24, 2021, Suburban Propane Partners, L.P. (“Suburban Propane”) and Suburban Energy Finance Corp. (together with Suburban Propane, “Suburban”) entered into an indenture (the “2031 Senior Notes Indenture”) with The Bank of New York Mellon, as trustee (the “Trustee”), in connection with the previously announced offering of $650,000,000 aggregate principal amount of Suburban’s 5.000% Senior Notes due 2031 (the “2031 Senior Notes”).
The 2031 Senior Notes will bear interest at a rate of 5.000% per year, payable semiannually in arrears on June 1 and December 1 of each year, commencing on December 1, 2021.
The 2031 Senior Notes will be unsecured, senior obligations and rank senior in right of payment to any future subordinated indebtedness and pari passu in right of payment to all of Suburban’s existing and future unsecured senior indebtedness. The 2031 Senior Notes will be structurally subordinated to the indebtedness and other liabilities of all of Suburban’s subsidiaries, including the indebtedness and other liabilities of its operating partnership, Suburban Propane L.P., and its subsidiaries, so long as such subsidiaries do not guarantee the 2031 Senior Notes.
The 2031 Senior Notes Indenture contains covenants that, among other things, limit Suburban’s ability and the ability of Suburban’s restricted subsidiaries (as defined in the 2031 Senior Notes Indenture) to:
| | • | | incur additional debt or issue preferred stock; |
| | • | | pay dividends or make other distributions on, redeem or repurchase Suburban’s capital stock; |
| | • | | make investments or other restricted payments; |
| | • | | enter into transactions with affiliates; |
| | • | | sell, transfer or issue shares of capital stock of restricted subsidiaries; |
| | • | | create liens on their assets; |
| | • | | transfer or sell assets; |
| | • | | restrict dividends or other payments to Suburban; and |
| | • | | effect a consolidation, liquidation or merger. |
These covenants are subject to important limitations and exceptions that are described in the 2031 Senior Notes Indenture.
The offering of the 2031 Senior Notes was not registered under the Securities Act of 1933, as amended (the “Securities Act”), and the 2031 Senior Notes may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The 2031 Senior Notes were sold to “qualified institutional buyers” as defined in Rule 144A under the Securities Act, and non-U.S. persons outside the United States under Regulation S under the Securities Act.
The net proceeds of the offering of the 2031 Senior Notes, after deducting estimated offering expenses, was approximately $639.9 million, all of which has been or will be used, together with borrowings under a revolving credit facility, to fund the refinancing, by repurchasing or redeeming, (i) all of the outstanding $525,000,000 aggregate principal amount of Suburban’s 5.500% senior notes due 2024 (the “2024 Senior Notes”), and (ii) all of the outstanding $250,000,000 aggregate principal amount of Suburban’s 5.750% Senior Notes due 2025 (the “2025 Senior Notes”), including fees and expenses associated with the refinancing.
In connection with the Offer (as defined below), on May 21, 2021, Suburban and the Trustee entered into (i) a Fourth Supplemental Indenture to the Indenture, dated as of May 27, 2014 (the “Senior Notes Indenture”), by and among Suburban and the Trustee, amending the First Supplemental Indenture, dated as of May 27, 2014, by and among Suburban and the Trustee, relating to the 2024 Senior Notes (the “Fourth Supplemental Indenture”), and (ii) a Fifth Supplemental Indenture to the Senior Notes Indenture, amending the Second Supplemental Indenture, dated as of February 25, 2015, by and among Suburban and the Trustee, relating to the 2025 Senior Notes (the “Fifth Supplemental Indenture,” and together with the Fourth Supplemental Indenture, the “Supplemental Indentures”). Pursuant to the Supplemental Indentures, the supplemental indentures to the Senior Notes Indenture governing the 2024 Senior Notes and the 2025 Senior Notes have been amended, in each case, to, among other changes, eliminate substantially all of the restrictive covenants, certain events of default and related provisions with respect to the 2024 Senior Notes and the 2025 Senior Notes, and shorten the minimum notice period for redemptions of such notes to three business days.
