Offering”), AROP and Alliance Resource Finance Corporation, AROP’s wholly owned subsidiary (together with AROP, the “Issuers”), entered into an Indenture (the “Indenture”), among the Issuers, the Guarantors (as defined below) and Computershare Trust Company, N.A., as trustee (“Computershare”). The Notes are guaranteed (the “Guarantees”), jointly and severally, on a senior unsecured basis by the Partnership, certain of the Partnership’s wholly owned oil and gas and coal royalties subsidiaries and each of the Partnership’s subsidiaries that guarantee obligations under the Credit Agreement (collectively, the “Guarantors”).
On June 12, 2024, the Notes Offering was completed and the Notes were issued pursuant to the Indenture. The Notes will be resold within the United States only to qualified institutional buyers in reliance on Rule 144A under the Securities Act, and outside the United States only to non-U.S. persons in reliance on Regulation S under the Securities Act. The Notes will accrue interest from June 12, 2024 at the rate of 8.625% per year. Interest on the Notes will be payable semi-annually in arrears on each June 15 and December 15, commencing on December 15, 2024.
A portion of the net proceeds from the Notes Offering will be used to redeem the Issuers’ outstanding 2025 Senior Notes and the remainder for general corporate purposes.
The Indenture contains customary terms, events of default and covenants relating to, among other things, the incurrence of debt, the payment of distributions or similar restricted payments, undertaking transactions with affiliates and limitations on asset sales.
At any time prior to June 15, 2026, the Issuers may redeem up to 35% of the aggregate principal amount of the Notes at a redemption price equal to 108.625% of the principal amount redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, with an amount of cash not greater than the net proceeds from one or more equity offerings. The Issuers may also redeem all or a part of the Notes at any time on or after June 15, 2026, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time prior to June 15, 2026, the Issuers may redeem the Notes at a redemption price equal to the principal amount of the Notes plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
In addition, if prior to June 15, 2026, a Specified Minerals Disposition (as defined in the Indenture and which involves oil and gas mineral interests) occurs, the Issuers will be required to make an offer to purchase up to 40% of the aggregate principal amount of Notes then outstanding at an offer price in cash in an amount equal to 108.625% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase.
The Notes and the Guarantees are the general unsecured obligations of the Issuers and the Guarantors and rank equally in right of payment with all of the Issuers’ and the Guarantors’ existing and future senior indebtedness and senior to all of the Issuers’ and the Guarantors’ future subordinated indebtedness, if any. The Notes and the Guarantees are effectively junior in right of payment to all of the Issuers’ and the Guarantors’ existing and future secured debt, to the extent of the value of the assets securing such debt, and are structurally junior to all indebtedness of any of the Partnership’s subsidiaries that do not guarantee the Notes.
The foregoing description of the Indenture is a summary only and is qualified by reference to the complete text of the Indenture, a copy of which is attached as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.
