Long-Term Debt | 9 Months Ended |
Sep. 30, 2014 |
Debt Disclosure [Abstract] | ' |
Long-Term Debt | ' |
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8. Long-Term Debt |
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As used in this Note 8, references to “NRP LP” refer to Natural Resource Partners L.P. only, and not to NRP (Operating) LLC or any of Natural Resource Partners L.P.’s other subsidiaries. References to “Opco” refer to NRP (Operating) LLC and its subsidiaries. References to NRP Oil and Gas refer to NRP Oil and Gas LLC, a wholly owned subsidiary of NRP LP. NRP Finance Corporation (NRP Finance) is a wholly owned subsidiary of NRP LP and a co-issuer with NRP LP on the 9.125% senior notes. |
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Long-term debt consists of the following: |
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| | September 30, | | | December 31, | | | | | | | | | | | | | | | | | |
2014 | 2013 | | | | | | | | | | | | | | | | |
| | (In thousands) | | | | | | | | | | | | | | | | | |
NRP LP Debt: | | (Unaudited) | | | | | | | | | | | | | | | | | | | | |
$300 million 9.125% senior notes, with semi-annual interest payments in April and October, maturing October 2018, issued at 99.007% | | $ | 297,617 | | | $ | 297,170 | | | | | | | | | | | | | | | | | |
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Opco Debt: | | | | | | | | | | | | | | | | | | | | | | | | |
$300 million floating rate revolving credit facility, due August 2016 | | | 7,000 | | | | 20,000 | | | | | | | | | | | | | | | | | |
$200 million floating rate term loan, due January 2016 | | | 99,000 | | | | 99,000 | | | | | | | | | | | | | | | | | |
4.91% senior notes, with semi-annual interest payments in June and December, with annual principal payments in June, maturing in June 2018 | | | 18,467 | | | | 23,084 | | | | | | | | | | | | | | | | | |
8.38% senior notes, with semi-annual interest payments in March and September, with annual principal payments in March, maturing in March 2019 | | | 107,143 | | | | 128,571 | | | | | | | | | | | | | | | | | |
5.05% senior notes, with semi-annual interest payments in January and July, with annual principal payments in July, maturing in July 2020 | | | 46,154 | | | | 53,846 | | | | | | | | | | | | | | | | | |
5.31% utility local improvement obligation, with annual principal and interest payments, maturing in March 2021 | | | 1,346 | | | | 1,538 | | | | | | | | | | | | | | | | | |
5.55% senior notes, with semi-annual interest payments in June and December, with annual principal payments in June, maturing in June 2023 | | | 24,300 | | | | 27,000 | | | | | | | | | | | | | | | | | |
4.73% senior notes, with semi-annual interest payments in June and December, with scheduled principal payments beginning December 2014, maturing in December 2023 | | | 75,000 | | | | 75,000 | | | | | | | | | | | | | | | | | |
5.82% senior notes, with semi-annual interest payments in March and September, with annual principal payments in March, maturing in March 2024 | | | 150,000 | | | | 165,000 | | | | | | | | | | | | | | | | | |
8.92% senior notes, with semi-annual interest payments in March and September, with scheduled principal payments beginning March 2014, maturing in March 2024 | | | 45,454 | | | | 50,000 | | | | | | | | | | | | | | | | | |
5.03% senior notes, with semi-annual interest payments in June and December, with scheduled principal payments beginning December 2014, maturing in December 2026 | | | 175,000 | | | | 175,000 | | | | | | | | | | | | | | | | | |
5.18% senior notes, with semi-annual interest payments in June and December, with scheduled principal payments beginning December 2014, maturing in December 2026 | | | 50,000 | | | | 50,000 | | | | | | | | | | | | | | | | | |
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NRP Oil and Gas Debt: | | | | | | | | | | | | | | | | | | | | | | | | |
Reserve-based floating rate revolving credit facility due August 2018 | | | 2,000 | | | | — | | | | | | | | | | | | | | | | | |
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Total debt | | | 1,098,481 | | | | 1,165,209 | | | | | | | | | | | | | | | | | |
Less – current portion of long term debt | | | (80,983 | ) | | | (80,983 | ) | | | | | | | | | | | | | | | | |
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Long-term debt | | $ | 1,017,498 | | | $ | 1,084,226 | | | | | | | | | | | | | | | | | |
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NRP LP Debt |
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Senior Notes. In September 2013, NRP LP, together with NRP Finance as co-issuer, issued $300 million of 9.125% senior notes at an offering price of 99.007% of par value. Net proceeds after expenses related to the issuance of the senior notes of approximately $289.0 million were used to repay all of the outstanding borrowings under Opco’s revolving credit facility and $91.0 million of Opco’s term loan. The senior notes call for semi-annual interest payments on April 1 and October 1 of each year. The notes will mature on October 1, 2018. |
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The indenture for the senior notes contains covenants that, among other things, limit the ability of NRP LP and certain of its subsidiaries to incur or guarantee additional indebtedness. Under the indenture, NRP LP and certain of its subsidiaries generally are not permitted to incur additional indebtedness unless, on a consolidated basis, the fixed charge coverage ratio (as defined in the indenture) is at least 2.0 to 1.0 for the four preceding full fiscal quarters. The ability of NRP LP and certain of its subsidiaries to incur additional indebtedness is further limited in the event the amount of indebtedness of NRP LP and certain of its subsidiaries that is senior to NRP LP’s unsecured indebtedness exceeds certain thresholds. |
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Opco Debt |
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Senior Notes. Opco made principal payments of $56.0 million on its senior notes during the nine months ended September 30, 2014. The Opco senior note purchase agreement contains covenants requiring Opco to: |
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| • | | Maintain a ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the note purchase agreement) of no more than 4.0 to 1.0 for the four most recent quarters; | | | | | | | | | | | | | | | | | | | | | |
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| • | | not permit debt secured by certain liens and debt of subsidiaries to exceed 10% of consolidated net tangible assets (as defined in the note purchase agreement); and | | | | | | | | | | | | | | | | | | | | | |
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| • | | maintain the ratio of consolidated EBITDDA to consolidated fixed charges (consisting of consolidated interest expense and consolidated operating lease expense) at not less than 3.5 to 1.0. | | | | | | | | | | | | | | | | | | | | | |
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The 8.38% and 8.92% senior notes also provide that in the event that Opco’s leverage ratio exceeds 3.75 to 1.00 at the end of any fiscal quarter, then in addition to all other interest accruing on these notes, additional interest in the amount of 2.00% per annum shall accrue on the notes for the two succeeding quarters and for as long thereafter as the leverage ratio remains above 3.75 to 1.00. |
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Revolving Credit Facility. The weighted average interest rates for the debt outstanding under Opco’s revolving credit facility for the nine months ended September 30, 2014 and year ended December 31, 2013 were 1.96% and 2.23%, respectively. Opco incurs a commitment fee on the undrawn portion of the revolving credit facility at rates ranging from 0.18% to 0.40% per annum. The facility includes an accordion feature whereby Opco may request its lenders to increase their aggregate commitment to a maximum of $500 million on the same terms. At September 30, 2014 Opco had $7 million drawn under the credit facility. |
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Opco’s revolving credit facility contains covenants requiring Opco to maintain: |
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| • | | a ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the credit agreement) not to exceed 4.0 to 1.0 and, | | | | | | | | | | | | | | | | | | | | | |
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| • | | a ratio of consolidated EBITDDA to consolidated fixed charges (consisting of consolidated interest expense and consolidated lease operating expense) of not less than 3.5 to 1.0 for the four most recent quarters. | | | | | | | | | | | | | | | | | | | | | |
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Term Loan Facility. During 2013, Opco issued $200 million in term debt. The weighted average interest rates for the debt outstanding under the term loan for the nine months ended September 30, 2014 and the year ended December 31, 2013 were 2.23% and 2.43%, respectively. Opco repaid $101 million in principal under the term loan during the third quarter of 2013. Repayment terms call for the remaining outstanding balance of $99 million to be paid in January 2016. The debt is unsecured but guaranteed by the subsidiaries of Opco. |
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Opco’s term loan contains covenants requiring Opco to maintain: |
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| • | | a ratio of consolidated indebtedness to consolidated EBITDDA (as defined in the credit agreement) not to exceed 4.0 to 1.0 and, | | | | | | | | | | | | | | | | | | | | | |
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| • | | a ratio of consolidated EBITDDA to consolidated fixed charges (consisting of consolidated interest expense and consolidated lease operating expense) of not less than 3.5 to 1.0 for the four most recent quarters. | | | | | | | | | | | | | | | | | | | | | |
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NRP Oil and Gas Debt |
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Revolving Credit Facility. In August 2013, NRP Oil and Gas entered into a 5-year, $100 million senior secured, reserve-based revolving credit facility in order to fund capital expenditure requirements related to the development of non-operated working interests in oil and gas assets. The credit facility had a borrowing base of $20.0 million as of September 30, 2014 and is secured by a first priority lien and security interest in substantially all of the assets of NRP Oil and Gas. At September 30, 2014, there was $2.0 million outstanding under the credit facility. The weighted average interest rate for the debt outstanding under the credit facility for the nine months ended September 30, 2014 was 1.90%. |
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Indebtedness under the NRP Oil and Gas credit facility bears interest, at the option of NRP Oil and Gas, at either: |
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| • | | the higher of (i) the prime rate as announced by the agent bank; (ii) the federal funds rate plus 0.50%; or (iii) LIBOR plus 1%, in each case plus an applicable margin ranging from 0.50% to 1.50%; or | | | | | | | | | | | | | | | | | | | | | |
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| • | | a rate equal to LIBOR, plus an applicable margin ranging from 1.75% to 2.75%. | | | | | | | | | | | | | | | | | | | | | |
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NRP Oil and Gas will incur a commitment fee on the unused portion of the borrowing base under the credit facility at a rate ranging from 0.375% to 0.50% per annum. |
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The NRP Oil and Gas credit facility contains certain covenants, which, among other things, require the maintenance of: |
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| • | | a total leverage ratio (defined as the ratio of the total debt of NRP Oil and Gas to its EBITDAX) of not more than 3.5 to 1.0; and | | | | | | | | | | | | | | | | | | | | | |
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| • | | a minimum current ratio of 1.0 to 1.0. | | | | | | | | | | | | | | | | | | | | | |
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Consolidated Principal Payments |
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The consolidated principal payments due as of September 30, 2014 are set forth below: |
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| | NRP LP | | | Opco | | | NRP | | | | |
Oil & Gas |
| | Senior Notes | | | Senior Notes | | | Credit Facility | | | Term Loan | | | Credit Facility | | | Total | |
| | (In thousands) | |
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(Unaudited) |
2014 | | $ | — | | | $ | 24,808 | | | $ | — | | | $ | — | | | $ | — | | | $ | 24,808 | |
2015 | | | — | | | | 80,983 | | | | — | | | | — | | | | — | | | | 80,983 | |
2016 | | | — | | | | 80,983 | | | | 7,000 | | | | 99,000 | | | | — | | | | 186,983 | |
2017 | | | — | | | | 80,983 | | | | — | | | | — | | | | — | | | | 80,983 | |
2018 | | | 300,000 | (1) | | | 80,983 | | | | — | | | | — | | | | 2,000 | | | | 382,983 | |
Thereafter | | | — | | | | 344,124 | | | | — | | | | — | | | | — | | | | 344,124 | |
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| | $ | 300,000 | | | $ | 692,864 | | | $ | 7,000 | | | $ | 99,000 | | | $ | 2,000 | | | $ | 1,100,864 | |
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(1) | The 9.125% senior notes due 2018 were issued at a discount and as of September 30, 2014 were carried at $297.6 million. | | | | | | | | | | | | | | | | | | | | | | | |
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NRP LP, Opco and NRP Oil and Gas were in compliance with all terms under their long-term debt as of September 30, 2014. |