LONG-TERM DEBT | 3 Months Ended |
Mar. 31, 2014 |
Debt Disclosure [Abstract] | ' |
LONG-TERM DEBT | ' |
LONG-TERM DEBT |
|
Credit Facility |
|
In November 2012, we entered into the Credit Facility, which matures on November 7, 2017. We may utilize the Credit Facility for working capital requirements and capital expenditures, the purchase of assets, the payment of distributions and other general purposes. Our outstanding debt is as follows: |
|
| | | | | | | |
| 31-Mar-14 | | 31-Dec-13 |
Credit Facility, due November 2017 | $ | 170,850 | | | $ | 267,300 | |
|
Total long-term debt | $ | 170,850 | | | $ | 267,300 | |
|
Our Credit Facility contains various covenants and restrictive provisions and requires maintenance of certain financial and operational compliance covenants. As of March 31, 2014 and December 31, 2013, we were in compliance with all of our loan covenants. All of our assets are pledged as collateral under our Credit Facility. The terms of our Credit Facility contain customary covenants, including those that restrict our ability to make or limit certain payments, distributions, acquisitions, loans, or investments, incur certain indebtedness or create certain liens on its assets, consolidate or enter into mergers, dispose of certain of our assets, engage in certain types of transactions with its affiliates, enter into certain sale/leaseback transactions and modify certain material agreements. |
Borrowings under our Credit Facility bear interest at LIBOR plus an applicable margin or a base rate as defined in the respective credit agreements. Under the terms of the Credit Facility, the applicable margin under LIBOR borrowings was 2.5% and 3.3% at March 31, 2014 and 2013, respectively. The weighted-average interest rate for the three months ended March 31, 2014 and the three months ended March 31, 2013 was 4.6% and 3.5%, respectively. |
|
Under our Credit Facility, we have the ability to borrow up to $350.0 million less any letters of credit outstanding. As of March 31, 2014, our borrowings under the Credit Facility were $170.9 million, our letters of credit outstanding were $24.5 million and our remaining unused borrowings under the Credit Facility were $154.7 million. For the three months ended March 31, 2014 and 2013, our average outstanding borrowings were $192.4 million and $229.8 million, respectively, and for the three months ended March 31, 2014 and 2013, our maximum outstanding borrowings were $267.3 million and $246.0 million. |
|
The fair value of the debt funded through our Credit Facility approximates its carrying amount as of March 31, 2014 and December 31, 2013 due primarily to the variable nature of the interest rate of the instrument. |
|
Amendments to Credit Facility |
|
During the fourth quarter of 2012 and into the first quarter of 2013 we encountered operational challenges including the January 2013 fire at our Gregory facility and contractual disputes with a former third party processor. These items impacted our operating results adversely and resulted in the need to amend our Credit Facility with the First Amendment and the Second Amendment (as described below). Due to the benefits from an equity raise during the first quarter of 2014 and improved financial performance, we entered into the Third Amendment and the Fourth Amendment (as described below), respectively, which reverted certain terms of the Credit Facility back to the original terms. |
|
First Amendment to Credit Facility |
|
On March 27, 2013, we entered into the first amendment (the “First Amendment”) to the Credit Facility. As a result of the First Amendment, our available credit was reduced from $350.0 million to the sum of $250.0 million plus any amounts placed on deposit in a collateral account of our General Partner (the “Collateral Account”) and letters of credit outstanding. Amounts on deposit in the Collateral Account were pledged as collateral to the Credit Facility. Pursuant to the First Amendment, we were permitted to pay our quarterly cash distribution of available cash for the first quarter of 2013 regardless of whether we met certain financial covenants for the period ending March 31, 2013. Because the First Amendment did not modify our requirement to meet the financial covenants under the Credit Facility beginning March 31, 2013, and because we believed it was unlikely that we would be in compliance with our financial covenants for the quarter ending March 31, 2013, we further amended our Credit Facility as discussed below. In connection with the First Amendment, we incurred $0.6 million in fees, which were deferred and are being amortized over the remaining life of the Credit Facility. |
|
Second Amendment to Credit Facility |
|
On April 12, 2013, we entered into the limited waiver and second amendment (the “Second Amendment”) to the Credit Facility, which waived our defaults relating to financial covenants in the Credit Facility for the period ended March 31, 2013 and provided more favorable financial covenants until we provided notice under the Credit Facility that we have achieved a consolidated total leverage ratio (the “Target Leverage Ratio”) of 4.25 to 1.00 for one quarter or 4.50 to 1.00 for two consecutive quarters, calculated excluding the benefit of cash on deposit in the Collateral Account and any equity cure amounts (the “Target Leverage Test”). See the Fourth Amendment discussion below regarding the Target Leverage Test. Our available credit, excluding our letters of credit, continued to be subject to the availability limits described in the First Amendment. In connection with the Second Amendment, we incurred $1.5 million in fees, which were deferred and are being amortized over the remaining life of the Credit Facility. |
|
The Second Amendment provided for, among other things, the following: |
| | | | | | | |
• | established our letters of credit sublimit at $50.0 million; | | | | | | |
| | | | | | | |
• | until we achieved the Target Leverage Ratio: | | | | | | |
| | | | | | | |
• | an increase in our interest rate to LIBOR plus 4.50%; | | | | | | |
| | | | | | | |
• | a limit to our growth capital expenditures of $25.0 million for the last three quarters of 2013 and an additional $25.0 million for the subsequent 18-months ending June 30, 2015 (provided that if additional cash, as required under the Second Amendment, is placed in the Collateral Account, such expenditures could have been increased to $28.0 million for the remaining three quarters of 2013 and the subsequent 18-months ending June 30, 2015); | | | | | | |
| | | | | | | |
• | distributions to our unitholders were effectively limited to our established minimum quarterly distribution of $0.40 per unit; and | | | | | | |
| | | | | | | |
• | our ability to make acquisitions was limited; and | | | | | | |
| | | | | | | |
• | once we achieved the Target Leverage Ratio, we had the option to revert certain provisions of the Credit Facility back to the terms of our original Credit Facility (See Fourth Amendment to Credit Facility below). | | | | | | |
Third Amendment to Credit Facility |
On January 29, 2014, we entered into the Third Amendment (the “Third Amendment”) to our Credit Facility. |
Pursuant to the Third Amendment, we were able to (a) acquire a specified target entity or its assets, provided that, among other things, the aggregate consideration paid by us in connection with such acquisition did not exceed $40.0 million and (b) make certain capital expenditures with respect to the addition to our pipeline systems into Webb County, Texas (the “Webb Pipeline”). |
|
In addition, the Third Amendment decreased our Maximum Adjusted Consolidated Total Leverage Ratio (as defined in our Credit Facility) to 5.75 to 1.00 for the March 31, 2014 calculation period when we (a) received net cash proceeds in a specified amount pursuant to permitted equity offerings and (b) initiated construction of the Webb Pipeline in accordance with the terms of our Credit Facility. In connection with the Third Amendment, we incurred $0.1 million in fees, which were deferred and are being amortized over the remaining life of the Credit Facility. |
|
Fourth Amendment to Credit Facility |
On March 13, 2014, we entered into the Fourth Amendment (the “Fourth Amendment”) to the Credit Facility. Concurrently with the Fourth Amendment becoming effective, we exercised the Target Leverage Option established pursuant to the Second Amendment and satisfied a leverage ratio of less than 4.25 to 1.00 calculated on a pro forma basis for the debt outstanding, after the net proceeds from the equity issuance were used to pay off debt, and utilizing the Adjusted EBITDA, as provided in the Fourth Amendment, for the period ended December 31, 2013. An effect of us exercising the Target Leverage Option was the removal of the $250.0 million availability limit as provided for in the First Amendment and returning the availability under the Credit Facility to its original $350.0 million, less any letters of credit outstanding. |
Pursuant to the Fourth Amendment, all funds previously deposited in the Collateral Account were released from the liens and security interests and are no longer pledged as collateral securing our obligations under the Credit Facility. |
As a result of the Fourth Amendment and our exercise of the Target Leverage Option, certain other provisions of the Credit Facility reverted to the requirements and terms in effect before the Second Amendment. The effects of such reversion are that, among other things, (a) the Applicable Margin has been reset to the current applicable level in the pricing grid based on our pro forma Consolidated Total Leverage immediately upon closing of the Fourth Amendment, (b) the $25.0 million limit on growth capital expenditures for the 18-month period ending June 30, 2015 is no longer effective and (c) certain limitations on unit distributions imposed by the Second Amendment are no longer effective. In connection with the Fourth Amendment, we incurred $0.1 million in fees, which were deferred and are being amortized over the remaining life of the Credit Facility. |
|
Concurrently with the Fourth Amendment and as a result of our acquisition in March 2014, our maximum consolidated total leverage ratio was increased to 5.00 to 1.00 through September 30, 2014. |
|
The Credit Facility contains various covenants and restrictive provisions and also requires maintenance of certain financial and operational covenants including but not limited to the following: |
|
| | | | | | | |
• | beginning October 1, 2014 and prior to exercising a one-time covenant election in connection with the issuance of certain unsecured notes, a consolidated total leverage ratio (generally defined as debt to EBITDA, as adjusted) of not more than 4.50 to 1.00, and a consolidated interest coverage ratio of not less than 2.50 to 1.00. The requirement to maintain a certain consolidated total leverage ratio is subject to a provision for increases to 5.00 to 1.00 in connection with certain acquisitions; and | | | | | | |
|
| | | | | | | |
• | upon exercising a one-time covenant election in connection with the issuance of certain unsecured notes, a consolidated total leverage ratio of not more than 5.25 to 1.00, a consolidated senior secured leverage ratio of not more than 3.50 to 1.00 and a consolidated interest coverage ratio of not less than 2.50 to 1.00. | | | | | | |