DEBT | 8. DEBT Debt for the Partnership at June 30, 2022 and December 31, 2021, follows: June 30, 2022 December 31, 2021 (In thousands) ABL Facility : Summit Holdings' asset based credit facility due May 1, 2026 $ 151,000 $ 267,000 Permian Transmission Credit Facility : Permian Transmission's variable rate senior secured credit facility due March 8, 2028 — 160,000 Permian Transmission Term Loan : Permian Transmission's variable rate senior secured term loan due March 8, 2028 157,758 — 2025 Senior Notes : Summit Holdings' 5.75% senior unsecured notes due April 15, 2025 259,463 259,463 2026 Secured Notes : Summit Holdings' and Finance Corp's 8.50% senior unsecured notes due October 15, 2026 700,000 700,000 Less: unamortized debt discount and debt issuance costs (28,183) (31,391) Total debt 1,240,038 1,355,072 Less: current portion (7,526) — Total long-term debt $ 1,232,512 $ 1,355,072 ABL Facility. On November 2, 2021, the Partnership, the Partnership’s subsidiary, Summit Holdings, and the subsidiaries of Summit Holdings party thereto entered into a first-lien, senior secured credit facility, consisting of a $400.0 million asset-based revolving credit facility (the “ABL Facility”), subject to a borrowing base comprised of a percentage of eligible accounts receivable of Summit Holdings and its subsidiaries that guarantee the ABL Facility (collectively, the “ABL Facility Subsidiary Guarantors”) and a percentage of eligible above-ground fixed assets including eligible compression units, processing plants, compression stations and related equipment of Summit Holdings and the ABL Facility Subsidiary Guarantors. As of June 30, 2022, the most recent borrowing base determination of eligible assets totaled $584.5 million, an amount greater than the $400.0 million of aggregate commitments. The ABL Facility will mature on May 1, 2026; provided that, (a) if the outstanding amount of the 2025 Senior Notes (or any permitted refinancing indebtedness in respect thereof that has a final maturity, scheduled amortization or any other scheduled repayment, mandatory prepayment, mandatory redemption or sinking fund obligation prior to the date that is 120 days after the Termination Date (as defined in the ABL Agreement)) on such date equals or exceeds $50,000,000, then the ABL Facility will mature on December 13, 2024 and (b) if both (i) any amount of the 2025 Senior Notes (or any permitted refinancing indebtedness in respect thereof that has a final maturity, scheduled amortization or any other scheduled repayment, mandatory prepayment, mandatory redemption or sinking fund obligation prior to the date that is 120 days after the Termination Date) is outstanding on such date and (ii) Liquidity (as defined in the ABL Agreement) is less than an amount equal to the sum of the then aggregate outstanding principal amount of the 2025 Senior Notes (or any permitted refinancing indebtedness in respect thereof that has a final maturity, scheduled amortization or any other scheduled repayment, mandatory prepayment, mandatory redemption or sinking fund obligation prior to the date that is 120 days after the Termination Date) plus the Threshold Amount (as defined in the ABL Agreement) on such date, then the ABL Facility will mature on January 14, 2025. As of June 30, 2022, the applicable margin under the adjusted LIBOR borrowings was 3.25%, the interest rate was 4.375% and the available borrowing capacity of the ABL Facility totaled $243.1 million after giving effect to the issuance of $5.9 million in outstanding but undrawn irrevocable standby letters of credit. The ABL Facility requires that Summit Holdings not permit (i) the First Lien Net Leverage Ratio (as defined in the ABL Agreement) as of the last day of any fiscal quarter to be greater than 2.50:1.00, or (ii) the Interest Coverage Ratio (as defined in the ABL Agreement) as of the last day of any fiscal quarter to be less than 2.00:1.00. As of June 30, 2022, the First Lien Net Leverage Ratio was 0.64:1.00 and the Interest Coverage Ratio was 2.73:1.00 As of June 30, 2022, the Partnership was in compliance with the financial covenants of the ABL Facility. Permian Transmission Credit Facility. On March 8, 2021 (the “Permian Closing Date”), the Partnership’s unrestricted subsidiary, Permian Transmission, entered into a Credit Agreement which provided for $175.0 million of senior secured credit facilities (the “Permian Transmission Credit Facilities”), including a $160.0 million Term Loan Facility and a $15.0 million Working Capital Facility. Borrowings from the Permian Transmission Credit Facilities were used to finance Permian Transmission’s capital calls associated with its investment in Double E. In January 2022, in accordance with the terms of Permian Transmission Credit Facilities, the Partnership converted the $160.0 million portion of the Permian Transmission Credit Facilities into a term loan facility (the “Permian Term Loan Facility”). As of June 30, 2022, the applicable margin under adjusted LIBOR borrowings was 2.375%, the interest rate was 3.4% and the available borrowing capacity of the Permian Transmission Credit Facility totaled $7.5 million, subject to a commitment fee of 0.7% after giving effect to the issuance of $7.5 million in outstanding but undrawn irrevocable standby letters of credit and surety bonds. As of June 30, 2022, the Partnership was in compliance with the financial covenants of the Permian Transmission Credit Facility. Permian Transmission Term Loan. As described above, in January 2022, the Permian Transmission Term Loan Facility was converted into a Term Loan (the “Permian Transmission Term Loan”). The Permian Transmission Term Loan is due on May 8, 2028. As of June 30, 2022, the applicable margin under adjusted LIBOR borrowings was 2.375% and the interest rate was 3.4%. As of June 30, 2022, the Partnership was in compliance with the financial covenants governing the Permian Transmission Term Loan. In accordance with the terms of the Permian Transmission Term Loan, Permian Transmission is required to make mandatory principal repayments. Below is a summary of the remaining mandatory principal repayments as of June 30, 2022: (In thousands) Total 2022 2023 2024 2025 2026 Thereafter Amortizing principal repayments $ 157,758 $ 2,405 $ 10,507 $ 15,524 $ 16,580 $ 16,967 $ 95,775 2026 Secured Notes. In November 2021, the Co-Issuers issued the 2026 Secured Notes. The 2026 Secured Notes are senior secured second lien notes due 2026. The 2026 Secured Notes will pay interest semi-annually in cash in arrears on April 15 and October 15 of each year, commencing on April 15, 2022, and will be jointly and severally guaranteed, on a senior second-priority secured basis (subject to permitted liens), by the Partnership and each restricted subsidiary of the Partnership (other than the Co-Issuers) that is an obligor under the ABL Agreement, or under the Co-Issuers’ 2025 Senior Notes on the issue date of the 2026 Secured Notes. The 2026 Secured Notes are effectively subordinated to any of our or the guarantors’ current and future secured first lien indebtedness, including indebtedness incurred under the ABL Facility, to the extent of the value of the collateral securing such indebtedness, and our and the guarantors’ current and future debt that is secured by liens on assets other than the collateral, to the extent of the value of such assets. The 2026 Secured Notes are structurally subordinated to all indebtedness and other liabilities of our subsidiaries that do not guarantee the 2026 Secured Notes. The 2026 Secured Notes are effectively equal to our and the guarantors’ obligations under any future second lien indebtedness and effectively senior to all of our future junior lien indebtedness and existing and future unsecured indebtedness, including our outstanding senior unsecured notes, to the extent of the value of the collateral, and senior to any of our future subordinated indebtedness. The 2026 Secured Notes will mature on October 15, 2026. Before October 15, 2023, the Co-Issuers may redeem the 2026 Secured Notes, in whole or in part, at a price equal to 100% of their principal amount, plus a make-whole premium, together with accrued and unpaid interest to, but not including the redemption date. On and after October 15, 2023, the Co-Issuers may redeem all or part of the 2026 Secured Notes at redemption prices (expressed as percentages of principal amount) equal to: (a) 104.250% for the twelve-month period beginning October 15, 2023; (b) 102.125% for the twelve-month period beginning October 15, 2024; and (c) 100.000% for the twelve-month period beginning on October 15, 2025 and at any time thereafter, in each case plus accrued and unpaid interest, if any, to, but not including, the redemption date. As of June 30, 2022, the Partnership was in compliance with the financial covenants governing its 2026 Secured Notes. 2025 Senior Notes. In February 2017, the Co-Issuers co-issued the 2025 Senior Notes. The 2025 Senior Notes will pay interest semi-annually in cash in arrears on April 15 and October 15 of each year. The 2025 Senior Notes are senior, unsecured obligations and rank equally in right of payment with all of the Partnership’s existing and future senior obligations. The 2025 Senior Notes are effectively subordinated in right of payment to all of the Partnership’s secured indebtedness, to the extent of the collateral securing such indebtedness. The Co-Issuers have the right to redeem all or part of the 2025 Senior Notes at a redemption price of 101.438% (with the redemption price declining to 100.00% on April 15, 2023 and thereafter), plus accrued and unpaid interest, if any, to, but not including the redemption date. As of June 30, 2022, the Partnership was in compliance with the financial covenants governing its 2025 Senior Notes. |