ITEM 8.01
Other Events
Indenture
On April 24, 2017, in connection with the previously announced offering of $400 million in aggregate principal amount of senior unsecured notes due 2025 in a private placement to eligible purchasers (the “Offering”), Alliance Resource Operating Partners, L.P. ("AROP"), a subsidiary of Alliance Resource Partners, L.P. ("ARLP") 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 Wells Fargo Bank, National Association, as trustee (“Wells Fargo”). The Notes are guaranteed (the “Guarantees”), jointly and severally, on a senior unsecured basis by ARLP and by AROP’s existing subsidiaries other than AROP Funding, LLC, Wildcat Insurance, LLC and Matrix Design Africa (PTY) LTD (collectively, the “Guarantors”).
On April 24, 2017, the 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 April 24, 2017 at the rate of 7.5% per year. Interest on the Notes will be payable semi-annually in arrears on each May 1 and November 1, commencing on November 1, 2017.
The net proceeds from the Offering of the Notes and the Guarantees will be used to repay AROP’s outstanding Series B senior notes due 2018, the term loan outstanding under AROP’s credit facility and a portion of the existing revolving borrowings under AROP’s credit facility.
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 May 1, 2020, the Issuers may redeem up to 35% of the aggregate principal amount of the Notes at a redemption price equal to 107.5% of the principal amount redeemed, plus accrued and unpaid interest, if any, to 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 May 1, 2020, 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 May 1, 2020, 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 the redemption date.
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