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Item 1.01.
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Entry into a Material Definitive Agreement.
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Term Credit Agreement
On June 3, 2020, NGL Energy Partners LP (the “Partnership”) and its wholly owned subsidiary, NGL Energy Operating LLC, a Delaware limited liability company (the “Borrower”), entered into a Term Credit Agreement (the “Term Credit Agreement”) with Wilmington Trust, National Association, as administrative agent, and the financial institutions party thereto as lenders, that provides for a $250,000,000 term loan facility. The term loans will mature on June 3, 2023 and will be subject to customary mandatory prepayment events, including with the proceeds of certain asset sales and debt incurrences.
The obligations of Borrower under the Term Credit Agreement are guaranteed by the Partnership and certain of the Borrower’s wholly owned subsidiaries. The term loans will be secured by substantially all of the assets of the Borrower, the Partnership and the other subsidiary guarantors subject to certain customary exclusions.
All borrowings under the Term Credit Agreement bear interest at an adjusted LIBOR rate (based on the higher of one month and three month LIBOR) plus 8.00% per annum.
The Term Credit Agreement contains various customary representations, warranties and covenants by the Partnership and its subsidiaries, including, without limitation, (i) commencing June 30, 2020, the Partnership, the Borrower and the subsidiary guarantors will be subject to financial covenants limiting leverage, including senior secured leverage and total leverage, and requiring a minimum interest coverage, (ii) negative covenants limiting indebtedness, liens, investments, equity distributions, dispositions and fundamental changes and involving the Partnership or its subsidiaries and (iii) affirmative covenants requiring, among other things, reporting of financial information and material events and covenants to maintain existence and pay taxes, in each case substantially consistent with the Borrower’s existing revolving credit facility.
Substantially consistent with the Borrower’s existing revolving facility, the Partnership’s and its subsidiaries’ obligations under the Term Credit Agreement may be accelerated following certain events of default (subject to applicable cure periods), including, without limitation, (i) the failure to pay principal or interest when due, (ii) a breach by the Partnership or its subsidiaries of any material representation or warranty or any covenant made in the Term Credit Agreement or (iii) certain events of bankruptcy or insolvency.
The description of the Term Credit Agreement is qualified in its entirety by reference to the full text of the Term Credit Agreement, which is filed as Exhibit 10.1 hereto and is incorporated into this Item 1.01 by reference.