NGL Energy Partners closed on $2.05 billion of newly issued 7.5% senior secured notes due 2026 and a new $500 million asset-based revolving credit facility which also matures in 2026. The proceeds from the 2026 Secured Notes and borrowings under the ABL Facility will be used to repay all outstanding amounts under the Partnership’s existing $1.915 billion revolving credit facility and repay its $250 million term credit facility, along with all fees and expenses associated with any of these repayments and the issuance of the 2026 Secured Notes and the ABL Facility. The Partnership currently has approximately $340 million in availability under the ABL Facility, net of all currently outstanding borrowings and letters of credit.
JP Morgan Chase Bank, N.A. is an Issuing Lender, Joint Lead Arranger, Joint Bookrunner and the Collateral and Administrative Agent for the ABL Facility. Royal Bank of Canada and Barclays Bank PLC are also Joint Lead Arrangers, Joint Bookrunners and Lenders for the ABL Facility. The Toronto-Dominion Bank, New York Branch, and Wells Fargo Bank, National Association are Issuing Lenders under the ABL Facility. Paul Hastings LLP was legal advisor to the Partnership and Simpson Thacher & Bartlett LLP was counsel to the bank group. Intrepid Partners, LLC served as an advisor to the Partnership.
In connection with the refinancing, the Partnership agreed to certain restricted payment provisions under the 2026 Notes and the ABL Facility. One of these provisions requires NGL to temporarily suspend the quarterly common unit distribution beginning with respect to the quarter ended December 31, 2020, as well as distributions on all of the Partnership’s preferred units, until the total leverage ratio falls below 4.75x. The cash savings from this suspension should accelerate the deleveraging of the Partnership’s balance sheet and increase NGL’s liquidity, thereby creating more financial flexibility for the Partnership going forward.
“This refinancing of our credit facility meaningfully extends our debt maturities and provides a significant improvement in our liquidity,” stated Mike Krimbill, NGL’s CEO. “This structure also gives the Partnership additional flexibility once our leverage has been reduced and eliminates certain financial covenants. Our Board of Directors expects to evaluate a reinstatement of the common and preferred distributions in due course, taking into account a number of important factors, including our debt leverage, our liquidity, the sustainability of our cash flows, upcoming debt maturities, capital expenditures and the overall performance of our businesses.”