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| AHGP > SEC Filings for AHGP > Form 8-K on 1-Jul-2008 | All Recent SEC Filings |
1-Jul-2008
Entry into a Material Definitive Agreement, Creation of a Direct Finan
Issuance of Senior Notes
On June 26, 2008, Alliance Resource Operating Partners, L.P. (the "Intermediate Partnership"), a wholly-owned subsidiary of Alliance Resource Partners, L.P. ("ARLP"), entered into a Note Purchase Agreement (the "2008 Note Purchase Agreement") with various institutional purchasers under which the Intermediate Partnership issued $205 million aggregate principal amount of its Series A Senior Notes and $145 million aggregate principal amount of its Series B Senior Notes. Alliance Holdings GP, L.P. (the "Partnership") owns a 42.1% limited partner interest in ARLP and 100% of ARLP's managing general partner, which owns a 0.99% general partner interest in ARLP and ARLP's incentive distribution rights.
The Series A and Series B Senior Notes (collectively, the "2008 Senior Notes") are non-amortizing notes and bear interest at the rate of 6.28% per annum, in the case of the Series A Series Notes, and 6.72% per annum, in the case of the Series B Senior Notes. Interest on both the Series A and Series B Senior Notes is payable semi-annually, with principal due upon maturity. The Series A Senior Notes mature on June 26, 2015, and the Series B Senior Notes mature on June 26, 2018. The Intermediate Partnership has the option to prepay the 2008 Senior Notes at any time in whole or in part subject to terms and conditions (including a make-whole payment) described in the 2008 Note Purchase Agreement. Upon a "change in control" (as defined in the 2008 Note Purchase Agreement), the Intermediate Partnership must offer to prepay the 2008 Senior Notes at a price equal to the principal amount of the 2008 Senior Notes plus accrued interest, but without any make-whole payment.
The 2008 Note Purchase Agreement requires the Intermediate Partnership and its
subsidiaries' to maintain (i) a "consolidated debt" to "consolidated cash flow"
(as defined in the 2008 Note Purchase Agreement) ratio of not more than 3.5 to
1.0 (or, under certain limited circumstances and for a certain limited period of
time, 4.0 to 1.0) and (ii) a "consolidated cash flow" to "consolidated interest
expense" (as defined in the 2008 Note Purchase Agreement) ratio during the four
most recently ended fiscal quarters of not less than 3.5 to 1.0. The 2008 Note
Purchase Agreement contains certain other restrictive covenants that, among
other things, limit or restrict the Intermediate Partnership and its
subsidiaries' ability to incur indebtedness (in addition to the restrictions set
forth in the financial ratios described above), create liens on their assets,
enter into mergers or consolidations, transfer assets, make investments in other
persons or pay dividends. In addition, the 2008 Note Purchase Agreement requires
the Intermediate Partnership and its subsidiaries to comply with certain
affirmative covenants, including the requirement to keep under the control of
the Intermediate Partnership and its subsidiaries a certain minimum amount of
mineable tons of coal.
The 2008 Note Purchase Agreement contains customary provisions regarding events of default which would permit the holders of the 2008 Senior Notes to declare the 2008 Senior Notes to be immediately due and payable if not cured within applicable grace periods, including but not limited to failure to make timely payments on the 2008 Senior Notes or the failure to comply with covenants or representations in the 2008 Note Purchase Agreement.
The net proceeds from the offering of the 2008 Senior Notes will be used to repay a portion of the amounts outstanding under the Intermediate Partnership's revolving credit facility, to pay expenditures associated with the development of the Intermediate Partnership's River View Coal, LLC mining complex, to pay expenses associated with the offering of the 2008 Senior Notes and for other general working capital requirements.
A copy of the 2008 Note Purchase Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K.
Amendment to Prior Note Purchase Agreement
On June 26, 2008 and in conjunction with the issuance of the 2008 Senior Notes, the Intermediate Partnership entered into a First Amendment (the "First Amendment") to the Note Purchase Agreement, dated as of August 16, 1999 (the "1999 NPA"), under which the Intermediate Partnership (as successor in interest to Alliance Resource GP, LLC) has issued $180 million in original aggregate principal amount of its 8.31% Senior Notes (the "1999 Senior Notes") due August 20, 2014. The First Amendment was entered into primarily for the purpose of conforming the affirmative and negative covenants contained in Sections 9 and 10 of the 1999 NPA to the corresponding affirmative and negative covenants contained in the 2008 Note Purchase Agreement. The First Amendment did not change the amount due, interest rate, maturity date or interest payment dates applicable to the 1999 Senior Notes.
The First Amendment amends the financial ratios contained in Section 10.1 of the 1999 NPA to provide for (A) a ratio of "consolidated cash flow" to "consolidated interest expense" (as defined in the First Amendment) during the four most recently ended fiscal quarters of not less than 3.5 to 1.0 and (B) a ratio of "consolidated debt" to "consolidated cash flow" (as defined in the First Amendment) of not more than 3.5 to 1.0 (or, under certain limited circumstances and for a certain limited period of time, 4.0 to 1.0).
The First Amendment also:
(i) amends the 1999 NPA by requiring the Intermediate Partnership to offer to prepay the 1999 Senior Notes upon a "change in control" (as defined in the 1999 NPA) at a price equal to the principal amount of the 1999 Senior Notes plus accrued interest, but without any make-whole payment;
(ii) modifies certain of the affirmative covenants contained in Section 9 of the 1999 NPA, including the covenants relating to (A) the maintenance of insurance on its and its subsidiaries' properties and business, (B) the payment of taxes and (C) the maintenance of its legal existence and that of its subsidiaries;
The information set forth in Item 1.01 above under "Issuance of Senior Notes" is hereby incorporated by reference into this Item 2.03.
On June 26, 2008, the Intermediate Partnership entered into an amendment to its Second Amended and Restated Credit Agreement dated as of September 25, 2007, among the Intermediate Partnership, JPMorgan Chase Bank, N.A., as paying agent and co-administrative agent, Citicorp USA, Inc., as co-administrative agent, and the banks and other financial institutions a party thereto (the "Credit Agreement"). The amendment provides that, among other things, the subsidiaries of the Intermediate Partnership may guaranty additional indebtedness of the Intermediate Partnership that is permitted to be incurred by the Intermediate Partnership pursuant to the terms of the Credit Agreement.
A copy of the amendment to the Credit Agreement is attached as Exhibit 99.1 to this Current Report on Form 8-K. A copy of the Credit Agreement was filed on September 27, 2007 as Exhibit 99.1 to the Partnership's Current Report on Form 8-K.
10.1 Note Purchase Agreement, 6.28% Senior Notes Due June 26, 2015, and 6.72% Senior Notes due June 26, 2018, dated as of June 26, 2008, by and among Alliance Resource Operating Partners, L.P. and various investors.
10.2 First Amendment, dated as of June 26, 2008, to the Note Purchase Agreement, 8.31% Senior Notes due August 20, 2014, by and among Alliance Resource Operating Partners, L.P. (as successor to Alliance Resource GP, LLC) and various investors.
99.1 Letter Amendment No. 1, dated as of June 26, 2008, to the Second Amended and Restated Credit Agreement, dated as of September 25, 2007, among Alliance Resource Operating Partners, L.P. as Borrower, the Initial Lenders, Initial Issuing Banks and Swing Line Bank, in each case as named therein, JPMorgan Chase Bank, N.A. as Paying Agent,, Citicorp USA, Inc. and JPMorgan Chase Bank, N.A. as Co-Administrative Agents,, and Citigroup Global Markets Inc. and J.P. Morgan Securities, Inc. as Joint Lead Arrangers and Joint Bookrunners.
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