JP Morgan Chase Bank served as issuing lender, joint lead arranger, joint bookrunner and the collateral and administrative agent on a $500 million asset-based revolving credit facility for NGL Energy Partners. The facility will be used to refinance existing debt.
Royal Bank of Canada and Barclays Bank also served as joint lead arrangers, joint bookrunners and lenders on the facility. TD Bank and Wells Fargo Bank are also issuing lenders, with Paul Hastings acting as legal advisor to NGL Energy Partners and Simpson Thacher & Bartlett acting as counsel to the bank group. Intrepid Partners served as an advisor to NGL Energy Partners.
The borrowings under the facility will be used to repay all outstanding amounts under NGL Energy Partners’ existing $1.915 billion revolving credit facility and to repay its $250 million term credit facility. NGL Energy Partners currently has approximately $340 million in availability under the ABL facility, net of all currently outstanding borrowings and letters of credit.
In connection with the refinancing, the partnership agreed to certain restricted payment provisions under the facility. One of these provisions requires NGL Energy Partners to temporarily suspend the quarterly common unit distribution beginning with respect to the quarter ended Dec. 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 NGL Energy Partners’ balance sheet and increase its liquidity.
“This refinancing of our credit facility meaningfully extends our debt maturities and provides a significant improvement in our liquidity,” Mike Krimbill, CEO of NGL Energy Partners, said. “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.”
NGL Energy Partners. a Delaware limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports. The company also treats and disposes of produced water generated as part of the oil and natural gas production process.