Sprague Resources LP - 10-K filing on 2017-03-10

Debt

12 Months Ended

Dec. 31, 2016



11.	Credit Agreement



	As of December 31,
	2016			2015
Working capital facilities	$	310,336		$	332,500
Acquisition facility	245,400			283,400
Total credit agreement	555,736			615,900
Less: current portion of working capital facilities	(153,603		)	(332,500		)
Total long-term portion	$	402,133		$	283,400

On December 9, 2014, OLLC entered into an amended and restated revolving credit agreement, which was subsequently amended on March 10, 2016 (as amended the “Credit Agreement”) that matures on December 9, 2019. Obligations under the Credit Agreement are secured by substantially all of the assets of the Partnership and its subsidiaries. The revolving credit facilities under the Credit Agreement contain, among other items, the following:


•	A U.S. dollar revolving working capital facility of up to $1.0 billion to be used for working capital loans and letters of credit in the principal amount equal to the lesser of Sprague’s borrowing base and $1.0 billion;


•	A multicurrency revolving working capital facility of up to $120.0 million to be used by Sprague’s Canadian subsidiaries for working capital loans and letters of credit in the principal amount equal to the lesser of Kildair’ s borrowing base and $120.0 million.


•	A revolving acquisition facility of up to $550.0 million to be used for loans and letters of credit to fund capital expenditures and acquisitions and other general corporate purposes related to Sprague’s current businesses; and,


•	Subject to certain conditions, the U.S. dollar or multicurrency revolving working capital facilities may be increased by $200.0 million. Additionally, subject to certain conditions, the revolving acquisition facility may be increased by $200.0 million.

Indebtedness under the Credit Agreement will bear interest, at the Partnership’s option, at a rate per annum equal to either the Eurocurrency Base Rate (which is the LIBOR Rate for loans denominated in U.S. dollars and CDOR for loans denominated in Canadian dollars, in each case adjusted for certain regulatory costs) for interest periods of one, two, three or six months plus a specified margin or an alternate rate plus a specified margin.

For the U.S. dollar working capital facility and the acquisition facility, the alternate rate is the Base Rate which is the higher of (a) the U.S. Prime Rate as in effect from time to time, (b) the Federal Funds rate as in effect from time to time plus 0.50% and (c) the one-month Eurocurrency Rate for U.S. dollars as in effect from time to time plus 1.00%.

For the Canadian dollar working capital facility, the alternate rate is the Prime Rate which is the higher of (a) the Canadian Prime Rate as in effect from time to time and (b) the one-month Eurocurrency Rate for U.S. dollars as in effect from time to time plus 1.00%.

The working capital facilities are subject to borrowing base reporting and as of December 31, 2016 and 2015, had a borrowing base of $525.4 million and $542.6 million, respectively. As of December 31, 2016 and 2015, outstanding letters of credit were $31.6 million and $23.6 million, respectively. As of December 31, 2016, excess availability under the working capital facility was $183.5 million and excess availability under the acquisition facility was $304.6 million.

The weighted average interest rate was 3.4% and 2.9% at December 31, 2016 and 2015, respectively. No amounts are due under the Credit Agreement until the maturity date, however, the current portion of the credit agreement at December 31, 2016 and 2015 represents the amounts intended to be repaid during the following twelve month period.

The Credit Agreement contains certain restrictions and covenants among which are a minimum level of net working capital, fixed charge coverage and debt leverage ratios and limitations on the incurrence of indebtedness. The Credit Agreement limits the Partnership’s ability to make distributions in the event of defaults as defined in the Credit Agreement. As of December 31, 2016, the Partnership is in compliance with these covenants.