ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Credit
Agreement
On January 13, 2023, Alliance Coal, LLC ("Alliance Coal"), as
borrower, entered into a Credit Agreement (the "Credit Agreement")
with various financial institutions, including PNC Bank, National
Association as administrative agent (the "Administrative Agent").
Alliance Coal is a wholly-owned subsidiary of Alliance
Resource Partners, L.P. (the "Partnership"). The Credit
Agreement provides for a $425 million revolving credit facility,
including a sublimit of $15.0 million for swingline borrowings, and
permits the issuance of letters of credit of up to the full amount
of $425 million (the "Revolving Credit Facility"), and a term loan
in an aggregate principal amount of $75 million (the "Term Loan").
The Credit Agreement matures on March 9, 2027, at which time
the aggregate outstanding principal amount of all Revolving Credit
Facility advances and all Term Loan advances are required to be
repaid in full. The Credit Agreement will instead mature on
January 30, 2025, if on that date our 7.500% Senior Notes due May
1, 2025, or certain refinancings thereof, are still outstanding and
Alliance Coal does not on that date have liquidity of at least $200
million. Interest is payable no less frequently than
quarterly, with principal of the Term Loan due in quarterly
installments equal to 6.25% of the original principal amount of the
Term Loan beginning with the quarter ending June 30, 2023 and the
balance payable at maturity. The Credit Facility replaces the
$459.5 million revolving credit facility extended to Alliance
Resource Operating Partners, L.P. (“AROP”) under its Fifth Amended
and Restated Credit Agreement, dated as of March 9, 2020 that would
have expired on March 9, 2024.
The Credit Agreement is guaranteed by the Partnership, AROP, UC
Coal, LLC, UC Mining, LLC, UC Processing, LLC, MGP II, LLC and most
of Alliance Coal’s direct and indirect subsidiaries (the
"Subsidiary Guarantors"). The Credit Agreement is also
secured by the seven active coal mines and related support
facilities, substantially all the personal property of Alliance
Coal, the Subsidiary Guarantors, UC Coal, LLC, UC Mining, LLC and
UC Processing, LLC as well as the limited liability company
ownership interests in Alliance Coal, AROP Funding, LLC, and UC
Coal, LLC.
Borrowings under the Credit Agreement bear interest, at our option,
at either (i) an adjusted one-month, three-month or six-month term
rate based on the secured overnight financing rate published by the
Federal Reserve Bank of New York, plus the applicable margin or
(ii) the Base Rate (“Base Rate”) plus the applicable margin.
The Base Rate is the highest of (i) the Overnight Bank
Funding Rate plus 0.50%, (ii) the Administrative Agent’s prime
rate, and (iii) the Daily Simple SOFR plus 100 basis points.
The applicable margin for borrowings under the Credit
Agreement are determined by reference to the Consolidated Debt to
Consolidated Cash Flow Ratio (as such term is defined in the Credit
Agreement) of Alliance Coal as set forth below:
|
Consolidated Debt to
Consolidated Cash Flow Ratio
|
Base Rate Advances
|
Term SOFR Rate Advances / Daily SOFR
Advances
/ Letter of Credit Fees
|
|
Level I
Greater than or equal to 1.00:1.00
|
2.50%
|
3.50%
|
|
Level II
Less than 1.00:1.00 but greater than or equal to 0.50:1.00
|
2.25%
|
3.25%
|
|
Level III
Less than 0.50:1.00
|
2.00%
|
3.00%
|
The Credit Agreement also provides for other fees, including an
annual commitment fee of 0.50% on the undrawn portion of the
Revolving Credit Facility and a fee with respect to the available
amount under outstanding letters of credit.
The Credit Agreement contains various restrictions affecting
Alliance Coal and its subsidiaries, including, among other things,
restrictions on incurrence of additional indebtedness and liens,
sale of assets, investments, mergers and consolidations and
transactions with affiliates. In each case, these
restrictions are subject to various exceptions. In addition, the
restrictions apply to the payment of cash distributions if such
payment would result in a certain fixed charge coverage ratio (as
determined in the Credit Agreement) or in Alliance Coal having
liquidity of less than $200 million. The Credit