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Long-Term Debt | 9 Months Ended
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Sep. 30, 2017
Debt Disclosure [Abstract] |
Long-Term Debt | 7. Long-Term Debt Long-term debt consisted of the following (in thousands):
| September 30, 2017 |  | December 31, 2016
Revolving credit facility due November 2020 | $ | 75,500 |  |  | $ | 99,000 |
Partnership’s revolving credit facility due March 2022 | 631,500 |  |  | — |
Partnership’s revolving credit facility due May 2018 | — |  |  | 509,500 |
Partnership’s term loan facility due May 2018 | — |  |  | 150,000 |
Less: Deferred financing costs, net of amortization | — |  |  | (353 | )
| — |  |  | 149,647 |
Partnership’s 6% senior notes due April 2021 | 350,000 |  |  | 350,000 |
Less: Debt discount, net of amortization | (2,700 | ) |  | (3,213 | )
Less: Deferred financing costs, net of amortization | (3,595 | ) |  | (4,366 | )
| 343,705 |  |  | 342,421 |
Partnership’s 6% senior notes due October 2022 | 350,000 |  |  | 350,000 |
Less: Debt discount, net of amortization | (3,603 | ) |  | (4,076 | )
Less: Deferred financing costs, net of amortization | (4,155 | ) |  | (4,768 | )
| 342,242 |  |  | 341,156 |
Long-term debt | $ | 1,392,947 |  |  | $ | 1,441,724 |
Archrock Revolving Credit Facility In October 2015, in connection with the Spin-off, we entered into the Credit Facility, a five-year, $350 million revolving credit facility and in November 2015, we terminated our former credit facility. The Credit Facility will mature in November 2020. As of September 30, 2017, we had $75.5 million in outstanding borrowings, $15.1 million in outstanding letters of credit and undrawn capacity of $259.4 million under the Credit Facility. Our Credit Facility limits our Total Debt to EBITDA ratio (as defined in the Credit Facility) to not greater than 4.25 to 1.0. As a result of this limitation, $156.5 million of the $259.4 million undrawn capacity under the Credit Facility was available for additional borrowings as of September 30, 2017. At September 30, 2017, the applicable margin on amounts outstanding was 1.75%. We are required to pay commitment fees based on the daily unused amount of the Credit Facility in an amount, depending on our leverage ratio, ranging from 0.25% to 0.50%. We incurred $0.2 million in commitment fees on the daily unused amount of the Credit Facility during each of the three months ended September 30, 2017 and 2016, and $0.5 million and $0.4 million during the nine months ended September 30, 2017 and 2016, respectively. The Partnership Asset-Based Revolving Credit Facility On March 30, 2017, the Partnership entered into the Partnership Credit Facility, a five-year, $1.1 billion asset-based revolving credit facility. The Partnership Credit Facility will mature on March 30, 2022, except that if any portion of the Partnership’s 6% senior notes due April 2021 are outstanding as of December 2, 2020, then the Partnership Credit Facility will instead mature on December 2, 2020. The Partnership incurred $14.9 million in transaction costs related to the Partnership Credit Facility, which were included in other long-term assets in our condensed consolidated balance sheets and will be amortized over the term of the Partnership Credit Facility. Concurrent with entering into the Partnership Credit Facility, the Partnership terminated its Former Credit Facility and repaid $648.4 million in borrowings and accrued and unpaid interest and fees outstanding. All commitments under the Former Credit Facility have been terminated. As a result of the termination, we expensed $0.6 million of unamortized deferred financing costs associated with the $825.0 million revolving credit facility, which was included in interest expense in our condensed consolidated statements of operations. Additionally, we recorded a loss of $0.3 million related to the extinguishment of the $150.0 million term loan. As of September 30, 2017, the Partnership had $631.5 million in outstanding borrowings and no outstanding letters of credit under the Partnership Credit Facility. Subject to certain conditions, including the approval by the lenders, the Partnership is able to increase the aggregate commitments under the Partnership Credit Facility by up to an additional $250.0 million. Portions of the Partnership Credit Facility up to $25.0 million and $50.0 million will be available for the issuance of letters of credit and swing line loans, respectively. The Partnership Credit Facility bears interest at a base rate or LIBOR, at the Partnership’s option, plus an applicable margin. Depending on the Partnership’s leverage ratio, the applicable margin varies (i) in the case of LIBOR loans, from 2.00% to 3.25% and (ii) in the case of base rate loans, from 1.00% to 2.25%. The base rate is the highest of (i) the prime rate announced by JPMorgan Chase Bank, (ii) the Federal Funds Effective Rate plus 0.50% and (iii) one-month LIBOR plus 1.00%. At September 30, 2017, the applicable margin on amounts outstanding was 3.24%. Additionally, the Partnership is required to pay commitment fees based on the daily unused amount of the Credit Facility in an amount, depending on its leverage ratio, ranging from 0.375% to 0.50%. The Partnership incurred $0.6 million and $0.3 million in commitment fees on the daily unused amount of the Partnership Credit Facility and the former $825.0 million revolving credit facility during the three months ended September 30, 2017 and 2016, respectively, and $1.5 million and $1.0 million during the nine months ended September 30, 2017 and 2016, respectively. The Credit Facility borrowing base consists of eligible accounts receivable, inventory and compressor units. The largest component is eligible compressor units. Borrowings under the Partnership Credit Facility are secured by substantially all of the personal property assets of the Partnership and its Significant Domestic Subsidiaries (as defined in the Partnership Credit Facility agreement), including all of the membership interests of the Partnership’s Domestic Subsidiaries (as defined in the Partnership Credit Facility agreement). The Partnership Credit Facility agreement contains various covenants including, but not limited to, restrictions on the use of proceeds from borrowings and limitations on the Partnership’s ability to incur additional indebtedness, engage in transactions with affiliates, merge or consolidate, sell assets, make certain investments and acquisitions, make loans, grant liens, repurchase equity and pay distributions. The Partnership Credit Facility agreement also contains various covenants requiring mandatory prepayments from the net cash proceeds of certain asset transfers. In addition, if as of any date the Partnership has cash and cash equivalents (other than proceeds from a debt or equity issuance received in the 30 days prior to such date reasonably expected to be used to fund an acquisition permitted under the Partnership Credit Facility agreement) in excess of $50.0 million, then such excess amount will be used to pay down outstanding borrowings of a corresponding amount under the Partnership Credit Facility. The Partnership must maintain the following consolidated financial ratios, as defined in the Partnership Credit Facility agreement:
EBITDA to Interest Expense | 2.5 to 1.0
Senior Secured Debt to EBITDA | 3.5 to 1.0
Total Debt to EBITDA |
Through fiscal year 2017 | 5.95 to 1.0
Through fiscal year 2018 | 5.75 to 1.0
Through second quarter of 2019 | 5.50 to 1.0
Thereafter (1) | 5.25 to 1.0
(1) | Subject to a temporary increase to 5.5 to 1.0 for any quarter during which an acquisition meeting certain thresholds is completed and for the following two quarters after the quarter in which the acquisition closes.
As of September 30, 2017, the Partnership had undrawn capacity of $468.5 million under the Partnership Credit Facility. As a result of the financial ratio requirements discussed above, $213.6 million of the $468.5 million of undrawn capacity was available for additional borrowings as of September 30, 2017. A material adverse effect on the Partnership’s assets, liabilities, financial condition, business or operations that, taken as a whole, impacts its ability to perform its obligations under the Partnership Credit Facility agreement, could lead to a default under that agreement. A default under one of the Partnership’s debt agreements would trigger cross-default provisions under the Partnership’s other debt agreements, which would accelerate its obligation to repay its indebtedness under those agreements. As of September 30, 2017, the Partnership was in compliance with all financial covenants under the Partnership Credit Facility agreement.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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