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Debt
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Debt

Note 8. DEBT

Our balances for long-term debt and finance lease obligations were as follows (in thousands):

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

CAPL Credit Facility

 

$

636,728

 

 

$

513,180

 

JKM Credit Facility

 

 

159,950

 

 

 

—

 

Finance lease obligations

 

 

17,736

 

 

 

20,007

 

Total debt and finance lease obligations

 

 

814,414

 

 

 

533,187

 

Current portion

 

 

9,923

 

 

 

2,631

 

Noncurrent portion

 

 

804,491

 

 

 

530,556

 

Deferred financing costs, net

 

 

8,865

 

 

 

3,257

 

Noncurrent portion, net of deferred financing costs

 

$

795,626

 

 

$

527,299

 

 

As of September 30, 2021, future principal payments on debt and future minimum rental payments on finance lease obligations were as follows (in thousands):

 

 

Debt

 

 

Finance Lease Obligations

 

 

Total

 

Remaining in 2021

 

$

—

 

 

$

804

 

 

$

804

 

2022

 

 

9,597

 

 

 

3,282

 

 

 

12,879

 

2023

 

 

9,597

 

 

 

3,381

 

 

 

12,978

 

2024

 

 

646,325

 

 

 

3,481

 

 

 

649,806

 

2025

 

 

9,597

 

 

 

3,583

 

 

 

13,180

 

Thereafter

 

 

121,562

 

 

 

4,926

 

 

 

126,488

 

Total future payments

 

 

796,678

 

 

 

19,457

 

 

 

816,135

 

Less interest component

 

 

—

 

 

 

1,721

 

 

 

1,721

 

 

 

 

796,678

 

 

 

17,736

 

 

 

814,414

 

Current portion

 

 

7,198

 

 

 

2,725

 

 

 

9,923

 

Long-term portion

 

$

789,480

 

 

$

15,011

 

 

$

804,491

 

 

CAPL Credit Facility

On July 28, 2021, the Partnership entered into an amendment (the “Amendment”) to its Credit Agreement, dated as of April 1, 2019 (as previously amended by the First Amendment to Credit Agreement, dated as of November 19, 2019, the “CAPL Credit Facility”), among the Partnership and Lehigh Gas Wholesale Services, Inc., as borrowers, the guarantors from time to time party thereto, the lenders from time to time party thereto and Citizens Bank, N.A., as administrative agent. The Amendment, among other things, (i) amended certain provisions relating to unrestricted subsidiaries, (ii) increased the maximum level for the consolidated leverage ratio financial covenant to 6.00 to 1.00 for the fiscal quarters ending September 30, 2021 and December 31, 2021, 5.75 to 1.00 for the fiscal quarter ending March 31, 2022, 5.50 to 1.00 for the fiscal quarter ending June 30, 2022, and 5.25 to 1.00 for the fiscal quarter ending September 30, 2022, after which the maximum level generally reverts to 4.75 to 1.00 unless in a specified acquisition period or a qualified note offering has occurred, and (iii) modified the applicable margin for borrowings under the CAPL Credit Facility (as amended by the Amendment), such that borrowings will bear interest, at the Partnership’s option, at either LIBOR plus a margin ranging from 1.50% to 3.00% per annum or a base rate plus a margin ranging from 0.50% to 2.00% per annum (in each case depending on the Partnership’s consolidated leverage ratio). 

We are also required to maintain a consolidated interest coverage ratio (as defined in the CAPL Credit Facility) of at least 2.50 to 1.00. We were in compliance with our financial covenants at September 30, 2021.

Our CAPL Credit Facility is secured by substantially all of our assets, including our equity interest in an indirect wholly-owned subsidiary of CrossAmerica and the sole member of CAPL JKM Partners LLC named CAPL JKM Holdings LLC (“Holdings”), other than the assets of unrestricted subsidiaries designated as such under the CAPL Credit Facility. Holdings and its subsidiaries are unrestricted subsidiaries under the CAPL Credit Facility. Letters of credit outstanding at September 30, 2021 and December 31, 2020 totaled $4.0 million. The amount of availability under the CAPL Credit Facility at September 30, 2021, after taking into consideration debt covenant restrictions, was $70.5 million.

Taking the interest rate swap contracts described in Note 9 into account, our effective interest rate on our CAPL Credit Facility at September 30, 2021 was 2.3% (our applicable margin was 2.0% as of September 30, 2021).  

JKM Credit Facility

 

On July 16, 2021, CAPL JKM Partners LLC (“Borrower”), an indirect wholly-owned subsidiary of CrossAmerica, entered into a Credit Agreement, as amended on July 29, 2021 (the “JKM Credit Facility”) among Borrower, Holdings, Borrower, and Manufacturers and Traders Trust Company, as administrative agent, swingline lender and issuing bank.

 

The JKM Credit Facility provides for a $200 million senior secured credit facility, consisting of a $185 million delayed draw term loan facility (the “Term Loan Facility”) and a $15 million revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility permits up to $7.5 million of swingline borrowings and $5.0 million in letters of credit. The interest rate applicable to loans outstanding under the JKM Credit Facility is equal to, at Borrower’s option, either (i) a base rate plus a margin (which will be determined based on Borrower’s consolidated leverage ratio) ranging from 0.50% to 1.50% per annum or (ii) LIBOR plus a margin (which will also be determined based on Borrower’s consolidated leverage ratio) ranging from 1.50% to 2.50% per annum. Commencing on the earliest of (a) the date on which the entire amount of the Term Loan Facility has been drawn, (b) the date on which the Term Loan Facility has been terminated or reduced to zero pursuant to the JKM Credit Facility, and (c) April 16, 2022, the Term Loan Facility will amortize in equal quarterly installments equal to 1.50% of the unpaid principal amount of the Term Loan Facility, with the balance payable on the maturity date of the Term Loan Facility. Letters of credit are subject to a 0.125% fronting fee and other customary administrative charges. Standby letters of credit accrue a fee at a rate based on the applicable margin of LIBOR loans. In addition, beginning in October 2021, a commitment fee was charged based on the unused portion of the JKM Credit Facility at a rate ranging from 0.25% to 0.375% per annum depending on Borrower’s consolidated leverage ratio. The JKM Credit Facility will mature on July 16, 2026. 

 

The obligations under the JKM Credit Facility are guaranteed by Holdings and its subsidiaries (other than Borrower) and secured by a lien on substantially all of the assets of Holdings and its subsidiaries (including Borrower). The obligations under the JKM Credit Facility are nonrecourse to CrossAmerica and its subsidiaries other than Holdings, Borrower and their respective subsidiaries.

 

The JKM Credit Facility contains customary events of default and covenants, including, among other things, and subject to certain exceptions, covenants that restrict the ability of Holdings and its subsidiaries to create or incur liens on assets, make investments, incur additional indebtedness, merge or consolidate and dispose of assets.

 

The JKM Credit Facility also contains financial covenants requiring Borrower to comply with, as of the last day of each fiscal quarter of Borrower, commencing with Borrower’s fiscal quarter ending December 31, 2021, (i) a maximum consolidated leverage ratio of 6.25 to 1.00, with step-downs to 6.00 to 1.00, 5.75 to 1.00, 5.50 to 1.00 and 5.25 to 1.00 on March 31, 2022, March 31, 2023, March 31, 2024 and March 31, 2025, respectively, and (ii) a minimum fixed charge coverage ratio of 1.10 to 1.00.

 

If an event of default under the JKM Credit Facility occurs and is continuing, the commitments thereunder may be terminated and the principal amount outstanding thereunder, together with all accrued unpaid interest and other amounts owed thereunder, may be declared immediately due and payable.

 

Letters of credit outstanding at September 30, 2021 totaled $0.8 million. 

 

Our borrowings under the JKM Credit Facility had a weighted-average interest rate of 2.6% as of September 30, 2021 (LIBOR plus an applicable margin, which was 2.5% as of September 30, 2021).

As of November 4, 2021, we had $182.5 million outstanding under our Term Loan Facility. The amount of availability under the Term Loan Facility and Revolving Credit Facility at November 4, 2021 was $2.5 million and $14.2 million, respectively.