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Debt
 6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
Debt

Note 7. DEBT

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

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

CAPL Credit Facility

 

$

761,491

 

 

$

606,137

 

JKM Credit Facility

 

 

—

 

 

 

158,980

 

Finance lease obligations

 

 

12,537

 

 

 

13,954

 

Total debt and finance lease obligations

 

 

774,028

 

 

 

779,071

 

Current portion

 

 

2,985

 

 

 

11,151

 

Noncurrent portion

 

 

771,043

 

 

 

767,920

 

Deferred financing costs, net

 

 

10,979

 

 

 

6,282

 

Noncurrent portion, net of deferred financing costs

 

$

760,064

 

 

$

761,638

 

 

 

As of June 30, 2023, 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 2023

 

 

—

 

 

 

1,665

 

 

 

1,665

 

2024

 

 

—

 

 

 

3,396

 

 

 

3,396

 

2025

 

 

—

 

 

 

3,495

 

 

 

3,495

 

2026

 

 

—

 

 

 

3,596

 

 

 

3,596

 

2027

 

 

—

 

 

 

1,211

 

 

 

1,211

 

2028

 

 

761,491

 

 

 

—

 

 

 

761,491

 

Total future payments

 

 

761,491

 

 

 

13,363

 

 

 

774,854

 

Less impact of discounting

 

 

—

 

 

 

826

 

 

 

826

 

 

 

 

761,491

 

 

 

12,537

 

 

 

774,028

 

Current portion

 

 

—

 

 

 

2,985

 

 

 

2,985

 

Long-term portion

 

$

761,491

 

 

$

9,552

 

 

$

771,043

 

 

On March 31, 2023, the Partnership and its subsidiary, LGWS (together with the Partnership, the “Borrowers”), amended and restated the CAPL Credit Facility. As amended, the CAPL Credit Facility provides for an increase of the senior secured revolving credit facility from $750 million to $925 million and extends the maturity date from April 1, 2024 to March 31, 2028. The credit facility can be increased from time to time upon the Partnership’s written request, subject to certain conditions, up to an additional $350 million. The aggregate amount of the outstanding loans and letters of credit under the CAPL Credit Facility cannot exceed the combined revolving commitments then in effect. Certain subsidiaries of the Borrowers are guarantors ("Guarantors") of all of the obligations under the CAPL Credit Facility. All obligations under the CAPL Credit Facility are secured by substantially all of the Partnership’s assets and substantially all of the assets of the Guarantors.

Borrowings under the credit facility bear interest, at the Partnership’s option, at (1) a rate equal to the secured overnight financing rate (“SOFR”), for interest periods of one, three or six months, plus a margin ranging from 1.75% to 2.75% per annum depending on the Partnership’s Consolidated Leverage Ratio (as defined in the CAPL Credit Facility) plus a customary credit spread adjustment or (2) (a) an alternative base rate equal to the greatest of (i) the federal funds rate plus 0.5% per annum, (ii) SOFR for one month interest periods plus 1.00% per annum or (iii) the rate of interest established by the Agent, from time to time, as its prime rate, plus (b) a margin ranging from 0.75% to 1.75% per annum depending on the Partnership’s Consolidated Leverage Ratio. In addition, the Partnership incurs a commitment fee based on the unused portion of the credit facility at a rate ranging from 0.25% to 0.45% per annum depending on the Partnership’s Consolidated Leverage Ratio. Until the Partnership delivers a compliance certificate for the fiscal quarter ending June 30, 2023, the applicable margin for SOFR and alternative base rate loans is 2.25% and 1.25%, respectively, and the commitment fee rate is 0.35%.

The Partnership also has the right to borrow swingline loans under the CAPL Credit Facility in an amount up to $35.0 million. Swingline loans bear interest at the base rate plus the applicable alternative base rate margin.

Letters of credit may be issued under the CAPL Credit Facility up to an aggregate amount of $65.0 million. Letters of credit are subject to a 0.125% fronting fee and other customary administrative charges. Letters of credit accrue a fee at a rate based on the applicable margin of SOFR loans.

The CAPL Credit Facility also contains certain financial covenants. The Partnership is required to maintain a Consolidated Leverage Ratio (as defined in the CAPL Credit Facility) of (i) for each fiscal quarter ending March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023, not greater than 5.25 to 1.00, (ii) for each fiscal quarter ending March 31, 2024, June 30, 2024 and September 30, 2024, not greater than 5.00 to 1.00, and (iii) for each fiscal quarter ending December 31, 2024 and thereafter, not greater than 4.75 to 1.00. For the quarter during a Specified Acquisition Period (as defined in the CAPL Credit Facility), such threshold will be increased by increasing the numerator thereof by 0.5, but such numerator may not exceed 5.25 to 1.00. Upon the occurrence of a Qualified Note Offering (as defined in the CAPL Credit Facility), the Consolidated Leverage Ratio threshold when not in a Specified Acquisition Period is increased to 5.25 to 1.00, while the Specified Acquisition Period threshold is 5.50 to 1.00. Upon the occurrence of a Qualified Note Offering, the Partnership is also required to maintain a Consolidated Senior Secured Leverage Ratio (as defined in the CAPL Credit Facility) for the most recently completed four fiscal quarter period of not greater than 3.75 to 1.00. Such threshold is increased to 4.00 to 1.00 for the quarter during a Specified Acquisition Period. The Partnership is also required to maintain a Consolidated Interest Coverage Ratio (as defined in the CAPL Credit Facility) of at least 2.50 to 1.00.

The incremental borrowings at the closing of the amended and restated CAPL Credit Facility were used to repay outstanding borrowings under the JKM Credit Facility, which was terminated on March 31, 2023, and to pay fees and expenses in connection with the CAPL Credit Facility and the termination of the JKM Credit Facility.

The CAPL Credit Facility prohibits the Partnership from making cash distributions to its unitholders if any event of default occurs or would result from the distribution. In addition, the CAPL Credit Facility contains various covenants that may limit, among other things, the Partnership’s ability to:

•
grant liens;
•
incur or assume other indebtedness;
•
materially alter the character of the Partnership’s business in any material respect;
•
enter into certain mergers, liquidations and dissolutions; and
•
make certain investments, acquisitions or dispositions.

 

If an event of default exists under the CAPL Credit Facility, the lenders will be able to accelerate the maturity of the CAPL Credit Facility and exercise other rights and remedies. Events of default include, among others, the following:

•
failure to pay any principal under the CAPL Credit Facility when due or any interest, fees or other amounts under the CAPL Credit Facility when due after a grace period;
•
failure of any representation or warranty to be true and correct in any material respect;
•
failure to perform or otherwise comply with the covenants in the CAPL Credit Facility or in other loan documents without a waiver or amendment;
•
any default in the performance of any obligation or condition beyond the applicable grace period relating to any other indebtedness of more than $45.0 million;
•
certain judgment default for monetary judgments exceeding $45.0 million;
•
bankruptcy or insolvency event involving the Partnership or any of its subsidiaries;
•
certain Employee Retirement Income Security Act of 1974 (ERISA) violations;
•
a Change of Control (as defined in the CAPL Credit Facility) without a waiver or amendment; and
•
failure of the lenders for any reason to have a perfected first priority security interest in a material portion of the collateral granted by the Partnership or any of its subsidiaries.

 

Taking the interest rate swap contracts described in Note 8 into account, our effective interest rate on our CAPL Credit Facility at June 30, 2023 was 5.1% (our applicable margin was 2.25% as of June 30, 2023). See Note 8 for information regarding additional interest rate swap contracts entered into in April 2023.

Letters of credit outstanding at June 30, 2023 and December 31, 2022 totaled $4.5 million and $4.6 million, respectively.

As of June 30, 2023, we were in compliance with our financial covenants under the CAPL Credit Facility. The amount of availability under the CAPL Credit Facility at June 30, 2023, after taking into consideration debt covenant restrictions, was $159.0 million.

In connection with amending the CAPL Credit Facility and terminating the JKM Credit Facility, the Partnership wrote off $1.1 million of deferred financing costs in the first quarter of 2023.