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Long-Term Debt and Bank Facility Borrowings
 9 Months Ended
Jun. 30, 2011
Long-Term Debt and Bank Facility Borrowings  
Long-Term Debt and Bank Facility Borrowings

6) Long-Term Debt and Bank Facility Borrowings

The Partnership's debt is as follows (in thousands):

 

     At June 30, 2011      At September 30, 2010  
     Carrying
Amount		      Estimated
Fair Value (a)		      Carrying
Amount		      Estimated
Fair Value (a)		  

8.875% Senior Notes (b)

    $ 124,241       $ 130,156       $ —         $ —     

10.25% Senior Notes (c)

      —           —           82,770         83,908   

Revolving Credit Facility Borrowings (d)

      —           —           —           —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Total debt

    $ 124,241       $ 130,156       $ 82,770       $ 83,908   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total long-term portion of debt

    $ 124,241       $ 130,156       $ 82,770       $ 83,908   
  

 

 

     

 

 

     

 

 

     

 

 

  

(a) The Partnership's fair value estimates of long-term debt are made at a specific point in time, based on relevant market information, open market quotations and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment. Changes in assumptions could significantly affect the estimates.
(b) The Partnership issued $125.0 million (excluding discount) 8.875% Senior Notes in November 2010 in a private placement offering pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the "Private Notes"). In February 2011, the Partnership concluded an exchange of all the Private Notes for substantially identical public notes registered with the Securities and Exchange Commission (the "Exchange Notes"). These notes mature in December 2017 and accrue interest at an annual rate of 8.875% requiring semi-annual interest payments on June 1 and December 1 of each year. The discount on these notes included above was $0.8 million at June 30, 2011. Under the terms of the indenture, these notes permit restricted payments after passing certain financial tests. The Partnership can incur debt up to $100 million for acquisitions and can also pay restricted payments of $22.0 million without passing certain financial tests.
(c) In December 2010, the Partnership redeemed its 10.25% Senior Notes due February 2013, at a price equal to 101.708% of face value plus any accrued and unpaid interest. The Partnership reported a $1.7 million loss on this redemption.
(d) In June 2011, the Partnership entered into an amended and restated asset based revolving credit facility agreement with a bank syndication comprised of fifteen banks. This amended and restated facility expires in June 2016, provides the Partnership with the ability to borrow up to $250 million ($300 million during the heating season from December to April each year) for working capital purposes (subject to certain borrowing base limitations and coverage ratios), including the issuance of up to $100 million in letters of credit. The Partnership can increase the facility size by $100 million without the consent of the bank group. The bank group is not obligated to fund the $100 million increase. If the bank group elects not to fund the increase, the Partnership can add additional lenders to the group, with the consent of the agent (as appointed in the credit agreement), which shall not be unreasonably withheld. Obligations under the revolving credit facility are guaranteed by the Partnership and its subsidiaries and are secured by liens on substantially all of the Partnership's assets including accounts receivable, inventory, general intangibles, real property, fixtures and equipment.

The interest rate is LIBOR plus (i) 1.75% (if availability, as defined in the revolving credit facility agreement is greater than or equal to $150 million), or (ii) 2.00% (if availability is greater than $75 million but less than $150 million), or (iii) 2.25% (if availability is less than or equal to $75 million). The commitment fee on the unused portion of the facility is 0.375% per annum. This amended and restated revolving credit facility imposes certain restrictions, including restrictions on the Partnership's ability to incur additional indebtedness, to pay distributions to unitholders, to pay inter-company dividends or distributions, make investments, grant liens, sell assets, make acquisitions and engage in certain other activities.

The Partnership is obligated to meet certain financial covenants under the amended and restated revolving credit facility, including the requirement to maintain at all times either excess availability (borrowing base less amounts borrowed and letters of credit issued) of 12.5% of the revolving commitment then in effect or a fixed charge coverage ratio (as defined in the credit agreement) of not less than 1.1. In addition, the Partnership must maintain excess availability of at least $52.5 million (17.5% of the revolving commitment then in effect) and a fixed charge coverage ratio of 1.15 in order to make any distributions to unitholders. Certain activities including investments, acquisitions, asset sales, inter-company dividends or distributions cannot be made (including those needed to pay interest or principle on the 8.875% senior notes), except to the Partnership or a wholly owned subsidiary of the Partnership, if the relevant covenant described above has not been met. The occurrence of an event of default or an acceleration under the amended and restated revolving credit facility would result in the Partnership's inability to obtain further borrowings under that facility, which could adversely affect its results of operations. Such a default may also restrict the ability of the Partnership to obtain funds from its subsidiaries in order to pay interest or paydown debt. An acceleration under the amended and restated revolving credit facility would result in a default under the Partnership's other funded debt.

At June 30, 2011, no amount was outstanding under the revolving credit facility and $46.7 million of letters of credit were issued. No amount was outstanding under the revolving credit facility at September 30, 2010, and $42.3 million of letters of credit were issued.

 

As of June 30, 2011, availability was $155.9 million, and the Partnership was in compliance with the fixed charge coverage ratio. As of September 30, 2010, availability was $104.8 million, and the Partnership was in compliance with the fixed charge coverage ratio.

On June 30, 2011, the Partnership filed a registration statement on Form S-3 with the Securities and Exchange Commission, utilizing a shelf registration process or continuous offering process. Under this shelf registration process, the Partnership may, from time to time, sell up to $250 million in one or more offerings, common units representing limited partnership interests, partnership securities and debt securities, which may be secured or unsecured senior debt securities or secured or unsecured subordinated debt securities.