CVR Partners LP filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
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Agricultural Chemicals
Industrials
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): September 26, 2023
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Item 1.01. Entry into a Material Definitive Agreement.
Overview
On September 26, 2023, CVR Partners, LP (the “Partnership”), CVR Nitrogen, LP (“CVR Nitrogen”), East Dubuque Nitrogen Fertilizers, LLC (“East Dubuque”), Coffeyville Resources Nitrogen Fertilizers, LLC (“Coffeyville Resources”), CVR Nitrogen Holdings, LLC (“CVR Nitrogen Holdings”), CVR Nitrogen Finance Corporation (“CVR Finance”) and CVR Nitrogen GP, LLC (“CVR Nitrogen GP” and collectively with the Partnership, CVR Nitrogen, East Dubuque, Coffeyville Resources, CVR Nitrogen Holdings, CVR Finance and CVR Nitrogen GP, the “Credit Parties”) entered into Amendment No. 1 to Credit Agreement (the “Amendment”) with Wells Fargo Bank, National Association, a national banking association (“Wells Fargo”), as administrative agent, collateral agent and a lender. The Amendment amends certain provisions of the Credit Agreement, dated as September 30, 2021 (as amended by the Amendment, the “Amended ABL Credit Facility”), by and among the Credit Parties thereto and Wells Fargo, as administrative agent, collateral agent and a lender.
The Amended ABL Credit Facility is a senior secured asset based revolving credit facility in an aggregate principal amount of up to $50.0 million, with an incremental facility, which permits an increase in borrowings of up to an additional $15.0 million in the aggregate subject to additional lender commitments and certain other conditions. The proceeds of the loans may be used for general corporate purposes of the Credit Parties and their subsidiaries. The Amended ABL Credit Facility provides for loans and letters of credit, subject to meeting certain borrowing base conditions, with sub-limits of $3.5 million for swingline loans and $10.0 million for letters of credit.
The borrowing base at any time equals the sum of (without duplication):
•85% of eligible accounts, plus
•90% of eligible investment grade accounts, plus
•the lesser of (i) 75% of the market value of eligible inventory and (ii) 85% of the net recovery percentage identified in the most recent acceptable appraisal of eligible inventory multiplied by the value of such eligible inventory at such time, provided that the amount included in the borrowing base shall not exceed $10.0 million in the aggregate with respect to eligible precious metals inventory and eligible spare parts inventory and $6.0 million in the aggregate with respect to the value of eligible inventory consisting of eligible domestic in-transit inventory, minus
•the aggregate amount of reserves then established.
Furthermore, all borrowings under the Amended ABL Credit Facility are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties.
Interest Rate and Fees
Loans under the Amended ABL Credit Facility initially bear interest at an annual rate equal to, at the option of the borrowers, (i) 1.615% plus SOFR or (ii) 0.615% plus a base rate. Based on the previous quarter’s excess availability, such annual rate could increase to (i) 2.115% plus SOFR or (ii) 1.115% plus a base rate.
The borrowers must also pay a commitment fee on the unutilized commitments to the lenders under the Amended ABL Credit Facility equal to (i) 0.25% per annum if utilization under the facility is greater than or equal to 50% of the maximum credit and (ii) 0.50% per annum if utilization under the facility is less than 50% of the maximum credit. The borrowers must also pay a letter of credit fee (in addition to the fronting fees and commissions, other fees, charges and expenses) that shall accrue at a per annum rate equal to SOFR times the average amount of the letter of credit usage during the immediately preceding month.
Mandatory and Voluntary Repayments
The borrowers are required to repay amounts outstanding under the Amended ABL Credit Facility under specified circumstances, including (i) with the proceeds of certain asset sales, (ii) when the sum of the outstanding revolving loans (inclusive of swing loans and protective advances) plus the amount of aggregate amount of all outstanding letters of credit and all unpaid drawings at any time exceeds the loan cap (i.e. the lesser of the maximum credit and the borrowing base) at such time, and (iii) under certain conditions, with the proceeds of certain extraordinary receipts, indebtedness and issuances of any equity interests. In addition, the borrowers are permitted to voluntarily prepay amounts outstanding under the Amended ABL Credit Facility at any time.
Amortization and Final Maturity
There is no scheduled amortization under the Amended ABL Credit Facility. All outstanding loans under the facility are due and payable in full on September 26, 2028.
Guarantees and Security
The obligations under the Amended ABL Credit Facility and related guarantees are secured by a first priority security interest in the Credit Parties’ inventory, accounts receivable, deposit, securities and commodity accounts and related assets and a second priority security interest in substantially all of the Credit Parties’ other assets, in each case subject to exceptions. The liens granted in connection with the Amended ABL Credit Facility remain subject to the intercreditor agreement (as defined in the Amended ABL Credit Facility).
Restrictive Covenants and Other Matters
The Amended ABL Credit Facility requires the Credit Parties in certain circumstances to comply with a minimum fixed charge coverage ratio test and contains other restrictive covenants that limit the Credit Parties’ ability and the ability of their subsidiaries to, among other things, incur liens, engage in a consolidation, merger, purchase or sale of assets, pay dividends, incur indebtedness, make advances, investments and loans, enter into affiliate transactions, issue certain equity interests, create subsidiaries and unrestricted subsidiaries and create certain restrictions on the ability to make distributions, loans and asset transfers to the other Credit Parties or their subsidiaries.
The Amended ABL Credit Facility contains certain customary representations and warranties, affirmative covenants and events of default.
The description of the Amendment is qualified in its entirety by reference to the full text of the Amendment, attached hereto as exhibit 10.1, which is incorporated herein by reference.
Affiliates of Wells Fargo have performed depository and other banking, investment banking, trust, investment management and advisory services for the Partnership and its affiliates (including the Credit Parties) from time to time for which they have received customary fees and expenses and may, from time to time, engage in transactions with and perform services for the Partnership and its affiliates in the ordinary course of their business.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this report is incorporated by reference into this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are being “furnished” as part of this Current Report on Form 8-K:
Exhibit Number | Exhibit Description | ||||
| 10.1+ | |||||
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). | ||||
+ Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Company agrees to furnish supplementally an unredacted copy of this exhibit to the SEC upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: September 27, 2023
| CVR Partners, LP | |||||
| By: CVR GP, LLC, its general partner | |||||
| By: | /s/ Dane J. Neumann | ||||
| Dane J. Neumann | |||||
| Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary | |||||