Alliance Resource gets $700 million revolver, $250 million term loan

By Marisa Wong

Madison, Wis., May 24 - Alliance Resource Partners, LP's wholly owned subsidiary Alliance Resource Operating Partners, LP entered into a third amended and restated credit agreement on May 23 with JPMorgan Chase Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The credit facility replaces Alliance Resource Operating Partners' $142.5 million revolving credit facility dated Sept. 25, 2007 and scheduled to expire on Sept. 25, 2012.

The restated credit agreement provides for a $700 million revolving credit facility, which includes a $250 million sublimit for letters of credit and a $15 million sublimit for swingline loans, and a $250 million term loan.

The revolving credit facility terminates on May 23, 2017, at which time the total outstanding principal amount of all revolver and term loan advances are required to be repaid in full.

The credit agreement calls for mandatory repayment of term loan advances on a quarterly basis in varying amounts. Beginning with the quarter ending June 30, 2014 and for each quarter after that until March 31, 2016, the company must repay an amount equal to 2.5% of the total amount outstanding. For each quarter ending after March 31, 2016 but on or prior to Dec. 31, 2016, the company must repay an amount equal to 20% of the total amount outstanding. The company has the option of prepaying the term loan at any time in whole or in part subject to certain conditions in the agreement.

Interest is equal to Libor plus 115 basis points to 190 bps, depending on Alliance Resource Operating Partners' consolidated debt to consolidated cash flow ratio. Initially, the applicable margin is equal to 165 bps.

The credit agreement requires that Alliance Resource Operating Partners remain in control of a certain amount of mineable coal reserves relative to its annual production.

In addition, the agreement requires the subsidiary to maintain a minimum consolidated debt to consolidated cash flow ratio of not more than 3.0 to 1.0 and a ratio of consolidated cash flow to consolidated interest expense of not less than 3.0 to 1.0, in each case during the four most recently ended fiscal quarters.

In connection with the new facility, Alliance Resource Operating Partners terminated its term loan agreement dated Dec. 29, 2010 with Citibank, NA as administrative agent on May 23.

As of the termination date, there was $300 million outstanding under the previous term loan. That amount was repaid with a portion of the proceeds from the new credit facility.

J.P. Morgan Securities LLC, Wells Fargo Securities, LLC and Citigroup Global Markets Inc. were joint lead arrangers and joint bookrunners for the new facility, and Wells Fargo Bank, NA and Citibank, NA were syndication agents.

Alliance Resource is a Tulsa, Okla.-based coal company.

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