Hi-Crush lifts credit facility to $200 million, adds term out feature

By Marisa Wong

Madison, Wis., May 15 - Hi-Crush Partners LP increased commitments under its credit agreement dated Aug. 21, 2012 to $200 million after exercising the facility's $100 million accordion feature, according to an 8-K filing with the Securities and Exchange Commission.

The company obtained the commitment increase and entered into a second amendment to the credit agreement with Amegy Bank NA as administrative agent on May 9.

In addition to increasing commitments from some existing lenders and adding new lenders, the amendment contains a term out feature. Of the total amount of borrowings, $50 million will convert to a term loan due Aug. 21, 2016 with quarterly amortization equal to 5% of the principal amount of the converted term loan, if at any time outstanding borrowings under the revolver exceed $125 million for four consecutive fiscal quarters.

Also, the amendment modifies the credit agreement's mandatory prepayment provisions to include prepayment of the revolver and the term loans with cash proceeds from asset sales and prepayment of the term loan with cash proceeds from debt and equity issuances.

Further, the amendment limits the partnership's ability to complete any acquisition unless either (a) the pro forma leverage ratio as of the start of the four fiscal quarters preceding the date of the acquisition is less than 2 to 1 and liquidity is equal to or greater than $15 million or (b) the total consideration for all acquisitions completed in the applicable fiscal year does not exceed $10 million.

The company also amended the agreement's financial covenants so that, if a term loan conversion occurs, the existing interest coverage ratio only applies on or prior to the effective date of the term out feature and, after that, will be replaced by a debt service coverage ratio of at least 1.5 to 1.

Hi-Crush is a Houston-based producer of monocrystalline sand (frac sand).

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