Martin Midstream amends agreement, cuts commitments to $350 million

By Sarah Lizee

Olympia, Wash., March 6 – Martin Midstream Partners LP and subsidiary Martin Operating Partnership LP amended and restated their credit agreement on March 2, reducing the amount of commitments to $350 million from $400 million, among other things, according to an 8-K filing with the Securities and Exchange Commission.

The amendment also permits the partnership to issue $400 million of second-lien notes that will be secured by a second-priority lien on the collateral that secures the credit agreement.

Upon the issuance of the second-lien notes, the maturity date of the lenders’ commitments under the credit agreement is Aug. 31, 2023.

The operating partnership’s ability to increase the commitments under the credit agreement without entering into a future amendment was removed.

The amendment also limits the partnership’s ability to increase distributions to its unitholders from their current level unless the partnership’s total leverage ratio is below 4x.

It also allows the partnership to prepay, redeem or otherwise purchase the second-lien notes with up to 50% of the first $150 million it receives in proceeds from future asset sales.

The amendment requires that the operating partnership prepay amounts outstanding under the credit agreement with some asset sale proceeds, with a corresponding reduction in commitments under the credit agreement, but in no event to less than $325 million.

It also requires the operating partnership to maintain a maximum first-lien leverage ratio of not more than 2.5x, which financial covenant replaces the existing maximum senior leverage ratio, and requires the operating partnership to maintain a minimum interest coverage ratio of 2x with respect to the fiscal quarters ending in June, September and December of 2020, 1.75x with respect to each fiscal quarter ending in 2021, and 2x with respect to each fiscal quarter onwards.

The 10th amendment will become effective when the $400 million of second-lien notes are issued and the partnership’s redemption or repurchase of, or offer to redeem, all its 7¼% senior notes due 2021 has occurred.

Martin Midstream is a Kilgore, Tex.-based company that collects, transports, stores and markets petroleum products and byproducts.

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