I like that you are genuinely processing this. OXF has two credit agreements a 60M term that costs them 1.5M a quarter, and a max revolving line of 115M, of which they consumed 104M as of 09/12. The 104M comes due 06/13, as you already stated. As of 09/12, OXF had 6M cash, in addition they preserve another 27.2 M (20.6M x .44) over the next 3Qs through continued dividend suspension. As well as the sale of idled mine equipment estimated at 6.6M. That would afford them 40M, 39% of the revolving credit liability. The plausibility of the banks refinancing the credit facility with extended terms are certain as long as OXF can demonstrate solvency, not profitability, just solvency. Banks want to loan, thats their business. As I wrote earlier these 27 year mining veterans have planned their work, and are working their plan. All is well, the only thing that has temporarily changed is this is no longer a dividend play investment. We are buying low and selling high until the dividend is reinstated in May or Aug. Check out how AVP, TEF, and NRGY have faired since canceling their dividend. These companies are healthier and their stocks are performing better now because the impending fear of a dividend suspension is behind them. The worst is over, it can only get better from here.!
NOTE 7: LONG-TERM DEBT
In connection with our initial public offering in July 2010, we entered into an agreement (the “Credit Agreement”) for a $175 million credit facility with Citicorp USA, Inc., as Administrative Agent, Citibank, N.A., as Swing Line Bank, Barclays Bank PLC and The Huntington National Bank, as Co-Syndication Agents, Fifth Third Bank and Comerica Bank, as Co-Documentation Agents, and the lenders party thereto. The Credit Agreement became effective July 19, 2010 and provides for a $60 million term loan and a $115 million revolving credit line. We are required to make quarterly principal payments of $1.5 million on the term loan commencing on September 30, 2010 and continuing until maturity in July 2014, when the remaining balance is to be paid. The $115 million revolving credit line matures in July 2013. Accordingly, the $104 million outstanding on the revolver as of September 30, 2012 has been classified as a current liability. Borrowings under the Credit Agreement bear interest at a variable rate per annum equal to, at our option, the London Interbank Offered Rate (“LIBOR”) or the Base Rate plus the Applicable Margin (Base Rate and Applicable Margin are defined in the Credit Agreement).
The Credit Agreement contains customary covenants, including restrictions on our ability to incur additional indebtedness, make certain investments, make distributions to our unitholders, make ordinary course dispositions of assets over predetermined levels and enter into equipment leases, as well as enter into a merger or sale of all or substantially all of our property or assets, including the sale or transfer of interests in our subsidiaries. The Credit Agreement also requires compliance with certain financial covenants, including limiting our leverage and interest coverage ratios, as well as capping capital expenditures in any fiscal year to certain predetermined amounts. Borrowings under the Credit Agreement are secured by a first-priority lien on and security interest in substantially all of our assets.
In June 2012, we executed an amendment to the Credit Agreement which is applicable for the remaining term of the Credit Agreement and which (i) modified the leverage ratio, (ii) authorized the sale of certain Kentucky assets, and (iii) allows quarterly distributions at minimum levels and additionally at certain higher levels as long as
OXFORD RESOURCE PARTNERS, LP AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in thousands, except for unit and per unit data) (CONTINUED)
LONG-TERM DEBT (continued)
specified liquidity thresholds are maintained after giving effect to the distribution. In connection with the amendment, we paid the consenting lenders a non-refundable amendment fee equal to 0.50% of their then outstanding loan commitments under the Credit Agreement. The amendment fee was capitalized and is being amortized over the remaining term of the Credit Agreement.
As of September 30, 2012, we were in compliance with all covenants under the terms of the Credit Agreement.
"As I wrote earlier these 27 year mining veterans have planned their work, and are working their plan."
So you are saying that they planned to screw the investors all along. That's the first thing you have said that I agree with as it was predictable right from day 1 of this company trading. Right at the time of IPO there were a number of analyst articles predicting it. Bringing this public as an MLP with a high distribution was a scam job with all the money going to insiders leaving not enough funds to continue the business unless coal prices kept going higher from record levels.
Management have proved they were out to screw investors right from the start.