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Penn Virginia Resource Partners L.P. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 30, 2010 12:17PM
Penn Virginia Resource Partners L.P. (PVR) filed Quarterly Report for the period ended 2010-06-30.
Highlight of Business Operations:
The net proceeds from the sale of the Senior Notes of approximately $292.6 million, after deducting fees and expenses of approximately $7.4 million, were used to repay borrowings under our revolving credit facility, or the Revolver.
During the six months ended June 30, 2010, we incurred $8.7 million of debt issuance costs related to the issuance of the $300 million Senior Notes. The net borrowings during both the six months ended June 30, 2010 and 2009 were used to finance acquisition and expansion projects.
Revolver. As of June 30, 2010, net of outstanding borrowings of $346.5 million and letters of credit of $1.6 million, we had remaining borrowing capacity of $451.9 million on the Revolver. The Revolver matures in December 2011 and is available to us for general purposes, including working capital, capital expenditures and acquisitions, and includes a $10.0 million sublimit for the issuance of letters of credit. The interest rate under the Revolver fluctuates based on the ratio of our total indebtedness-to-EBITDA. Interest is payable at a base rate plus an applicable margin of up to 1.25% if we select the base rate borrowing option or at a rate derived from the London Interbank Offered Rate, or LIBOR, plus an applicable margin ranging from 1.75% to 2.75% if we select the LIBOR-based borrowing option. The weighted average interest rate on borrowings outstanding under the Revolver during the six months ended June 30, 2010 was approximately 2.3%. We do not have a public rating for the Revolver. As of June 30, 2010, we were in compliance with all of our covenants under the Revolver.
Senior Notes. In April 2010, we sold $300.0 million of Senior Notes due on April 15, 2018 with an annual interest rate of 8.25%, which is payable semi-annually in arrears on April 15 and October 15 of each year. The Senior Notes were sold at par, equating to an effective yield to maturity of approximately 8.25%. The net proceeds from the sale of the Senior Notes of approximately $292.6 million, after deducting fees and expenses of approximately $7.4 million, were used to repay borrowings under the Revolver. We may redeem some or all of the Senior Notes at any time on or after April 15, 2014 at the redemption prices set forth in the Supplemental Indenture governing the Senior Notes and prior to such date at a make-whole redemption price. We may also redeem up to 35% of the Senior Notes prior to April 15, 2013 with cash proceeds received from certain equity offerings. If we sell certain assets and do not reinvest the proceeds or repay senior indebtedness or if we experience a change of control, we must offer to repurchase the Senior Notes. The Senior Notes are senior to any subordinated indebtedness, and are effectively subordinated to all of our secured indebtedness including the Revolver to the extent of the collateral securing that indebtedness. The obligations under the Senior Notes are fully and unconditionally guaranteed by our current and future subsidiaries, which are also guarantors under the Revolver.
As of June 30, 2010, our remaining borrowing capacity under the Revolver of approximately $451.9 million will be more than sufficient to meet our anticipated 2010 capital needs and commitments. Our short-term cash requirements for operating expenses and quarterly distributions to our general partner and our unitholders are expected to be funded through operating cash flows. In 2010, we anticipate making capital expenditures, excluding acquisitions, of approximately $142.0 million, including anticipated maintenance capital of $17.0 million to $22.0 million. The majority of the 2010 capital expenditures are expected to be incurred in the natural gas midstream segment. We intend to fund these capital expenditures with a combination of operating cash flows and borrowings under the Revolver. Long-term cash requirements for acquisitions and other capital expenditures are expected to be funded by operating cash flows, borrowings under the Revolver and the issuances of additional debt and equity securities if available under commercially acceptable terms.