Item 1.01. Entry into a Material Definitive Agreement.
On April 29, 2014, SunCoke Energy Partners, L.P. (the "Partnership") and SunCoke
Energy Partners Finance Corp., a Delaware corporation ("Finance Corp." and,
together with the Partnership, the "Issuers"), together with certain other
affiliated parties, entered into a note purchase agreement (the "Note Purchase
Agreement") with Citigroup Global Markets Inc., Barclays Capital Inc., Credit
Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and RBC Capital Markets,
LLC, as representatives of the several initial purchasers (the "Initial
Purchasers") with respect to the issue and sale by the Issuers of $250,000,000
principal amount of their 73/8% Senior Notes due 2020 (the "Notes"). The Notes
will be issued pursuant to the Indenture dated as of January 24, 2013 (as
amended and supplemented to date, the "Indenture") among the Issuers, the
several guarantors identified therein, and The Bank of New York Mellon Trust
Company, N.A., as trustee, pursuant to which the Issuers issued an initial
tranche of $150,000,000 principal amount of their 7 3/8% Senior Notes due 2020
in January 2013.
A copy of the Note Purchase Agreement is filed as Exhibit 4.1 to this report and
is incorporated by reference herein. Payment and delivery of the Notes is
expected to occur on May 9, 2014.
The Partnership expects to receive gross proceeds of approximately $263.1
million from the Notes offering. The Partnership intends to use approximately
$271.3 million of the aggregate net proceeds from the issuance and sale of the
Notes, and from the Partnership's issuance and sale on April 30, 2014 of common
units representing limited partner interests in the Partnership, to fund the
Partnership's assumption and repayment of certain outstanding debt of SunCoke
Energy, Inc. ("SunCoke") consisting of: (i) term loan debt bearing a floating
rate of interest based on LIBOR plus 3.00% per annum and maturing in July 2018;
and (ii) 7.625% senior notes due 2019. The Partnership also intends to use
approximately $10.4 million of such proceeds to fund the cash consideration to
be paid in connection with the Partnership's acquisition from Sun Coal & Coke
LLC, a wholly owned subsidiary of SunCoke, of an additional 33% membership
interest in each of Haverhill Coke Company LLC ("Haverhill") and Middletown Coke
Company, LLC, of which $7.0 million of this cash consideration will be retained
to prefund SunCoke's obligation to indemnify the Partnership for the anticipated
cost of an ongoing environmental remediation project at Haverhill. The
Partnership also intends to repay approximately $40.0 million outstanding on its
revolving credit facility, which matures on January 24, 2018, and does not
expect to have any borrowings outstanding under the existing revolving credit
facility at the completion of this Notes offering, other than as may be
necessary to satisfy ordinary working capital requirements. Remaining proceeds
will be retained to pay fees and for general partnership purposes.
The Notes constitute "Additional Notes" (as such term is defined in the
Indenture) and will be issued pursuant to and in compliance with the Indenture.
The Notes are being offered in the United States to qualified institutional
buyers in reliance on Rule 144A under the Securities Act, and outside the United
States to non-U.S. persons in reliance on Regulation S under the Securities Act.
The Notes have not been registered under the Securities Act and may not be
offered or sold in the United States absent registration or an applicable
exemption from the registration requirements.
The Notes are the senior unsecured obligations of the Issuers, and are
guaranteed on a senior unsecured basis by each of the Partnership's existing and
certain future subsidiaries (other than Finance Corp.
). The Notes will mature on
February 1, 2020
. Interest on the Notes will accrue at the rate of 7.375% from
February 1, 2014
. Interest on the Notes is payable semi-annually in cash in
arrears on August 1
and February 1
of each year, commencing on August 1, 2014
The Issuers may redeem some or all of the Notes at any time on or after
February 1, 2016
at specified redemption prices plus accrued and unpaid
interest, if any, to the redemption date. Before February 1, 2016
certain equity offerings, the Issuers may also redeem up to 35% of the Notes at
a price equal to 107.375% of the principal amount, plus accrued and unpaid
interest, if any, to the redemption date. In addition, at any time prior to
February 1, 2016
, the Issuers may redeem some or all of the notes at a price
equal to 100% of the principal amount, plus accrued and unpaid interest, if any,
to the redemption date, plus a "make-whole" premium.
The Issuers are obligated to offer to purchase all or a portion of the Notes at
a price of (a) 101% of their principal amount, together with accrued and unpaid
interest, if any, to the date of purchase, upon the occurrence of certain change
of control events and (b) 100% of their principal amount, together with accrued
and unpaid interest, if any, to the date of purchase, upon the occurrence of
certain asset dispositions. These restrictions and prohibitions are subject to
certain qualifications and exceptions set forth in the Indenture, including
without limitation, reinvestment rights with respect to the proceeds of asset
The Indenture contains covenants that, among other things, limit the
Partnership's ability and the ability of certain of the Partnership's
subsidiaries to (i) incur indebtedness, (ii) pay dividends or make other
distributions, (iii) prepay, redeem or repurchase certain subordinated debt,
(iv) make loans and investments, (v) sell assets, (vi) incur liens, (vii) enter
into transactions with affiliates, (viii) enter into agreements restricting the
ability of subsidiaries to pay dividends and (ix) consolidate or merge. These
covenants are subject to a number of exceptions and qualifications set forth in
By purchasing the Notes in the Notes offering, the purchasers are deemed to
consent to an amendment to the Indenture that will increase the size of the
basket for credit facility indebtedness.
The foregoing descriptions of the Indenture and the Notes are qualified in their
entirety by reference to the actual terms of the respective documents.
The Initial Purchasers and their respective affiliates are full service
financial institutions. Certain of the Initial Purchasers and their respective
affiliates have, from time to time, performed, and may in the future perform,
various financial advisory, investment banking, commercial banking and other
services for the Partnership, its general partner and SunCoke, for which they
received or will receive customary fees and expenses. In particular, affiliates
of Citigroup Global Markets Inc.
, Barclays Capital Inc.
, Credit Suisse
) LLC, J.P. Morgan Securities LLC
and RBC Capital Markets, LLC
are lenders under the Partnership's revolving credit facility. Affiliates of
certain of the Initial Purchasers also are lenders under SunCoke's term loan or
holders of SunCoke's senior notes and, accordingly, will receive a portion of
the proceeds from the issuance and sale of the Notes in the form of repayment of
SunCoke Energy, Inc. debt assumed by the Partnership.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The information in Item 1.01 of this report is incorporated in this Item 2.03 by
Item 9.01 Financial Statements and Exhibits.
4.1 Note Purchase Agreement (dated April 29, 2014).