Item 2.03 Creation of a Direct
Financial Obligation
On November 30, 2012 the Partnership
drew down a total of $4.25 million on its revolving credit facility under the
Credit Agreement with JPMorgan Chase Bank, N.A. See below for a further
discussion of the Partnership’s revolving credit facility. The Partnership
intends to use the majority of these proceeds to fund its ongoing capital
expenditures related to the expansion of its Latin American and other
international fleet of compressor units and other equipment as a result of increased
demand. The Partnership intends to use the remainder of these proceeds domestically to fund
its ongoing upgrades of compressor units and for the manufacture of additions to its fleet of compressor units. Subsequent to the
borrowing, the Partnership had $10.05 million outstanding under the credit
facility.
As previously disclosed, on June 24,
2011, the Partnership entered into the Credit Agreement establishing a $20.0 million
revolving credit facility agreement with JPMorgan Chase Bank, N.A. The
borrowers under the revolving credit facility are the Partnership, Compressco
Partners Operating, LLC and Compressco Partners Sub, Inc., each a wholly owned
subsidiary of the Partnership. As amended by the Amendment, the revolving
credit facility includes borrowing capacity available for letters of credit (at
a sublimit of $5.0 million) and a $20.0 million uncommitted expansion feature.
Amounts borrowed under the revolving credit facility, including the advance
reported above, are due and payable, together with all unpaid interest, fees
and other obligations, on June 24, 2015, or earlier upon early repayment by the
Partnership or exercise by the lender of its rights under the revolving credit
facility.
The $10.05 million of borrowings
under the revolving credit facility will bear interest at a weighted average
initial rate of 2.5986% per annum. Generally, borrowings under the
Partnership’s revolving credit facility bear interest at a rate per annum equal
to, at the Partnership’s option, either (a) British Bankers Association LIBOR
(adjusted to reflect any required bank reserves) for an interest period equal
to one, two, three or six months (as selected by the Partnership) plus a margin
of 2.25% per annum or (b) a base rate determined by reference to the highest of
(1) the prime rate of interest announced from time to time by JPMorgan Chase
Bank, N.A. or (2) British Bankers Association LIBOR (adjusted to reflect any
required bank reserves) for a one-month interest period on such day plus 2.50%
per annum. In addition to paying interest on outstanding principal under the
Partnership’s revolving credit facility, the Partnership is required to pay a
commitment fee, in respect of the unutilized commitments thereunder, of 0.425%
per annum, paid quarterly in arrears. The Partnership is also required to pay
customary collateral monitoring fees and letter of credit fees, including,
without limitation, a letter of credit fee equal to the applicable margin on
revolving credit LIBOR loans and fronting fees.
The foregoing description of the
Credit Agreement is qualified in its entirety by reference to (i) the full text
of the Credit Agreement, a copy of which was attached as Exhibit 10.1 to the Form
8-K filed with the Securities and Exchange Commission on June 24, 2011, and
incorporated by reference into this Item 2.03, and (ii) the Amendment, a copy
of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and
incorporated in this item 2.03 by reference.