NRP Announces $250 Million Preferred Unit Investment and Extension of 2018 Debt Maturities

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Feb 23, 2017, 07:00 ET

HOUSTON, Feb. 23, 2017 /PRNewswire/ -- Natural Resource Partners L.P. (NYSE: NRP) announced that it has entered into definitive agreements with current and new stakeholders in order to strengthen its balance sheet, enhance its liquidity and reposition the partnership for long-term growth. At closing of the transactions contemplated by these agreements:

NRP will issue $250 million of a new class of preferred units representing limited partner interests in NRP, together with warrants to purchase common units, to entities controlled by funds managed by Blackstone Tactical Opportunities and to several affiliates of GoldenTree Asset Management LP. The preferred units will have a 12.0% coupon, one-half of which NRP may elect to pay in kind and will be convertible and/or redeemable by NRP under certain circumstances. Generally, NRP will have the right to settle the preferred units and warrants in cash or common units; and
Certain holders of NRP's 9.125% Senior Notes due 2018 (the "2018 Notes") will exchange $241 million of their notes for a new series of 10.50% Senior Notes due 2022 (the "2022 Notes") and will invest $105 million of new capital in NRP in exchange for an additional $105 million of the 2022 Notes.

In addition, NRP Operating LLC's revolving credit facility will be extended to April 2020, with commitment reductions to $180 million at closing, $150 million at December 31, 2017, and $100 million at December 31, 2018 until maturity.

"These transactions mark the culmination of a two-year strategy focused on deleveraging NRP and extending our 2018 debt maturities," said Craig Nunez, Chief Financial Officer. "Following the closing of these transactions, we intend to continue to deleverage and improve our balance sheet with the ultimate goal of returning to growth for the benefit of our unitholders."

NRP intends to use the net proceeds from the preferred unit investment and new notes issuance to redeem $90 million of the 2018 Notes and repay the NRP Operating revolving credit facility in full at closing. Following closing of the transactions announced today, NRP will have total debt of $944 million, including $346 million of the 2022 Notes, with expected maturities set forth at the end of this press release. NRP intends to redeem all remaining outstanding 2018 Notes in October 2017. The terms of the transactions are described in more detail in NRP's Current Report on Form 8-K filed today. The transactions are expected to close in early March.

"Today is the beginning of a new era for NRP," said Wyatt Hogan, President and Chief Operating Officer. "The royalty nature of our coal business, combined with the diversification of our aggregates and soda ash businesses, have enabled us to navigate an extremely difficult period in the coal industry specifically, and the energy industry more broadly. Our performance in light of industry headwinds has provided our investors and lenders the confidence to commit their capital to NRP. We are pleased to partner with such well-regarded, sophisticated investment firms as Blackstone and GoldenTree. In evaluating this investment, these firms had the vision not only to see the near-term benefits of their capital in facilitating these transactions, but also the opportunity for long-term value creation."

Blackstone will receive the right to appoint one member and one observer to the Board of Directors of GP Natural Resource Partners LLC in connection with their preferred investment in NRP. In addition, Blackstone and GoldenTree will have consent rights with respect to certain partnership actions.

"This investment reflects our confidence in NRP's strong management team and its strategy to move the company forward," said Jasvinder Khaira, Senior Managing Director at Blackstone Tactical Opportunities. "Blackstone has robust expertise and history in the natural resources sector, and we believe NRP is well positioned for success in the years ahead."

Greenhill & Co. served as financial advisors to NRP in connection with the transactions.

Company Profile

Natural Resource Partners L.P., a master limited partnership headquartered in Houston, TX, is a diversified natural resource company that owns interests in coal, aggregates, and industrial minerals across the United States. A large percentage of NRP's revenues are generated from royalties and other passive income. In addition, NRP owns an equity investment in Ciner Wyoming, a trona/soda ash operation and owns VantaCore, one of the top 25 aggregates producers in the United States.

For additional information please contact Kathy Roberts at 713-751-7555 or [email protected]. Further information about NRP is available on the partnership's website at http://www.nrplp.com.

Cautionary Note Regarding Forward-Looking Statements

This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission. All statements, other than statements of historical facts, that address financial results, activities, events or developments that NRP expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by NRP based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. The assumptions used in preparing the statements may prove to be incorrect in a number of material ways and are subject to a risks and uncertainties, many of which are beyond the control of NRP. These risks include, but are not limited to, risks that the transactions described in this press release may not be consummated; commodity prices; decreases in demand for coal, aggregates and industrial minerals, including trona/soda ash; changes in operating conditions and costs; production cuts by our lessees; unanticipated geologic problems; our liquidity and access to capital and financing sources; changes in the legislative or regulatory environment and other factors detailed in NRP's Securities and Exchange Commission filings. NRP has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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Natural Resource Partners L.P.
Pro Forma Debt Maturities

The following table summarizes NRP's long-term debt and convertible preferred unit obligations as of December 31, 2016 and as of December 31, 2016 pro forma for the recapitalization transactions announced today (in millions):

	Principal Payments Due by Period
As of December 31, 2016	2017		2018		2019		2020		2021		Thereafter		Total
2018 Notes	$	—	$	425.0	$	—	$	—	$	—	$	—	$	425.0
Opco credit facility	60.0		150.0		—		—						210.0
Opco senior notes and other	80.6		80.6		76.0		54.7		47.0		164.9		503.8
Total	$	140.6	$	655.6	$	76.0	$	54.7	$	47.0	$	164.9	$	1,138.8

	Principal Payments Due by Period
As of December 31, 2016 Pro Forma for Recapitalization Transactions	2017		2018		2019		2020		2021		Thereafter		Total
Preferred Units ⁽¹⁾	$	—	$	—	$	—	$	—	$	—	$	250.0	$	250.0
2022 Notes	—		—		—		—		—		346.0		346.0
2018 Notes ⁽²⁾	95.0		—										95.0
Opco credit facility ⁽³⁾	—		—		—		—		—		—		—
Opco senior notes	80.6		80.6		76.0		54.7		47.0		164.9		503.8
Total	$	180.6	$	80.6	$	76.0	$	54.7	$	47.0	$	754.9	$	1,193.8


(1)	Assumes no early conversion or redemption of the preferred units pursuant to the terms thereof.
(2)	NRP has also agreed to redeem any and all remaining outstanding 2018 Notes within 60 days after October 1, 2017.
(3)	Assumes no additional borrowings under the Opco revolving credit facility following closing of the recapitalization transactions.