Global Partners announces early termination of railcar sublease
Global Partners announced that its wholly owned subsidiary, Global Companies, has signed an agreement to terminate early a sublease for 1,610 railcars leased from a third party. As part of this agreement, in the fourth quarter of 2016 Global will make a one-time discounted lease termination payment. The payment represents a discount of approximately $10.2 million from approximately $72M in railcar lease payments that Global would have been obligated to pay over the next three years. The termination of the sublease eliminates future lease payments related to these railcars of approximately $30M, $29M and $13M in 2017, 2018 and 2019, respectively. In the fourth quarter of 2016, the Partnership expects to incur a one-time expense of approximately $81M associated with the early termination. In addition to the discounted lease termination payment, the one-time expense includes costs for future railcar storage, freight, cleaning and inspection services as well as certain non-cash accounting adjustments associated with the early termination. In connection with the sublease termination, the Partnership executed an amendment to its credit agreement that permits the use of borrowings to make the early termination payment. The amendment also accelerates the step-down in the combined total leverage ratio from 5.50 times to 5.00 times effective with the fiscal quarter ending December 31, 2016.