DEBT

Credit Agreement

In connection with our IPO, we entered into a $300 million senior secured credit agreement, the Credit Agreement, comprised of a $200 million revolving credit facility, the Revolving Credit Facility, and a $100 million term loan, the Term Loan Facility (borrowed in Canadian dollars), with Citibank, N.A., as administrative agent, and a syndicate of lenders. The Credit Agreement is a five year committed facility that matures October 15, 2019, unless amended or extended.

On November 13, 2015, we entered into an amendment of our existing secured revolving credit facility to raise the commitments thereunder to $300 million with the option to further increase the unsecured revolving credit facility to $400 million subject to receipt of lender commitments and satisfaction of other conditions. This modification agreement did not impact the interest rate, the October 15, 2019 maturity date of the Term Loan Facility, or collateral and guarantees under the original agreement. In connection with the amendment, we incurred additional deferred financing costs of $0.9 million, which, in addition to the deferred financing costs from the original agreement, will be amortized over the life of the remaining term of the Credit Agreement using the effective interest method.

Our Revolving Credit Facility and issuances of letters of credit are available for working capital, capital expenditures, permitted acquisitions and general partnership purposes, including distributions. As we make payments on the Term Loan Facility, availability equal to the U.S. dollar equivalent amount of the payments is transferred from the Term Loan Facility to the Revolving Credit Facility automatically, ultimately increasing availability on the Revolving Credit Facility to $400 million once the Term Loan Facility is fully repaid. In addition, we also have the ability to increase the maximum amount of credit available under the Credit Agreement by an aggregate amount of up to $100 million, to a total facility size of $500 million, as amended, subject to receiving increased commitments from lenders or other financial institutions and satisfaction of other specified conditions. The Revolving Credit Facility includes an aggregate $20 million sublimit for standby letters of credit and a $20 million sublimit for swingline loans. Obligations under the Revolving Credit Facility are guaranteed by our restricted subsidiaries, and are secured by a first priority lien on our assets and those of our restricted subsidiaries other than certain excluded assets.

The Term Loan Facility was used to fund a $100 million distribution to USDG and is guaranteed by USDG. The guaranty by USDG includes a covenant that USDG maintain a net worth (without taking into account its interests in us, either directly or indirectly) greater than the outstanding amount of the term loan and if such covenant is breached and not cured within a certain amount of time, the interest rate on the term loan increases by an additional 1.0%. The Term Loan Facility is not subject to any scheduled amortization. Mandatory prepayments of the term loan are required from certain non-ordinary course asset sales subject to customary exceptions and reinvestment rights.

Loans under the Credit Agreement accrue interest at a per annum rate by reference, at our election, to the London Interbank Offered Rate, or LIBOR, the Canadian Dealer Offered Rate, or CDOR, a base rate, or Canadian prime rate, in each case, plus an applicable margin. Our borrowings under the Revolving Credit Agreement bear interest at either a base rate and Canadian prime rate plus an applicable margin ranging from 1.25% to 2.25%, or at LIBOR or CDOR plus an applicable margin ranging from 2.25% to 3.25%. Borrowings under the Term Loan Facility bear interest at either the base rate or Canadian prime rate plus a margin ranging from 1.35% to 2.35% or at LIBOR or CDOR, as applicable, plus an applicable margin ranging from 2.35% to 3.35%. The applicable margin, as well as a commitment fee on the Revolving Credit Facility of 0.375% to 0.50% per annum on unused commitments, will vary based upon our consolidated net leverage ratio, as defined in our Credit Agreement. The actual average interest rate on our outstanding indebtedness was 2.71% and 3.87% at December 31, 2015 and 2014, respectively.

Our Credit Agreement contains affirmative and negative covenants that, among other things, limit or restrict our ability and the ability of our restricted subsidiaries to incur or guarantee debt, incur liens, make investments, make restricted payments, engage in business activities, engage in mergers, consolidations and other organizational changes, sell, transfer or otherwise dispose of assets or enter into burdensome agreements or enter into transactions with affiliates on terms that are not arm’s length, in each case, subject to exceptions.

Additionally, we are required to maintain the following financial ratios, each determined on a quarterly basis for the immediately preceding four quarter period then ended (or such shorter period as shall apply, on an annualized basis):


•	Consolidated Interest Coverage Ratio (as defined in the credit agreement), of at least 2.50 to 1.00;

Consolidated Leverage Ratio of not greater than 4.50 to 1.00 (or 5.00 to 1.00 at any time after we have issued at least $150.0 million of unsecured notes). In addition, upon the consummation of a Material Acquisition (as defined in our Credit Agreement), for the fiscal quarter in which the Material Acquisition is consummated and for two fiscal quarters immediately following such fiscal quarter (the “Material Acquisition Period”), if elected by us by written notice to the Administrative Agent given on or prior to the date of such acquisition, the maximum permitted ratio shall be increased by 0.50 to 1.00 above the otherwise relevant level; and


•	after we have issued at least $150.0 million of unsecured notes, a Consolidated Senior Secured Leverage Ratio (as defined in the Credit Agreement) of not greater than 3.50 to 1.00 (or 4.00 to 1.00 during a Material Acquisition Period).

Our acquisition of the Casper terminal qualifies as a Material Acquisition as defined under the terms of the Credit Agreement, and as a result, our Consolidated Total Leverage Ratio is increased to 5.00 to 1.00 from the previous 4.50 to 1.00, and will be effective through the second quarter of 2016.

Our Credit Agreement generally prohibits us from making cash distributions (subject to exceptions as set forth in the Credit Agreement) except so long as no default exists or would be caused thereby, we may make cash distributions to unitholders up to the amount of our available cash (as defined in our partnership agreement).

The Credit Agreement contains events of default, including, but not limited to (and subject to grace periods in circumstances set forth in the Credit Agreement), the failure to pay any principal, interest or fees when due, failure to perform or observe any covenant that does not have certain materiality qualifiers contained in the Credit Agreement or related loan documentation, any representation, warranty or certification made or deemed made in the agreements or related loan documentation being untrue in any material respect when made, default under certain material debt agreements, commencement of bankruptcy or other insolvency proceedings, certain changes in our ownership or the ownership of our general partner, material judgments or orders, certain judgment defaults, ERISA events or the invalidity of the loan documents. Upon the occurrence and during the continuation of an event of default under the agreements, the lenders may, among other things, terminate their commitments, declare any outstanding loans to be immediately due and payable and/or exercise remedies against us and the collateral as may be available to the lenders under the agreements and related documentation or applicable law. As of December 31, 2015, we were in compliance with the covenants set forth in our Credit Agreement.

We determined the capacity available to us under the terms of our Credit Agreement as follows:



	December 31,
	2015		2014
	(in millions)
Aggregate borrowing capacity under Credit Agreement	$	400.0	$	300.0
Less: Term Loan Facility amounts outstanding	41.5		81.4
Revolving Credit Facility amounts outstanding	201.0		—
Letters of credit outstanding	—		—
Available under Credit Agreement ⁽¹⁾	$	157.5	$	218.6

⁽¹⁾

Pursuant to the terms of our Credit Agreement, our borrowing capacity for 2015 is limited to 5.0 times consolidated EBITDA for the two quarters following a material acquisition, as defined in our Credit Agreement, at which time the limit returns to 4.5 times consolidated EBITDA. Our acquisition of the Casper terminal is treated as a material acquisition under the terms of our Credit Agreement and as a result, the 5.0 times consolidated EBITDA covenant will be effective through June 30, 2016.

In November 2008, the Predecessor, through USDG, became party to a credit agreement, the BOK Credit Agreement, with the Bank of Oklahoma consisting of a revolving credit facility with a borrowing capacity of $150 million. The BOK Credit Agreement was guaranteed by all USDG subsidiaries, including us. The outstanding balance under the BOK Credit Agreement was $30.0 million at December 31, 2013, which expanded in 2014 to $97.8 million after borrowing approximately $67.8 million, net of deferred financing costs, for costs associated with constructing the Hardisty terminal. We repaid the entire outstanding balance on October 15, 2014, with proceeds we received from our IPO. We incurred interest expense under the terms of the BOK Credit Agreement at LIBOR plus a margin based on USDG’s leverage ratio, as defined in the BOK Credit Agreement. The average interest rate was 3.90% and 3.92% for the years ended December 31, 2014 and 2013, respectively, in addition to a fee of 0.50% that was charged on the unused portion of the BOK Credit Agreement.

A detail of interest expense from continuing operations is as follows:



	For the Years Ended December 31,
	2015		2014		2013
	(in thousands)
Interest expense on BOK Credit Agreement	$	—	$	2,819	$	1,821
Interest expense on Credit Agreement	3,709		950		—
Amortization of deferred financing costs	659		1,056		1,420
Total interest expense	$	4,368	$	4,825	$	3,241

Details regarding the composition of our long-term debt balances are as follows:



	December 31,
	2015			2014
	(in thousands)
Term Loan Facility	$	41,539		$	81,358
Revolving Credit Facility	201,000			—
Less: Deferred financing costs, net	(3,095		)	$	(2,900	)
Total long-term debt, net	$	239,444		$	78,458