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Genesis Energy Reports Implementation Of Certain Cost-Saving Measures Expected To Result In Annual Savings Of $38M; Co. Has Executed Amendment To Existing Senior Secured Credit Facility That Will Add Back To Adj. EBITDA Of ~$13.5M

Genesis Energy, L.P. (NYSE:GEL) announced today that it has implemented certain cost savings measures that are expected to result in annual savings of approximately $38 million dollars starting in the third quarter of

Benzinga · -

Genesis Energy, L.P. (NYSE:GEL) announced today that it has implemented certain cost savings measures that are expected to result in annual savings of approximately $38 million dollars starting in the third quarter of 2020. In conjunction with these measures, Genesis has executed an amendment to its existing senior secured credit facility that will add back to Adjusted Consolidated EBITDA (as calculated under our senior secured credit facility) approximately $13.5 million dollars of one-time charges associated with our cost savings initiatives for the test period ending June 30, 2020 and for each of the following three test periods.

In addition to the add back, and to help us manage the near-term uncertainty around the COVID-19 pandemic, our Consolidated Leverage Ratio covenant will increase to 5.75x in 3Q 2020 through 1Q 2021 and then revert back to 5.50x for the remaining term of the facility, which currently runs through May of 2022. Also, our Consolidated Interest Coverage Ratio covenant will decrease to 2.75x in 3Q 2020 through 1Q 2021 and then revert back to 3.00x for the remaining term of the facility.

Grant Sims, CEO of Genesis Energy, said, “Given the current operating environment and near-term challenges with the COVID-19 pandemic, we made the difficult yet prudent decision to right size our work force, which is expected to result in significant long-term recurring cost savings. While we currently don’t expect to have any issues with our existing covenants, we made the proactive decision with the unanimous support of our lender group to increase our Consolidated Leverage Ratio covenant by a full quarter turn through the first quarter of 2021. The bank group recognizes the long term fundamentals of our businesses are strong and that the negative effects of the COVID-19 pandemic will pass. Despite the headwinds, we remain on track to be cash flow positive and a net payer of debt in 2020 and beyond.”