Natural Resource Partners LP
) plans to offer senior notes worth $300 million to eligible
buyers through a private placement. The senior notes will mature
in 2021. The offering is subject to market and other conditions.
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Natural Resource Partners intends to utilize the net proceeds of
the issue to repay the amount outstanding under its revolving
credit facility. The balance would be used to pay a part of the
term-loan, worth $200 million, related to the OCI Wyoming
Natural Resource Partners and its subsidiaries issue notes from
time to time and accumulate funds for repaying existing debts and
for expansion projects. The partnership's subsidiary NRP
(Operating) LLC issued senior unsecured notes, worth $50 million,
in Oct 2011. Natural Resource Partners primarily used the net
proceeds to finance its acquisitions.
Apart from the OCI Wyoming acquisition, Natural Resource Partners
recently decided to acquire another asset to expand its existing
operations. The partnership acquired a non-operated stake in oil
and gas assets located in the Bakken/Three Forks formation from
Abraxas Petroleum Corp.
Natural Resource Partners had cash balance of $105.2 million as
of Jun 30, 2013. Cash provided by operating activities during
second-quarter 2013 was $79.7 million. The partnership had $109
million available as of Jun 30, 2013 under its revolving credit
It is evident that Natural Resource Partners utilizes a major
chunk of the net proceeds of the issues for its inorganic growth
activities. We believe the partnership's current liquidity
position is not strong enough to meet the fund requirements.
In addition to following an inorganic growth strategy, Natural
Resource Partners is also curtailing its debt level. We believe
it is easier for the partnership to collect funds from investors
as it has a good debt service record with a rating of B1 assigned
by credit rating company Moody's Investors Service.
Natural Resource Partners currently has a Zacks Rank #3 (Hold).
However, other stocks from the industry that are presently
performing well include
Alliance Holdings GP, L.P.
Alliance Resource Partners LP
), each with a Zacks Rank #1 (Strong Buy).
Houston, Texas-based Natural Resource Partners along with its
subsidiaries engages in the ownership, management, and leasing of
mineral properties in the United States.