WALTHAM, Mass.--(EON: Enhanced Online News)--Global Partners LP (NYSE: GLP) (“the Partnership”) today announced that its wholly owned subsidiary, Global Companies LLC (“Global”), 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 $72 million 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 $30 million, $29 million and $13 million in 2017, 2018 and 2019, respectively.
In the fourth quarter of 2016, the Partnership expects to incur a one-time expense of approximately $81 million 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.
Eric Slifka, President and CEO of Global Partners, said, “Terminating the lease for these railcars – three years ahead of its scheduled expiration in 2019 – saves the Partnership more than $10 million in cash and puts some of the expenses associated with underutilized railcars behind us.”
About Global Partners LP
Global Partners is a midstream logistics and marketing master limited partnership that owns, controls or has access to one of the largest terminal networks of petroleum products and renewable fuels in the Northeast. Global also is one of the largest distributors of gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers in New England and New York. With approximately 1,500 locations, primarily in the Northeast, Global is one of the largest independent owners, suppliers and operators of gasoline stations and convenience stores. The Partnership is also engaged in the transportation of crude oil and other products by rail from the mid-continental U.S. and Canada to the East and West Coasts for distribution to refiners and others. Global is No. 276 in the Fortune 500 list of America’s largest corporations. For additional information, visit www.globalp.com.
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