Long-Term Debt

6 Months Ended

Jun. 30, 2011

Long-Term Debt

Long-Term Debt

6. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

	June 30, 2011			December 31, 2010
AHGP Credit facility	$	—		$	—
ARLP Credit facility		—			—
ARLP Senior notes		72,000			72,000
ARLP Series A senior notes		205,000			205,000
ARLP Series B senior notes		145,000			145,000
ARLP Term loan		300,000			300,000
		722,000			722,000
Less current maturities		(18,000	)		(18,000	)
Total long-term debt	$	704,000		$	704,000

On December 29, 2010, the Intermediate Partnership entered into a term loan agreement (the "ARLP Term Loan Agreement") with various financial institutions for a term loan (the "Term Loan") in the aggregate principal amount of $300 million. The Term Loan bears interest at a variable rate plus an applicable margin, which fluctuates depending upon whether we elect the Term Loan (or a portion thereof) to bear interest at the Base Rate or the Eurodollar Rate (as defined in the Term Loan Agreement). The ARLP Partnership elected the Eurodollar Rate which, with applicable margin, was 2.3% as of June 30, 2011. Interest is payable quarterly with principal due as follows: $15 million due per quarter beginning March 31, 2013 through December 31, 2013, $18.75 million due per quarter beginning March 31, 2014 through September 30, 2015 and the balance of $108.75 million due on December 31, 2015. The ARLP Partnership has the option to prepay the Term Loan at any time in whole or in part subject to terms and conditions described in the Term Loan Agreement. Upon a "change of control" (as defined in the Term Loan Agreement), the unpaid principal amount of the Term Loan, all interest thereon and all other amounts payable under the Term Loan Agreement will become due and payable.

The ARLP Partnership incurred debt issuance costs of approximately $1.4 million in 2010 associated with the ARLP Term Loan Agreement, which have been deferred and are being amortized as a component of interest expense over the duration of the Term Loan.

The Intermediate Partnership has a $142.5 million revolving credit facility (the "ARLP Credit Facility"), $72.0 million in senior notes ("Senior Notes"), $205.0 million in Series A and $145.0 million in Series B senior notes (the "2008 Senior Notes") and the $300 million Term Loan (collectively, the "ARLP Debt Arrangements"), which are guaranteed by all of the direct and indirect subsidiaries of the Intermediate Partnership. The ARLP Debt Arrangements contain various covenants affecting the Intermediate Partnership and its subsidiaries restricting, among other things, the amount of distributions by the Intermediate Partnership, the incurrence of additional indebtedness and liens, the sale of assets, the making of investments, the entry into mergers and consolidations and the entry into transactions with affiliates, in each case subject to various exceptions. The ARLP Debt Arrangements also require the Intermediate Partnership to remain in control of a certain amount of mineable coal reserves relative to its annual production. In addition, the ARLP Debt Arrangements require the Intermediate Partnership to maintain the following: (a) debt to cash flow ratio of not more than 3.0 to 1.0 and (b) cash flow to interest expense ratio of not less than 4.0 to 1.0, in both cases, during the four most recently ended fiscal quarters. The ARLP Credit Facility, Senior Notes and the 2008 Senior Notes limit the Intermediate Partnership's maximum annual capital expenditures, excluding acquisitions. The amount of any annual limit in excess of actual capital expenditures for that year carries forward and is added to the annual limit of the subsequent year. As a result, the capital expenditure limit for 2011 is approximately $531.9 million. The debt to cash flow ratio and cash flow to interest expense ratio were 1.33 to 1.0 and 16.2 to 1.0, respectively, for the trailing twelve months ended June 30, 2011. Actual capital expenditures were $142.4 million for the six months ended June 30, 2011. The ARLP Partnership was in compliance with the covenants of the ARLP Debt Arrangements as of June 30, 2011.

We previously maintained a $2.0 million revolving credit facility (the "AHGP Credit Facility") with C-Holdings, LLC, which owns 100% of the members' interest of our general partner, AGP, and is controlled by Joseph W. Craft, III, Chairman, President and Chief Executive Officer of AGP. There were no material operating restrictions, financial restrictions or covenants in the AHGP Credit Facility. The AHGP Credit Facility expired on April 1, 2011 and was not renewed.

At June 30, 2011, the ARLP Partnership had $11.6 million of letters of credit outstanding with $130.9 million available for borrowing, and it had no borrowings outstanding under the ARLP Credit Facility as of June 30, 2011 and December 31, 2010. The ARLP Partnership utilizes the ARLP Credit Facility, as appropriate, to meet working capital requirements, anticipated capital expenditures, scheduled debt payments or distribution payments. The ARLP Partnership incurs an annual commitment fee of 0.375% on the undrawn portion of the ARLP Credit Facility.