Natural Resource Partners Provides Update on Effects of COVID-19 Pandemic and Distribution Update
HOUSTON–(BUSINESS WIRE)–Natural Resource Partners L.P. (NYSE: NRP) today provided an update on the effects of COVID-19 on its business and first quarter 2020 distributions. NRP has been operating under remote work protocols since mid-March. All employees are healthy, and the Partnership is conducting business as usual. The executive management team convenes daily to address employee welfare and remote work issues. We have taken steps to isolate our executive leadership and key employees from one another to ensure our succession management plans and delegation of authorities will continue to function in the event of COVID-19 infections in our workforce.
Most of our coal lessees continue to operate, and we have not yet seen a material impact on our cash flow or profitability as a result of the COVID-19 pandemic. However, we are aware of 13 coal companies that have announced temporary mine idlings. Nine of those announcements relate directly to NRP properties, representing approximately 40% of monthly cash collections. We believe all the idled mines plan to continue selling coal from inventory, which should result in continued royalty payments to NRP over the near term. We believe the eventual duration of the idlings will be dependent on the market impact of COVID-19 developments. NRP continues to maintain strong cash balances and liquidity, and efforts to de-lever and de-risk the Partnership over the past five years have prepared NRP to operate through this downturn.
In light of the unprecedented uncertainty that exists, we believe it is important to continue exercising a prudent approach to our financial stability. As a result, the Board of Directors of NRP’s general partner has determined that it is in the best interest of NRP to preserve liquidity by suspending the common unit distribution with respect to the first quarter of 2020 and paying in-kind one-half of the distribution on NRP’s preferred units as contemplated by those securities. This decision enables NRP to continue to build cash reserves until there is more visibility into the financial impact caused by the COVID-19 pandemic on our lessees and equity investment in the Ciner Wyoming soda ash business.
Craig Nunez, NRP’s President and Chief Operating Officer said, “This decision by the Board enables NRP to conserve $9 million of cash this quarter. We currently have $106 million of cash and $100 million of available borrowing capacity, and our $300 million parent company bonds do not mature until 2025. Because we are uncertain of the ongoing impact of the COVID-19 pandemic on our business, we believe this strategy is the most prudent course for our stakeholders. In the upcoming months, our Board will decide whether to reinstate our common unit distribution as we gain greater visibility into the duration of mine idlings, the operating performance of Ciner Wyoming and the progress of the ongoing bankruptcy of Foresight Energy, our largest coal lessee. With management and directors owning over 25% of the partnership, our interests are aligned with our unitholders.”
Natural Resource Partners L.P., a master limited partnership headquartered in Houston, TX, is a natural resource company that owns, manages and leases a diversified portfolio of mineral properties in the United States, including interests in coal, industrial minerals and other natural resources, and owns an equity investment in Ciner Wyoming, a trona/soda ash operation.
Withholding Information for Foreign Investors
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of NRP's distributions to foreign investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, NRP's distributions to foreign investors are subject to federal income tax withholding at the highest applicable rate.
This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Partnership based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Partnership. These risks include, among other things, statements regarding: the effects of the global COVID-19 pandemic; future distributions on the Partnership’s common and preferred units; the Partnership's business strategy; its liquidity and access to capital and financing sources; its financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected production levels by the Partnership's lessees; Ciner Wyoming LLC’s trona mining and soda ash refinery operations; distributions from the soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving the Partnership, and of scheduled or potential regulatory or legal changes; global and U.S. economic conditions; and other factors detailed in Natural Resource Partners’ Securities and Exchange Commission filings. Natural Resource Partners L.P. has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Tiffany Sammis, 713-751-7515