Natural Resource Partners L.P. (NRP) has been operating under remote-work protocols since mid-March due to the coronavirus (COVID-19). All of its employees are healthy, and the partnership is conducting business as usual, according to the company. The executive management team convenes daily to address employee welfare and remote work issues.
Most of their coal lessees continue to operate, and NRP said it has not yet seen a material impact on cash flow or profitability as a result of the COVID-19 pandemic. However, 13 coal companies 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,” the company said. “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 uncertainty that exists, the Board of Directors of NRP’s general partner has suspended the common unit distribution with respect to the first quarter of 2020 and paid in-kind one-half of the distribution on NRP’s preferred units as contemplated by those securities.
NRP President and Chief Operating Officer Craig Nunez 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.”
Moving forward, the board will decide whether to reinstate the common unit distribution.
