What changed in this filing

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Item 1. Financial Statements

2020-08-07 compared with 2020-05-11 · 397 added, 227 removed, 668 unchanged (48% of the section changed)

3 unchanged sentences

(Dollars in thousands)

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

(Unaudited) (Audited)

Cash $ 52 $ 2,856

Accounts and other receivables, less allowance for doubtful accounts of $ 516 and $ 532 , respectively

48,517 87,254

Inventories 65,668 62,540

Due from affiliates 18,889 17,829

Fair value of derivatives

Other current assets 9,605 5,833

4 unchanged sentences

Property, plant and equipment, net 406,110 417,197

Goodwill 17,705 17,705

Right-of-use assets 24,554 23,901

1 unchanged sentence

Other assets, net 3,475 3,567

Total assets $ 616,979 $ 667,156

Liabilities and Partners’ Capital (Deficit)

20 unchanged sentences

(Dollars and units in thousands, except per unit amounts)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Terminalling and storage * $ 19,908 $ 21,377 $ 40,382 $ 44,481

5 unchanged sentences

Terminalling and storage 25,526 31,371 54,460 62,438

86,331 121,767 222,884 298,042

Total revenues 140,638 187,323 339,521 427,356

5 unchanged sentences

Terminalling and storage * 21,438 26,118 45,118 52,989

63,290 101,788 172,100 254,545

Operating expenses * 44,202 53,579 95,484 105,428

7 unchanged sentences

Gain on retirement of senior unsecured notes — — 3,484 —

Other, net 4 1 7 4

Total other expense ( 9,373 ) ( 14,985 ) ( 15,811 ) ( 28,653 )

3 unchanged sentences

Income from discontinued operations, net of income taxes

— ( 180,568 ) — ( 179,466 )

Net income (loss) ( 2,203 ) ( 191,182 ) 6,612 ( 194,838 )

8 unchanged sentences

* Related Party Transactions Included Above

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Terminalling and storage $ 15,942 $ 17,477 $ 31,816 $ 36,449

12 unchanged sentences

(Dollars and units in thousands, except per unit amounts)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Allocation of net income (loss) attributable to:

2 unchanged sentences

Discontinued operations — ( 176,895 ) — ( 175,814 )

$ ( 2,149 ) $ ( 187,293 ) $ 6,435 $ ( 190,874 )

General partner interest:

1 unchanged sentence

Discontinued operations — ( 3,612 ) — ( 3,590 )

$ ( 44 ) $ ( 3,824 ) $ 132 $ ( 3,897 )

Net income (loss) per unit attributable to limited partners:

1 unchanged sentence

Discontinued operations — ( 4.55 ) — ( 4.52 )

$ ( 0.06 ) $ ( 4.82 ) $ 0.17 $ ( 4.91 )

Weighted average limited partner units - basic 38,662 38,871 38,651 38,912

1 unchanged sentence

Discontinued operations — ( 4.55 ) — ( 4.52 )

$ ( 0.06 ) $ ( 4.82 ) $ 0.17 $ ( 4.91 )

Weighted average limited partner units - diluted 38,662 38,871 38,652 38,912

4 unchanged sentences

Partners’ Capital (Deficit)

Parent Net Investment

Common Limited

General Partner Amount

Parent Net Investment Common Limited General Partner Amount

Units Amount Total

Balances - January 1, 2019 $ 23,720 39,032,237 $ 258,085 $ 6,627 $ 288,432

Net loss — — ( 190,941 ) ( 3,897 ) ( 194,838 )

Issuance of common units, net — — ( 259 ) — ( 259 )

Issuance of restricted units — 16,944 — — —

4 unchanged sentences

Excess purchase price over carrying value of acquired assets

— — ( 102,393 ) — ( 102,393 )

Deferred taxes on acquired assets and liabilities — — 24,781 — 24,781

Contribution to parent ( 23,720 ) — — — ( 23,720 )

Balances - March 31, 2019

Balances - June 30, 2019 $ — 38,863,389 $ ( 39,255 ) $ 2,141 $ ( 37,114 )

Balances - January 1, 2020 $ — 38,863,389 $ ( 38,342 ) $ 2,146 $ ( 36,196 )

Net income — — 6,480 132 6,612

Issuance of restricted units — 81,000 — — —

3 unchanged sentences

Purchase of treasury units — ( 7,748 ) ( 9 ) — ( 9 )

Balances - March 31, 2020

Balances - June 30, 2020 $ — 38,852,507 $ ( 35,987 ) $ 2,180 $ ( 33,807 )

See accompanying notes to consolidated and condensed financial statements.

2 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net income (loss) $ 6,612 $ ( 194,838 )

(Income) from discontinued operations, net of income taxes

Loss from discontinued operations, net of income taxes — 179,466

Net income (loss) from continuing operations 6,612 ( 15,372 )

12 unchanged sentences

Product exchange receivables — 59

Inventories ( 3,128 ) 3,044

Due from affiliates ( 1,060 ) ( 15,947 )

11 unchanged sentences

Payments for property, plant and equipment ( 19,053 ) ( 14,102 )

Acquisitions — ( 23,720 )

Payments for plant turnaround costs ( 231 ) ( 4,742 )

2 unchanged sentences

Net cash used in continuing investing activities ( 13,147 ) ( 41,905 )

Net cash used in discontinued investing activities

Net cash used in investing activities

Net cash provided by discontinued investing activities — 209,155

Net cash provided by (used in) investing activities ( 13,147 ) 167,250

Cash flows from financing activities:

1 unchanged sentence

Proceeds from long-term debt 131,000 298,000

Proceeds from issuance of common units, net of issuance related costs — ( 259 )

Purchase of treasury units ( 9 ) ( 392 )

3 unchanged sentences

Net cash used in financing activities ( 34,283 ) ( 197,542 )

Net decrease in cash

Net increase (decrease) in cash ( 2,804 ) 2,221

Cash at beginning of period 2,856 300

5 unchanged sentences

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

June 30, 2020

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

17 unchanged sentences

Actual results could differ from those estimates.

Restructuring Support Agreement.

On June 25, 2020, the Partnership entered into a restructuring support agreement (as amended on July 7, 2020, the "Restructuring Support Agreement") with certain holders (the "Supporting Holders") that beneficially own, as of July 24, 2020, over 74 % in principal amount of the Partnership’s 7.25 % senior unsecured notes due 2021 (the "2021 Notes"), pursuant to which such holders and the Partnership agreed to enter into and implement a proposed debt restructuring transaction through an exchange offer with respect to the 2021 Notes (the "Exchange Offer") and a cash tender offer (the "Cash Tender Offer").

The Restructuring Support Agreement contemplates the following transactions:

• The Partnership agreed to commence the Exchange Offer to exchange the 2021 Notes, held by eligible holders of record, for either of:

(1) $ 650 in cash for each $1,000 in principal amount of 2021 Notes tendered (together with the Cash Tender Offer, the "Cash Offers"),

(2) $1,000 in principal amount of 11.50 % senior secured second lien notes due 2025 (the "Exchange Notes") for each $1,000 in principal amount of 2021 Notes tendered, and

(a) The right to acquire such holder’s pro rata share of $ 50 million of 10.00 % senior secured 1.5 lien notes due 2024 (the "New Notes", and the offer of the right to acquire such New Notes, the "Rights Offering"), the proceeds of which will be used to fund the Cash Offers;

(b) Holders that participate in the Rights Offering will receive Unused Proceeds (as described below) on a pro rata basis based on the principal amount of 2021 Notes participating in the Rights Offering, and $ 1,000 in principal amount of Exchange Notes for each $1,000 in principal amount of such holder’s 2021 Notes remaining after application of an amount (the "Unused Proceeds") equal to (i) the difference between $ 50 million and the amount of cash actually used in the Cash Offers multiplied by (ii) 0.85 .

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

• In connection with the Exchange Offer, the Partnership agreed to (x) commence a consent solicitation to make certain proposed amendments to the terms of the indenture governing the 2021 Notes to (i) eliminate substantially all of the restrictive covenants in the indenture governing the 2021 Notes, (ii) delete certain events of default and (iii) reduce the required time period for the Partnership to deliver a notice of redemption from at least 30 days before a redemption date to at least three business days before a redemption date and (y) solicit votes to accept the Plan, as further described below.

• The Partnership also agreed to commence a Cash Tender Offer to purchase 2021 Notes for $ 650 in cash for each $1,000 in principal amount of 2021 Notes tendered, to the extent held by holders of record not eligible to participate in the Exchange Offer.

In connection with the Cash Tender Offer, the Partnership also agreed to commence a consent solicitation to make certain proposed amendments to the terms of the indenture governing the 2021 Notes, as described above.

• Each Supporting Holder agreed to tender its 2021 Notes pursuant to the terms of the Exchange Offer and to deliver corresponding consents.

The Restructuring Support Agreement contemplates various closing conditions, including, among other things, the negotiation of definitive documentation and a minimum tender condition (the "Minimum Participation Condition"), as described below.

If the Exchange Offer and Cash Tender Offer are unsuccessful, the Restructuring Support Agreement provides agreed-upon terms for a pre-packaged financial restructuring plan (the "Plan") to be filed in cases commenced under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code" and such cases, the "Chapter 11 Cases"), subject to the terms and conditions of the Restructuring Support Agreement, including in the term sheet and the Plan attached thereto.

As of 5:00 p.m., New York City time, on July 23, 2020 (the “Early Participation Date”), the Partnership received tenders of approximately $ 335.5 million aggregate principal amount of the 2021 Notes in the Exchange Offer and Cash Tender Offer, which represented approximately 92.045 % in principal amount of the 2021 Notes.

On July 31, 2020, the required amount of Supporting Holders and the Partnership entered into an amendment to the Restructuring Support Agreement that, among other things, reduced the Minimum Participation Condition from 95 % to 92 % in principal amount of 2021 Notes tendered.

As a result, the Minimum Participation Condition has been satisfied and, subject to satisfaction of other customary closing conditions, the Exchange offer and Cash Tender Offer will be consummated on or about August 12, 2020 and the Plan will not be filed.

The Supporting Holders may terminate the Restructuring Support Agreement if, among other customary termination events, the Partnership files for bankruptcy other than as contemplated by the Restructuring Support Agreement.

The Partnership expects to continue the operation of its business in the ordinary course and does not anticipate interruption in its operations during the restructuring regardless of whether the Partnership conducts its restructuring in or out of the chapter 11 process.

The transactions contemplated by the Restructuring Support Agreement are not intended to impact trade vendors, employees, customers, or any related contractual agreements or obligations.

The Partnership’s common units will remain outstanding and are not a part of the transactions contemplated by the Restructuring Support Agreement.

See Note 18, "Subsequent Events" for further discussion of the Exchange Offer and the related transactions that are being conducted pursuant to the Restructuring Support Agreement.

Divestiture of Natural Gas Storage Assets.

4 unchanged sentences

The Partnership concluded the disposition represented a strategic shift which had a major effect on its financial results going forward.

As a result, the Partnership has presented the results of operations and cash flows relating to the Natural Gas Storage Assets as discontinued operations for the three months ended March 31, 2019.

As a result, the Partnership has presented the results of operations and

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

cash flows relating to the Natural Gas Storage Assets as discontinued operations for the three and six months ended June 30, 2019.

See Note 3 for more information.

3 unchanged sentences

Due to the economic impacts of the COVID-19 pandemic, the markets have experienced a decline in oil prices in response to oil demand concerns.

These concerns have been further exacerbated by the price war among members of the Organization of Petroleum Exporting Countries and other non-OPEC producer nations during the first quarter 2020 and global storage considerations.

These concerns were further exacerbated by the price war among members of the Organization of Petroleum Exporting Countries ("OPEC") and other non-OPEC producer nations during the first quarter of 2020 and global storage considerations.

Travel restrictions and stay-at-home orders implemented by governments in many regions and countries across the globe, including the United States, have greatly impacted the demand for refined products resulting in a significant reduction in refinery utilization.

2 unchanged sentences

Accordingly, it is possible that the impact of the COVID-19 pandemic could have a material adverse effect on the Partnership's results of operations, financial position and cash flows for the year ended December 31, 2020, including the recoverability of long-lived assets and goodwill, the valuation of inventory, and the amount of expected credit losses.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

Management considered the impact of the COVID-19 pandemic on the assumptions and estimates used in the preparation of the financial statements.

Management identified triggering events requiring the performance of impairment testing of long-lived assets and goodwill related to both the performance the Partnership's unit price during the first quarter of 2020 and certain of the Partnership's businesses that are sensitive to reductions in refined product demand and refinery utilization.

As a result, the Partnership recorded impairment charges of $ 4.4 million related to long-lived assets.

Management identified triggering events requiring the performance of impairment testing of long-lived assets and goodwill related to both the performance of the Partnership's unit price during the first quarter of 2020 and certain of the Partnership's businesses that are sensitive to reductions in refined product demand and refinery utilization.

As a result, the Partnership recorded impairment charges totaling $ 4,352 related to long-lived assets during the first quarter of 2020.

See Note 3 for more information.

2 unchanged sentences

Management also assessed the extent to which the current macroeconomic events brought about by COVID-19 and significant declines in refined product demand impacted the valuation of expected credit losses on accounts receivable and certain inventory items or resulted in modifications to any significant contracts.

Ultimately the results of these assessments did not have a material impact on the Partnership's results as of March 31, 2020.

Ultimately the results of these assessments did not have a material impact on the Partnership's results as of June 30, 2020.

NEW ACCOUNTING PRONOUNCEMENTS

9 unchanged sentences

The Partnership has concluded the disposition represents a strategic shift and will have a major effect on its financial results going forward.

As a result, the Partnership has presented the results of operations and cash flows relating to the Natural Gas Storage Assets as discontinued operations for the three months ended March 31, 2019.

As a result, the Partnership has presented the results of operations and cash flows relating to the Natural Gas Storage Assets as discontinued operations for the three and six months ended June 30, 2019.

The operating results, which are included in income from discontinued operations, were as follows:

Three Months Ended March 31, 2019

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

Three Months Ended June 30, 2019 Six Months Ended June 30, 2019

Total revenues

$ 11,902 $ 22,836

Total costs and expenses and other, net, excluding depreciation and amortization

( 9,609 ) ( 15,360 )

Depreciation and amortization

Income from discontinued operations before income taxes

( 4,080 ) ( 8,161 )

Other operating loss 1

( 178,781 ) ( 178,781 )

Loss from discontinued operations before income taxes

( 180,568 ) ( 179,466 )

Income tax expense

Income from discontinued operations, net of income taxes

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

Loss from discontinued operations, net of income taxes

$ ( 180,568 ) $ ( 179,466 )

1 The three and six months ended June 30, 2019 includes a loss on the disposition of the Natural Gas Storage Assets of $ 178,781 .

Long-Lived Assets Held for Sale

1 unchanged sentence

These assets are considered non-core assets to the Partnership's operations and did not qualify for discontinued operations presentation under the guidance of ASC 205-20.

March 31, 2020

2020 December 31, 2019

3 unchanged sentences

In the first quarter of 2020, the Partnership identified a triggering event related to a decline in the fair value related to the assets classified as held for sale at December 31, 2019.

As a result, an impairment charge of $ 3,052 and $ 1,300 was recorded in the Terminalling and Storage and Transportation segments, respectively, in the first quarter of 2020 and was recorded in "Other operating income (loss)" in the Partnership's Consolidated and Condensed Statements of Operations.

At March 31, 2020, the assets previously classified as held for sale no longer met the criteria to be classified as held for sale in accordance with ASC 360-10.

As a result, an impairment charge of $ 3,052 and $ 1,300 was recorded in the Terminalling and Storage and Transportation segments, respectively, during the three months ended March 31, of 2020 and was recorded in "Other operating income (loss)" in the Partnership's Consolidated and Condensed Statements of Operations.

At June 30, 2020, the remaining assets previously classified as held for sale in the amount of $ 700 no longer met the criteria to be classified as held for sale in accordance with ASC 360-10.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

The following table disaggregates our revenue by major source:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Terminalling and storage segment

1 unchanged sentence

Throughput and storage 19,908 21,377 40,382 44,481

$ 45,434 $ 52,748 $ 94,842 $ 106,919

Natural gas liquids segment

Natural gas liquids product sales $ 30,299 $ 57,398 $ 112,510 $ 173,872

$ 30,299 $ 57,398 $ 112,510 $ 173,872

Sulfur services segment

2 unchanged sentences

Sulfur services 2,914 2,858 5,829 5,717

$ 33,420 $ 35,856 $ 61,743 $ 67,449

Transportation segment

2 unchanged sentences

Offshore transportation 1,001 1,636 2,002 2,835

$ 31,485 $ 41,321 $ 70,426 $ 79,116

Revenue is measured based on a consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties where the Partnership is acting as an agent.

The Partnership recognizes revenue when the Partnership satisfies a performance obligation, which typically occurs when the Partnership transfers control over a product to a customer or as the Partnership delivers a service.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

The following is a description of the principal activities - separated by reportable segments - from which the Partnership generates revenue.

7 unchanged sentences

Natural Gas Liquids Segment

NGL distribution revenue is recognized when product is delivered by truck, rail, or pipeline to the Partnership's NGL customers.

Natural Gas Liquids ("NGL") distribution revenue is recognized when product is delivered by truck, rail, or pipeline to the Partnership's NGL customers.

Revenue is recognized on title transfer of the product to the customer.

Delivery of product is invoiced as the transaction occurs and is generally paid within a month.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

Sulfur Services Segment

12 unchanged sentences

The Partnership applies the practical expedient in ASC 606-10-50-14(a) and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

2020 2021 2022 2023 2024 Thereafter Total

Terminalling and storage

2 unchanged sentences

Sulfur product sales 12,980 17,025 14,879 13,834 975 975 60,668

Total $ 36,103 $ 60,298 $ 55,273 $ 55,439 $ 43,829 $ 339,314 $ 590,256

Components of inventories at June 30, 2020 and December 31, 2019 were as follows:

2020 December 31,

Natural gas liquids $ 26,783 $ 19,097

Sulfur 5,257 4,586

Fertilizer 11,478 15,852

Lubricants 18,209 18,925

Other 3,941 4,080

$ 65,668 $ 62,540

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

Components of inventories at March 31, 2020 and December 31, 2019 were as follows:

March 31, 2020

June 30, 2020

At June 30, 2020 and December 31, 2019, long-term debt consisted of the following:

2020 December 31,

Natural gas liquids

At March 31, 2020 and December 31, 2019 , long-term debt consisted of the following:

$400,000 Revolving credit facility at variable interest rate (3.93% 1 weighted average at March 31, 2020), due August 2023 4 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries, net of unamortized debt issuance costs of $4,457 and $4,586, respectively 2

$ 400,000 Revolving credit facility at variable interest rate ( 3.44 % 1 weighted average at June 30, 2020), due August 2023 4 secured by substantially all of the Partnership’s assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in the Partnership’s operating subsidiaries, net of unamortized debt issuance costs of $ 4,206 and $ 4,586 , respectively 2

$ 176,794 $ 196,414

$ 400,000 Senior notes, 7.25 % interest, net of unamortized debt issuance costs of $ 428 and $ 770 , respectively, including unamortized premium of $ 191 and $ 344 , respectively, issued $ 250,000 February 2013 and $ 150,000 April 2014, $ 26,200 repurchased during 2015, $ 9,344 repurchased during 2020, due February 2021, unsecured 2,3,4,5

364,219 373,374

Total 541,013 569,788

current portion ( 364,219 ) —

6 unchanged sentences

Indebtedness under the credit facility bears interest at LIBOR plus an applicable margin or the base prime rate plus an applicable margin.

All amounts outstanding at March 31, 2020 and December 31, 2019 were at LIBOR plus an applicable margin.

The applicable margin for revolving loans that are LIBOR loans ranges from 2.25 % to 3.50 % and the applicable margin for revolving loans that are base prime rate loans ranges from 1.25 % to 2.50 % .

The applicable margin for existing LIBOR borrowings at March 31, 2020 is 3.25 % .

The credit facility contains various covenants which limit the Partnership’s ability to make certain investments and acquisitions;

All amounts outstanding at June 30, 2020 and December 31, 2019 were at LIBOR plus an applicable margin.

The applicable margin for revolving loans that are LIBOR loans currently ranges from 2.25 % to 3.50 % and the applicable margin for revolving loans that are base prime rate loans currently ranges from 1.25 % to 2.50 %.

The applicable margin for existing LIBOR borrowings at June 30, 2020 is 3.25 %.

The credit facility contains various covenants which limit the Partnership’s ability to make distributions;

make certain investments and acquisitions;

enter into certain agreements;

1 unchanged sentence

and make certain amendments to the Partnership's omnibus agreement with Martin Resource Management Corporation (the "Omnibus Agreement").

The Partnership is permitted to make quarterly distributions so long as no event of default exists.

2 The Partnership is in compliance with all debt covenants as of March 31, 2020 and December 31, 2019 , respectively.

Upon the earlier of (i) the closing of the Exchange Offer and related transactions and (ii) August 15, 2020, the applicable margin for revolving loans that are LIBOR loans will range from 2.75 % to 4.00 % and the applicable margin for revolving loans that are base prime rate loans will range from 1.75 % to 3.00 %.

Starting on such date, LIBOR will have a floor of 1.0 % per annum.

2 The Partnership is in compliance with all debt covenants as of June 30, 2020 and December 31, 2019, respectively.

3 The 2021 indenture restricts the Partnership’s ability to sell assets;

3 unchanged sentences

and consolidate, merge or transfer all or substantially all of its assets.

4 As of June 30, 2020, the 2021 Notes were due within twelve months and have therefore been presented as a current liability on the Consolidated and Condensed Balance Sheets at June 30, 2020.

The Partnership's amended revolving credit facility includes a provision that accelerates the August 31, 2023 maturity date of the revolving credit facility to (i) August 19, 2020 if either (x) more than $ 36.5 million of the 2021 Notes remain outstanding after completion of the Exchange Offer or (y) the Exchange Offer has not been completed by August 15, 2020 and the Partnership has not commenced the chapter 11 proceedings contemplated by the Plan prior to August 19, 2020 or (ii) October 16, 2020 if the Partnership commences such chapter 11 proceedings and the Plan is not effective by October 16, 2020.

On July 8, 2020, the Partnership amended its revolving credit facility to, among other things, permit the Exchange Offer.

Certain of the amendments to the revolving credit facility became effective immediately, such as a modification to its maturity date to facilitate either the Exchange Offer or the Plan.

Other amendments to the revolving credit facility will become effective upon the completion of the Exchange Offer and related transactions, or on August 15, 2020 if the Exchange Offer and

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

4 As of March 31, 2020, the Partnership’s 7.25 % senior unsecured notes due 2021 (the "2021 Notes") were due within twelve months and have therefore been presented as a current liability on the Consolidated and Condensed Balance Sheets at March 31, 2020.

The Partnership's amended revolving credit facility includes a provision which accelerates the maturity date to August 19, 2020 if the 2021 Notes are not refinanced in a manner not prohibited by the facility.

If the Partnership is unable to refinance the 2021 Notes and is unable to repay the outstanding borrowings under its revolving credit facility on August 19, 2020, the Partnership's ability to meet its obligations would be adversely affected.

Failure to comply with this provision, if not waived, would result in an event of default under the Partnership's revolving credit facility, the potential acceleration of outstanding debt thereunder, and the potential foreclosure on the collateral securing such debt, and could cause a cross-default under other agreements, which could also result in the acceleration of those obligations by the counterparties to those agreements.

The Partnership, with support from the Board of Directors, is actively pursuing a variety of strategic alternatives to strengthen the balance sheet and address near term maturities and accordingly, announced on April 6, 2020, the hiring of Stephens Inc.

as a financial advisor to assist in the process.

Pending the successful implementation of the refinancing, the conditions described above have raised substantial doubt about the Partnership’s ability to continue as a going concern.

June 30, 2020

such related transactions have not closed by such date.

The subsequent amendments to the Partnership’s revolving credit facility include, among other things, a reduction of the aggregate revolving commitments thereunder from $ 400 million to $ 300 million and an increase in the pricing under the revolving credit facility.

On July 9, 2020, the Partnership commenced the Exchange Offer and related transactions and offers contemplated by the Restructuring Support Agreement.

As of the Early Participation Date, the Partnership received sufficient 2021 Notes tendered such that the Minimum Participation Condition has been satisfied and, subject to satisfaction of other customary closing conditions, the Exchange offer and Cash Tender Offer will be consummated on or about August 12, 2020 and the Plan will not be filed.

In addition, the Partnership received the requisite majority consent necessary for the adoption of the proposed amendments to the indenture governing the 2021 Notes (the “2021 Notes Indenture”), which will, among other things, eliminate substantially all of the restrictive covenants in the 2021 Notes Indenture, delete certain events of default, and shorten the period of advance notice required to be given to holders of 2021 Notes from 30 days to three business days in the case of a redemption of the 2021 Notes.

See Note 18, "Subsequent Events" for further discussion of the Exchange Offer and related transactions.

If we are unable to refinance the 2021 Notes either via the Exchange Offer or the Plan, in each case as contemplated by the Restructuring Support Agreement, we would be in default under our revolving credit facility.

An event of default under our revolving credit facility would allow the lenders to declare the balance outstanding thereunder due and payable in full, which could trigger cross-defaults under other agreements, which could also result in the acceleration of those obligations by the counterparties to those agreements.

Pending the successful implementation of the refinancing of the 2021 Notes, the conditions described above have raised substantial doubt about the Partnership’s ability to continue as a going concern.

The Partnership’s management is engaged in ongoing communication with credit providers and presently believes the measures being taken will enable the Partnership to successfully refinance the 2021 Notes and comply with covenants under its revolving credit facility, although no assurance can be given.

5 In March 2020, the Partnership repurchased on the open market an aggregate $ 9,344 of the 2021 Notes.

These transactions resulted in a gain on retirement of $ 3,484 .

The Partnership paid cash interest, net of capitalized interest, in the amount of $ 16,736 and $ 19,363 for the three months ended March 31, 2020 and 2019 , respectively.

Capitalized interest was $ 4 and $ 2 for the three months ended March 31, 2020 and 2019 , respectively.

5 In March 2020, the Partnership repurchased on the open market an aggregate $ 9,344 of the 2021 Notes, resulting in a gain on retirement of $ 3,484 .

The Partnership paid cash interest, net of capitalized interest, in the amount of $ 2,376 and $ 7,330 for the three months ended June 30, 2020 and 2019, respectively.

The Partnership paid cash interest, net of capitalized interest, in the amount of $ 19,113 and $ 26,693 for the six months ended June 30, 2020 and 2019, respectively.

Capitalized interest was $ 6 and $ 0 for the three months ended June 30, 2020 and 2019, respectively.

Capitalized interest was $ 9 and $ 2 for the six months ended June 30, 2020 and 2019, respectively.

The Partnership has numerous operating leases primarily for terminal facilities and transportation and other equipment.

5 unchanged sentences

The Partnership includes extension periods and excludes termination periods from its lease term if, at commencement, it is reasonably likely that the Partnership will exercise the option.

The components of lease expense for the three months ended March 31, 2020 and 2019 were as follows:

Three Months Ended March 31,

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

The components of lease expense for the six months ended June 30, 2020 and 2019 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Operating lease cost $ 2,767 $ 2,784 $ 5,611 $ 5,381

3 unchanged sentences

Short-term lease cost $ 3,492 2,671 $ 6,915 5,222

Variable lease cost $ 22 $ 22 $ 50 $ 50

Total lease cost $ 6,893 $ 6,350 $ 13,887 $ 12,331

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

Supplemental balance sheet information related to leases was as follows:

Three Months Ended March 31,

Supplemental balance sheet information related to leases at June 30, 2020 and December 31, 2019 was as follows:

2020 December 31, 2019

Operating Leases

10 unchanged sentences

Total finance lease obligations $ 4,336 $ 7,475

The Partnership’s future minimum lease obligations as of March 31, 2020 consist of the following:

Operating Leases

Finance Leases

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

The Partnership’s future minimum lease obligations as of June 30, 2020 consist of the following:

Operating Leases Finance Leases

Year 1 $ 8,964 $ 4,044

Year 2 6,731 252

Year 3 4,055 172

Year 4 1,887 —

Year 5 1,210 —

Thereafter 6,319 —

Total $ 29,166 $ 4,468

Less amounts representing interest costs ( 4,179 ) ( 132 )

1 unchanged sentence

The Partnership has non-cancelable revenue arrangements that are under the scope of ASC 842 whereby we have committed certain terminalling and storage assets in exchange for a minimum fee.

Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of March 31, 2020 are as follows:

Future minimum revenues the Partnership expects to receive under these non-cancelable arrangements as of June 30, 2020 are as follows:

2020 - $ 9,960 ;

4 unchanged sentences

subsequent years - $ 49,414 .

SUPPLEMENTAL BALANCE SHEET INFORMATION

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

June 30, 2020

SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of "Other accrued liabilities" were as follows:

March 31, 2020

2020 December 31, 2019

4 unchanged sentences

Operating lease liabilities 7,906 7,722

Other 1,415 1,859

$ 26,496 $ 28,789

The schedule below summarizes the changes in our asset retirement obligations:

March 31, 2020

June 30, 2020

Beginning asset retirement obligations $ 8,936

7 unchanged sentences

2 The non-current portion of asset retirement obligations is included in "Other long-term obligations" on the Partnership's Consolidated and Condensed Balance Sheets.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Partnership’s revenues and cost of products sold are materially impacted by changes in NGL prices.

The Partnership’s revenues and cost of products sold are materially impacted by changes in commodity prices.

Additionally, the Partnership's results of operations are materially impacted by changes in interest rates.

6 unchanged sentences

In addition, the Partnership has focused on utilizing counterparties for these transactions whose financial condition is appropriate for the credit risk involved in each specific transaction.

The Partnership has entered into hedging transactions as of March 31, 2020 to protect a portion of its commodity price risk exposure.

These hedging arrangements are in the form of swaps for NGLs.

At March 31, 2020 , the Partnership has instruments totaling a gross notional quantity of 25,000 barrels settling during the month of April 2020.

At June 30, 2020, the Partnership has instruments totaling a gross notional quantity of 0 barrels.

At December 31, 2019, the Partnership had instruments totaling a gross notional quantity of 452,000 barrels settling during the period from January 31, 2020 through February 29, 2020.

These instruments settle against the applicable pricing source for each grade and location.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

(b) Interest Rate Derivative Instruments

3 unchanged sentences

From time to time, the Partnership enters into interest rate swaps to manage interest rate risk associated with the Partnership’s variable rate credit facility and its 2021 Notes.

At March 31, 2020 and December 31, 2019 , the Partnership did not have any outstanding interest rate derivative instruments.

At June 30, 2020 and December 31, 2019, the Partnership did not have any outstanding interest rate derivative instruments.

For information regarding gains and losses on interest rate derivative instruments, see "Tabular Presentation of Gains and Losses on Derivative Instruments" below.

2 unchanged sentences

Fair Values of Derivative Instruments in the Consolidated and Condensed Balance Sheets

Derivative Assets

Derivative Liabilities

Balance Sheet Location

March 31, 2020

December 31, 2019

Derivative Assets Derivative Liabilities

Fair Values Fair Values

Balance Sheet Location

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019 Balance Sheet Location

June 30, 2020 December 31, 2019

Derivatives not designated as hedging instruments:

Commodity contracts

Fair value of derivatives

Commodity contracts Fair value of derivatives $ — $ — Fair value of derivatives $ — $ 667

Total derivatives not designated as hedging instruments

$ — $ — $ — $ 667

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

Effect of Derivative Instruments on the Consolidated and Condensed Statements of Operations

For the Three Months Ended March 31, 2020 and 2019

For the Three Months Ended June 30, 2020 and 2019

Location of Gain (Loss)

Recognized in Income on

Amount of Gain (Loss) Recognized in

Derivatives Amount of Gain (Loss) Recognized in

Income on Derivatives

Derivatives not designated as hedging instruments:

Commodity contracts

Cost of products sold

Commodity contracts Cost of products sold $ ( 162 ) $ ( 2,083 )

Total effect of derivatives not designated as hedging instruments $ ( 162 ) $ ( 2,083 )

Effect of Derivative Instruments on the Consolidated and Condensed Statements of Operations

For the Six Months Ended June 30, 2020 and 2019

Location of Gain (Loss)

Recognized in Income on

Derivatives Amount of Gain (Loss) Recognized in

Income on Derivatives

Derivatives not designated as hedging instruments:

Commodity contracts Cost of products sold $ ( 129 ) $ ( 2,322 )

Total effect of derivatives not designated as hedging instruments $ ( 129 ) $ ( 2,322 )

PARTNERS' CAPITAL

As of March 31, 2020 , Partners’ capital consisted of 38,852,507 common limited partner units, representing a 98 % partnership interest, and a 2 % general partner interest.

As of June 30, 2020, Partners’ capital consisted of 38,852,507 common limited partner units, representing a 98 % partnership interest, and a 2 % general partner interest.

Martin Resource Management Corporation, through subsidiaries, owns 6,114,532 of the Partnership's common limited partner units representing approximately 15.7 % of the Partnership's outstanding common limited partner units.

1 unchanged sentence

Martin Resource Management Corporation controls the Partnership's general partner, by virtue of its 51 % voting interest in MMGP Holdings, LLC ("Holdings"), the sole member of the Partnership's general partner.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

The partnership agreement of the Partnership (the "Partnership Agreement") contains specific provisions for the allocation of net income and losses to each of the partners for purposes of maintaining their respective partner capital accounts.

3 unchanged sentences

The Partnership is required to distribute all of its available cash from operating surplus, as defined in the Partnership Agreement.

The general partner was allocated no incentive distributions during the three months ended March 31, 2020 and 2019.

The general partner was allocated no incentive distributions during the six months ended June 30, 2020 and 2019.

The target distribution levels entitle the general partner to receive 2 % of quarterly cash distributions from the minimum of $ 0.50 per unit up to $ 0.55 per unit, 15 % of quarterly cash distributions in excess of $ 0.55 per unit until all unitholders have received $ 0.625 per unit, 25 % of quarterly cash distributions in excess of $ 0.625 per unit until all unitholders have received $ 0.75 per unit and 50 % of quarterly cash distributions in excess of $ 0.75 per unit.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

Distributions of Available Cash

14 unchanged sentences

The following is a reconciliation of net income from continuing operations and net income from discontinued operations allocated to the general partner and limited partners for purposes of calculating net income attributable to limited partners per unit:

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Continuing operations:

3 unchanged sentences

General partner interest in undistributed income (loss)

( 48 ) ( 223 ) 79 ( 338 )

Less income (loss) allocable to unvested restricted units ( 10 ) ( 4 ) 45 ( 5 )

Limited partners’ interest in net income (loss) $ ( 2,149 ) $ ( 10,398 ) $ 6,435 $ ( 15,060 )

Three Months Ended March 31,

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Discontinued operations:

1 unchanged sentence

Less general partner’s interest in net income (loss):

Distributions payable on behalf of IDRs — — — —

Distributions payable on behalf of general partner interest — 185 — 362

General partner interest in undistributed income

— ( 3,797 ) — ( 3,952 )

Less income allocable to unvested restricted units — ( 61 ) — ( 62 )

2 unchanged sentences

The following are the unit amounts used to compute the basic and diluted earnings per limited partner unit for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Basic weighted average limited partner units outstanding

38,661,852 38,871,420 38,651,357 38,912,250

Dilutive effect of restricted units issued

Total weighted average limited partner diluted units outstanding

38,661,852 38,871,420 38,651,897 38,912,250

All outstanding units were included in the computation of diluted earnings per unit and weighted based on the number of days such units were outstanding during the periods presented.

All common unit equivalents were antidilutive for the three months ended March 31, 2019 because the limited partners were allocated a net loss in this period.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

All common unit equivalents were antidilutive for the three and six months ended June 30, 2019 and the three months ended June 30, 2020 because the limited partners were allocated a net loss in this period.

UNIT BASED AWARDS

1 unchanged sentence

Amounts recognized in selling, general, and administrative expense in the consolidated and condensed financial statements with respect to these plans are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Employees $ 301 $ 300 $ 602 $ 629

Non-employee directors 62 63 107 86

Total unit-based compensation expense $ 363 $ 363 $ 709 $ 715

All of the Partnership's outstanding awards at March 31, 2020 met the criteria to be treated under equity classification.

All of the Partnership's outstanding awards at June 30, 2020 met the criteria to be treated under equity classification.

Long-Term Incentive Plans

The Partnership's general partner has a long-term incentive plan for employees and directors of the general partner and its affiliates who perform services for the Partnership.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

On May 26, 2017, the unitholders of the Partnership approved the Martin Midstream Partners L.P.

20 unchanged sentences

In addition, the PBRU's awarded on March 1, 2018 that are achieved will only vest if the grantee is employed by Martin Resource Management Corporation on March 31, 2021.

As of March 31, 2020 , the Partnership is unable to ascertain if certain performance conditions will be achieved and, as such, has not recognized compensation expense for the vesting of the units.

The Partnership will record

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

compensation expense for the vested portion of the units once the achievement of the performance condition is deemed probable.

As of June 30, 2020, the Partnership is unable to ascertain if certain performance conditions will be achieved and, as such, has not recognized compensation expense for the vesting of the units.

The Partnership will record compensation expense for the vested portion of the units once the achievement of the performance condition is deemed probable.

The restricted units are valued at their fair value at the date of grant which is equal to the market value of common units on such date.

A summary of the restricted unit activity for the three months ended March 31, 2020 is provided below:

Number of Units

Weighted Average Grant-Date Fair Value Per Unit

A summary of the restricted unit activity for the six months ended June 30, 2020 is provided below:

Number of Units Weighted Average Grant-Date Fair Value Per Unit

Non-vested, beginning of period 379,019 $ 13.91

Granted (TBRU) 81,000 $ 2.53

Vested ( 101,128 ) $ 13.95

Forfeited ( 84,134 ) $ 13.90

Non-Vested, end of period 274,757 $ 10.54

Aggregate intrinsic value, end of period $ 327

A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three months ended March 31, 2020 and 2019 is provided below:

Three Months Ended March 31,

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

A summary of the restricted units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three and six months ended June 30, 2020 and 2019 is provided below:

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Aggregate intrinsic value of units vested $ — $ — $ 151 $ 1,351

Fair value of units vested — — 1,427 1,551

As of March 31, 2020 , there was $ 1,613 of unrecognized compensation cost related to non-vested restricted units.

As of June 30, 2020, there was $ 1,249 of unrecognized compensation cost related to non-vested restricted units.

That cost is expected to be recognized over a weighted-average period of 1.37 years.

RELATED PARTY TRANSACTIONS

As of March 31, 2020 , Martin Resource Management Corporation owns 6,114,532 of the Partnership’s common units representing approximately 15.7 % of the Partnership’s outstanding limited partner units.

As of June 30, 2020, Martin Resource Management Corporation owns 6,114,532 of the Partnership’s common units representing approximately 15.7 % of the Partnership’s outstanding limited partner units.

Martin Resource Management Corporation controls the Partnership's general partner by virtue of its 51 % voting interest in Holdings, the sole member of the Partnership's general partner.

The Partnership’s general partner, MMGP, owns a 2 % general partner interest in the Partnership and the Partnership’s IDRs.

The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of March 31, 2020 , effectively gives Martin Resource Management Corporation the ability to veto some of the Partnership’s actions and to control the Partnership’s management.

The Partnership’s general partner’s ability, as general partner, to manage and operate the Partnership, and Martin Resource Management Corporation’s ownership as of June 30, 2020, effectively gives Martin Resource Management Corporation the ability to veto some of the Partnership’s actions and to control the Partnership’s management.

The following is a description of the Partnership’s material related party agreements and transactions:

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

Omnibus Agreement

7 unchanged sentences

• providing land and marine transportation of petroleum products, by-products, and chemicals;

• distributing NGLs;

• distributing NGL's;

• manufacturing and selling sulfur-based fertilizer products and other sulfur-related products.

3 unchanged sentences

◦ distributing fuel oil, marine fuel and other liquids;

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

◦ providing marine bunkering and other shore-based marine services in Texas, Louisiana, Mississippi, Alabama, and Florida;

7 unchanged sentences

• any business that Martin Resource Management Corporation acquires or constructs that has a fair market value of $ 5,000 or more if the Partnership has been offered the opportunity to purchase the business for fair market value and the Partnership declines to do so with the concurrence of the conflicts committee of the board of directors of the general partner of the Partnership (the "Conflicts Committee");

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

• any business that Martin Resource Management Corporation acquires or constructs where a portion of such business includes a restricted business and the fair market value of the restricted business is $ 5,000 or more and represents less than 20 % of the aggregate value of the entire business to be acquired or constructed;

5 unchanged sentences

Effective January 1, 2020, through December 31, 2020, the Conflicts Committee approved an annual reimbursement amount for indirect expenses of $ 16,410 .

The Partnership reimbursed Martin Resource Management Corporation for $ 4,103 and $ 4,164 of indirect expenses for the three months ended March 31, 2020 and 2019 , respectively.

The Partnership reimbursed Martin Resource Management Corporation for $ 4,103 and $ 4,164 of indirect expenses for the three months ended June 30, 2020 and 2019, respectively.

The Partnership reimbursed Martin Resource Management Corporation for $ 8,261 and $ 8,328 of indirect expenses for the six months ended June 30, 2020 and 2019, respectively.

The Conflicts Committee will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually.

1 unchanged sentence

The provisions of the Omnibus Agreement regarding Martin Resource Management Corporation’s services will terminate if Martin Resource Management Corporation ceases to control the general partner of the Partnership.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

Related Party Transactions .

16 unchanged sentences

Under the agreement, MTI agreed to transport Martin Resource Management Corporation's petroleum products and by-products.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

Term and Pricing.

15 unchanged sentences

Under this agreement, the Partnership agreed to purchase all of its marine fuel requirements that occur in the areas serviced by Martin Resource Management Corporation.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

Terminal Services Agreements

2 unchanged sentences

At such time, the per-gallon throughput fee the Partnership charged under this agreement was increased when compared to the previous agreement and may be adjusted annually based on a price index.

This agreement was further amended on January 1, 2017, October 1, 2017, and April 1, 2019 to modify its minimum throughput requirements and throughput fees.

This agreement was further amended on January 1, 2017, October 1, 2017, April 1, 2019, and January 1, 2020 to modify its minimum throughput requirements and throughput fees.

The term of this agreement is currently evergreen and it will continue on a month to month basis until terminated by either party by giving 60 days’ written notice.

13 unchanged sentences

Further, certain capital improvements, to the extent requested by Cross, are reimbursed through a capital recovery fee.

As of December 31, 2019, annual capital recovery fee reimbursement of $ 2,088 expired.

As of December 31, 2019, the annual capital recovery fee reimbursement of $ 2,088 expired.

An additional $ 2,586 of capital recovery fee reimbursement will expire on December 31, 2020.

All of these fees (other than the fuel

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

surcharge and capital recovery fee) are subject to escalation annually based upon the greater of 3 % or the increase in the Consumer Price Index for a specified annual period.

In addition, on the third, sixth and ninth anniversaries of the agreement, the parties can negotiate an upward or downward adjustment in the fees subject to their mutual agreement.

Also, the Partnership renegotiated a crude transportation contract set to expire in the first half of 2022 resulting in a reduction in revenue of $ 2,145 annually beginning January 1, 2020.

All of these fees (other than the fuel surcharge and capital recovery fee) are subject to escalation annually based upon the greater of 3 % or the increase in the Consumer Price Index for a specified annual perio d .

A lso, the Partnership renegotiated a crude transportation contract set to expire in the first half of 2022 resulting in a reduction in revenue of $ 2,145 annually beginning January 1, 2020.

Other Miscellaneous Agreements.

3 unchanged sentences

The impact of related party revenues from sales of products and services is reflected in the consolidated and condensed financial statements as follows:

Three Months Ended March 31,

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Terminalling and storage $ 15,942 $ 17,477 $ 31,816 $ 36,449

3 unchanged sentences

Terminalling and storage 29 277 102 691

38 286 130 707

$ 21,373 $ 23,619 $ 43,233 $ 48,655

The impact of related party cost of products sold is reflected in the consolidated and condensed financial statements as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Cost of products sold:

1 unchanged sentence

Terminalling and storage 4,249 7,203 10,026 13,112

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

$ 6,803 $ 10,087 $ 15,347 $ 18,570

The impact of related party operating expenses is reflected in the consolidated and condensed financial statements as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Operating expenses:

3 unchanged sentences

Terminalling and storage 4,417 4,632 8,992 9,239

$ 19,440 $ 24,407 $ 41,211 $ 46,943

The impact of related party selling, general and administrative expenses is reflected in the consolidated and condensed financial statements as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Selling, general and administrative:

4 unchanged sentences

Indirect, including overhead allocation 4,124 4,254 8,312 8,439

$ 8,055 $ 8,558 $ 16,367 $ 17,093

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

BUSINESS SEGMENTS

6 unchanged sentences

There is no allocation of administrative expenses or interest expense.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

Three Months Ended March 31, 2020

Operating Revenues

Intersegment Revenues Eliminations

Operating Revenues after Eliminations

Depreciation and Amortization

Operating Income (Loss) after Eliminations

Capital Expenditures and Plant Turnaround Costs

Three Months Ended June 30, 2020 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage 46,976 ( 1,542 ) 45,434 7,272 2,969 3,427

3 unchanged sentences

Indirect selling, general and administrative — — — — ( 4,361 ) —

Three Months Ended March 31, 2019

Operating Revenues

Intersegment Revenues Eliminations

Operating Revenues after Eliminations

Depreciation and Amortization

Operating Income (Loss) after Eliminations

Capital Expenditures and Plant Turnaround Costs

Total $ 145,955 $ ( 5,317 ) $ 140,638 $ 15,343 $ 7,960 $ 6,008

Three Months Ended June 30, 2019 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage 54,351 ( 1,603 ) 52,748 7,826 4,254 3,668

3 unchanged sentences

Indirect selling, general and administrative — — — — ( 4,599 ) —

The Partnership's assets by reportable segment as of March 31, 2020 and December 31, 2019 , are as follows:

March 31, 2020

December 31, 2019

Total $ 194,838 $ ( 7,515 ) $ 187,323 $ 15,087 $ 5,010 $ 8,627

Six Months Ended June 30, 2020 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 98,110 $ ( 3,268 ) $ 94,842 $ 14,728 $ 3,727 $ 7,022

Transportation 80,433 ( 10,007 ) 70,426 8,608 ( 7,099 ) 4,698

Sulfur services 61,756 ( 13 ) 61,743 6,025 22,672 4,874

Natural gas liquids 112,515 ( 5 ) 112,510 1,221 12,993 175

Indirect selling, general and administrative

— — — — ( 8,733 ) —

Total $ 352,814 $ ( 13,293 ) $ 339,521 $ 30,582 $ 23,560 $ 16,769

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

Six Months Ended June 30, 2019 Operating Revenues Intersegment Revenues Eliminations Operating Revenues after Eliminations Depreciation and Amortization Operating Income (Loss) after Eliminations Capital Expenditures and Plant Turnaround Costs

Terminalling and storage $ 110,243 $ ( 3,324 ) $ 106,919 $ 15,663 $ 9,069 $ 9,013

Transportation 92,419 ( 13,303 ) 79,116 7,348 ( 6,509 ) 3,207

Sulfur services 67,449 — 67,449 5,722 13,908 5,479

Natural gas liquids 173,872 — 173,872 1,255 7,314 1,227

Indirect selling, general and administrative

— — — — ( 9,166 ) —

Total $ 443,983 $ ( 16,627 ) $ 427,356 $ 29,988 $ 14,616 $ 18,926

The Partnership's assets by reportable segment as of June 30, 2020 and December 31, 2019, are as follows:

June 30, 2020 December 31, 2019

Total assets:

3 unchanged sentences

Natural gas liquids 62,682 94,195

COMMITTMENTS AND CONTINGENCIES

Total assets $ 616,979 $ 667,156

COMMITMENTS AND CONTINGENCIES

Contingencies

4 unchanged sentences

Accordingly, on January 7, 2016, the Partnership filed a Complaint for Declaratory Judgment in the Chancery Court of Davidson County, Tennessee requesting a judicial determination that the Partnership does not owe the customer the demanded defense and indemnity obligations.

The lawsuits against the customer have been transferred to the United States

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

District Court for the Western District of Missouri for consolidated pretrial proceedings.

The lawsuits against the customer have been transferred to the United States District Court for the Western District of Missouri for consolidated pretrial proceedings.

On March 1, 2017, at the request of the parties, the Chancery Court of Davidson County, Tennessee administratively closed the Partnership's lawsuit pending rulings in the United States District Court for the Western District of Missouri.

2 unchanged sentences

The insurer has denied the claim.

However, in the event that the customer is successful in pursuing the claim, such action would negatively impact the Partnership because the Partnership has certain reimbursement obligations it would owe the insurance company.

However, in the event that the customer is successful in pursuing the claim, such action would negatively impact the Partnership because the Partnership may have certain reimbursement obligations it would owe the insurance company.

If the case is reopened or the insurance claim by the customer is successful, we are currently unable to determine the exposure we may have in this matter, if any.

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

FAIR VALUE MEASUREMENTS

10 unchanged sentences

Assets and liabilities measured at fair value on a recurring basis are summarized below:

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Commodity derivative contracts, net $ — $ ( 667 )

5 unchanged sentences

There is negligible credit risk associated with these instruments.

Current and noncurrent portion of long-term debt:

• Current and non-current portion of long-term debt:

The carrying amount of the revolving credit facility approximates fair value due to the debt having a variable interest rate and is in Level 2.

The Partnership has not had any indicators which represent a change in the market spread associated with its variable interest rate debt.

The estimated fair value of the 2021 Notes is considered Level 1, as the fair value is based on quoted market prices in active markets.

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Value Carrying

2021 Notes $ 364,219 $ 294,685 $ 373,374 $ 343,470

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

2 unchanged sentences

(the "Operating Partnership"), the Partnership’s wholly-owned subsidiary, and the Partnership's other operating subsidiaries have issued in the past, and may issue in the future, unconditional guarantees of senior or subordinated debt securities of the Partnership.

The guarantees that have been issued are full, irrevocable and unconditional

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

and joint and several.

The guarantees that have been issued are full, irrevocable and unconditional and joint and several.

In addition, the Operating Partnership may also issue senior or subordinated debt securities which, if issued, will be fully, irrevocably and unconditionally guaranteed by the Partnership.

Substantially all of the Partnership's operating subsidiaries are subsidiary guarantors of its 2021 Notes and any subsidiaries other than the subsidiary guarantors are minor.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Provision for income taxes $ 790 $ 639 $ 1,137 $ 1,335

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

The operations of a partnership are generally not subject to income taxes, except for Texas margin tax, because its income is taxed directly to its partners.

MTI is subject to income taxes due to its corporate structure.

Total income tax expense of $ 347 , related to the operation of the subsidiary, for the three months ended March 31, 2020 , resulted in an effective income tax rate of 32.17 % .

Total income tax expense of $ 448 , related to the operation of the subsidiary, for the three months ended March 31, 2019 , resulted in an effective income tax rate of 24.79 % .

The increase in the effective income tax rate for income taxes during the three months ended March 31, 2020 , compared to the three months ended March 31, 2019 , is primarily due to an increase in permanent differences and a decrease in income before income taxes.

The decrease in the provision for income taxes during the three months ended March 31, 2020 , compared to the similar period in 2019 , was primarily due to the impact of a decrease in income before income taxes in the current period.

MTI, a wholly owned subsidiary of the Partnership, is subject to income taxes due to its corporate structure.

Total income tax expense of $ 590 and $ 937 , related to the operation of the subsidiary, for the three and six months ended June 30, 2020, resulted in an effective income tax rate of ( 472 )% and 98.32 %, respectively.

Total income tax expense of $ 429 and $ 877 , related to the operation of the subsidiary, for the three and six months ended June 30, 2019, respectively, resulted in an effective income tax rate ("ETR") of 26.3 % and 25.49 %, respectively.

The following items caused the quarterly and year-to-date ETR to be significantly different from the historical annual effective income tax rate ("AETR"):

• Pretax loss recorded for the three months ended June 30, 2020 due to the economic downturn resulting from the coronavirus pandemic.

• The Partnership has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the AETR for the full year to "ordinary" income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period.

The Partnership has used a discrete ETR method to calculate taxes for the three and six month periods ended June 30, 2020.

The Partnership determined that since small changes in estimated "ordinary" income would result in significant changes in the estimated AETR, the historical method would not provide a reliable estimate for the three and six month periods ended June 30, 2020.

• During the second quarter and six months ended June 30, 2020, the Partnership recorded an income tax expense of approximately $ 341 related to the filing of the 2019 Federal income tax return, which decreased the quarter-to-date ETR by 272.8 % and increased the year-to-date ETR by 35.78 %.

The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was enacted on March 27, 2020, in response to the market volatility and instability resulting from the COVID-19 pandemic, and includes changes to various income tax provisions including, but not limited to, providing for a five-year carryback of net operating losses generated in taxable years beginning after December 31, 2017, and before January 1, 2021, suspension of the 80% taxable income limitation for net operating losses generated after December 31, 2017, and before January 1, 2021, and relaxation of the limitation of adjusted taxable income as determined under Internal Revenue Code Section 163(j) from 30% to 50% when determining the deduction for business interest expense for 2019 and 2020.

Since, prior to its acquisition by the Partnership, MTI was a Qualified Subchapter S subsidiary ("QSub") of Martin Resource Management Corporation, it is precluded from carrying back net operating losses to its QSub taxable years.

The other applicable provisions of the CARES Act have no material impact on the annual effective tax rate ("AETR"), deferred taxes, or valuation allowances.

A current federal income tax expense (benefit) of $ 133 and $ 297 , related to the operation of the subsidiary, were recorded for the three months ended March 31, 2020 and 2019 , respectively.

A current state income tax expense (benefit) of $( 72 ) and $( 218 ) , related to the operation of the subsidiary, were recorded for the three months ended March 31, 2020 and 2019 , respectively

The other applicable provisions of the CARES Act have no material impact on the AETR, deferred taxes, or valuation allowances.

A current federal income tax expense (benefit) of $( 307 ) and $( 174 ), related to the operation of the subsidiary, were recorded for the three and six months ended June 30, 2020, respectively, and $( 78 ) and $ 218 , for the three and six months ended June 30, 2019, respectively.

A current state income tax expense (benefit) of $ 164 and $ 93 , related to the operation of the subsidiary, were recorded for the three and six months ended June 30, 2020, respectively, and $ 20 and $( 198 ) for the three and six months ended June 30, 2019, respectively.

With respect to MTI, income taxes are accounted for under the asset and liability method pursuant to the provisions of ASC 740 related to income taxes.

2 unchanged sentences

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

A deferred tax expense related to the MTI temporary differences of $ 286 and $ 369 was recorded for the three months ended March 31, 2020 and 2019, respectively.

A deferred tax asset of $ 23,136 and $ 23,422 , related to the cumulative book and tax temporary differences, existed at March 31, 2020 and December 31, 2019 , respectively.

All income tax positions taken for all open years are more likely than not to be sustained based upon their technical merit under applicable tax laws.

A deferred tax expense related to the MTI temporary differences of $ 733 and $ 487 was recorded for the three months ended June 30, 2020 and 2019, respectively, and $ 1,018 and $ 856 was recorded for the six months ended June 30, 2020 and 2019, respectively.

A deferred tax asset of $ 22,404 and $ 23,422 , related to the cumulative book and tax temporary differences, existed at June 30, 2020 and December 31, 2019, respectively.

MARTIN MIDSTREAM PARTNERS L.P.

1 unchanged sentence

(Dollars in thousands, except where otherwise indicated)

March 31, 2020

June 30, 2020

All income tax positions taken for all open years are more likely than not to be sustained based upon their technical merit under applicable tax laws.

SUBSEQUENT EVENTS

Quarterly Distribution.

On April 22, 2020, the Partnership declared a quarterly cash distribution of $ 0.0625 per common unit for the first quarter of 2020, or $ 0.25 per common unit on an annualized basis, which will be paid on May 15, 2020 to unitholders of record as of May 8, 2020.

On July 27, 2020, the Partnership declared a quarterly cash distribution of $ 0.005 per common unit for the second quarter of 2020, or $ 0.020 per common unit on an annualized basis, which will be paid on August 14, 2020 to unitholders of record as of August 7, 2020.

Amendment to Credit Facility .

On July 8, 2020, the Partnership amended its revolving credit facility (such amendment, the "Credit Facility Amendment") to, in part, facilitate the transactions contemplated by the Restructuring Support Agreement.

Upon the closing of the Credit Facility Amendment, the revolving credit facility was amended to, among other things:

• require the Partnership to prepay revolving loans to the extent that its Excess Cash (as defined in the Credit Facility Amendment) exceeds $ 25.0 million;

• provide that the maturity date of the lenders’ commitments under the revolving credit facility is August 31, 2023;

however, the maturity date will be:

◦ August 19, 2020 if either (x) more than $ 36.5 million of the 2021 Notes remain outstanding after completion of the Exchange Offer or (y) the Exchange Offer has not been completed by August 15, 2020 and the Partnership has not commenced the chapter 11 proceedings contemplated by the Plan prior to August 19, 2020;

◦ October 16, 2020 if the Partnership commences the chapter 11 proceedings contemplated by the Plan and the Plan is not effective by October 16, 2020.

Upon the earlier of (x) the closing of the Exchange Offer and Cash Tender Offer and satisfaction of certain other conditions set forth in the Credit Facility Amendment and (y) August 15, 2020, the Credit Facility Amendment will amend the Partnership’s revolving credit facility to, among other things:

• permit the Partnership to issue up to $ 54.0 million of the New Notes and up to $ 323.0 million of the Exchange Notes, subject to the restrictions set forth therein;

• reduce the aggregate amount of commitments under the revolving credit facility from $ 400 million to $ 300 million;

• require an additional $ 25 million reduction in the commitments under the revolving credit facility if the Partnership receives $ 25 million or more in net cash proceeds from any asset sale;

• limit the Partnership’s ability to make quarterly distributions to its unitholders in excess of $ 0.005 per unit unless the Partnership’s Total Leverage Ratio (as defined in the revolving credit facility) is below 3.75 x;

• increase the pricing under the revolving credit facility and add a 1.0 % LIBOR floor;

• require the Partnership to maintain a minimum Interest Coverage Ratio (as defined in the revolving credit facility) of 2.0 :1.0 with respect to the fiscal quarters ending in September and December of 2020, 1.75 :1.0 with respect to each fiscal quarter ending in 2021, and 2.0 x with respect to each fiscal quarter thereafter;

• require the Partnership to maintain a maximum Total Leverage Ratio (as defined in the Credit Facility Amendment) of not more than 5.75 :1.0 with respect to the fiscal quarters ending in September and December of 2020 and March and June of 2021, 5.50 with respect to the fiscal quarter ending in September of 2021, 5.00 with respect to the fiscal quarter ending in December of 2021 and the fiscal quarters ending in March, June and September of 2022, and

MARTIN MIDSTREAM PARTNERS L.P.

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except where otherwise indicated)

June 30, 2020

4.50 :1.0 with respect to each fiscal quarter thereafter, which financial covenant replaces the existing maximum Leverage Ratio (as defined in the revolving credit facility in effect prior to the Credit Facility Amendment);

• require the Partnership to maintain a maximum First Lien Leverage Ratio (as defined in the Credit Facility Amendment) of not more than 2.25 :1.0 with respect to the fiscal quarters ending in September and December of 2020 and each fiscal quarter ending in 2021, and 2.0 :1.0 with respect to each fiscal quarter thereafter, which financial covenant replaces the existing maximum Senior Leverage Ratio (as defined in the revolving credit facility in effect prior to the Credit Facility Amendment).

Backstop Agreement .

On July 9, 2020, the Partnership entered into a Backstop Agreement with certain of the Supporting Holders of the 2021 Notes, pursuant to which such Supporting Holders agreed to purchase any unsubscribed New Notes that are not purchased by eligible holders in the Rights Offering, or if the Exchange Offer and Cash Tender Offer are not consummated, pursuant to the Plan.

The Partnership has agreed to pay the Supporting Holders a backstop commitment fee of $ 3.75 million allocated among the Supporting Holders based on their pro rata shares of the backstop commitment, which commitment fee will be paid in New Notes.

However, if the Restructuring Support Agreement is terminated due to the Partnership’s governing body exercising its fiduciary duties, if the backstop agreement is materially breached by the Partnership and therefore terminated by the Supporting Holdings, or if the New Notes are not issued by August 17, 2020 and the Partnership has not commenced Chapter 11 Cases, the commitment fee will be paid in cash.

Exchange Offer .

On July 9, 2020, the Partnership commenced the Exchange Offer, the Cash Tender Offer, the Rights Offering and the consent solicitation contemplated by the Restructuring Support Agreement.

The Exchange Offer expires at 5:00 p.m., New York City time, on August 7, 2020;

however, the Early Participation Date occurred at 5:00 p.m., New York City time, on July 23, 2020.

As of the Early Participation Date, the Partnership received tenders of approximately $ 335.5 million aggregate principal amount of the 2021 Notes, which represented approximately 92.045 % in principal amount of the 2021 Notes.

In addition, the Partnership received the requisite majority consent necessary for the adoption of the proposed amendments to the 2021 Notes Indenture, which will, among other things, eliminate substantially all of the restrictive covenants in the 2021 Notes Indenture, delete certain events of default, and shorten the period of advance notice required to be given to holders of 2021 Notes from 30 days to three business days in the case of a redemption of the 2021 Notes.

This description of the Exchange Offer, Cash Tender Offer and related consent solicitations (collectively, the "Offers") is for informational purposes only and does not constitute an offer to purchase or exchange or a solicitation of an offer to purchase or exchange any 2021 Notes or an offer to sell securities.

The Offers are being made only pursuant to the Exchange Offer Memorandum, Consent Solicitation, Rights Offering, and Disclosure Statement Soliciting Acceptances of a Prepackaged Plan of Reorganization (the "Offering Memorandum") and Offer to Purchase and Consent Solicitation Statement, each dated July 9, 2020, which set forth a more detailed description of the terms of the Offers.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements