Fair Value Measurements

12 Months Ended

Dec. 31, 2018

13. FAIR VALUE MEASUREMENTS

The book values of cash and cash equivalents, receivables and accounts payables are considered to be representative of their respective fair values because of the immediate short-term maturity of these financial instruments.

In connection with our refinancing in June 2013, certain of the second lien lenders and lender affiliates received warrants entitling them to purchase common units. The warrants are measured at fair value at each balance sheet date. All outstanding warrants expired without being exercised in June 2018.

Long-term debt fair value estimates are based on observed prices for securities with an active trading market when available (Level 2) and otherwise using discount rate estimates based on interest rates (Level 3). As of December 31, 2018, the Partnership valued the Term Loan using Level 3 fair value inputs. The estimated fair values of the Partnership’s debt with fixed and variable interest rates are as follows:



	Fixed Interest Rate				Variable Interest Rate
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
December 31, 2018	$	9,928	$	9,928	$	323,322	$	125,459
December 31, 2017	13,853		13,853		309,980		144,536

The table below sets forth, by level, the Partnership’s financial assets and liabilities that are accounted for at fair value on a recurring basis:



	December 31, 2018
			Quoted Prices in Active Markets for Identical Asset or Liability		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
Assets:
Available-for-sale investments, included in Restricted investments	$	29,584	$	29,584	$	—	$	—



	December 31, 2017
			Quoted Prices in Active Markets for Identical Asset or Liability		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
Assets:
Available-for-sale investments, included in Restricted investments	$	29,485	$	29,485	$	—	$	—
Liabilities:
Warrants	$	445	$	—	$	445	$	—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Westmoreland Resource Partners, LP 10-K