8-KFinancial EventsOther Events

CONOCOPHILLIPS 8-K Report, Financial Obligation (Mar 20, 2006)

Filed March 20, 2006For Securities:COP

Summary

ConocoPhillips (COP) filed an 8-K on March 20, 2006, to disclose the establishment of two $7.5 billion 364-day credit facilities, referred to as "Bridge Facilities." These facilities were entered into on March 15, 2006, with a syndicate of major banks including Bank of America, Barclays, Citibank, and others. The primary purpose of these significant credit lines is to finance a portion of the cash required for ConocoPhillips' proposed acquisition of Burlington Resources Inc. The funding is expected to occur upon the closing of the merger, within 364 days of the facility's closing date. These Bridge Facilities are crucial for the financing strategy of the Burlington Resources acquisition, indicating a substantial commitment by ConocoPhillips to complete the transaction. The filing also outlines customary covenants and events of default, including restrictions on liens, mergers, and asset transfers, with consequences for non-compliance such as increased interest rates and potential acceleration of debt. Notably, the company anticipates these bridge loans will be refinanced through subsequent term loan and revolving loan facilities, suggesting a plan to manage the short-term financing structure.

Key Highlights

  • 1ConocoPhillips established two $7.5 billion 364-day credit facilities (Bridge Facilities) on March 15, 2006.
  • 2The Bridge Facilities are intended to finance a portion of the cash consideration for the proposed acquisition of Burlington Resources Inc.
  • 3The lenders include Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., and The Royal Bank of Scotland plc.
  • 4Funding under the facilities is expected to occur at the closing of the Burlington Resources merger, no later than 364 days after the facility closing date.
  • 5ConocoPhillips Company has provided a full and unconditional guarantee for the obligations under the Bridge Facilities.
  • 6The facilities contain standard covenants, events of default, and restrictions on liens, mergers, and asset transfers.
  • 7There is a provision for refinancing the Bridge Facilities with subsequent term loan and revolving loan facilities.

Frequently Asked Questions

The primary purpose of the two $7.5 billion 364-day credit facilities (Bridge Facilities) is to secure funding for a portion of the cash needed to complete the proposed acquisition of Burlington Resources Inc.

Funding is expected to occur in a single draw on the same date as the closing of the Burlington Resources merger, but in no event later than 364 days after the closing date of the Bridge Facilities.

Upon an event of default, lenders can increase the interest rate by 2%, terminate their obligation to make loans, and declare all amounts due immediately payable. Lenders may also accelerate payment upon certain change of control events.

Yes, one of the Bridge Facilities anticipates the execution of a subsequent term loan facility (up to $5.0 billion) and a revolving loan facility (up to $2.5 billion) to repay any outstanding indebtedness under that Bridge Facility, indicating a refinancing strategy.