Summary
ConocoPhillips (COP) announced on March 21, 2016, that it entered into a $1.6 billion three-year senior unsecured term loan facility on March 18, 2016. This new facility, secured by its wholly-owned subsidiary ConocoPhillips Company as guarantor, provides the company with significant liquidity for general corporate purposes. The loan agreement outlines terms for interest rates based on the company's credit ratings, ranging from 0.500% to 1.000% for base rate borrowings and 1.500% to 2.000% for LIBOR-based borrowings, with current applicable margins set at 0.500% and 1.500% respectively. The agreement includes standard covenants related to compliance with laws, restrictions on mergers and asset sales, and limitations on creating liens. Financial covenants, such as a total debt to capitalization ratio not exceeding 65%, are also in place to ensure financial health. The facility matures on March 18, 2019, with the company retaining the flexibility to prepay outstanding amounts without penalty.
Key Highlights
- 1ConocoPhillips secured a $1.6 billion, three-year senior unsecured term loan facility.
- 2The proceeds are designated for general corporate purposes.
- 3ConocoPhillips Company, a subsidiary, acts as guarantor for the loan.
- 4Interest rates are variable, tied to the company's corporate credit ratings (base rate plus 0.500% or LIBOR plus 1.500% currently).
- 5Key covenants include restrictions on mergers, asset sales, liens, and maintaining a total debt to capitalization ratio below 65%.
- 6The loan matures on March 18, 2019.
- 7The company has the option to prepay the loan, in whole or in part, without penalty.