8-KMaterial AgreementsFinancial EventsOther Events+1

ENTERPRISE PRODUCTS PARTNERS L.P. 8-K Report, Material Agreement (Jun 20, 2013)

Filed June 20, 2013For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) has filed an 8-K report detailing significant updates to its credit facilities. On June 19, 2013, its operating subsidiary, Enterprise Products Operating LLC (EPO), entered into a new $1.0 billion 364-Day Revolving Credit Agreement. This agreement provides short-term liquidity and is guaranteed by the Partnership. Additionally, EPO and a subsidiary entered into a First Amendment to their existing Multi-Year Credit Agreement, which extends its maturity to five years, modifies the "Applicable Rate" based on debt ratings, and links it to the new 364-day facility by adding its default provisions as an event of default for the multi-year agreement. These actions indicate proactive management of EPD's financing structure, providing flexibility and ensuring adequate liquidity. The new 364-day facility offers immediate borrowing capacity, while the amendment to the multi-year agreement enhances its long-term financial stability and integration with the short-term facility. Investors should note the variable interest rates, facility fees tied to credit ratings, and covenants that may restrict distributions in case of default, all of which are standard for such agreements.

Key Highlights

  • 1Enterprise Products Operating LLC (EPO) secured a new $1.0 billion 364-Day Revolving Credit Agreement on June 19, 2013, enhancing short-term liquidity.
  • 2The new credit facility has a variable interest rate and matures on June 18, 2014, with an option for a one-year extension into non-revolving term loans.
  • 3The Partnership (EPD) provides a Guaranty Agreement for EPO's obligations under the 364-Day Credit Agreement, indicating corporate support.
  • 4EPO entered into a First Amendment to its Multi-Year Credit Agreement, extending its maturity to five years from the amendment date.
  • 5The amendment adjusts "Applicable Rate" metrics based on index debt ratings and integrates the 364-day facility by making its default a default under the multi-year agreement.
  • 6The credit agreements contain customary covenants and events of default, which could impact the company's ability to pay distributions if breached.
  • 7Interest rates and facility fees on the 364-day agreement are variable and dependent on EPO's senior debt credit rating.

Frequently Asked Questions

The primary purpose of the new $1.0 billion 364-Day Revolving Credit Agreement is to provide Enterprise Products Operating LLC (EPO) with short-term liquidity and financial flexibility for general corporate purposes.

The First Amendment extends the maturity of the Multi-Year Credit Agreement to five years, enhancing the company's long-term financing stability. It also adjusts interest rate benchmarks and links the new 364-day facility's performance as a condition to the multi-year agreement, creating a more integrated credit profile.

No, EPO's obligations under the 364-Day Revolving Credit Agreement are not secured by any collateral. However, these obligations are guaranteed by the parent company, Enterprise Products Partners L.P. (EPD).

The credit agreements include standard covenants and events of default. If a default occurs and continues, lenders have the right to accelerate the maturity of the borrowed amounts. Importantly, these agreements also restrict EPO's ability to pay cash distributions to the Partnership if a default is ongoing at the time such distribution is scheduled.