Summary
Kinder Morgan, Inc. (KMI) filed an 8-K on February 16, 2012, detailing significant financing arrangements related to its proposed acquisition of El Paso Corporation. The company secured substantial debt facilities, including a $6.8 billion 364-day facility and a $5.0 billion 3-year term loan facility, to finance a portion of the acquisition's cash consideration. Additionally, KMI amended and restated its existing revolving credit facility, increasing its capacity by $750 million to $1.0 billion, intended for ongoing working capital and general corporate purposes, and to accommodate the El Paso merger. The filing outlines the interest rates, maturity dates, fees (including ticking and duration fees), guarantees, security arrangements, and covenants associated with these new credit facilities. These financing agreements are critical for the execution of the El Paso acquisition, highlighting the capital-intensive nature of such large-scale transactions. Investors should note the complexity of the debt structure, the dependency on the successful closing of the acquisition, and the financial covenants that will govern KMI's operations moving forward.
Key Highlights
- 1Kinder Morgan has entered into significant financing agreements to fund the acquisition of El Paso Corporation, including a $6.8 billion 364-day facility and a $5.0 billion 3-year term loan facility.
- 2The company amended and restated its existing $1.0 billion revolving credit facility, adding $750 million in commitments for general corporate purposes and to facilitate the El Paso merger.
- 3Interest rates on the acquisition debt facilities are variable, tied to LIBOR or an alternate base rate plus an applicable margin that depends on Kinder Morgan's debt rating.
- 4The acquisition debt facilities include various fees such as ticking fees and duration fees, which will be payable on outstanding commitments and loans.
- 5The financing agreements are secured by a pledge of assets and capital stock of Kinder Morgan's and El Paso's restricted subsidiaries, subject to certain exceptions.
- 6The closing of these credit facilities is contingent upon the successful consummation of the El Paso acquisition and other customary conditions, including regulatory approvals.
- 7The filing also references a Registration Statement on Form S-4 related to the El Paso transaction, urging investors to read it for important information.