Summary
Kinder Morgan, Inc. (KMI) filed an 8-K on May 9, 2014, to report the entry into a new, unsecured credit agreement, effective May 6, 2014. This new agreement replaces KMI's prior secured credit facilities and consists of a $650 million term loan facility maturing in May 2017 and a $1.75 billion revolving credit facility maturing in May 2019. The new facilities provide KMI with significant liquidity for general corporate purposes and refinancing existing debt, while also extending maturity dates. Notably, the new agreement is unsecured, which has the effect of making KMI's outstanding senior notes and certain subsidiary senior indebtedness also unsecured, unless specific collateral trigger events occur.
Key Highlights
- 1KMI entered into a new $2.4 billion unsecured credit agreement ($650M term loan, $1.75B revolving facility) on May 6, 2014.
- 2The new credit agreement replaces and terminates prior secured credit facilities with longer maturity dates (2017 for term loan, 2019 for revolving).
- 3Borrowings under the new facility will be used to refinance existing debt and for general corporate purposes.
- 4The new credit agreement is unsecured, resulting in KMI's senior notes and certain subsidiary debt also becoming unsecured.
- 5Collateral can be triggered under the new agreement through specific debt rating downgrades or events of default at KMI or its major subsidiaries like KMP and EPB.
- 6The agreement includes financial covenants, such as a maximum consolidated indebtedness to consolidated EBITDA ratio of 4.75x (or 5.50x after specified acquisitions).
- 7Customary events of default are included, with provisions that can lead to termination of commitments and acceleration of debt.