What are the key financial covenants associated with these new credit facilities?

Both facilities introduce financial covenants, with a key one being a maximum ratio of Consolidated Net Indebtedness to Consolidated EBITDA. Initially, this ratio is set at 6.50 to 1.00 for the Bridge Facility and will be tested at this level for periods up to December 31, 2017, for the Revolving Credit Facility, with slightly tighter ratios in subsequent periods. Other covenants restrict debt incurrence, liens, and certain affiliate transactions, and dividend payments may be restricted if an event of default occurs.

What is the timeline and maturity of these credit facilities?

The Bridge Credit Facility has a short-term maturity of 364 days from the closing date, reflecting its use for immediate acquisition funding. The Revolving Credit Facility has a longer maturity of five years from the closing date, providing ongoing liquidity.

What are the implications for investors regarding KMI's acquisition plans?

The entry into these substantial credit facilities signifies KMI's commitment and financial capability to proceed with its proposed consolidation of KMR, KMP, and EPB. This move is expected to simplify the corporate structure and potentially lead to operational efficiencies. Investors should closely monitor the progress and consummation of these 'Proposed Transactions' as outlined in the filing, as the terms and success of these credit facilities are directly linked to them.

KMI/EP-PC 8-K: Material Agreements & Financial Events

Q: What is the primary purpose of the Bridge Credit Facility and the Revolving Credit Facility?

The $5.0 billion Bridge Credit Facility is primarily intended to fund the cash consideration and transaction costs associated with Kinder Morgan's proposed acquisitions of the remaining equity interests in Kinder Morgan Management, LLC (KMR), Kinder Morgan Energy Partners, L.P. (KMP), and El Paso Pipeline Partners, L.P. (EPB). The $4.0 billion Revolving Credit Facility will be used for working capital and other general corporate purposes and will also replace existing credit facilities of KMI and its subsidiaries.

Summary

Kinder Morgan, Inc. (KMI) filed an 8-K on September 25, 2014, to report on the entry into a significant new credit facilities. The company entered into a $5.0 billion Bridge Credit Facility and a $4.0 billion (potentially expandable to $5.0 billion) Revolving Credit Facility, both dated September 19, 2014, with Barclays Bank PLC as administrative agent. These facilities are crucial for financing KMI's proposed transactions, which involve the acquisition of all outstanding equity interests in Kinder Morgan Management, LLC (KMR), Kinder Morgan Energy Partners, L.P. (KMP), and El Paso Pipeline Partners, L.P. (EPB) that KMI does not currently own. The Bridge Facility is specifically designed to cover cash consideration and transaction costs for these acquisitions, while the Revolving Credit Facility will provide ongoing liquidity for general corporate purposes and replace existing credit facilities of KMI, KMP, and EPB. These credit agreements introduce new financial covenants, including a maximum Consolidated Net Indebtedness to Consolidated EBITDA ratio, which will be tested upon the consummation of the Proposed Transactions. The terms also outline specific conditions for borrowing, repayment obligations, and events of default. Investors should note that these facilities are a key component in KMI's strategy to consolidate its various entities, and the terms reflect the significant debt financing required for this major corporate restructuring.

Key Highlights

1KMI entered into a $5.0 billion Bridge Credit Facility to finance its proposed acquisitions of KMR, KMP, and EPB.
2KMI also established a $4.0 billion (up to $5.0 billion) Revolving Credit Facility for general corporate purposes and to replace existing credit agreements.
3Both credit facilities are subject to the consummation of KMI's proposed transactions to acquire the remaining interests in KMR, KMP, and EPB.
4The Bridge Facility has a maturity of 364 days, while the Revolving Credit Facility matures in five years.
5New financial covenants, including a maximum leverage ratio (Consolidated Net Indebtedness to Consolidated EBITDA of 6.50:1.00 initially), are introduced.
6Subsidiaries KMR, KMP, and EPB will act as guarantors for KMI's obligations under these new facilities.
7The filing also includes important disclaimers and information regarding ongoing solicitations and the availability of further details on the proposed transactions.

KINDER MORGAN, INC. 8-K Report, Material Agreement (Sep 25, 2014)

Summary

Key Highlights

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