What is the purpose of this 8-K filing?

This 8-K filing announces Kinder Morgan's (KMI) entry into a material definitive agreement for the issuance of new preferred stock, specifically 32,000,000 depositary shares of its 9.75% Series A Mandatory Convertible Preferred Stock, and details the terms of this new security.

What are the key financial terms of the 9.75% Series A Mandatory Convertible Preferred Stock?

The preferred stock offers a cumulative annual dividend of 9.75% on its liquidation preference, payable quarterly. It ranks senior to common stock but junior to debt. It is designed to automatically convert into KMI's common stock on October 26, 2018, with the number of shares received depending on the common stock's market price over a specified period.

Are there any restrictions on KMI's ability to pay dividends on its common stock due to this preferred stock?

Yes, the terms of the preferred stock impose restrictions on KMI's ability to declare or pay dividends, or make distributions, on its Class P common stock or other junior/parity stock if KMI fails to pay accrued and unpaid dividends on the preferred stock in full.

What happens if KMI experiences a 'fundamental change' before the mandatory conversion date?

In the event of a fundamental change, holders of the preferred stock have the option to convert their shares at a specific 'fundamental change conversion rate'. They would also be entitled to accrued and unpaid dividends for past periods and a make-whole dividend for the current and remaining periods until October 26, 2018.

KMI 8-K: Material Agreements, Shareholder Matters & More

Summary

Kinder Morgan, Inc. (KMI) filed an 8-K on October 30, 2015, reporting the entry into a material definitive agreement related to the issuance of new preferred stock. Specifically, the company entered into an Underwriting Agreement to sell 32,000,000 depositary shares, each representing 1/20th of a share of its 9.75% Series A Mandatory Convertible Preferred Stock. This offering was registered under an effective Form S-3 registration statement. The filing also details the terms of this new preferred stock, which carries a 9.75% annual dividend rate on its liquidation preference. The Preferred Stock is senior to common stock but junior to existing and future indebtedness. A key feature is its mandatory conversion into common stock on October 26, 2018, with the conversion ratio dependent on the common stock's volume-weighted average price during a specified period. Holders have options for earlier conversion under certain conditions. The company also amended its Certificate of Incorporation to establish the terms of this new preferred stock.

Key Highlights

1Kinder Morgan (KMI) issued 32,000,000 depositary shares representing 9.75% Series A Mandatory Convertible Preferred Stock.
2The offering was conducted under an Underwriting Agreement and registered via a Form S-3.
3The new preferred stock has a cumulative annual dividend rate of 9.75% of its liquidation preference.
4Dividends will be paid quarterly in cash, shares of common stock, or a combination thereof, at KMI's election.
5The preferred stock is mandatorily convertible into KMI's common stock on October 26, 2018.
6The conversion ratio is variable, based on the common stock's trading price over a 20-day period prior to conversion.
7The preferred stock ranks senior to common stock but junior to existing and future debt.

KINDER MORGAN, INC. 8-K Report, Material Agreement (Oct 30, 2015)

Summary

Key Highlights

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