Summary
Marathon Petroleum Corporation (MPC) filed an 8-K on August 30, 2018, to report the entry into new, significant credit facilities. MPC secured a $5 billion five-year revolving credit agreement and a $1.0 billion 364-day revolving credit agreement. These new agreements are crucial as they are contingent upon the successful closing of MPC's pending acquisition of Andeavor and will replace MPC's existing 2017 credit agreement. The new facilities provide substantial liquidity, with options to increase commitments, and include provisions for letters of credit and swing-line loans, offering financial flexibility. These new credit agreements underscore MPC's proactive approach to financing its strategic growth, particularly the acquisition of Andeavor, which is expected to reshape its operational footprint. The terms include customary covenants, such as a debt-to-capitalization ratio limit of 65%, and provide MPC with access to significant borrowing capacity while maintaining financial discipline. The termination of the old credit agreement upon the Availability Date signifies a transition to a new financing structure aligned with MPC's future business objectives.
Key Highlights
- 1MPC entered into a new $5 billion five-year revolving credit facility and a $1.0 billion 364-day revolving credit facility.
- 2The new credit agreements are contingent on the closing of MPC's acquisition of Andeavor.
- 3The new facilities will replace MPC's existing $2.5 billion 2017 credit agreement.
- 4The five-year facility has an option to increase commitments by up to $1 billion and can be extended for up to two one-year periods.
- 5The agreements include sub-facilities for swing-line loans (up to $250 million) and letters of credit (up to $2.2 billion, potentially to $3 billion).
- 6Interest rates and commitment fees are tiered based on MPC's credit ratings.
- 7A key covenant requires MPC to maintain Consolidated Net Debt to Total Capitalization not exceeding 65%.