Summary
Marathon Petroleum Corporation (MPC) and its master limited partnership, MPLX LP, have entered into significant financing arrangements concurrent with the closing of a merger. MPC secured a new $1 billion 364-day revolving credit facility to replace its existing similar facility, providing short-term liquidity with customary covenants, including a maximum debt-to-capitalization ratio of 65%. Simultaneously, MPLX finalized an amended and restated five-year, $3.5 billion revolving credit facility, which can be increased by up to an additional $1 billion. This facility replaces MPLX's prior agreement and also includes standard covenants, notably a maximum Debt-to-EBITDA ratio of 5.0x (or 5.5x during an Acquisition Period). The termination of certain prior credit agreements for ANDX (a subsidiary involved in the merger) was also noted, with all outstanding obligations paid in full. These actions indicate proactive financial management by MPC and MPLX to ensure robust liquidity and align their credit facilities with their post-merger operational and strategic objectives. The new agreements offer flexibility and maintain existing financial discipline through defined covenants, which should be reassuring to investors regarding the companies' financial stability and access to capital.
Key Highlights
- 1MPC entered into a new $1 billion 364-day revolving credit agreement, set to become effective around September 30, 2019, replacing an existing facility.
- 2MPLX entered into an amended and restated five-year, $3.5 billion revolving credit facility, effective July 30, 2019, with the option to increase capacity by an additional $1.0 billion.
- 3The new MPC credit agreement includes a covenant requiring Consolidated Net Debt to Total Capitalization to not exceed 65%.
- 4The MPLX credit agreement includes a covenant requiring Consolidated Total Debt to Consolidated EBITDA not to exceed 5.0x (or 5.5x during an Acquisition Period).
- 5Both new credit agreements feature customary covenants, representations, warranties, and events of default, similar to prior agreements.
- 6ANDX terminated its Third Amended and Restated Credit Agreement and its Drop-Down Credit Agreement on July 30, 2019, with all outstanding amounts paid in full.
- 7An amendment to the Fourth Amended and Restated Omnibus Agreement (the "Omnibus Amendment") was executed to reflect changes related to Andeavor Logistics GP LLC's admission as general partner of ANDX and define "Partnership Change of Control" to provide continued control by MPC.