Summary
Marathon Petroleum Corporation (MPC) announced that its majority-owned subsidiary, MPLX LP, has entered into a new $1 billion Term Loan Agreement. This facility is designed to provide flexible funding for MPLX's existing debt repayment and general partnership purposes. The loan has a two-year maturity and offers competitive interest rates based on MPLX's credit ratings, with options for Adjusted LIBO Rate or Alternate Base Rate plus a margin. This agreement signifies a strategic move by MPLX to enhance its liquidity and financial flexibility. Investors should note the customary covenants, including a debt-to-EBITDA leverage ratio not exceeding 5.0x (or 5.5x following certain acquisitions), which are consistent with industry standards and MPLX's existing credit facilities. The ability to prepay borrowings without penalty is also a positive feature for managing debt efficiently.
Key Highlights
- 1MPLX LP, a subsidiary of MPC, secured a new $1 billion Term Loan Agreement.
- 2The primary use of proceeds is for repayment of existing indebtedness and general partnership purposes.
- 3The term loan facility has a maturity date of September 26, 2021 (two-year term).
- 4Borrowings will bear interest at either Adjusted LIBO Rate plus a margin (75-100 bps) or Alternate Base Rate.
- 5The agreement includes a financial covenant requiring Consolidated Total Debt to Consolidated EBITDA not to exceed 5.0 to 1.0.
- 6Borrowings can be prepaid at any time without premium or penalty.
- 7The loan commitments expire 90 days after September 26, 2019, if not fully utilized.