8-KMaterial AgreementsExhibits & Filings

Marathon Petroleum Corp 8-K Report, Material Agreement (Sep 27, 2019)

Filed September 27, 2019For Securities:MPC

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.

Frequently Asked Questions

The primary purpose of the Term Loan Agreement is to provide MPLX with funding for the repayment of its existing indebtedness and for general partnership purposes, enhancing its financial flexibility and liquidity.

The loan matures on September 26, 2021. Interest rates can be either the Adjusted LIBO Rate plus a margin ranging from 75.0 to 100.0 basis points (currently 87.5 bps) or the Alternate Base Rate. Borrowings can be prepaid without penalty.

A key financial covenant requires MPLX's ratio of Consolidated Total Debt to Consolidated EBITDA to not exceed 5.0 to 1.0 as of the last day of each fiscal quarter. This ratio can temporarily increase to 5.5 to 1.0 following certain acquisitions.

This indicates that MPLX intends to draw on the facility relatively quickly for its intended purposes. If they don't draw the full amount within 90 days of September 26, 2019, the remaining commitments will expire, meaning they will no longer be available to borrow.