What is the primary purpose of the new $4.1 billion term loan facility?

The primary purpose of the $4.1 billion term loan facility is to provide the necessary funding for the cash consideration and associated transaction expenses related to the Membership Interests Contribution Agreement, a significant acquisition previously announced by MPLX.

When will MPLX draw on this term loan, and when do the commitments expire?

MPLX can draw on the term loan facility upon the consummation of the transactions contemplated by the Contribution Agreement, provided customary conditions are met. The commitments for this term loan facility will expire on the earlier of May 13, 2018, or the closing or termination of the Contribution Agreement.

What are the key financial covenants associated with this new loan?

A key financial covenant requires MPLX's ratio of Consolidated Total Debt to Consolidated EBITDA not to exceed 5.0 to 1.0. This ratio can temporarily increase to 5.5 to 1.0 during the six-month period following certain acquisitions. Consolidated EBITDA is subject to adjustments for acquisitions and capital projects.

Are there any fees associated with this term loan?

Yes, MPLX paid customary upfront fees to the lenders. Additionally, beginning February 11, 2018, a commitment fee of 20.0 basis points per annum will accrue on any undrawn amounts until the funding date or expiration. Duration fees of 25.0 basis points will also apply to borrowings outstanding on specific days after the funding date.

MPLX 8-K: Leadership Changes, Material Agreements & More

Summary

MPLX LP (MPLX) filed an 8-K on January 3, 2018, reporting the entry into a material definitive agreement, specifically a $4.1 billion 364-day term loan facility. This facility was established to fund the cash consideration and related transaction expenses for the previously announced Membership Interests Contribution Agreement with MPC Investment LLC, which is expected to close soon. The term loan is a crucial component for financing MPLX's significant acquisition. The loan facility can be drawn upon closing of the contribution agreement, with commitments expiring in May 2018 if not drawn or if the contribution agreement is terminated. The interest rates are tied to LIBOR or an alternate base rate plus applicable margins, and the company also faces commitment fees and duration fees on undrawn and outstanding amounts, respectively. Mandatory prepayments are required under certain conditions, such as the establishment of replacement debt or receipt of proceeds from equity/debt offerings and asset sales. The agreement includes customary covenants, notably a debt-to-EBITDA ratio not to exceed 5.0x (or 5.5x post-acquisition), and it also disclosed the retirement of C. Richard Wilson from the MPLX GP LLC board due to the company's mandatory retirement policy.

Key Highlights

1MPLX LP entered into a $4.1 billion 364-day term loan facility on January 2, 2018.
2The purpose of the term loan is to finance the cash consideration and transaction expenses for the previously announced Membership Interests Contribution Agreement.
3The term loan commitments expire on the earlier of May 13, 2018, or the closing/termination of the Contribution Agreement.
4Borrowings will bear interest based on Adjusted LIBO Rate or Alternate Base Rate, plus applicable margins that vary with credit ratings.
5The agreement includes customary covenants, such as a Consolidated Total Debt to Consolidated EBITDA ratio not exceeding 5.0x.
6MPLX paid upfront fees and will pay a commitment fee on undrawn amounts and duration fees on outstanding borrowings.
7C. Richard Wilson retired from the MPLX GP LLC board on December 31, 2017, due to a mandatory retirement policy.

MPLX LP 8-K Report, Material Agreement (Jan 4, 2018)

Summary

Key Highlights

Frequently Asked Questions