Summary
MPLX LP (MPLX) has announced the execution of a new $2.0 billion, five-year unsecured revolving credit facility, referred to as the New MPLX Credit Agreement, which became effective on July 7, 2022. This new facility replaces the company's prior $3.5 billion credit agreement and provides enhanced financial flexibility. Investors should note the potential for an additional $1.0 billion increase in commitments and the option for two one-year maturity extensions, subject to lender consent. The agreement includes provisions for swing-line loans and letters of credit, with commitment fees and interest rates tied to MPLX's credit ratings, offering a cost-effective financing option.
Key Highlights
- 1MPLX entered into a new $2.0 billion, five-year unsecured revolving credit facility maturing on July 7, 2027.
- 2The new credit facility replaces the previous $3.5 billion credit agreement.
- 3MPLX has the option to increase the facility's capacity by an additional $1.0 billion, subject to lender approval.
- 4The company can request up to two one-year extensions of the maturity date, with majority lender consent.
- 5Commitment fees range from 10 to 25 basis points, currently at 15 basis points, based on credit ratings.
- 6Interest rates on borrowings are based on Adjusted Term SOFR or Alternate Base Rate, plus a margin dependent on credit ratings.
- 7The agreement includes customary covenants, including a debt-to-EBITDA ratio not to exceed 5.0:1.0 (or 5.5:1.0 during an acquisition period).
Frequently Asked Questions
The new $2.0 billion revolving credit agreement provides MPLX LP with financial flexibility and liquidity. It replaces an older credit facility and offers terms that are considered customary for similar agreements, including options to increase borrowing capacity and extend maturity dates.
The new facility is for $2.0 billion and has a five-year term, replacing the prior $3.5 billion amended and restated credit agreement dated July 26, 2019. While the size is reduced on paper, the flexibility for increases and extensions may offer strategic advantages.
A key financial covenant requires MPLX's ratio of Consolidated Total Debt to Consolidated EBITDA not to 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 during an 'Acquisition Period,' providing flexibility for strategic acquisitions.
Costs include commitment fees on unused portions, which currently stand at 15 basis points per annum and can range from 10 to 25 basis points depending on credit ratings. Interest on borrowings will be based on either Adjusted Term SOFR or the Alternate Base Rate, plus a margin that also varies with MPLX's credit ratings.