8-KAcquisitions & DispositionsMaterial AgreementsFinancial Events+2

Phillips 66 8-K Report, Material Agreement (May 1, 2012)

Filed May 1, 2012For Securities:PSX

Summary

This Form 8-K filing by Phillips 66 (PSX) on May 1, 2012, primarily details the critical agreements and financial arrangements established in connection with its recent spin-off from ConocoPhillips. Key information for investors includes the execution of several material definitive agreements that govern the post-separation relationship between the two companies, covering aspects such as separation, indemnification, intellectual property, taxes, employee matters, and transition services. Additionally, the report announces the establishment of a $1.2 billion accounts receivable securitization facility (A/R Facility) to ensure adequate liquidity for ongoing business needs. This facility provides a significant source of funding through the sale of receivables. The filing also notes an amendment to the Limited Liability Company Agreement of Chevron Phillips Chemical Company LLC to reflect Phillips 66 as a member, replacing ConocoPhillips, and confirms the completion of asset disposition and acquisition related to the spin-off, including a special cash distribution of approximately $5.95 billion to ConocoPhillips.

Key Highlights

  • 1Phillips 66 entered into several material definitive agreements with ConocoPhillips to govern their relationship post-spin-off, covering separation, indemnification, IP, taxes, employee matters, and transition services.
  • 2A $1.2 billion accounts receivable securitization facility (A/R Facility) was established on April 27, 2012, to provide liquidity and funding for Phillips 66 and its subsidiaries.
  • 3The A/R Facility involves a special purpose entity (SPE) that purchases receivables from Phillips 66 Company and sells undivided interests to purchasers.
  • 4Phillips 66's role as a member in Chevron Phillips Chemical Company LLC was formalized through an amendment to its LLC agreement, replacing ConocoPhillips.
  • 5The company completed internal restructuring and asset transfers related to the spin-off, including a significant cash distribution of approximately $5.95 billion to ConocoPhillips.
  • 6Phillips 66 amended and restated its Certificate of Incorporation and By-Laws, effective April 30, 2012.
  • 7The company adopted Corporate Governance Guidelines and a Code of Business Ethics & Conduct.

Frequently Asked Questions

Phillips 66 entered into several key agreements with ConocoPhillips, including a Separation and Distribution Agreement, Indemnification and Release Agreement, Intellectual Property Assignment and License Agreement, Tax Sharing Agreement, Employee Matters Agreement, and Transition Services Agreement. These agreements define the operational and financial relationships between the two companies after the spin-off.

The $1.2 billion accounts receivable securitization facility (A/R Facility) was established to provide additional liquidity and funding for Phillips 66 and its subsidiaries' ongoing business needs. It allows the company to sell its trade receivables to a special purpose entity, which then sells undivided interests in these receivables to purchasers, generating cash proceeds.

Phillips 66 and Chevron Corporation amended the LLC agreement for Chevron Phillips Chemical Company LLC to substitute Phillips 66 Company as a member in place of ConocoPhillips Company. This formalizes Phillips 66's ownership stake in this joint venture post-spin-off.

In connection with the spin-off, Phillips 66 made a special cash distribution of approximately $5.95 billion to ConocoPhillips. This amount may be subject to adjustment based on the actual levels of Phillips 66's cash, inventory, and working capital as of the spin-off date.