8-KMaterial AgreementsFinancial EventsOther Events+1

Phillips 66 8-K Report, Material Agreement (Mar 24, 2020)

Filed March 24, 2020For Securities:PSX

Summary

Phillips 66 (PSX) announced on March 24, 2020, a significant business update in response to the prevailing business environment. The company has secured a $1 billion 364-day delayed draw term loan facility with Mizuho Bank, Ltd. This facility was fully drawn on March 24, 2020, providing immediate liquidity. The company also retains the option to increase this facility by an additional $1 billion, subject to certain conditions, potentially totaling $2 billion. In conjunction with securing this financing, Phillips 66 is implementing cost-saving measures. These include reducing expected 2020 capital expenditures, lowering operating and administrative costs for 2020, and temporarily suspending its share repurchase program. These actions underscore the company's proactive approach to navigating economic uncertainty and preserving financial flexibility.

Key Highlights

  • 1Secured a $1 billion 364-day delayed draw term loan facility with Mizuho Bank, Ltd.
  • 2Fully drew the $1 billion facility on March 24, 2020, enhancing liquidity.
  • 3Retains the option to increase the total facility size to $2 billion.
  • 4Reducing expected 2020 capital spending.
  • 5Implementing reductions in operating and administrative costs for 2020.
  • 6Temporarily suspending share repurchase program to conserve cash.

Frequently Asked Questions

Phillips 66 entered into the $1 billion credit facility to enhance its liquidity and financial flexibility in response to the evolving business environment in early 2020.

The facility is a 364-day delayed draw term loan with Mizuho Bank, Ltd. It carries an initial commitment of $1 billion, which was fully borrowed on March 24, 2020. Interest rates are based on either the alternate base rate or the eurodollar rate plus applicable margins, which depend on the company's credit rating. The agreement includes customary covenants, such as a maximum consolidated net debt-to-capitalization ratio of 65%.

In addition to securing the credit facility, Phillips 66 is reducing its 2020 capital spending, lowering operating and administrative costs, and temporarily suspending its share repurchase program.

Yes, Phillips 66 has the option to increase the facility by up to an additional $1 billion, for a total of $2 billion, subject to Mizuho Bank's reduction of its initial funded amount and the participation of additional lenders.