Marathon Petroleum enters two revolving agreements for $6 billion

By Wendy Van Sickle

Columbus, Ohio, Aug. 31 – Marathon Petroleum Corp. entered into a $5 billion five-year revolving credit agreement and a $1 billion 364-day revolving credit agreement on Aug. 28, according to an 8-K filing with the Securities and Exchange Commission.

JPMorgan Chase Bank, NA, Wells Fargo Securities, LLC, Barclays Bank plc, Citibank, NA, Bank of America Merrill Lynch, Mizuho Bank, Ltd., MUFG Bank, Ltd. and RBC Capital Markets acted as joint lead arrangers and joint bookrunners; Wells Fargo as syndication agent; Bank of America, NA, Barclays, Citibank, Mizuho, MUFG and Royal Bank of Canada as documentation agents; and JPMorgan as administrative agent.

Pricing on the five-year revolver is initially Libor plus 125 basis points with a commitment fee of 15 bps. The margin above Libor can range from 100 bps to 175 bps and the commitment fee from 10 bps to 25 bps, depending on Marathon’s credit ratings.

The company has the option to increase the five-year revolver by up to an additional $1 billion. The credit facility has a $250 million sublimit for swingline loans and a $2.2 billion sublimit for letters of credit.

The company has two one-year extension options.

Pricing on the 364-day revolver is initially Libor plus 125 bps with a commitment fee of 12.5 bps. The margin above Libor can range from 112.5 bps to 150 bps and the commitment fee from 10 bps to 17.5 bps, depending on Marathon’s credit ratings.

Each credit agreement contains representations and warranties, affirmative and negative covenants and events, including a covenant that requires Marathon’s ratio of total net debt to total capitalization not to exceed 65% as of the last day of each fiscal quarter.

Proceeds of each of the new revolvers may be used for working capital and general corporate purposes, including financing of a portion of the cash consideration of Marathon’s planned acquisition of Andeavor.

The new five-year revolver is intended to replace Marathon Petroleum’s $2.5 billion five-year revolver, dated July 21, 2017.

The availability of the commitments under the new credit agreements is contingent upon the closing of Marathon Petroleum’s pending acquisition of Andeavor and the termination of the current $2.5 billion credit agreement. If that does not occur by Dec. 31, the commitments of the lenders under the new credit agreements will automatically terminate.

Marathon Petroleum is a crude oil refiner based in Findlay, Ohio. The company announced in April that it would buy Andeavor, a San Antonio-based marketing, logistics and refining company, for more than $23 billion in a cash-and-stock deal.

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