Marathon Petroleum Corp. and its energy midstream subsidiary MPLX LP struck credit agreements that were related to the completion of MPLX's unit-for-unit merger with Andeavor Logistics LP worth about $9 billion in equity value.
Marathon on July 26 entered into a new 364-day revolving credit agreement, which provides for $1 billion in borrowing capacity, according to an Aug. 1 SEC filing. JPMorgan Chase Bank NA is the administrative agent for Marathon's credit facility.
MPLX also struck an agreement to amend and restate its existing credit deal entered into in July 2017. The amendment provides for a five-year revolving credit facility worth $3.5 billion, which can be expanded by up to $1 billion in borrowing capacity, subject to lenders' approval. The agreement also includes up to about $300 million of letter of credit issuing capacity and up to $150 million of swingline loan capacity.
The amended and restated facility took effect July 30, the day the merger was closed, and it will mature July 30, 2024. MPLX has the option to extend the facility for up to two additional one-year periods. Wells Fargo Bank NA is the administrative agent for MPLX's facility.
The merger, worth $14 billion in enterprise value, involves the assumption of roughly $5 billion of debt. Under the agreement signed in May, Andeavor unit holders would get 1.135x MPLX common units for each unit held, representing a 7.3% premium when the deal was announced. Marathon would get 1.0328x MPLX units for each Andeavor unit held, representing a 2.4% discount. The deal has a blended exchange ratio of 1.07x.