MPLX: $1 billion convertibles placement, at-the-market issues meet funding needs for 2016-2017

By Lisa Kerner

Charlotte, N.C., April 28 – MPLX LP chairman and chief executive officer Gary R. Heminger said the company “elected to take advantage of very strong investor interest in convertible preferred securities to privately place $1 billion with a select group of investors” on Wednesday.

The private placement, along with some opportunistic at-the-market issuances in the first quarter, provide for the partnership’s anticipated funding needs for the remainder of 2016 and into 2017, said chief financial officer Nancy K. Buese during the company’s first-quarter earnings call on Thursday.

As previously reported, MPLX plans a $1 billion private placement of 6.5% series A convertible preferred units. The company will sell the preferred units at $32.50 apiece. Investors include funds managed by Stonepeak Infrastructure Partners, Magnetar Capital, Kayne Anderson Capital Advisors and the Energy & Minerals Group. Settlement is expected in May.

During the quarter, MPLX issued 12 million new units through its ATM program and received net proceeds of about $315 million, according to the earnings news release.

MPLX ended the quarter on March 31 with about $5.2 billion of total debt, down slightly from $5.3 billion at year-end.

Net of the $764 million of borrowings outstanding at March 31, MPLX had $1.67 billion of remaining capacity under its $2 billion bank revolving credit facility. The company also had $62 million available under the facility with MPC.

Buese said MPLX remains committed to maintaining an investment-grade credit profile. The company is targeting a leverage ratio of roughly four times. Pro forma for acquisitions, the partnership’s debt-to-adjusted EBITDA ratio was 4.3 times at quarter-end.

MPLX expects to reduce leverage by increasing EBITDA and does not anticipate increasing its net debt in 2016, Buese said on the call.

For the quarter, MPLX had adjusted EBITDA of $302 million and distributable cash flow of $236 million.

The company declared a 23% year-over-year increase in its declared distribution to $0.505 per common unit.

MPLX is a master limited partnership formed in 2012 by Marathon Petroleum Corp. to own, operate, develop and acquire pipelines and other midstream assets related to the transportation and storage of crude oil, refined products and other hydrocarbon-based products. The company is based in Findlay, Ohio.

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