Marathon Petroleum enters into two new revolvers totaling $3.5 billion

By Wendy Van Sickle

Columbus, Ohio, July 26 – Marathon Petroleum Corp. entered into a $2.5 billion four-year revolving credit agreement and a $1 billion 364-day revolving credit agreement on July 20, according to an 8-K filing with the Securities and Exchange Commission.

For each new credit facility, JPMorgan Chase Bank, NA, Citigroup Global Markets Inc., Barclays Bank plc, BofA Merrill Lynch, Mizuho Bank, Ltd., MUFG, UBS Securities LLC and Wells Fargo Securities, LLC acted as joint lead arrangers and joint bookrunners; Citigroup as syndication agent; Bank of America, NA, Barclays, Mizuho, MUFG, UBS Securities and Wells Fargo Bank, NA, as documentation agents; and JPMorgan as administrative agent.

The new four-year revolver replaced a $2.5 billion five-year revolving credit agreement, dated Sept. 14, 2012, which was terminated.

Pricing on the four-year revolver is initially Libor plus 125 basis points with a commitment fee of 17.5 bps. The margin above Libor can range from 100 bps to 175 bps and the commitment fee from 7.5 bps to 30 bps, depending on Marathon’s credit ratings.

The company has the option to increase the four-year revolver by up to an additional $500 million. The credit facility has a $100 million sublimit for swingline loans and a $2 billion sublimit for letters of credit.

The company has two one-year extension options.

The new 364-day revolver matures on July 19, 2017.

Pricing is initially Libor plus 125 bps with a commitment fee of 12.5 bps. The margin above Libor can range from 100 bps to 175 bps and the commitment fee from 7.5 bps to 25 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.

Also on July 20, the company amended its existing accounts receivable securitization facility to reduce the capacity of the receivables purchase agreement to $750 million, with an option to increase the overall capacity by up to an additional $250 million and to extend the term of the receivables purchase agreement to July 19, 2019.

Marathon Petroleum is a crude oil refiner based in Findlay, Ohio.

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