Marathon Petroleum Corp. and MPLX LP announce agreement for approximately $8.1 billion dropdown to MPLX, and MPC initiates offer to exchange its general partner interests, including its IDRs, in MPLX
(Thomson Reuters ONE) -
FINDLAY, Ohio, Nov. 13, 2017 - Marathon Petroleum Corp. (NYSE: MPC) and MPLX LP
(NYSE: MPLX) today announced an agreement for the dropdown of refining logistics
assets and fuels distribution services to MPLX for total consideration of
approximately $8.1 billion. The transaction is expected to close on Feb.
1, 2018, and be immediately accretive to MPLX's distributable cash flow per
unit.
These assets and services are projected to generate annual earnings before
interest, taxes, depreciation and amortization (EBITDA) of $1 billion. MPC is
contributing these assets and services in exchange for $4.1 billion in cash and
MPLX equity valued at approximately $4 billion. The equity to be issued will
consist of 111.6 million MPLX common (LP) units and 2.3 million general partner
(GP) units to maintain MPC's 2 percent GP interest in MPLX.
"We are very pleased to have reached agreement on the terms for the remaining
dropdown to MPLX outlined in our strategic actions," said Gary R. Heminger,
chairman and CEO of both MPC and MPLX. "The addition of these high-quality, fee-
based revenue streams to MPLX further diversifies the partnership's earnings and
contributes substantially to the distributable cash flow base of the
partnership."
Year-to-date through October, MPC has returned $2.75 billion to its shareholders
and plans further return of capital with the after-tax cash proceeds of this
dropdown once the transaction closes, in a manner consistent with managing its
current investment grade credit profile.
The dropdown agreement was approved by the MPLX board of directors following the
approval of the terms of the transaction by its independent conflicts committee.
The conflicts committee was advised by Jefferies LLC as to financial matters and
Andrews Kurth Kenyon LLP as to legal matters. MPC was advised by Tudor,
Pickering, Holt & Co. as to financial matters. The closing of the dropdown
transaction is subject to customary conditions, including tax and regulatory
review.
Michael J. Hennigan, president of MPLX, added, "We are very enthusiastic about
this drop and the substantial benefits it provides to the partnership. The
ability to add these stable earnings streams, particularly the fuels
distribution services, which require no maintenance capital, is a unique
opportunity to supplement the financial strength of the partnership. It also
supports our focus on growing distribution coverage while building a sustainable
and attractive growth path for LP distributions well into the future."
Today, MPC also offered to the MPLX board an exchange of its GP economic
interests in MPLX, which include incentive distribution rights (IDRs), for newly
issued MPLX common units. This transaction is expected to provide a clear
valuation for MPC's GP interests in MPLX, and reduce MPLX's cost of capital to
support the sustainable long-term growth of the partnership. MPC will continue
to own the non-economic general partner interest in MPLX. This transaction is
now under review by the conflicts committee of the MPLX board of directors.
Subject to approval of the MPLX board, the exchange is expected to close on Feb.
1, 2018, in conjunction with the closing of the dropdown.
In connection with entering into the dropdown agreement, MPLX entered into a
commitment letter with Mizuho Bank, Ltd.; Bank of America Merrill Lynch; The
Bank of Tokyo-Mitsubishi UFJ, Ltd.; Barclays Bank PLC; JPMorgan Chase Bank,
N.A.; and Wells Fargo Bank, N.A. for a $4.1 billion 364-day term-loan facility
to be funded upon the closing of the dropdown transaction expected on Feb.
1, 2018. The proceeds from the term-loan facility will be used to fund the cash
portion of the dropdown consideration. These commitments are subject to
customary conditions, including the closing of the dropdown transaction.
###
About Marathon Petroleum Corporation
MPC is the nation's third-largest refiner, with a crude oil refining capacity of
approximately 1.8 million barrels per calendar day in its seven-refinery system.
Marathon brand gasoline is sold through approximately 5,600 independently owned
retail outlets across 20 states and the District of Columbia. In addition,
Speedway LLC, an MPC subsidiary, owns and operates the nation's second-largest
convenience store chain, with approximately 2,730 convenience stores in 21
states. MPC owns, leases or has ownership interests in approximately 10,800
miles of crude oil and light product pipelines. Through subsidiaries, MPC owns
the general partner of MPLX LP, a midstream master limited partnership. Through
MPLX, MPC has ownership interests in gathering and processing facilities with
approximately 5.9 billion cubic feet per day of gathering capacity, 8 billion
cubic feet per day of natural gas processing capacity and 570,000 barrels per
day of fractionation capacity. MPC's fully integrated system provides
operational flexibility to move crude oil, NGLs, feedstocks and petroleum-
related products efficiently through the company's distribution network and
midstream service businesses in the Midwest, Northeast, East Coast, Southeast
and Gulf Coast regions.
About MPLX LP
MPLX is a diversified, growth-oriented master limited partnership formed in
2012 by Marathon Petroleum Corporation to own, operate, develop and acquire
midstream energy infrastructure assets. We are engaged in the gathering,
processing and transportation of natural gas; the gathering, transportation,
fractionation, storage and marketing of NGLs; and the transportation, storage
and distribution of crude oil and refined petroleum products. Headquartered in
Findlay, Ohio, MPLX's assets consist of a network of crude oil and products
pipeline assets located in the Midwest and Gulf Coast regions of the United
States; 62 light-product terminals with approximately 24 million barrels of
storage capacity; an inland marine business; storage caverns with approximately
2.8 million barrels of storage capacity; crude oil and product storage
facilities (tank farms) with approximately 5 million barrels of available
storage capacity; a barge dock facility with approximately 78,000 barrels per
day of crude oil and product throughput capacity; and gathering and processing
assets that include approximately 5.9 billion cubic feet per day of gathering
capacity, 8 billion cubic feet per day of natural gas processing capacity and
570,000 barrels per day of fractionation capacity.
Investor Relations Contacts:
Lisa Wilson (419) 421-2071
Denice Myers (419) 421-2965
Doug Wendt (419) 421-2423
Media Contacts:
Chuck Rice (419) 421-2521
Katie Merx (419) 672-5159
Forward-looking Statements
This press release contains forward-looking statements within the meaning of
federal securities laws regarding Marathon Petroleum Corporation ("MPC") and
MPLX LP ("MPLX"). These forward-looking statements relate to, among other
things, expectations, estimates and projections concerning the business and
operations of MPC and MPLX, including proposed strategic initiatives and our
value creation plans. You can identify forward-looking statements by words such
as "anticipate," "believe," "design," "estimate," "expect," "forecast," "goal,"
"guidance," "imply," "intend," "objective," "opportunity," "outlook," "plan,"
"position," "pursue," "prospective," "predict," "project," "potential," "seek,"
"strategy," "target," "could," "may," "should," "would," "will" or other similar
expressions that convey the uncertainty of future events or outcomes. Such
forward-looking statements are not guarantees of future performance and are
subject to risks, uncertainties and other factors, some of which are beyond the
companies' control and are difficult to predict. Factors that could cause MPC's
actual results to differ materially from those implied in the forward-looking
statements include: the time, costs and ability to obtain regulatory or other
approvals and consents and otherwise consummate the strategic initiatives
discussed herein; the satisfaction or waiver of conditions in the agreements
governing the strategic initiatives discussed herein; our ability to achieve the
strategic and other objectives related to the strategic initiatives discussed
herein; our ability to generate sufficient income and cash flow to effect the
intended share repurchases, including within the expected timeframe; our ability
to manage disruptions in credit markets or changes to our credit rating; the
potential impact on our share price if we are unable to effect the intended
share repurchases; adverse changes in laws including with respect to tax and
regulatory matters; inability to agree with the MPLX conflicts committee with
respect to the timing of and value attributed to assets identified for dropdown
and/or the general partner economic interests; continued/further volatility in
and/or degradation of market and industry conditions; the impact of adverse
market conditions affecting MPC's and MPLX's midstream businesses; modifications
to MPLX earnings and distribution growth objectives, and other risks described
below with respect to MPLX; changes to MPC's capital budget; other risk factors
inherent to MPC's industry; and the factors set forth under the heading "Risk
Factors" in MPC's Annual Report on Form 10-K for the year ended Dec. 31, 2016,
filed with Securities and Exchange Commission (SEC). Factors that could cause
MPLX's actual results to differ materially from those implied in the forward-
looking statements include: negative capital market conditions, including an
increase of the current yield on common units, adversely affecting MPLX's
ability to meet its distribution growth guidance; the time, costs and ability to
obtain regulatory or other approvals and consents and otherwise consummate the
strategic initiatives discussed herein; the satisfaction or waiver of conditions
in the agreements governing the strategic initiatives discussed herein; our
ability to achieve the strategic and other objectives related to the strategic
initiatives discussed herein; adverse changes in laws including with respect to
tax and regulatory matters; inability to agree with respect to the timing of and
value attributed to assets identified for dropdown and/or the general partner
economic interests; the adequacy of MPLX's capital resources and liquidity,
including, but not limited to, availability of sufficient cash flow to pay
distributions and access to debt to fund anticipated dropdowns on commercially
reasonable terms, and the ability to successfully execute its business plans and
growth strategy; the timing and extent of changes in commodity prices and demand
for crude oil, refined products, feedstocks or other hydrocarbon-based products;
continued/further volatility in and/or degradation of market and industry
conditions; changes to the expected construction costs and timing of projects;
completion of midstream infrastructure by competitors; the suspension, reduction
or termination of MPC's obligations under MPLX's commercial agreements;
modifications to earnings and distribution growth objectives; the level of
support from MPC, including dropdowns, alternative financing arrangements,
taking equity units, and other methods of sponsor support, as a result of the
capital allocation needs of the enterprise as a whole and its ability to provide
support on commercially reasonable terms; changes to MPLX's capital budget;
other risk factors inherent to MPLX's industry; and the factors set forth under
the heading "Risk Factors" in MPLX's Annual Report on Form 10-K for the year
ended Dec. 31, 2016, filed with the SEC. In addition, the forward-looking
statements included herein could be affected by general domestic and
international economic and political conditions. Unpredictable or unknown
factors not discussed here, in MPC's Form 10-K or in MPLX's Form 10-K could also
have material adverse effects on forward-looking statements. Copies of MPC's
Form 10-K are available on the SEC website, MPC's website at
http://ir.marathonpetroleum.com or by contacting MPC's Investor Relations
office. Copies of MPLX's Form 10-K are available on the SEC website, MPLX's
website at http://ir.mplx.com or by contacting MPLX's Investor Relations office.
Non-GAAP Financial Measures
The EBITDA forecasts were determined on an EBITDA-only basis. Accordingly,
information related to the elements of net income, including tax and interest,
are not available and, therefore, reconciliations of these non-GAAP financial
measures to the nearest GAAP financial measures have not been provided.
dropdown draft 111317:
http://hugin.info/147922/R/2149487/824939.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Marathon Petroleum Corporation via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 13.11.2017 - 22:15 Uhr
Sprache: Deutsch
News-ID 567938
Anzahl Zeichen: 14373
contact information:
Town:
Findlay, Ohio
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 151 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Marathon Petroleum Corp. and MPLX LP announce agreement for approximately $8.1 billion dropdown to MPLX, and MPC initiates offer to exchange its general partner interests, including its IDRs, in MPLX"
steht unter der journalistisch-redaktionellen Verantwortung von
Marathon Petroleum Corporation (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
