Business Context and Reporting Period
This Form 8-K Current Report was filed by Kinder Morgan, Inc. (KMI) on February 22, 2018. The filing discloses a significant capital market transaction involving the issuance of senior notes.
Key Financial Metrics and Transaction Details
KMI entered into an underwriting agreement to sell $2.0 billion in aggregate principal amount of senior notes. The issuance consists of two tranches:
- 2028 Notes: $1.25 billion aggregate principal amount with a 4.300% interest rate, maturing March 1, 2028.
- 2048 Notes: $0.75 billion aggregate principal amount with a 5.200% interest rate, maturing March 1, 2048.
Interest accrues from March 1, 2018, and is payable semi-annually in arrears beginning September 1, 2018. The filing text does not provide specific values for revenue, profit, cash flow, margins, or existing debt levels; it focuses solely on this new debt issuance.
Material Changes and Use of Proceeds
The primary material change is the increase in long-term debt obligations by $2.0 billion. KMI expects to use the proceeds from this offering to:
- Repay commercial paper.
- Repay borrowings under its revolving credit facility.
- Fund general corporate purposes.
Affiliates of the underwriters are lenders under KMI's revolving credit facility and may hold portions of KMI's commercial paper, meaning they will receive a portion of the offering proceeds.
Management Commentary, Risks, and Contingencies
The Notes are guaranteed pursuant to a Cross Guarantee Agreement. The Indenture includes standard covenants and an event of default clause. Upon an event of default (including payment defaults, covenant breaches, or bankruptcy), the entire principal amount of the Notes may be accelerated and become immediately due and payable. KMI retains the right to redeem all or part of the Notes at applicable redemption prices.
Investor Verification Checklist
- Verify the specific terms of the Cross Guarantee Agreement referenced in the 2017 Form 10-K.
- Confirm the exact amount of commercial paper and revolving credit facility debt being retired with these proceeds.
- Review the full Underwriting Agreement (Exhibit 1.1) for detailed indemnification and contribution provisions.
- Assess the impact of the new interest obligations on future cash flow coverage ratios.