Business Context and Reporting Period
Company: Marathon Petroleum Corp
Filing Type: Form 8-K (Current Report)
Date of Report: December 18, 2013
Event: Entry into a Material Definitive Agreement and Termination of a Material Agreement regarding accounts receivable securitization.
Key Financial Metrics
This filing details a liquidity facility rather than operating performance metrics. Key financial terms include:
- New Facility Size: $1.3 billion accounts receivable securitization facility (A/R Facility).
- Term: Initial three-year term with extension options.
- Letter of Credit Capacity: Up to $1.25 billion.
- Outstanding Balance: As of December 23, 2013, no trade receivable purchases or letters of credit were outstanding under the new facility.
- Cost Structure: Costs vary based on funding alternatives (CP Costs or Yield) as defined in the agreement.
Material Changes Versus Prior Period
The Company replaced its existing accounts receivable securitization facility with a new, larger facility:
- Previous Facility: $1.0 billion facility dated October 1, 2011, set to expire on June 30, 2014.
- Change: The previous facility was terminated on December 18, 2013, and replaced by the new $1.3 billion facility.
- Administrative Agent Change: The new facility is administered by The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, replacing JPMorgan Chase Bank, N.A.
Guidance, Outlook, and Risks
Purpose: The A/R Facility is intended to provide additional liquidity and funding for ongoing business needs.
Structure and Guarantees:
- The facility involves a bankruptcy-remote special purpose entity (Trade Receivables SPE).
- Neither the Originator nor the SPE guarantees the collectability of trade receivables or the creditworthiness of obligors.
- Marathon Petroleum Corporation has provided a guaranty of performance regarding the obligations of the Originator.
Risks and Contingencies:
- The agreement includes "Amortization Events" which, if triggered, allow Purchasers to terminate further purchases and impose default fees.
- Eligible trade receivables are subject to customary criteria, limits, and reserves.
Investor Verification Checklist
- Verify the specific interest rates or yield calculations applicable to the $1.3 billion facility in the full text of the Receivables Purchase Agreement (Exhibit 10.1).
- Confirm the definition of "Amortization Events" to understand triggers for early termination or default fees.
- Review the scope of the Company's guaranty of performance to assess potential liability exposure.
- Monitor future utilization of the facility to determine actual liquidity drawdowns versus the $1.3 billion capacity.