Hess Midstream LP Form 8-K Summary
Business Context and Reporting Period
Hess Midstream LP filed a Current Report on Form 8-K dated July 14, 2022, reporting the amendment and restatement of its existing credit agreement. The filing does not present quarterly or annual operating results.
Financing and Key Financial Terms
- The restated senior secured revolving credit facility provides commitments of up to $1.0 billion.
- The senior secured term loan facility provides commitments of up to $400 million.
- The maturity date was extended from December 16, 2024 to July 14, 2027, unless earlier terminated or extended under the agreement.
- The accordion feature was increased to permit up to an additional $750 million of commitments.
- LIBOR was replaced with the Secured Overnight Financing Rate, or SOFR, as the benchmark interest rate, subject to the agreement’s terms.
- The obligations remain guaranteed by the Partnership’s direct and indirect wholly owned material domestic subsidiaries and secured by first-priority liens on substantially all assets of the Partnership and those subsidiaries, subject to customary exclusions.
Material Changes Versus the Prior Agreement
- Extended debt maturity by approximately two years and seven months.
- Expanded potential borrowing capacity through the larger accordion feature.
- Updated the interest-rate benchmark from LIBOR to SOFR.
- Other representations, covenants and events of default were amended as set forth in the complete Restated Credit Agreement.
Covenants, Risks and Other Considerations
- The Partnership must generally maintain a total debt-to-EBITDA ratio of no more than 5.00 to 1.00 as of each fiscal quarter-end, increasing to 5.50 to 1.00 for a specified period following certain acquisitions.
- Before obtaining an investment-grade credit rating, secured debt-to-EBITDA generally may not exceed 4.00 to 1.00.
- Failure to comply with covenants or the occurrence of specified events of default could affect access to the facilities and accelerate obligations.
- The filing does not provide current debt outstanding, interest rates, liquidity balances, cash flow, revenue, profit, margins or management guidance.
- Several lenders have provided or may provide investment banking, advisory, lending or other services to the Company or its affiliates and may receive customary compensation.
Investor Verification Checklist
- Review Exhibit 10.1 for the complete borrowing terms, applicable margins, mandatory prepayments, covenant definitions and events of default.
- Verify amounts drawn and available capacity under the revolving and term loan facilities in subsequent financial filings.
- Assess compliance with the total debt-to-EBITDA and secured debt-to-EBITDA covenants.
- Confirm the effect of the SOFR transition on borrowing costs and interest-rate exposure.
- Review future filings for any changes in guarantees, collateral, maturity, accordion commitments or lender commitments.