Business Context and Reporting Period
This Form 8-K Current Report is filed by Kinder Morgan, Inc. (KMI) for the reporting period of November 24, 2014. The filing discloses the entry into a material definitive agreement involving a significant debt offering and the execution of a cross-guarantee agreement with substantially all wholly-owned subsidiaries.
Key Financial Metrics and Debt Issuance
KMI entered into an underwriting agreement to sell a total of $6.0 billion in aggregate principal amount of Senior Notes across five series. The filing does not provide revenue, profit, cash flow, or margin data as this is a transactional report rather than a periodic financial statement.
| Note Series | Principal Amount | Interest Rate | Maturity Date |
|---|---|---|---|
| 2017 Notes | $500,000,000 | 2.000% | December 1, 2017 |
| 2019 Notes | $1,500,000,000 | 3.050% | December 1, 2019 |
| 2025 Notes | $1,500,000,000 | 4.300% | June 1, 2025 |
| 2034 Notes | $750,000,000 | 5.300% | December 1, 2034 |
| 2045 Notes | $1,750,000,000 | 5.550% | June 1, 2045 |
Interest is payable semi-annually in arrears on June 1 and December 1, with the first payment date set for June 1, 2015. Interest accrues from November 26, 2014.
Material Changes and Related Agreements
Concurrent with the debt offering, KMI and its subsidiaries entered into a Cross Guarantee Agreement dated November 26, 2014. Under this agreement, substantially all wholly-owned subsidiaries jointly and severally guarantee the prompt and complete payment of the Notes.
The filing notes the termination of two credit agreements on November 26, 2014: the KMI Credit Agreement (dated May 6, 2014) and the KMP Credit Agreement (dated May 1, 2013). Additionally, a new revolving credit agreement entered into on September 19, 2014, became effective on November 26, 2014.
Outlook, Risks, and Management Commentary
The Notes are redeemable by KMI at any time at the applicable redemption price. An event of default, including payment defaults, bankruptcy, or failure to pay certain indebtedness, may result in the acceleration of the entire principal amount.
The underwriters (Barclays Capital Inc., Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Wells Fargo Securities, LLC) and their affiliates have engaged in commercial and investment banking transactions with KMI and its affiliates, including acting as financial advisors for the acquisition of Kinder Morgan Energy Partners, L.P., Kinder Morgan Management, LLC, and El Paso Pipeline Partners, L.P.
Investor Verification Checklist
- Verify the total debt load increase of $6.0 billion and its impact on leverage ratios.
- Review the specific terms of the Cross Guarantee Agreement (Exhibit 10.1) to understand subsidiary liability.
- Confirm the status of the terminated credit agreements and the terms of the new effective revolving credit facility.
- Assess the weighted average cost of capital based on the varying interest rates (2.000% to 5.550%) across the maturity spectrum.
- Examine the redemption provisions to understand KMI's flexibility in refinancing these notes.