Kinder Morgan, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Kinder Morgan, Inc. on May 6, 2014. The filing details the entry into a new material definitive credit agreement and the simultaneous termination of prior credit facilities.
Key Financial Metrics and Debt Structure
The Company entered into a new unsecured credit agreement with the following terms:
- Term Loan Facility: $650 million, maturing May 6, 2017.
- Revolving Credit Facility: $1.75 billion, maturing May 6, 2019.
- Interest Rates: LIBOR plus 1.25% to 2.25% per annum, or base rate plus 0.25% to 1.25% per annum, based on credit ratings.
- Commitment Fees: 0.175% to 0.400% per annum on the unused revolving portion.
- Financial Covenants: Maximum consolidated indebtedness to consolidated EBITDA ratio of 4.75x (or 5.50x following specified acquisitions).
The filing does not provide specific values for revenue, profit, cash flow, or current liquidity positions outside of the new credit facility terms.
Material Changes Versus Prior Period
The new Credit Agreement replaced the Company's prior secured revolving credit facility and secured bridge and term loan credit facilities, which were scheduled to mature on December 31, 2014, and May 25, 2015. Key changes include:
- Security Status: The new obligations are unsecured. Consequently, the Company's outstanding senior notes and certain subsidiary indebtedness, previously secured equally and ratably with the prior facilities, have also become unsecured.
- Collateral Release: Collateral securing the prior facilities was released upon termination.
- Refinancing: Borrowings under the new agreement were used to refinance the prior facilities and pay associated fees and expenses.
Outlook, Risks, and Contingencies
Secured Trigger Events: The unsecured obligations will become secured if: (a) specific debt rating downgrade events occur; (b) S&P and/or Moody's withdraw debt ratings; or (c) specified events of default occur regarding Kinder Morgan Energy Partners, L.P. (KMP) or El Paso Pipeline Partners, L.P. (EPB).
Events of Default: The agreement includes standard defaults (non-payment, bankruptcy, change in control) and specific cross-defaults related to KMP and EPB. If an event of default occurs, lenders may terminate commitments and accelerate maturity.
Covenants: The agreement restricts the Company's ability to incur additional debt, grant liens, make investments, pay dividends, repurchase stock, and sell assets.
Investor Verification Checklist
- Verify the Company's current credit ratings to determine applicable interest rate margins and commitment fees.
- Confirm the current consolidated indebtedness to EBITDA ratio to ensure compliance with the 4.75x covenant.
- Monitor the credit status and default events of affiliates KMP and EPB, as these can trigger secured status or default under the new agreement.
- Review the full text of the Credit Agreement (Exhibit 10.1) for detailed definitions of "consolidated indebtedness" and "EBITDA."