Marathon Petroleum Gets Help to Fund Hess Retail Acquisition

MPC enters into $700-million, five-year term loan agreement

Marathon Petroleum Corp. (MPC) Speedway Hess M&A (CSP Daily News / Convenience Stores / Gas Stations)

FINDLAY, Ohio -- Marathon Petroleum Corp. (MPC) has entered into a five-year senior unsecured term loan agreement with a syndicate of lenders providing commitments for $700 million in term loan borrowings that will be used to fund a portion of Speedway's acquisition of Hess Retail Holdings LLC.

The Federal Trade Commission (FTC) recently concluded its review and has approved the deal, which the companies expect will close later this year. The $2.874-billion acquisition, announced in May, will result in Speedway growing to more than 2,700 stores in 23 states.

Borrowings under the term loan agreement are subject to customary conditions and would have to be repaid if the acquisition is not completed within 10 business days following the funding date.

The term loan was substantially oversubscribed from a group of the lenders who are also participants in MPC's primary revolving credit facility. The borrowings will mature five years following the funding date and may be prepaid at any time without premium or penalty. Interest on the borrowings will accrue at a rate determined by a grid-based pricing matrix that is dependent upon the company's credit ratings.

RBS Securities Inc., Bank of Tokyo-Mitsubishi UFJ Ltd., Barclays Bank PLC, Citigroup Global Markets Inc. and Morgan Stanley Senior Funding Inc. served as joint lead arrangers and joint bookrunners under the term loan agreement.

MPC is the nation's fourth-largest refiner, with a crude oil refining capacity of approximately 1.7 million barrels per calendar day in its seven-refinery system. It also owns, leases or has ownership interests in approximately 8,300 miles of pipeline. Through subsidiaries, MPC owns the general partner of MPLX LP, a midstream master limited partnership (MLP). MPC's fully integrated system provides operational flexibility to move crude oil, feedstocks and petroleum-related products efficiently through the company's distribution network in the Midwest, Southeast and Gulf Coast regions.

Marathon-brand gasoline is sold through approximately 5,300 independently owned gas stations and convenience stores across 19 states. In addition, Speedway LLC, an MPC subsidiary, owns and operates the nation's fourth-largest convenience store chain, with approximately 1,490 convenience stores in nine states.

Part of CSP's 2014 Convenience Top 101 retailers