| Item 1.01 | Entry into a Material Definitive Agreement. |
On November 19, 2021, DCP Midstream Operating, LP (the “Operating Partnership”) completed the previously announced public offering (the “Offering”) of $400 million aggregate principal amount of its 3.250% Senior Notes due 2032 (the “Notes”). The Notes are fully and unconditionally guaranteed by DCP Midstream, LP (the “Partnership”). The Notes will mature on February 15, 2032. Interest on the Notes is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on August 15, 2022.
The Operating Partnership intends to use the net proceeds from the Offering to repay indebtedness under its revolving credit facility and for general partnership purposes. We may temporarily invest certain net proceeds in short-term marketable securities until they are used for their stated purpose. Certain of the Underwriters and/or their affiliates are lenders under the Operating Partnership’s revolving credit facility. To the extent that the Operating Partnership uses proceeds from the Offering to repay indebtedness under its revolving credit facility, such Underwriters and/or their affiliates may receive a portion of the net proceeds from the Offering.
The Notes constitute a new series of debt securities under an indenture dated as of September 30, 2010 (the “Base Indenture”) between the Operating Partnership and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), as amended and supplemented by the Third Supplemental Indenture dated as of June 14, 2012 (the “Third Supplemental Indenture”) by and among the Operating Partnership, the Partnership, as guarantor, and the Trustee, as further supplemented by the Tenth Supplemental Indenture dated as of November 19, 2021 (the “Tenth Supplemental Indenture” and, together with the Base Indenture and the Third Supplemental Indenture, the “Indenture”) by and among the Operating Partnership, the Partnership, as guarantor, and the Trustee, setting forth the specific terms applicable to the Notes.
The Notes are the Operating Partnership’s senior unsecured obligations, ranking equally in right of payment with all of the Operating Partnership’s other existing and future senior unsecured indebtedness, and senior in right of payment to any of its subordinated indebtedness. The Notes are not initially guaranteed by any of the Operating Partnership’s subsidiaries, but are fully and unconditionally guaranteed by the Partnership. The guarantees of the Notes by the Partnership will rank equally in right of payment with the Partnership’s existing and future senior unsecured indebtedness and senior in right of payment to any subordinated debt the Partnership may incur.
Prior to August 15, 2031, the Operating Partnership will have the right to redeem the Notes, in whole or in part, at a redemption price equal to the greater of (1) 100% of the principal amount of the Notes to be redeemed, and (2) the sum of the present values of the principal amount of the Notes to be redeemed and the remaining scheduled payments of interest on such Notes (exclusive of interest accrued to the redemption date) discounted from their respective scheduled payment dates to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Tenth Supplemental Indenture), plus 50 basis points, plus, in either case, accrued and unpaid interest, if any, on the principal amount being redeemed to, but not including, such redemption date. At any time on or after August 15, 2031, the Operating Partnership will have the right to redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date.
Upon the occurrence of a Change of Control Triggering Event (as defined in the Tenth Supplemental Indenture), unless the Operating Partnership previously exercised its right to redeem all of the Notes, each holder of the Notes will have the right to require the Operating Partnership to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that holder’s Notes at a cash purchase price equal to 101% of the aggregate principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, on the Notes repurchased to, but excluding, the date of purchase, subject to the rights of holders of the Notes on the relevant record date to receive interest due on the related interest payment date that has accrued on or prior to the date of purchase. Within 30 days following the occurrence of a Change of Control Triggering Event, the Operating Partnership will send a notice to each holder of the Notes describing the transaction or transactions that constitute a Change of Control Triggering Event and offer to purchase the Notes as of a date that will be no earlier than 30 days and no later than 60 days from the date such notice is sent.
The Indenture contains customary covenants that will limit the ability of the Partnership, the Operating Partnership and certain of their subsidiaries to, among other things, create liens on their principal properties, engage in sale-leaseback transactions, and merge or consolidate with another entity or sell, lease or transfer substantially all of their properties or assets to another entity. The Indenture also contains customary events of default, including, among other things, (i) default for 30 days in the payment, when due, of interest on the Notes, (ii) default in the payment of principal or any premium on the Notes when due, and (iii) certain events of bankruptcy, insolvency or reorganization with respect to the Operating Partnership or the Partnership.
