| Item 1.01 | Entry into a Material Definitive Agreement. |
On June 23, 2022, Phillips 66 Company (the “Company”), a wholly-owned subsidiary of Phillips 66, entered into a $5 billion revolving credit agreement with a syndicate of banks and other financial institutions party thereto and Mizuho Bank, Ltd., as administrative agent (the “Credit Agreement”). The Credit Agreement is guaranteed by Phillips 66 and replaces the $5 billion Amended and Restated Credit Agreement dated as of July 30, 2019 (the “Existing Credit Agreement”) with Phillips 66 as the borrower and the Company as guarantor. In connection with the entry into the Credit Agreement, the Existing Credit Agreement and the $750 million Amended and Restated Credit Agreement dated as of July 30, 2019 with Phillips 66 Partners LP as the borrower and Phillips 66 Partners Holdings LLC as guarantor have been terminated.
The Credit Agreement has a scheduled maturity of June 22, 2027. The Credit Agreement contains customary covenants similar to the Existing Credit Agreement including a maximum consolidated net debt-to-capitalization ratio of 65% as of the last day of each fiscal quarter. The facility has customary events of default, such as nonpayment of principal when due; nonpayment of interest, fees or other amounts after grace periods; and violation of covenants. The Company may at any time prepay outstanding borrowings under the Credit Agreement, in whole or in part, without premium or penalty. At closing, the Company had no borrowings under the Credit Agreement.
The Company has the option to increase the overall capacity of the Credit Agreement by up to an additional $1 billion for a total of $6 billion, subject to, among other things, the consent of the existing lenders whose commitments will be increased or any additional lenders providing such additional capacity. The Company also has the option to extend the scheduled maturity of the Credit Agreement for up to two additional one-year terms, subject to, among other things, the consent of the lenders holding the majority of the commitments and of each lender extending its commitment.
Outstanding borrowings under the Credit Agreement bear interest at either: (a) Adjusted Term SOFR (as described in the Credit Agreement) in effect from time to time plus the applicable margin; or (b) the reference rate (as described in the Credit Agreement) plus the applicable margin. The pricing levels for the commitment fee and interest-rate margins are determined based on the ratings in effect for the Company’s senior unsecured long-term debt from time to time.
Certain of the banks and other financial institutions that are party to the Credit Agreement and their affiliates have provided and may, from time to time, continue to provide investment banking, financial advisory, lending and/or commercial banking services to Phillips 66, the Company and their affiliates, for which they have received, and may in the future receive, customary compensation and reimbursement of expenses.
The foregoing description of the Credit Agreement is not complete and is qualified in its entirety by reference to the Credit Agreement, a copy of which is filed herewith as Exhibit 10.1 and incorporated herein by reference.
2
