Tesoro amends revolver to up availability, adds QEP guarantors

By Marisa Wong

Madison, Wis., Dec. 9 – Tesoro Logistics LP, an affiliate of Tesoro Corp., entered into a second amended and restated senior secured revolving credit agreement on Dec. 2 with Bank of America, NA as administrative agent to increase total revolving loan availability to $900 million from $575 million, according to an 8-K filing with the Securities and Exchange Commission.

The amendment was made concurrently with Tesoro Logistics closing its acquisition of QEP Field Services, LLC, which holds an about 55.8% limited partner interest in QEP Midstream Partners, LP.

The amended and restated credit agreement permits Tesoro Logistics to request that the availability be increased up to an aggregate of $1.5 billion.

The credit agreement is guaranteed by some of Tesoro Logistics’ subsidiaries, including QEP subsidiaries.

The restated facility is scheduled to mature on Dec. 2, 2019.

Borrowings will bear interest at one-month Libor plus an applicable margin. The applicable margin at closing was 250 basis points but will generally vary based on the company’s consolidated leverage ratio.

The restated credit agreement retains a number of restrictive covenants and financial covenants. Under the financial covenants, the company cannot

• Permit the ratio of its consolidated EBITDA to its consolidated interest charges as of the end of any fiscal quarter, for the immediately preceding four-quarter period, to be less than 2.50 to 1.00;

• Permit the ratio of its consolidated funded debt to its consolidated EBITDA as of the end of any fiscal quarter, for the immediately preceding four-quarter period, to be (a) greater than 5.50 to 1.00 during a temporary period from the date of consummation of certain acquisitions until the last day of the third consecutive quarter following those acquisitions and (b) except during a specified acquisition period, (i) greater than 5.50 to 1.00 for each fiscal quarter ending on or prior to June 30, 2015; (ii) greater than 5.25 to 1.00 for the fiscal quarter ending on Sept. 30, 2015 and (iii) greater than 5.00 to 1.00 for each fiscal quarter after that; or

• Permit the ratio of its senior consolidated funded debt to its consolidated EBITDA as of the end of any fiscal quarter, for the immediately preceding four quarter period, to be (a) greater than 3.00 to 1.00 prior to Dec. 31, 2015, (b) greater than 3.50 to 1.00 at all times on and after Dec. 31, 2015 (except during a specified acquisition period) and (c) greater than 4.00 to 1.00 during a specified acquisition period.

Joinders, QEP facilities

According to another 8-K filing, QEP Field Services, QEP Midstream Partners GP, LLC and QEP Midstream and some direct and indirect subsidiaries entered into joinders and supplements to subsidiary guaranty and security agreements relating to Tesoro Logistics’ second amended and restated senior secured revolver.

Under the joinders, Tesoro Logistics’ restated revolver is guaranteed by the QEP entities and is also secured by substantially all of the assets of the QEP entities.

In addition, prior to the completion of the acquisition, QEP Field Services and QEP Midstream entered into an unsecured intercompany credit agreement dated Dec. 2, under which QEP Field Services agreed to make revolving loans and advances to QEP Midstream in a maximum principal amount of up to $500 million and loaned about $230 million for repayment of an existing secured credit facility.

On Dec. 2, QEP Midstream and QEP Midstream Partners Operating, LLC terminated their existing credit agreement dated Aug. 14, 2013 with Wells Fargo Bank, NA as administrative agent.

The maturity date of the QEP intercompany credit facility is Aug. 14, 2018.

Tesoro is a San Antonio-based owner, operator, developer and acquirer of crude oil and refined products logistics assets. QEP is an energy company based in Denver.

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