MDU enters credit agreements totaling $725 million after separation

By William Gullotti

Buffalo, N.Y., June 2 – MDU Resources Group, Inc. entered into three credit agreements with U.S. Bank, NA as administrative agent totaling $725 million on May 31 after spinning off former subsidiary Knife River Corp., according to an 8-K filing with the Securities and Exchange Commission.

The agreements consist of a $150 million 364-day revolver, a $200 million five-year revolver and a $375 million two-year term loan agreement.

Borrowings from the 364-day revolver, which matures May 29, 2024, bear interest at SOFR plus a margin ranging from 92.5 basis points to 150 bps. There is also a facility fee that ranges from 7.5 bps to 25 bps.

Borrowings from the five-year revolver, which matures May 31, 2028, also bear interest at SOFR, except with a margin ranging from 90 bps to 147.5 bps. Similarly, the facility fee ranges from 10 bps to 27.5 bps.

With each revolver, the margins and fees are determined by the company’s debt ratings.

Subject to certain conditions, commitments under the five-year revolver may be increased by up to $50 million. MDU may also request two, one-year maturity extensions.

The five-year revolver also includes a $25 million standby letter-of-credit subfacility and a $25 million swingline subfacility.

The term loan, which matures May 31, 2025, bears interest at SOFR plus 115 bps.

At closing, MDU drew the full $375 million from the term facility.

Each of the new credit agreements include a financial covenant not to permit the ratio of funded debt to total capitalization to exceed 65%.

Proceeds from the new agreements may be used for capital budget and working capital needs, for general corporate purposes and to refinance indebtedness of the company and its subsidiaries.

In addition to serving as administrative agent for each new facility, U.S. Bank is also a joint lead arranger and joint bookrunner along with Cobank, ACB, JPMorgan Chase Bank, NA, PNC Capital Markets LLC and Wells Fargo Securities, LLC.

Cobank and JPMorgan are also acting as co-syndication agents for each facility along with PNC Bank, NA and Wells Fargo Bank, NA.

At closing and in accordance with covenants included in each new facility, CEHI, LLC, a wholly owned subsidiary of MDU and successor by merger to Centennial Energy Holdings, Inc., prepaid and terminated (1) a fifth amended and restated credit agreement with U.S. Bank as administrative agent dated Dec. 19, 2019, (2) a term loan agreement with KeyBank, NA as administrative agent dated March 18, 2022 and (3) a 364-day term loan agreement with JPMorgan Chase Bank, NA as administrative agent dated Dec. 19, 2022.

Bismarck, N.D.-based MDU Resources Group provides products and services through its regulated energy delivery and construction materials and services businesses.

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