Knife River signs credit agreement for $625 million after separation

By William Gullotti

Buffalo, N.Y., June 2 – Knife River Corp., formerly known as Knife River Holding Co., entered into a $625 million credit agreement with JPMorgan Chase Bank, NA as administrative agent and collateral agent on May 31 after separation from MDU Resources Group, Inc., according to an 8-K filing with the Securities and Exchange Commission.

The agreement is comprised of a $350 million senior secured first-lien revolving credit facility and a $275 million senior secured first-lien term loan facility, both of which mature May 31, 2028.

Borrowings bear interest at SOFR plus a margin ranging from 175 basis points to 250 bps, and the revolver includes a commitment fee that ranges from 25 bps to 50 bps. The margins and fee are determined by the company’s consolidated total net leverage ratio.

The borrower is permitted, at the lenders’ discretion and subject to certain conditions, to request incremental revolving or term facilities of up to $300 million.

The term loan requires quarterly amortization payments of 2.5% per annum for the first two years, 5% per annum for the next two years and 7.5% per annum for the final year.

The overarching agreement contains financial covenants requiring the company to maintain a maximum consolidated total net leverage ratio of 4.75 to 1.00 and a minimum interest coverage ratio of 2.25 to 1.00. The consolidated total net leverage ratio may be increased at the company’s option to 5.00 to 1.00 in connection with certain qualifying material acquisitions.

At closing, Knife River drew $190 million from the revolver and the entire $275 million provided by the term facility. Proceeds were used, together with proceeds from the company’s 7¾% note offering due 2031, to fund the company’s repayment obligations to certain subsidiaries of its former parent and for general corporate purposes.

JPMorgan is also serving as a joint lead arranger, joint bookrunner and co-syndication agent along with BofA Securities, Inc., MUFG Bank, Ltd., RBC Capital Markets, U.S. Bank, NA and Wells Fargo Securities, LLC.

TD Bank NA is the documentation agent.

Knife River, a supplier of crushed stone, sand, gravel and related construction materials, was spun off from MDU Resources in May 2023.

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