Kinetik Holdings Inc.
For the period ended Mar 31, 2025. Filed May 8, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
DEBT AND FINANCING COSTS
- DEBT AND FINANCING COSTS
December 2028 Sustainability-Linked Senior Notes
On March 14, 2025, the Company completed an additional private placement of $250.0 million aggregate principal amount of 6.625% Sustainability-Linked Senior Notes due 2028 (the “New 2028 Notes”) at 101.25% of par. Interest on the New 2028 Notes is payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2024. The aggregate fees and expenses totaling $2.5 million paid to third parties to issue the New 2028 Notes and the initial purchasers’ discount of $2.5 million were capitalized as debt issuance cost and original debt discount, respectively. These capitalized costs were included in the Condensed Consolidated Balance Sheets as a direct deduction to the New 2028 Notes. In addition, original debt premium of $3.1 million was added to the New 2028 Notes. The debt issuance cost and original debt discount are amortized, and the debt premium is accreted to interest expense over the term of the New 2028 Notes using the effective interest method.
The New 2028 Notes were issued as additional notes under the indenture dated as of December 6, 2023, as may be supplemented from time to time (the “Indenture”), pursuant to which the Partnership has previously issued $800.0 million aggregate principal amount of 6.625% Sustainability-Linked Senior Notes due 2028 (the “Existing Notes” and together with the New 2028 Notes, the “2028 Notes”).
The New 2028 Notes and the Existing Notes are treated as a single series of securities under the Indenture and vote together as a single class and the New 2028 Notes have substantially identical terms, other than the issue date, issue price and the first interest payment date, as the Existing Notes.
The following table summarizes the Company’s debt obligations as of March 31, 2025 and December 31, 2024:
| March 31, | December 31, | |
|---|---|---|
| 2025 | 2024 | |
| (In thousands) | ||
| A/R Facility(1) | $148,800 | $140,200 |
| Total current debt obligations | $148,800 | $140,200 |
| Unsecured term loan(2) | $1,000,000 | $1,000,000 |
| 5.875% senior unsecured notes due 2030 (“2030 Notes”) | 1,000,000 | 1,000,000 |
| 6.625% senior unsecured notes due 2028 (“2028 Notes”) | 1,050,000 | 800,000 |
| $1.25 billion revolving line of credit(3) | 545,000 | 590,000 |
| Total long-term debt | 3,595,000 | 3,390,000 |
| Debt issuance costs, net(4) | (27,380) | (26,174) |
| Unamortized debt premiums and discounts, net | 837 | 170 |
| Total long-term debt, net | $3,568,457 | $3,363,996 |
(1)The effective interest rate was 5.32% and 5.55% as of March 31, 2025 and December 31, 2024, respectively.
(2)The effective interest rate was 6.00% and 6.25% as of March 31, 2025 and December 31, 2024, respectively.
(3)The weighted average effective interest rate was 6.25% and 6.43% as of March 31, 2025 and December 31, 2024, respectively.
(4)Excludes unamortized debt issuance costs related to the revolving line of credit. Unamortized debt issuance costs associated with the revolving line of credit were $3.4 million and $3.8 million as of March 31, 2025 and December 31, 2024, respectively. The unamortized debt issuance costs related to the revolving credit facilities were included in the “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets.
The table below presents the components of the Company’s financing costs, net of capitalized interest:
| Three Months Ended March 31, | ||
|---|---|---|
| 2025 | 2024 | |
| (In thousands) | ||
| Capitalized interest | $(3,304) | $(944) |
| Debt issuance costs | 1,972 | 1,699 |
| Interest expense | 57,046 | 46,712 |
| Total financing costs, net of capitalized interest | $55,714 | $47,467 |
As of March 31, 2025 and December 31, 2024, unamortized debt issuance costs associated with the 2030 Notes, the 2028 Notes and the Term Loan Credit Facility (as defined herein) were $27.4 million and $26.2 million, respectively, and unamortized debt premiums and discount, net, associated with the 2028 Notes and the unsecured term loan were $0.8 million and $0.2 million, respectively.
Compliance with our Covenants
Each of the revolving credit agreement with Bank of America, N.A. as administrative agent and the term loan credit agreement with PNC Bank as administrative agent (the “Term Loan Credit Facility”), contain customary covenants and restrictive provisions which may, among other things, limit the Partnership’s ability to create liens, incur additional indebtedness and make restricted payments and the Partnership’s ability to liquidate, dissolve, consolidate with or merge into or with any other person. The 2030 Notes and the 2028 Notes also contain covenants and restrictive provisions, which may, among other things, limit the Partnership’s and its subsidiaries’ ability to create liens to secure indebtedness.
The A/R Facility contains covenants and restrictive provisions with respect to the Partnership and Kinetik Receivables, LLC, a wholly owned subsidiary of the Partnership (“Kinetik Receivables”) that are customary for accounts receivable securitization facilities. As of March 31, 2025, the Partnership was in compliance with all customary and financial covenants.
Letters of Credit
Our $1.25 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”), scheduled to mature on or before June 8, 2027, can be used for letters of credit. Our obligations with respect to related letters of credit totaled $12.6 million as of March 31, 2025 and December 31, 2024. As of March 31, 2025, the Revolving Credit Facility has a borrowing base of $692.4 million available.
Fair Value of Financial Instruments
The fair value of the Company and its subsidiaries’ consolidated debt as of March 31, 2025 and December 31, 2024 was $3.74 billion and $3.52 billion, respectively. On March 31, 2025, the senior unsecured notes’ fair value was based on Level 1 inputs, the Term Loan Credit Facility and Revolving Credit Facility’s fair value was based on Level 3 inputs and the A/R Facility’s fair value approximates its carrying value due to its short-term nature.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.