Item 8.01.
Other Events.
On August 3, 2017, Kinder Morgan, Inc. (“KMI”) entered into an underwriting agreement (the “Underwriting Agreement”) with Barclays Capital Inc., J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several underwriters named therein, pursuant to which KMI agreed to sell $1,250,000,000 in aggregate principal amount of senior notes consisting of (i) $1,000,000,000 in aggregate principal amount of KMI’s 3.150% Senior Notes due 2023 (the “Fixed Rate Notes”) and (ii) $250,000,000 in aggregate principal amount of KMI’s Floating Rate Senior Notes due 2023 (the “Floating Rate Notes” and together with the Fixed Rate Notes, the “Notes”).
The Notes are guaranteed pursuant to a Cross Guarantee Agreement, which is described in and filed as Exhibit 10.1 to KMI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017. The Underwriting Agreement contains customary representations and warranties by KMI. The Underwriting Agreement also contains customary indemnification and contribution provisions whereby KMI and the underwriters have agreed to indemnify each other against certain liabilities. The Notes were offered and sold under a prospectus supplement and related prospectus filed with the Securities and Exchange Commission pursuant to a shelf registration statement on Form S-3 (File No. 333-207599).
The Notes were issued pursuant to an Indenture, dated as of March 1, 2012, between KMI and U.S. Bank National Association, as trustee. The Notes will mature on January 15, 2023. Interest on the Notes will accrue from August 10, 2017. Interest on the Fixed Rate Notes will be payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2018. Interest on the Floating Rate Notes will be payable quarterly in arrears on January 15, April 15, July 15 and October 15, beginning on October 15, 2017.
KMI may redeem all or a part of the Fixed Rate Notes at any time at the applicable redemption price. The Floating Rate Notes are not redeemable at KMI’s option.
Upon the occurrence of an event of default under the Indenture, which includes payment defaults, defaults in the performance of affirmative and negative covenants, bankruptcy and insolvency related defaults and failure to pay certain indebtedness, the obligations of KMI under the Notes may be accelerated, in which case the entire principal amount of the Notes would be immediately due and payable.
The foregoing description of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the Underwriting Agreement, a copy of which is filed as Exhibit 1.1 to this Current Report on Form 8-K and incorporated herein by reference.
KMI expects to use the proceeds from the offering of the Notes (i) to pay indebtedness outstanding under KMI’s term loan facility, (ii) to redeem the 5.50% senior notes due 2022 issued by KMI’s subsidiary, Hiland Partners Holdings LLC, and guaranteed by KMI (such notes, the “Hiland notes”), and (iii) for general corporate purposes.
The underwriters and their related entities have, from time to time, engaged in commercial and investment banking transactions with KMI and its affiliates and provided financial advisory
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