Debt (Notes)

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Debt

Debt

Credit Facilities

In conjunction with the announcement of the Trans Mountain Transaction described in Note 3, on May 30, 2018 and concurrently with the termination of our June 16, 2017 revolving credit facility (“2017 Credit Facility”), we established a $500.0 million revolving credit facility (the “Temporary Credit Facility”), for general corporate purposes, including working capital during the period from June 1, 2018 through the closing of the Trans Mountain Transaction. The approximate $100.0 million of borrowings outstanding under the terminated 2017 Credit Facility were repaid pursuant to an initial drawdown under the Temporary Credit Facility and approximately $60.5 million of deferred costs associated with the 2017 Credit Facility that were being amortized as interest expense over its term were written off.

On June 14, 2018, our former subsidiary, Trans Mountain, as the borrower, entered into a non-revolving, unsecured construction credit agreement (the “Trans Mountain Non-recourse Credit Agreement”) in an aggregate principal amount of up to approximately $1.0 billion to facilitate the resumption of the TMEP planning and construction work until the close of the Transaction. The $559.8 million of outstanding borrowings under the Trans Mountain Non-recourse Credit Agreement were included in the Trans Mountain Asset Group’s assets and liabilities as part of the Trans Mountain Transaction.

Upon the closing of the Trans Mountain Transaction on August 31, 2018, the Temporary Credit Facility was replaced with a new 4-year, $500.0 million unsecured revolving credit facility (“2018 Credit Facility”) for working capital purposes under a credit agreement with the Royal Bank of Canada, as agent (the “Credit Agreement”). In addition, the $132.6 million of outstanding borrowings under the Temporary Credit Facility were paid off prior to its termination with a portion of the proceeds from the Trans Mountain Transaction.

Depending on the type of loan requested, interest on loans outstanding will be calculated based on: (i) a Canadian prime rate of interest; (ii) a U.S. base rate; (iii) LIBOR; or (iv) bankers’ acceptance fees, plus (A) in the case of Canadian prime rate or U.S. base rate loans, an applicable margin of up to 1.25% per annum; or (B) in the case of LIBOR loans or banker’s acceptances, an applicable margin ranging from 1.00% to 2.25% per annum, with such margin determined by our then applicable debt credit rating. Standby fees for the unused portion of the 2018 Credit Facility will be calculated at a rate ranging from 0.20% to 0.45% per annum based upon our then applicable debt credit rating.

The Credit Agreement contains various financial and other covenants that apply to KMCU and its subsidiaries and that are common in such agreements, including a maximum ratio of consolidated total funded debt to consolidated earnings before interest, income taxes, D&A, and non-cash adjustments as defined in the Credit Agreement, of 5.00:1.00 and restrictions on KMCU's ability to incur debt, grant liens, make dispositions, engage in transactions with affiliates, make restricted payments(including distributions), amend our organizational documents and engage in corporate reorganization transactions.

In addition, the Credit Agreement contains customary events of default, including non-payment; non-compliance with covenants (in some cases, subject to grace periods); payment default under, or acceleration events affecting, certain other indebtedness; bankruptcy or insolvency events involving KMCU or certain of its subsidiaries; and changes of control. If an event of default under the Credit Agreement exists and is continuing, the lenders could terminate their commitments and accelerate the maturity of our outstanding obligations under the Credit Agreement.

As of December 31, 2018, we had no outstanding borrowings under our 2018 Credit Facility, and had $489.0 million available under the 2018 Credit Facility, after reducing the $500.0 million capacity for $11.0 million in letters of credit. Of the

total $11.0 million of letters of credit issued, approximately $7.9 million are issued on behalf of Trans Mountain for which it has issued a backstop letter of credit to us. As of December 31, 2018, we were in compliance with all required covenants. As of December 31, 2017, we had no borrowings outstanding under our 2017 Credit Facility. For the years  ended December 31, 2018 and 2017, we incurred $1.1 million and $0.7 million, respectively, in standby fees.