Fitch: MPLX's Acquisition of Marine Assets Reflective of Strong Sponsor Support

NEW YORK--()--Today, MPLX LP (MPLX; IDR 'BBB-'/Outlook Stable) announced that it has agreed to the drop down of marine assets from its sponsor, Marathon Petroleum Corp. (MPC; IDR 'BBB'/Outlook Stable). MPLX will finance the acquisition through the issuance of $600 million of common units to MPC. Fitch Ratings does not expect that this transaction will impact MPLX's ratings in the near term.

MPLX expects that the marine assets will generate approximately $120 million of EBITDA on an annual basis which implies a relatively low multiple of only 5x. The partnership has noted that the acquisition price reflects MPC's support of MLPX. The dropdown was previously anticipated to be completed in the second quarter and with the timing moved up, the transaction should now close by March 31, 2016.

The marine assets being purchased include 205 barges and 18 tow boats. These assets move light products, heavy oils, crude, renewable fuels, and other products. Following this dropdown, MPC has assets which generate approximately $1.5 billion of EBITDA that could be future dropdowns to MPLX. Remaining assets that could be dropped include pipelines, terminals, railcars, refineries and fuels distribution.

With the drop down of assets, Fitch expects to see leverage improve over the course of 2016. Using pro forma 4Q15 adjusted EBITDA (which includes MarkWest adjusted EBITDA for the full quarter) on an annualized basis, pro forma adjusted leverage was 4.6x. Assuming the marine assets close as expected, Fitch forecasts adjusted leverage to be in the range of 4-4.25x by yearend 2016.

Additional information is available at 'www.fitchratings.com'.

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Contacts

Fitch Ratings
Primary Analyst
Kathleen Connelly
Director
+1-212-908-0290
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Brad Bell
Associate Director
+1-312-368-3149
or
Media Relations:
Alyssa Castelli, New York, +1 212-908-0540
Email: alyssa.castelli@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Kathleen Connelly
Director
+1-212-908-0290
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
Brad Bell
Associate Director
+1-312-368-3149
or
Media Relations:
Alyssa Castelli, New York, +1 212-908-0540
Email: alyssa.castelli@fitchratings.com