MARATHON PETROLEUM CORPORATION PROVIDES UPDATE ON STRATEGIC ACTIONS TO ENHANCE SHAREHOLDER VALUE - Seite 2

"We are pleased with the additional decisive actions MPC announced today that will accelerate value creation for all shareholders," said Quentin Koffey, portfolio manager at Elliott Management. "We appreciate the open and candid dialogue we have had with the management team, and expect these additional actions to be important elements of the value realization MPC continues to drive for its shareholders."

The actions announced today include:

Dropdown of All MLP-Qualifying EBITDA As Soon As Practicable (Expected in 2017).  These planned dropdowns are subject to regulatory clearances including tax, requisite approvals and market and other conditions.

o    A proposed transaction representing ~$250 million of this annual EBITDA is already under review by the conflicts committee of the MPLX Board and the transaction is expected to be completed in the first quarter of 2017.

o    MPC plans to dropdown an additional ~$350 million of EBITDA-generating assets by the end of the fourth quarter of 2017.

o    The remaining ~$800 million of EBITDA-generating assets, with ~$600 million of annual EBITDA related to fuels distribution, are expected to be offered to MPLX as soon as practicable once the company has received the necessary tax clearance, which will likely include a private letter ruling from the IRS indicating these earnings will be qualifying income to the partnership under pending IRS regulations. If tax clearance is delayed for the fuels distribution business, then ~$200 million would be dropped no later than the first quarter of 2018, with the remaining ~$600 million dropped following receipt of the necessary tax clearance.

o    The company expects these dropdowns to be valued consistent with recent industry precedent valuation multiples ranging between 7.0x and 9.0x EBITDA, subject to the MPLX conflicts committee review process and receipt of customary fairness opinions. MPC also expects the partnership to finance the dropdown transactions with debt and equity in approximately equal proportions, with the equity financing to be funded through MPLX LP units issued to MPC.

 

  IDR Exchange for MPLX LP Units in Conjunction with Completion of the Dropdowns (Expected in 2017). As a part of the substantial acceleration of dropdowns into MPLX, the company, with the assistance of its independent financial advisors, has completed its initial evaluation of strategic alternatives to highlight and capture the value of its GP interest in MPLX while optimizing the partnership's cost of capital. Based on this review, the company expects to pursue an exchange of MPC's economic interests in the GP for newly issued MPLX LP units in conjunction with completion of its dropdowns, with the details of the transaction to be announced following the receipt of requisite approvals and tax clearance for all dropdowns. MPC would continue to retain control of the GP following this exchange. This transaction is designed to provide a more tangible valuation of MPC's economic interest in the GP and reduce MPLX's cost of capital.