UBS cuts Brent crude oil forecasts
HOUSTON - Summit Midstream (NYSE:SMLP) Partners, LP (NYSE: SMLP), a player in midstream energy infrastructure, has successfully priced an upsized offering of $575 million in senior secured second lien notes, carrying an interest rate of 8.625% and maturing in 2029. The transaction is slated to close on July 26, 2024, subject to the satisfaction of customary closing conditions.
The company plans to allocate the net proceeds from this offering, along with available cash and potential borrowings under its asset-based lending credit facility, to various financial maneuvers. These include the repurchase or redemption of all outstanding 8.500% senior secured second lien notes due 2026 and 5.75% senior notes due 2025. Additionally, the funds will cover accrued interest on these notes and support general partnership purposes, which encompasses the payment of related fees and expenses.
The new notes are expected to be backed on a senior second-priority basis by Summit Midstream Holdings, LLC, a subsidiary of the Partnership, and certain of the Partnership's existing and future subsidiaries. The collateral securing these notes will initially be the same as that pledged for the benefit of the Partnership's lenders under the ABL Facility.
This offering is targeted at qualified institutional buyers within the United States under Rule 144A and to non-U.S. persons in compliance with Regulation S of the Securities Act of 1933. The new notes and guarantees have not been registered under the Securities Act and will be offered only in private sales exempt from the registration requirements.
Summit Midstream Partners operates across several key unconventional resource basins in the United States, focusing on the development and operation of midstream energy infrastructure assets. The company's services include natural gas, crude oil, and produced water gathering, processing, and transportation, primarily under long-term, fee-based agreements.
This announcement, which is based on a press release statement, does not constitute an offer to sell or a solicitation of an offer to buy any securities. The release is also not a notice of redemption under the optional redemption provisions of the indenture governing the notes due in 2026 or 2025.
In other recent news, Summit Midstream Partners has initiated a tender offer to repurchase up to $215 million of their 8.500% Senior Secured Second Lien Notes due 2026. This move, known as the Asset Sale Offer, is in compliance with the terms of the indenture governing the notes. In line with recent developments, Summit Midstream has also reported a robust Q1, with a net income of $132.9 million and adjusted EBITDA of $70.1 million.
The company has successfully completed the sale of its Northeast segment assets for approximately $700 million. Following this divestiture, Summit Midstream now aims to focus on organic growth and bolt-on acquisitions in the Rockies and Permian segments.
These actions are part of the company's strategy to strengthen its operational performance throughout the year. Investors are advised to consult the Offer to Purchase document for complete details about the Asset Sale Offer. These recent proceedings underscore Summit Midstream's strategic advancements and financial highlights.
InvestingPro Insights
As Summit Midstream Partners, LP (NYSE: SMLP) prepares to expand its financial strategy with the pricing of a significant offering of senior secured second lien notes, the company's stock market performance and financial metrics provide a broader context for investors. According to InvestingPro data, Summit Midstream Partners boasts a market capitalization of $382.29 million, with a notably low price-to-earnings (P/E) ratio of 4.97 for the last twelve months as of Q1 2024. This low P/E ratio could be indicative of the stock being undervalued compared to its earnings, offering a potentially attractive entry point for investors.
InvestingPro Tips suggest that Summit Midstream Partners has experienced a high return over the last year, with a 138.84% price total return, and is currently trading near its 52-week high at 97.61% of the peak price. The company's liquid assets also exceed its short-term obligations, which may reassure investors of its ability to meet its immediate financial liabilities. Moreover, the company has been profitable over the last twelve months, which aligns with the strategic financial maneuvers outlined in their recent press release.
For investors looking to delve deeper into Summit Midstream Partners' performance and potential, additional InvestingPro Tips are available, providing a comprehensive analysis that could guide investment decisions. There are 7 more InvestingPro Tips listed for SMLP at Investing.com/pro/SMLP. To access these insights and more, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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