Antero Midstream Announces Pricing of Upsized $600 Million Offering of Senior Notes

Rhea-AI Summary

Antero Midstream Corporation (NYSE: AM) announced the pricing of its upsized private placement of $600 million in aggregate principal amount of 6.625% senior unsecured notes due 2032 at par. The company estimates receiving net proceeds of approximately $593 million, intending to use them to repay indebtedness under its revolving credit facility for general corporate purposes.

Insights

Financial Analyst

The private placement of $600 million in senior unsecured notes by Antero Midstream Corporation signifies a strategic financial maneuver aimed at optimizing the company's capital structure. By electing to repay existing indebtedness under its revolving credit facility, the company is evidently prioritizing the reduction of short-term liabilities, which may improve its financial flexibility. The chosen interest rate of 6.625% must be evaluated against the current interest rate environment and the company's creditworthiness. This action may be viewed favorably by investors seeking indications of prudent financial management and a commitment to maintaining a sustainable debt profile.

However, it is crucial to scrutinize the terms of the notes, especially since they have not been registered under the Securities Act of 1933. This limits their liquidity as they can only be sold to qualified institutional buyers or outside the United States under specific regulations. The implications for the stock market include a potential increase in investor confidence if the use of proceeds leads to an enhanced credit standing, but conversely, a higher interest expense could impact future profitability.

Market Research Analyst

The midstream sector, where Antero Midstream operates, is characterized by a heavy reliance on infrastructure and capital-intensive projects. The company's decision to manage its debt profile through the issuance of senior unsecured notes may reflect broader industry trends where firms seek to lock in long-term financing to support their capital expenditures. With the net proceeds directed towards repaying near-term maturities, Antero Midstream appears to be mitigating refinancing risk and securing operational liquidity.

From a market perspective, the offering's timing and size could be indicative of favorable market conditions and investor appetite for midstream debt. The interest rate attached to the notes will likely influence the attractiveness of the offering to institutional buyers. It's also essential to consider how this financial strategy aligns with the company's growth trajectory and the overall health of the energy sector, particularly in the Appalachian Basin, which could affect the company's future revenue streams and, consequently, its ability to service the new debt.

Legal Expert

The legal considerations surrounding the private placement of notes are multifaceted. The notes being offered in reliance on Rule 144A and Regulation S highlight a targeted approach to fundraising, allowing Antero Midstream to bypass the public registration process. This move suggests a strategic choice to expedite funding while targeting a specific segment of the investment community. However, the lack of registration under the Securities Act also implies a degree of risk for investors due to reduced disclosure requirements.

Investors must be cognizant of the legal ramifications of investing in unregistered securities, including restrictions on the resale of the notes. The legal framework governing these transactions is designed to protect investors and the integrity of the financial markets. It is imperative for stakeholders to understand the legal complexities and implications of such unregistered securities, as they may influence the perceived risk and, ultimately, the success of the offering.

DENVER, Jan. 11, 2024 /PRNewswire/ -- Antero Midstream Corporation (NYSE: AM) ("Antero Midstream") announced today the pricing of its upsized private placement to eligible purchasers of $600 million in aggregate principal amount of 6.625% senior unsecured notes due 2032 at par (the "Notes"). The offering is expected to close on January 16, 2024, subject to customary closing conditions.

Antero Midstream estimates that it will receive net proceeds of approximately $593 million, after deducting the initial purchasers' discounts and estimated expenses. Antero Midstream intends to use the net proceeds from the offering to repay indebtedness under its revolving credit facility, which amounts may be reborrowed for general corporate purposes, including repayment of near-term maturities.

The Notes to be offered have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes are being offered only to persons reasonably believed to be qualified institutional buyers in reliance on  Rule 144A under the Securities Act and outside the United States pursuant to Regulation S under the Securities Act.

This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.

Antero Midstream Corporation is a Delaware corporation that owns, operates and develops midstream gathering, compression, processing and fractionation assets located in the Appalachian Basin, as well as integrated water assets that primarily service Antero Resources Corporation's properties.

This release includes "forward-looking statements." Such forward-looking statements are subject to a number of risks and uncertainties, many of which are not under Antero Midstream's control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Midstream expects, believes or anticipates will or may occur in the future, such as statements regarding the proposed offering and the intended use of proceeds are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements speak only as of the date of this release. Although Antero Midstream believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Except as required by law, Antero Midstream expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.

Antero Midstream cautions you that these forward-looking statements are subject to all of the risks and uncertainties incident to our business, most of which are difficult to predict and many of which are beyond Antero Midstream's control. These risks include, but are not limited to, commodity price volatility, inflation, supply chain or other disruptions, environmental risks, Antero Resources Corporation's drilling and completion and other operating risks, regulatory changes or changes in law, the uncertainty inherent in projecting Antero Resources Corporation's future rates of production, cash flows and access to capital, the timing of development expenditures, impacts of geopolitical events, including the conflicts in Ukraine and in the Middle East, and world health events, cybersecurity risks, the state of markets for, and availability of, verified quality carbon offsets and the other risks described under the heading "Item 1A. Risk Factors" in Antero Midstream's Annual Report on Form 10-K for the year ended December 31, 2022 and its subsequently filed Quarterly Reports on Form 10-Q.

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SOURCE Antero Midstream Corporation

FAQ

What did Antero Midstream announce?

Antero Midstream Corporation (NYSE: AM) announced the pricing of its upsized private placement of $600 million in aggregate principal amount of 6.625% senior unsecured notes due 2032 at par.

When is the offering expected to close?

The offering is expected to close on January 16, 2024, subject to customary closing conditions.

What will Antero Midstream use the net proceeds for?

Antero Midstream estimates receiving net proceeds of approximately $593 million, intending to use them to repay indebtedness under its revolving credit facility for general corporate purposes.

Where are Antero Midstream's assets located?

Antero Midstream Corporation owns, operates, and develops midstream gathering, compression, processing, and fractionation assets located in the Appalachian Basin, as well as integrated water assets that primarily service Antero Resources Corporation's properties.