Aris Water Announces $400 Million Offering of Senior Notes due 2030 and Issues Notice of Conditional Redemption for its 2026 Notes

Rhea-AI Summary

Aris Water Solutions (NYSE: ARIS) has announced plans to offer $400 million in Senior Notes due 2030 through its subsidiary Aris Water Holdings, The company intends to use the proceeds, along with cash on hand, to redeem all outstanding 7.625% Senior Notes due 2026.

The new Notes will be guaranteed on a senior unsecured basis by all existing subsidiaries. The redemption of the 2026 Notes is scheduled for April 1, 2025, contingent upon completing an offering of at least $400 million in senior debt securities. The Notes will be offered exclusively to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S.

Positive

• Refinancing of higher interest rate debt (7.625%) with potentially lower rate notes
• Extended debt maturity from 2026 to 2030, improving debt structure

Negative

• Taking on $400 million in new debt obligations
• Continued reliance on debt financing

Insights

Financial Analyst

Aris Water Solutions' announcement of a $400 million senior notes offering represents a significant debt refinancing move that warrants investor attention. The company is using these proceeds to redeem all outstanding 7.625% Senior Notes due 2026, effectively extending its debt maturity profile by four years to 2030.

The refinancing represents approximately 48% of Aris's market capitalization ($833 million), highlighting the material nature of this financial restructuring. The redemption at par value suggests this is a standard refinancing operation rather than addressing distressed debt.

While the announcement doesn't disclose the interest rate for the new 2030 notes, this transaction likely aims to capitalize on potential interest rate advantages or to enhance financial flexibility. The extension of maturity reduces near-term refinancing risk, allowing management to focus on core operations in the Permian Basin water management sector.

For context, Aris provides environmental infrastructure and water handling solutions to energy companies, with integrated pipelines supporting produced water management and recycling. This refinancing maintains the company's leverage profile while potentially adjusting its debt service timeline.

The transaction's ultimate impact depends on the undisclosed terms of the new notes. If secured at favorable rates compared to the 7.625% on the 2026 notes, this could enhance free cash flow through reduced interest expenses. Conversely, if rates are similar or higher, the primary benefit would be to maturity extension.

This debt restructuring represents proactive financial management but doesn't fundamentally alter the company's business trajectory or capital structure. Without details on the new notes' terms, the immediate financial impact remains neutral from an investment perspective.

HOUSTON--(BUSINESS WIRE)-- Aris Water Solutions, Inc. (NYSE: ARIS) (“Aris”) today announced that Aris Water Holdings, LLC (the “Issuer”), a subsidiary of Aris, intends, subject to market conditions, to offer (the “Offering”) for sale $400 million aggregate principal amount of Senior Notes due 2030 (the “Notes”). The Issuer intends to use the net proceeds from the Offering, together with cash on hand, to redeem all of its outstanding 7.625% Senior Notes due 2026 (the “2026 Notes”). The Notes will be fully and unconditionally guaranteed on a senior unsecured basis by all of the Issuer’s existing subsidiaries.

Aris also announced today that the Issuer has delivered a notice of conditional redemption for all of the 2026 Notes at a redemption price of par, plus accrued and unpaid interest, if any, to, but not including, the redemption date. The redemption date for the 2026 Notes provided in the notice of conditional redemption is April 1, 2025 (the “Redemption Date”). The Issuer’s obligation to redeem the 2026 Notes is conditioned upon the completion of an offering of at least $400 million aggregate principal amount of the Issuer’s senior debt securities on or before the Redemption Date (which could be delayed in the Issuer’s sole discretion if this condition is not satisfied pursuant to the terms of the indenture governing the 2026 Notes). This press release does not constitute a notice of redemption of the 2026 Notes.

The Notes have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The Notes are being offered in the United States only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to persons outside the United States only in compliance with Regulation S under the Securities Act.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any of these securities, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

Forward-Looking Statements

This press release contains “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. Examples of forward-looking statements include, but are not limited to, statements regarding the Offering, the terms of the Notes and the use of proceeds therefrom and the conditional redemption of the 2026 Notes. In some cases, you can identify forward-looking statements by terminology such as “expect,” “sustain,” “will,” “intend,” “believe,” “future,” “predict,” “may,” and variations of such words or similar expressions. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated or implied by the forward-looking statements. Risks and uncertainties include, but are not limited to, those detailed in Aris’ most recent Annual Report on Form 10-K and other filings with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. All forward-looking statements, expressed or implied, included in this press release and any oral statements made in connection with this press release are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

About Aris Water Solutions, Inc.

Aris Water Solutions, Inc. is a leading, growth-oriented environmental infrastructure and solutions company that directly helps its customers reduce their water and carbon footprints. Aris delivers full-cycle water handling and recycling solutions that increase the sustainability of energy company operations. Its integrated pipelines and related infrastructure create long-term value by delivering high-capacity, comprehensive produced water management, recycling and supply solutions to operators in the core areas of the Permian Basin.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250311077861/en/

David Tuerff

Senior Vice President, Finance and Investor Relations

(281) 501-3070

IR@ariswater.com

Source: Aris Water Solutions, Inc.

FAQ

What is the size and purpose of Aris Water Solutions' (ARIS) new notes offering?

Aris is offering $400 million in Senior Notes due 2030, with proceeds intended to redeem all outstanding 7.625% Senior Notes due 2026.

When is ARIS planning to redeem its 2026 Notes?

The redemption is scheduled for April 1, 2025, conditional upon completing the new $400 million senior debt securities offering.

Who are the eligible investors for ARIS's 2030 Notes offering?

The Notes are only available to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S.

What security backing does ARIS provide for the new 2030 Notes?

The Notes will be fully and unconditionally guaranteed on a senior unsecured basis by all of Aris Water Holdings' existing subsidiaries.