EnLink Midstream Announces Redemption of Its 6.000% Series C Preferred Units

Rhea-AI Summary

EnLink Midstream, (NYSE: ENLC) has announced that its subsidiary, EnLink Midstream Partners, LP (ENLK), will redeem all of its 6.000% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units on September 17, 2024. The redemption price is set at $1,008.28 per unit, which includes accumulated and unpaid distributions up to the redemption date. ENLC plans to finance this redemption using borrowings from its revolving credit facility. This move signifies a strategic financial decision by EnLink Midstream to manage its capital structure and potentially reduce its overall cost of capital.

Positive

• Redemption of high-interest (6.000%) preferred units may reduce overall cost of capital
• Utilization of revolving credit facility for redemption indicates access to flexible financing options

Negative

• Increased debt due to borrowing from revolving credit facility to fund redemption
• Potential impact on financial ratios and leverage due to additional borrowing

Insights

Financial Analyst

EnLink Midstream's decision to redeem its Series C Preferred Units is a strategic financial move with mixed implications. The redemption at $1,008.28 per unit, including unpaid distributions, suggests the company is confident in its cash flow and ability to manage debt. By replacing preferred units with revolving credit, ENLC may reduce its overall cost of capital, as interest rates on credit facilities are often lower than preferred unit distributions.

However, this action also increases the company's debt load, which could impact its financial flexibility. The timing, coinciding with the units' transition from fixed to floating rates, indicates ENLC's proactive approach to capital structure optimization. For investors, this move signals management's focus on efficient financing but warrants attention to the company's future leverage ratios and interest coverage.

Corporate Finance Expert

The redemption of EnLink's Series C Preferred Units represents a significant shift in the company's capital structure. By replacing 6.000% fixed-rate preferred units with variable-rate debt, ENLC is likely betting on a favorable interest rate environment. This move could potentially enhance shareholder value by freeing up cash flow previously committed to preferred distributions.

However, it's important to note the trade-off between equity and debt. While this action may improve near-term financial metrics, it also increases financial risk. Investors should closely monitor ENLC's debt-to-EBITDA ratio and interest coverage post-redemption. The company's ability to generate sufficient cash flow to service the increased debt will be key to assessing the long-term impact of this financial restructuring on both the company and its common unitholders.

DALLAS, Sept. 17, 2024 /PRNewswire/ -- EnLink Midstream, LLC (NYSE: ENLC) ("ENLC") today announced that its subsidiary, EnLink Midstream Partners, LP ("ENLK"), gave the required notice pursuant to the Eleventh Amended and Restated Agreement of Limited Partnership of ENLK to optionally redeem all of ENLK's 6.000% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the "Series C Preferred Units") on September 17, 2024 (the "Redemption Date"). ENLC intends to fund the redemption and associated costs with borrowings under its revolving credit facility. The redemption price for the Series C Preferred Units will be $1,008.28 per Series C Preferred Unit, including accumulated and unpaid distributions to, but not including, the Redemption Date.

A notice of redemption is being sent to all holders of the Series C Preferred Units by Equiniti Trust Company, LLC, the paying agent for the Series C Preferred Units. This press release does not constitute an offer to sell any security, including the Series C Preferred Units, nor a solicitation for an offer to purchase any security, including the Series C Preferred Units.

About EnLink Midstream
Headquartered in Dallas, EnLink Midstream (NYSE: ENLC) provides integrated midstream infrastructure services for natural gas, crude oil, and NGLs, as well as CO₂ transportation for carbon capture and sequestration (CCS). Our large-scale, cash-flow-generating asset platforms are in premier production basins and core demand centers, including the Permian Basin, Louisiana, Oklahoma, and North Texas. EnLink is focused on maintaining the financial flexibility and operational excellence that enables us to strategically grow and create sustainable value.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws. Although these statements reflect the current views, assumptions, and expectations of ENLC's management, the matters addressed herein involve certain assumptions, risks, and uncertainties that could cause actual activities, performance, outcomes, and results to differ materially from those indicated herein. Therefore, you should not rely on any of these forward-looking statements. All statements, other than statements of historical fact, included in this press release constitute forward-looking statements, including but not limited to statements identified by the words "forecast," "may," "believe," "will," "should," "plan," "predict," "anticipate," "intend," "estimate," "expect," "continue," and similar expressions. Such forward-looking statements include, but are not limited to, statements regarding the anticipated redemption of the Series C Preferred Units and other statements that are not historical facts. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management's control, including risks and uncertainties related to ENLC's business, market conditions, whether ENLC will consummate the offering, the anticipated use of proceeds, and other risk factors included in ENLC's reports filed with the SEC. An extensive list of factors that can affect ENLC's business are discussed in ENLC's filings with the SEC, including ENLC's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. ENLC assumes no obligation to update any forward-looking statements.

Investor Relations: Brian Brungardt, Senior Director of Investor Relations, 214-721-9353, brian.brungardt@enlink.com
Media Relations: Megan Wright, Director of Corporate Communications, 214-721-9694, megan.wright@enlink.com

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SOURCE EnLink Midstream, LLC

FAQ

When will EnLink Midstream (ENLC) redeem its Series C Preferred Units?

EnLink Midstream's subsidiary, ENLK, will redeem all of its 6.000% Series C Preferred Units on September 17, 2024.

What is the redemption price for ENLC's Series C Preferred Units?

The redemption price for the Series C Preferred Units is $1,008.28 per unit, including accumulated and unpaid distributions up to the redemption date.

How will EnLink Midstream (ENLC) fund the redemption of its Series C Preferred Units?

ENLC intends to fund the redemption and associated costs with borrowings under its revolving credit facility.

What is the interest rate of the Series C Preferred Units being redeemed by EnLink Midstream (ENLC)?

The Series C Preferred Units being redeemed have a 6.000% fixed-to-floating rate.