Energy Transfer LP Announces Public Offering of Senior Notes and Fixed-to-Fixed Reset Rate Junior Subordinated Notes and Redemption of Select Preferred Units

Rhea-AI Summary

Energy Transfer LP (ET) intends to offer senior notes due 2034 and senior notes due 2054, as well as fixed-to-fixed reset rate junior subordinated notes due 2054. The net proceeds will be used to refinance existing indebtedness, redeem outstanding preferred units, and for general partnership purposes.

Insights

Financial Analyst

Energy Transfer LP's announcement of concurrent offerings of senior notes and junior subordinated notes is a strategic financial move aimed at optimizing the company's capital structure. By refinancing existing debt and redeeming preferred units, the company is potentially lowering its cost of capital and improving its financial flexibility. This could lead to an improved debt profile with extended maturities, which often results in a more favorable view from credit rating agencies and investors.

From an investor's perspective, the shift from variable to fixed-rate debt could be seen as a hedge against rising interest rates, which is particularly relevant in an environment where rate hikes are anticipated. However, the issuance of debt also dilutes existing equity holders and could imply that the company is not generating sufficient cash flow from its operations to meet its financial obligations. It's important to monitor the terms of the new debt, such as the interest rate and covenants, as they will impact the company's financial health and its ability to pay dividends or invest in growth opportunities.

Market Research Analyst

Energy Transfer's operations span a significant portion of the energy infrastructure within the United States, making it a key player in the energy sector. The decision to refinance and redeem select preferred units indicates a proactive approach to capital management, which could be seen as a positive signal by the market. The move may also reflect the company's expectations regarding future interest rate movements and its desire to lock in lower rates for the long term.

Investors and analysts will be keen to assess the impact of this refinancing on the company's leverage ratios and interest coverage metrics. These financial indicators are critical in assessing the company's ability to meet its obligations and its overall financial stability. If the refinancing leads to a more robust balance sheet, it could result in a positive re-rating of the company's stock. Conversely, if the market perceives the debt offering as a sign of financial distress, it could negatively impact the stock price.

Energy Sector Analyst

The energy sector is highly capital-intensive, with companies like Energy Transfer requiring substantial funding for maintaining and expanding their infrastructure. The issuance of senior notes and junior subordinated notes is a common practice within the industry, particularly for financing large-scale projects or refinancing existing debt. By addressing its near-term financial obligations, Energy Transfer may be positioning itself to take advantage of growth opportunities within the evolving energy landscape.

In evaluating the company's strategic move, it's essential to consider the current state of the energy market, including supply and demand dynamics, regulatory changes and the transition towards renewable energy sources. These factors can significantly influence the company's performance and its ability to service debt. The long-term nature of the notes suggests that Energy Transfer is confident in its operational stability and cash flow generation capabilities over an extended period.

DALLAS--(BUSINESS WIRE)-- Energy Transfer LP (NYSE: ET) today announced its intention, subject to market and other conditions, to concurrently offer senior notes due 2034 and senior notes due 2054 (together, the “senior notes”) and fixed-to-fixed reset rate junior subordinated notes due 2054 (the “junior subordinated notes”) in separate registered public offerings. Energy Transfer intends to use the net proceeds from the concurrent offerings to refinance existing indebtedness, including borrowings under its revolving credit facility, to redeem all of its outstanding Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “Series C preferred units”), Series D Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “Series D preferred units”) and, when redeemable on May 15, 2024, Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “Series E preferred units” and, together with the Series C preferred units and the Series D preferred units, the “select preferred units”), and for general partnership purposes. This press release does not constitute a notice of redemption with respect to, or an offer to purchase, any indebtedness or the select preferred units.

Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., PNC Capital Markets LLC and RBC Capital Markets, LLC are acting as joint book-running managers for the senior notes offering and the junior subordinated notes offering.

The concurrent offerings of the senior notes and the junior subordinated notes are being made pursuant to an effective shelf registration statement and prospectus filed by Energy Transfer with the Securities and Exchange Commission (“SEC”). The concurrent offerings of the senior notes and the junior subordinated notes may each be made only by means of a prospectus and related prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933, as amended, copies of which may be obtained for each of the senior notes and the junior subordinated notes, respectively, from the following addresses:

Citigroup Global Markets Inc. c/o Broadridge Financial Solutions 1155 Long Island Avenue Edgewood, NY 11717 Telephone: (800) 831-9146 Email: prospectus@citi.com   Deutsche Bank Securities Inc. Attention: Prospectus Group 1 Columbus Circle New York, NY 10019 Telephone: (800) 503-4611 Email: prospectus.CPDG@db.com   RBC Capital Markets, LLC Brookfield Place 200 Vesey Street, 8th Floor New York, NY 10281 Telephone: 866-375-6829 Email: TMGUS@rbccm.com Attention: DCM Transaction Management

Credit Agricole Securities (USA) Inc. 1301 Avenue of the Americas New York, NY 10019 Attention: Debt Capital Markets Telephone: 866-807-6030   PNC Capital Markets LLC 300 Fifth Avenue, 10th Floor Pittsburgh, PA 15222 Attention: Debt Capital Markets, Securities Settlement Telephone: (855) 881-0697 Email: pnccmprospectus@pnc.com

You may also obtain these documents for free when they are available by visiting EDGAR on the SEC website at www.sec.gov.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Energy Transfer LP owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with more than 125,000 miles of pipeline and associated energy infrastructure. Energy Transfer’s strategic network spans 44 states with assets in all of the major U.S. production basins. Energy Transfer is a publicly traded limited partnership with core operations that include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (“NGL”) and refined product transportation and terminalling assets; and NGL fractionation. Energy Transfer also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights and approximately 34% of the outstanding common units of Sunoco LP (NYSE: SUN), and the general partner interests and approximately 47% of the outstanding common units of USA Compression Partners, LP (NYSE: USAC).

Forward-Looking Statements

Statements about the offering may be forward-looking statements. Forward-looking statements can be identified by words such as “anticipates,” “believes,” “intends,” “projects,” “plans,” “expects,” “continues,” “estimates,” “goals,” “forecasts,” “may,” “will” and other similar expressions. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of Energy Transfer, and a variety of risks that could cause results to differ materially from those expected by management of Energy Transfer. Important information about issues that could cause actual results to differ materially from those expected by management of Energy Transfer can be found in Energy Transfer’s public periodic filings with the SEC, including its Annual Report on Form 10-K. Energy Transfer undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

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Energy Transfer LP



Investor Relations:

Bill Baerg, Brent Ratliff, Lyndsay Hannah, 214-981-0795



Media Relations:

Media@energytransfer.com

214-840-5820

Source: Energy Transfer LP

FAQ

What is Energy Transfer LP's (ET) plan for the senior notes and junior subordinated notes?

Energy Transfer LP (ET) plans to offer senior notes due 2034 and senior notes due 2054, as well as fixed-to-fixed reset rate junior subordinated notes due 2054.

How does Energy Transfer LP (ET) intend to utilize the net proceeds from the offerings?

Energy Transfer LP (ET) will use the net proceeds to refinance existing indebtedness, redeem outstanding preferred units, and for general partnership purposes.

Who are the joint book-running managers for the senior notes and junior subordinated notes offering by Energy Transfer LP (ET)?

Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., PNC Capital Markets LLC, and RBC Capital Markets, LLC are acting as joint book-running managers for the offerings.

What is the total pipeline network coverage of Energy Transfer LP (ET) in the United States?

Energy Transfer LP (ET) owns and operates more than 125,000 miles of pipeline and associated energy infrastructure, spanning 44 states with assets in all major U.S. production basins.

What are the core operations of Energy Transfer LP (ET)?

Energy Transfer LP (ET) has core operations including natural gas midstream, intrastate and interstate transportation and storage assets, crude oil, natural gas liquids (NGL), and refined product transportation and terminalling assets, as well as NGL fractionation.