Genesis Energy, L.P. Announces Senior Notes Redemption

Rhea-AI Summary

Genesis Energy (NYSE: GEL) has announced the complete redemption of its 8.0% senior notes due 2027. The outstanding principal amount of $406,245,000 will be redeemed on April 3, 2025 at a redemption price of 102% of the principal amount, plus accrued and unpaid interest.

The notes were co-issued with Genesis Energy Finance After the redemption date, interest will cease to accrue, and the notes will no longer be outstanding. Genesis Energy is a diversified midstream energy master partnership based in Houston, Texas, with operations in offshore pipeline transportation, marine transportation, sulfur services, and onshore facilities, primarily in the Gulf Coast region.

Positive

• Early redemption of high-interest (8.0%) senior notes indicates strong financial position
• Complete redemption of $406.2M debt shows robust cash management

Negative

• 102% redemption premium increases cost of debt repayment
• Early redemption may result in additional interest expenses

Insights

Financial Analyst

Genesis Energy's announcement to redeem $406.2 million of its 8.0% senior notes due 2027 represents a significant financial maneuver that impacts roughly 25% of the company's $1.6 billion market capitalization. The redemption includes a 2% premium plus accrued interest, costing approximately $8.1 million above principal value.

This strategic debt management move likely aims to optimize Genesis Energy's capital structure. With the notes carrying a relatively high 8.0% coupon rate, early redemption potentially reduces future interest expenses if replaced with lower-cost financing or paid through available cash flow. For midstream MLPs like Genesis, effective debt management directly influences distributable cash flow, which ultimately affects unitholder returns.

The company's diversified operations across offshore pipeline transportation, marine transportation, sulfur services, and onshore facilities provide multiple revenue streams that can support this type of financial restructuring. While the announcement doesn't specify the funding source for this redemption, the willingness to pay the premium suggests management confidence in their financial position and operational stability.

For investors, this move signals management's proactive approach to liability management and could enhance financial flexibility for future growth initiatives or improved distribution coverage. However, without details on replacement financing terms or the redemption funding mechanism, the full financial impact remains partially undefined.

HOUSTON--(BUSINESS WIRE)-- Genesis Energy, L.P. (NYSE: GEL) today announced that it will redeem the entire outstanding principal amount of its 8.0% senior notes due 2027 (the “Notes”) that were co-issued with its subsidiary, Genesis Energy Finance Corporation. As of March 3, 2025, $406,245,000 in aggregate principal amount of the Notes were outstanding.

The redemption date for the Notes is April 3, 2025 (the “Redemption Date”). The Notes will be redeemed on the Redemption Date at a redemption price equal to 102% of the aggregate principal amount being redeemed, plus accrued and unpaid interest on such Notes to the Redemption Date, in accordance with the terms of the Notes and the applicable indenture governing such Notes. On and after the Redemption Date, interest will cease to accrue on the Notes, and the Notes will cease to be outstanding.

A notice of redemption is being sent by the trustee for the Notes to all currently registered holders of such Notes. This press release does not constitute a notice of redemption under the indenture governing the Notes.

Genesis Energy, L.P. is a diversified midstream energy master limited partnership headquartered in Houston, Texas. Genesis’ operations include offshore pipeline transportation, marine transportation, sulfur services and onshore facilities and transportation. Genesis’ operations are primarily located in the Gulf Coast region of the United States and the Gulf of America.

This press release includes forward-looking statements as defined under federal law. Although we believe that our expectations are based upon reasonable assumptions, no assurance can be given that our goals will be achieved, including statements regarding the terms and timing of the redemption of the Notes. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q, filed with the Securities Exchange Commission. Actual results may vary materially. We undertake no obligation to publicly update or revise any forward-looking statement.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250304412425/en/

Genesis Energy, L.P.

Dwayne Morley

VP – Investor Relations

(713) 860-2536

Source: Genesis Energy, L.P.

FAQ

What is the redemption price for Genesis Energy's (GEL) 8.0% senior notes due 2027?

The notes will be redeemed at 102% of the principal amount plus accrued and unpaid interest.

When will GEL redeem its 8.0% senior notes due 2027?

The redemption date is set for April 3, 2025.

How much is the outstanding principal amount of GEL's senior notes being redeemed?

The outstanding principal amount is $406,245,000.

What are Genesis Energy's (GEL) main business operations?

GEL operates in offshore pipeline transportation, marine transportation, sulfur services, and onshore facilities, primarily in the Gulf Coast region.