Genesis Energy, L.P. Announces Tender Offer for up to $385 Million Aggregate Principal Amount of Its 8.0% Senior Notes Due 2027

Rhea-AI Summary

Genesis Energy (NYSE: GEL) has announced a cash tender offer to purchase up to $385 million of its outstanding 8.0% senior notes due 2027. Currently, $981,245,000 in aggregate principal amount of these notes are outstanding.

Holders who tender their notes by the Early Tender Deadline (December 18, 2024) will receive $1,021.90 per $1,000 principal amount, including a $30.00 early tender payment. Those tendering after the Early Tender Deadline but before January 6, 2025, will receive $991.90 per $1,000 principal amount.

The tender offer is contingent upon Genesis receiving sufficient net proceeds from future senior notes offerings to fund the purchase. The company intends, but is not obligated, to redeem additional notes after the tender offer completion.

Positive

• Early tender participants receive a premium of $1,021.90 per $1,000 principal amount
• Company plans to refinance existing debt which could potentially improve debt structure

Negative

• The tender offer is contingent on securing new financing through senior notes offerings
• Company will need to raise new debt to fund the tender offer

Insights

Financial Analyst

Genesis Energy's tender offer for up to $385 million of its 8.0% Senior Notes due 2027 represents a strategic debt management move. The company is offering a premium of $21.90 per $1,000 principal amount for early tenders, indicating urgency in restructuring its debt. This refinancing effort, contingent on a new senior notes offering, suggests the company is likely seeking to take advantage of potentially more favorable interest rates or terms. The current 8.0% notes are relatively expensive in today's market and this refinancing could lead to meaningful interest expense savings. The tender premium structure incentivizes quick participation, while the potential follow-up redemption ensures maximum participation. This liability management exercise demonstrates proactive financial stewardship, though its ultimate success will depend on the terms of the new financing.

Credit Risk Analyst

The tender offer's structure reveals important insights about Genesis Energy's credit strategy. The $981.2 million outstanding notes represent a significant portion of their debt and targeting $385 million for refinancing shows measured approach to liability management. The premium pricing structure (2.19% for early tenders) is competitive enough to attract noteholders while remaining cost-effective for the company. The contingency on new senior notes issuance indicates a simultaneous refinancing rather than a net debt reduction, though potentially at better terms. The optional redemption right for additional notes provides flexibility in achieving optimal debt structure. This transaction should be viewed positively from a credit perspective, as it demonstrates market access and proactive debt management.

HOUSTON--(BUSINESS WIRE)-- Genesis Energy, L.P. (NYSE: GEL) today announced the commencement of a cash tender offer to purchase up to $385 million (the “Tender Cap”) of the outstanding aggregate principal amount of the 8.0% senior notes due 2027 (the “Notes”) that we co-issued with our subsidiary, Genesis Energy Finance Corporation (such transaction, the “Tender Offer”). As of December 5, 2024, $981,245,000 aggregate principal amount of the Notes were outstanding. The Tender Offer is being made pursuant to the terms and conditions of an offer to purchase, dated as of December 5, 2024 (as may be amended or supplemented from time to time, the “Offer to Purchase”).

Notes validly tendered and not validly withdrawn at or prior to 5:00 p.m., New York City time, on December 18, 2024, unless extended (such time and date as the same may be extended the “Early Tender Deadline”), will be eligible to receive a purchase price of $1,021.90 per $1,000 principal amount of Notes tendered, including an early tender payment of $30.00 per $1,000 principal amount of the Notes tendered. Notes validly tendered and not validly withdrawn after the Early Tender Deadline but at or prior to 5:00 p.m., New York City time, on January 6, 2025, unless extended or earlier terminated (such time and date as the same may be extended the “Expiration Time”), will be eligible to receive a purchase price of $991.90 per $1,000 principal amount of Notes tendered. Tendering holders will also receive accrued and unpaid interest from the last interest payment date to, but not including, the applicable settlement date. Settlement for the Notes validly tendered and not validly withdrawn by the Early Tender Deadline is expected to occur on December 20, 2024 and settlement for the Notes validly tendered and not validly withdrawn after the Early Tender Deadline but at or prior to the Expiration Time is expected to occur on January 8, 2025, in each case assuming the Early Tender Deadline and Expiration Time, respectively, are not extended by us and that the Tender Offer is not terminated by us.

The Tender Offer is contingent upon, among other things, the receipt by us after the date hereof of net proceeds from one or more offerings of senior notes by us (the “Financing”) which will provide us with an amount of funds that is sufficient in our reasonable discretion to fund the purchase of all the Notes that would be accepted for payment in the Tender Offer, assuming the Tender Offer was fully subscribed. The Tender Offer is not conditioned on any minimum amount of Notes being tendered. We may amend, extend or terminate the Tender Offer in our sole discretion, subject to applicable law. We expressly reserve the right, in our sole discretion, subject to applicable law, to terminate the Tender Offer at any time prior to the Expiration Time. We will not be required to purchase any of the Notes tendered unless certain conditions have been satisfied.

We currently intend, but are not obligated, to exercise our right to redeem Notes in an aggregate principal amount that together with the aggregate principal amount of notes purchased in the Tender Offer would equal the Tender Offer Cap. However, we may, but are not obligated to, redeem a greater amount of Notes that remain outstanding after completion of the Tender Offer.

Subject to certain exceptions, tendered Notes can only be withdrawn before 5:00 p.m., New York City time, on the Early Tender Deadline, unless extended (such time and date as the same may be extended the “Withdrawal Deadline”). Following the Withdrawal Deadline, holders who have tendered their Notes may not withdraw such Notes unless we are required to extend withdrawal rights under applicable law.

In connection with the Tender Offer, we have retained Wells Fargo Securities, LLC as the Dealer Manager. Questions regarding the Tender Offer should be directed to Wells Fargo Securities, LLC by calling collect at (704) 410-4820 or toll free at (866) 309- 6316. Requests for copies of the Offer to Purchase and related documents should be directed to D.F. King & Co., Inc., the Tender Agent and Information Agent for the Tender Offer, at (866) 342-4883 (toll free).

This press release is not an offer to purchase or a solicitation of an offer to sell with respect to any Notes or any other securities. Any offer to purchase the Notes will be made by means of an Offer to Purchase. No offer to purchase will be made in any jurisdiction in which such an offer to purchase would be unlawful. In addition, nothing contained herein constitutes a notice of redemption of the Notes. No recommendation is made as to whether holders of the Notes should tender their Notes.

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 related to the Tender Offer. 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 Quarterly Reports on Form 10-Q, which are publicly available on our website at https://www.genesisenergy.com/. Actual results may vary materially. We undertake no obligation to publicly update or revise any forward- looking statement.

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20241205461743/en/

Genesis Energy, L.P.

Dwayne Morley

VP – Investor Relations

(713) 860-2536

Source: Genesis Energy, L.P.

FAQ

What is the tender cap for Genesis Energy's (GEL) 2027 notes tender offer?

Genesis Energy's tender offer has a cap of $385 million for its 8.0% Senior Notes due 2027.

When is the Early Tender Deadline for Genesis Energy's (GEL) tender offer?

The Early Tender Deadline is December 18, 2024, at 5:00 p.m., New York City time.

What is the purchase price for Genesis Energy's (GEL) notes during the early tender period?

During the early tender period, the purchase price is $1,021.90 per $1,000 principal amount, including a $30.00 early tender payment.

What is the final expiration date for Genesis Energy's (GEL) tender offer?

The tender offer expires on January 6, 2025, at 5:00 p.m., New York City time, unless extended or terminated earlier.