Genesis Energy, L.P. Upsizes and Prices Public Offering of Senior Notes

Rhea-AI Summary

Genesis Energy (NYSE: GEL) has priced a public offering of $600 million in 8.000% senior notes due 2033, upsized from the previously announced $400 million. The notes will be co-issued with Genesis Energy Finance and guaranteed by all subsidiaries except unrestricted ones.

The proceeds will be used to purchase or redeem up to $575 million of outstanding 8.0% senior notes due 2027 and for general partnership purposes, including repaying revolving borrowings under their senior secured credit facility. The offering is expected to settle on December 19, 2024.

Positive

• Successful upsizing of note offering from $400M to $600M indicates strong investor demand
• Refinancing extends debt maturity from 2027 to 2033, improving debt structure
• Partial repayment of revolving credit facility will improve liquidity position

Negative

• New notes carry the same 8.0% interest rate as existing 2027 notes, showing no interest cost improvement
• Additional $25M debt beyond refinancing needs could increase overall leverage

Insights

Financial Analyst

The upsized $600 million senior notes offering represents a significant refinancing move that improves Genesis Energy's debt maturity profile. By extending the maturity from 2027 to 2033 on $575 million of notes at the same 8% interest rate, the company maintains its cost of capital while gaining additional financial flexibility. The strong demand evidenced by the $200 million upsize from the initial offering suggests solid market confidence in Genesis's credit profile and business model.

The remaining proceeds will help reduce revolving credit facility borrowings, potentially lowering the company's overall interest expense given typically higher floating rates on revolving facilities. This refinancing transaction effectively addresses near-term maturities while maintaining leverage ratios, though investors should monitor the company's ability to generate sufficient cash flow to service this debt given the competitive midstream energy sector.

Market Research Analyst

The successful upsizing of the notes offering by 50% signals robust institutional investor appetite for Genesis Energy's debt, particularly noteworthy given the challenging interest rate environment. The maintained interest rate of 8% on a longer-dated maturity reflects market confidence in the company's diversified midstream operations across offshore pipelines, soda ash and marine transportation segments.

The strong syndicate of 15 financial institutions participating in the offering, including major players like Wells Fargo, SMBC and BofA Securities, adds credibility to the transaction. This refinancing strengthens Genesis's capital structure by extending maturities without increasing interest costs, potentially positioning the company more favorably against peers in the midstream sector.

HOUSTON--(BUSINESS WIRE)-- Genesis Energy, L.P. (NYSE: GEL) today announced that it has priced a public offering of $600,000,000 in aggregate principal amount of 8.000% senior notes due 2033 (the “notes”). The offering of the notes was upsized from the previously announced $400,000,000 in aggregate principal amount of the notes. The price to investors will be 100% of the principal amount of the notes. The notes will be co-issued with our subsidiary, Genesis Energy Finance Corporation, and initially will be guaranteed by all of our subsidiaries, other than our unrestricted subsidiaries. We intend to use the net proceeds from this offering (i) to purchase or redeem up to $575 million aggregate principal amount of our outstanding 8.0% senior notes due 2027 (or such lesser aggregate principal amount of such notes that could be acquired with the net cash proceeds of this offering) and (ii) for general partnership purposes, including repaying a portion of the revolving borrowings outstanding under our senior secured credit facility. The offering of the notes is expected to settle on December 19, 2024, subject to customary closing conditions.

Wells Fargo Securities LLC, SMBC Nikko, Capital One Securities, Regions Securities LLC, RBC Capital Markets, BNP PARIBAS, Scotiabank, BofA Securities, Fifth Third Securities, Citigroup, Citizens Capital Markets, Truist Securities, PNC Capital Markets LLC, and First Citizens Capital Securities are acting as joint book-running managers for the offering and Comerica Securities is acting as co-manager. A copy of the final prospectus supplement and accompanying base prospectus relating to this offering, when available, may be obtained from:

Wells Fargo Securities, LLC
Attn: Transaction Management
550 South Tryon Street
Charlotte, North Carolina 28202
(704) 347 – 6967

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

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities 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 state or jurisdiction. The offer of the notes is being made only through the prospectus supplement and accompanying base prospectus, each of which is part of our effective shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission.

This press release does not constitute a notice of redemption under the indenture governing the 8.0% senior notes due 2027.

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.

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 our ability to successfully close the offering and to use the net proceeds as indicated above. 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/20241205450837/en/

Genesis Energy, L.P.

Dwayne Morley

VP – Investor Relations

(713) 860-2536

Source: Genesis Energy, L.P.

FAQ

What is the size and interest rate of Genesis Energy's (GEL) new senior notes offering?

Genesis Energy's new senior notes offering is $600 million with an 8.000% interest rate, due in 2033.

How will Genesis Energy (GEL) use the proceeds from its 2023 senior notes offering?

The proceeds will be used to redeem up to $575 million of 8.0% senior notes due 2027 and for general partnership purposes, including repaying revolving credit facility borrowings.

When will Genesis Energy's (GEL) new senior notes offering settle?

The senior notes offering is expected to settle on December 19, 2024, subject to customary closing conditions.

By how much did Genesis Energy (GEL) upsize its senior notes offering?

Genesis Energy upsized its senior notes offering by $200 million, from the initially announced $400 million to $600 million.