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Genesis Energy, L.P. announced an upsized public offering of $700,000,000 in senior unsecured notes due 2032 to redeem outstanding notes and for general partnership purposes. The notes will be co-issued with Genesis Energy Finance and guaranteed by most subsidiaries. The offering will close on May 9, 2024.
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Genesis Energy's decision to upsize and price their public offering of senior notes from $500 million to $700 million at a 7.875% interest rate due in 2032 underlines a strategic move to refinance existing debt. The redemption of the 6.250% senior unsecured notes due in 2026 indicates an active management of the company's debt profile, aiming to capitalize on current market conditions for potentially favorable long-term interest rates. However, investors should be mindful of the increased debt load and its implications on the company's financial flexibility. The chosen interest rate for the new notes might reflect the market's perception of the company's creditworthiness and could influence investor sentiment towards Genesis Energy's fiscal health. The involvement of high-profile financial institutions as joint book-running managers lends credibility to the offering, potentially increasing investor confidence. The intended use of the remainder of the funds for general partnership purposes, such as repaying a portion of borrowings under their credit facility, suggests a proactive approach to liquidity management. Overall, while this move may be initially accretive to the company's capital structure, the long-term implications will depend on the company's execution of its financial strategy and the performance of its core operations.
The upsizing of Genesis Energy's public offering signifies a possible bullish outlook from the company regarding investor appetite for energy sector debt instruments. It might also hint at an industry trend where energy partnerships are pre-emptively locking in financing ahead of potential interest rate fluctuations. The offering's settlement and closing date of May 9, 2024, provides a timeline for investors to monitor market reactions and the subsequent effect on Genesis Energy's stock price. Investors should also consider the broader industry context—midstream energy companies like Genesis Energy are typically considered stable investments due to their fee-based income structures. This stability could make the new notes an attractive option for investors seeking steady returns in a volatile market. The fact that the new senior notes will be co-issued by Genesis Energy Finance Corporation and guaranteed by the majority of the company's subsidiaries, excluding unrestricted subsidiaries, projects a level of security to bondholders, which may be reflected in investor sentiment toward the company's equity.
HOUSTON--(BUSINESS WIRE)--
Genesis Energy, L.P. (NYSE: GEL) today announced that it has priced a public offering of $700,000,000 in aggregate principal amount of 7.875% senior unsecured notes due 2032 (the “notes”). The offering of the notes was upsized from the previously announced $500,000,000 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 will be guaranteed, with certain exceptions, by substantially all of our existing and future subsidiaries other than our unrestricted subsidiaries. We intend to use a portion of the net proceeds from the offering of the notes to redeem all of our outstanding 6.250% senior unsecured notes due 2026 and the remainder for general partnership purposes, including repaying a portion of the borrowings outstanding under our credit facility. The offering of the notes is expected to settle and close on May 9, 2024, subject to customary closing conditions.
RBC Capital Markets, LLC, Wells Fargo Securities, LLC, Capital One Securities, Inc., Regions Securities LLC, SMBC Nikko Securities America, Inc., BNP Paribas Securities Corp., BofA Securities, Inc., Citigroup Global Markets Inc., Citizens JMP Securities, LLC, Fifth Third Securities, Inc., Scotia Capital (USA) Inc. and Truist Securities, Inc. are acting as joint book-running managers for the offering and Comerica Securities, Inc. 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:
RBC Capital Markets, LLC
Attn: HY Capital Markets
200 Vesey Street – 8th Floor
New York, NY 10281
(212) 428 – 6200
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 6.250% senior unsecured notes due 2026.
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.
What is the amount of the public offering of senior notes by Genesis Energy, L.P.?
Genesis Energy, L.P. priced a public offering of $700,000,000 in aggregate principal amount of senior unsecured notes due 2032.
What is the interest rate on the senior unsecured notes?
The senior unsecured notes have an interest rate of 7.875%.
When is the closing date of the offering of the notes?
The offering of the notes is expected to settle and close on May 9, 2024.
Which companies are acting as joint book-running managers for the offering of the notes?
RBC Capital Markets, , Wells Fargo Securities, , and several other companies are acting as joint book-running managers for the offering.
What will Genesis Energy, L.P. use the net proceeds from the offering for?
Genesis Energy, L.P. intends to use a portion of the net proceeds to redeem outstanding 6.250% senior unsecured notes due 2026 and the remainder for general partnership purposes.
