Global Partners LP Announces Pricing of Private Offering of Senior Notes
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Insights
Global Partners LP's recent announcement regarding the pricing of their $450 million senior unsecured notes offering is a significant financial event. The 8.250% interest rate is notably higher than the current average corporate bond yield, reflecting either a premium for the perceived risk associated with Global Partners or the prevailing market conditions. Investors should consider the credit rating of the company and the overall health of the energy sector when assessing the risk level of these notes.
The capital raised through this offering is likely earmarked for strategic initiatives such as debt refinancing, acquisitions, or expansion projects. The decision to go for a private offering allows the company to negotiate terms directly with institutional investors and may expedite the capital raising process. However, the added debt will increase the company's leverage, which could impact its balance sheet and financial ratios. Stakeholders should monitor the company's subsequent financial disclosures to assess how the proceeds are utilized and the impact on its financial health.
From a legal standpoint, the issuance of senior unsecured notes by Global Partners LP involves a complex set of agreements, including the guarantee by certain subsidiaries. This structure provides investors with a degree of protection, as the guarantees ensure that multiple entities are responsible for the debt. However, as these notes are unsecured, they do not have collateral backing them, which places them at a higher risk category compared to secured notes.
Investors should be aware that private offerings are subject to different regulations than public offerings, such as being exempt from some of the Securities and Exchange Commission's registration requirements under Rule 144A. This means that the notes will be offered to qualified institutional buyers, which can limit the liquidity of these notes as they may not be as easily tradable on the secondary market.
Examining the broader market implications, the issuance of senior unsecured notes by Global Partners LP is indicative of the company's market sentiment and access to capital. The 8.250% yield can be compared against industry benchmarks to gauge investor confidence. A higher yield suggests that investors may require more compensation for risk associated with the energy sector or with Global Partners specifically.
Additionally, the move to secure long-term financing at a fixed rate may be a strategic hedge against potential interest rate increases, which are a concern given the current economic climate. The energy sector's performance is closely tied to global economic trends and energy prices and as such, this capital raise might be a proactive measure to strengthen the company's position amid market volatility. Stakeholders should watch how this financial move correlates with the company's future growth and performance in the sector.
Global intends to use the net proceeds from the offering of the Senior Notes to repay a portion of the borrowings outstanding under its credit agreement and for general corporate purposes.
The Senior Notes are being offered only to persons reasonably believed to be qualified institutional buyers in reliance upon Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and non-
The Senior Notes have not been and will not be registered under the Securities Act or the securities laws of any state and may not be offered or sold in
This announcement shall not constitute an offer to sell, or the solicitation of an offer to buy, the Senior Notes, nor shall there be any sale of the Senior Notes in any state in which the offer, solicitation, or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.
About Global Partners LP
With approximately 1,700 locations primarily in the Northeast, Global is one of the region’s largest independent owners, suppliers and operators of gasoline stations and convenience stores. Global also owns, controls or has access to a large terminal network—with strategic rail, pipeline and marine assets—spanning from
Forward-Looking Statements
Certain statements and information in this press release may constitute “forward-looking statements,” including statements regarding the expected timing of the closing of the offering and the intended use of proceeds from the offering. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Global’s current expectations and beliefs concerning future developments and their potential effect on Global. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting Global will be those that it anticipates. Forward-looking statements involve significant risks and uncertainties (some of which are beyond Global’s control) and assumptions that could cause actual results to differ materially from Global’s historical experience and present expectations or projections. The assumptions and future performance are subject to a wide range of business risks, uncertainties and factors, which are described in our filings with the Securities and Exchange Commission (the “SEC”).
For additional information regarding known material factors that could cause actual results to differ from Global’s projected results, please see Global’s filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Global undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
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Gregory B.
Chief Financial Officer
Global Partners LP
(781) 894-8800
Sean T. Geary
Chief Legal Officer and Secretary
Global Partners LP
(781) 894-8800
Source: Global Partners LP
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