NGL Energy Partners LP Announces $700 Million Senior Secured Term Loan Facility and Provides Financial Update

Rhea-AI Summary

NGL Energy Partners LP announces plans to syndicate a new seven-year $700 million senior secured term loan facility and provides preliminary third quarter financial estimates. The company expects to use the net proceeds to refinance existing debt and for general corporate purposes. The estimated consolidated adjusted EBITDA for the third quarter is $150 - $160 million, with capital expenditures of $30 - $40 million.

Insights

Financial Analyst

The announcement of NGL Energy Partners LP's intention to syndicate a new $700 million senior secured term loan facility is a strategic financial maneuver that could have notable implications on the company's capital structure and liquidity. Such a significant refinancing effort indicates a proactive approach to managing debt obligations, potentially leading to improved debt covenants and a reduction in interest expenses. The success of this syndication will depend heavily on market conditions and investor appetite for energy sector debt, particularly in the context of the current economic climate and industry-specific risks.

From a financial standpoint, the anticipated use of proceeds to refinance existing debt could be a positive signal to investors, as it may suggest a strengthening of the company's balance sheet. However, the actual impact on the company's financial health will depend on the terms of the new facility and its comparison to the existing debt being refinanced. If the new terms are more favorable, it could lead to increased financial flexibility and possibly a positive reevaluation of the company's creditworthiness.

Market Research Analyst

The preliminary third quarter results provided by NGL, which include an estimated Consolidated Adjusted EBITDA of $150 - $160 million, offer a snapshot of the company's operational performance. While these figures are subject to final adjustments, they serve as an early indicator for stakeholders to gauge the company's financial trajectory. In the energy sector, Adjusted EBITDA is a critical metric, as it reflects the company's underlying profitability and ability to generate cash flow from operations, excluding non-cash expenses and accounting anomalies.

It's also noteworthy to consider the capital expenditure estimates of $30 - $40 million, which suggest ongoing investments in both maintenance and growth initiatives. This level of reinvestment is crucial for sustaining operations and pursuing strategic growth, but it also requires careful balance against the company's debt servicing commitments and overall financial strategy.

Debt Market Analyst

The details provided regarding the outstanding principal amount of NGL's debt, including senior notes with varying interest rates and maturities, are pivotal for understanding the company's current debt profile. The senior secured term loan facility's potential impact on these obligations will be of particular interest to debt market analysts, as it could alter the risk profile of the company's existing debt instruments. The senior unsecured notes due in 2025 and 2026, as well as the senior secured notes due in 2026, will likely be closely monitored for any changes in yield spreads following the announcement of the new term loan facility.

Market participants will also scrutinize the terms and size of the new facility, as they can affect the secondary market pricing and liquidity of NGL's existing debt securities. A successful syndication at favorable terms could enhance the company's credit perception, potentially leading to tighter spreads and increased demand for their debt securities in the secondary market.

TULSA, Okla.--(BUSINESS WIRE)-- New Term Loan Facility

NGL Energy Partners LP (NYSE: NGL) (“Partnership” or “NGL”), together with its wholly owned subsidiary NGL Energy Operating LLC (“NGL Energy Operating”), today announced plans to syndicate a new seven-year $700 million senior secured term loan facility (the “Term Loan Facility”). NGL Energy Operating will be the borrower under the Term Loan Facility. NGL Energy Operating expects to use the net proceeds of the Term Loan Facility, together with proceeds from any additional senior secured financing, to refinance existing debt (including repayment of existing senior notes); to pay related fees, costs and expenses; and for general corporate purposes.

There can be no assurances that NGL and NGL Energy Operating will be successful in their marketing efforts or that NGL Energy Operating will be able to enter into the Term Loan Facility (or the actual size or terms thereof). Closing of the Term Loan Facility, which is anticipated to occur in the first quarter of calendar 2024, is subject to obtaining lender commitments, as well as market conditions and the negotiation and execution of definitive documents and the satisfaction of customary closing conditions.

Preliminary Third Quarter Results

In connection with the Term Loan Facility syndication, NGL is providing certain preliminary estimates of financial information for its fiscal third quarter ended December 31, 2023.

For the three months ended December 31, 2023, NGL is estimating the following:

• Consolidated Adjusted EBITDA¹: $150 - $160 million; and
• Capital expenditures (including both maintenance and growth): $30 - $40 million.

In addition, NGL is providing the following information regarding the outstanding principal amount of certain of its debt as of December 31, 2023:

• Asset-based revolving credit facility borrowings of: $55.0 million
• Senior notes:
  • 6.125% senior unsecured notes due 2025: $281 million;
  • 7.5% senior unsecured notes due 2026: $320 million; and
  • 7.500% senior secured notes due 2026: $2.050 billion.

As of the date of this press release, NGL has not finalized its financial results nor completed its quarter-end closing for the quarter ended December 31, 2023, and its auditors have not reviewed the financial information for such period. The preliminary estimates presented above are derived from NGL’s internal records and are based on information currently available to management. These preliminary estimates are subject to the completion of financial closing procedures, final adjustments and other developments that may arise between now and the time the financial results for the third quarter are finalized. Therefore, all of these preliminary estimates are subject to change. Further, these estimates are not a comprehensive statement of NGL’s financial results as of and for the quarter ended December 31, 2023, and NGL undertakes no obligation to update or revise these estimates prior to issuance of its financial statements.

NGL plans to issue its fiscal third quarter ended December 31, 2023 earnings press release post-market close on Thursday, February 8, 2024. Members of NGL’s management team intend to host an earnings call following this release on Thursday, February 8, 2024 at 4:00 pm CT to discuss its financial results. Analysts, investors, and other interested parties may join the webcast via the event link: https://www.webcaster4.com/Webcast/Page/2808/49742 or by dialing (888) 506-0062 and providing access code: 847654. An archived audio replay of the call will be available for 14 days, which can be accessed by dialing (877) 481-4010 and providing replay passcode 49742.

Forward-Looking Statements

This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. Specifically, forward-looking statements include, among others, statements concerning the new Term Loan Facility, including the expected use of proceeds thereof and the preliminary estimates for the fiscal third quarter. While NGL believes such forward-looking statements are reasonable, NGL cannot assure they will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

About NGL Energy Partners LP

NGL Energy Partners LP, a Delaware limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports, treats and disposes of produced water generated as part of the oil and natural gas production process.

For further information, visit the Partnership’s website at www.nglenergypartners.com.

¹ Due to the impracticality of estimating certain amounts required by GAAP prior to completing its quarter-end closing, NGL is not able, without unreasonable effort, to estimate Net Income, the GAAP financial measure most directly comparable to the non-GAAP financial measure of Adjusted EBITDA. The variability of these amounts could have a significant impact on our final GAAP financial results.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240117993203/en/

Investor Contact:

NGL Energy Partners LP

David Sullivan, 918-495-4631

Vice President - Finance

David.Sullivan@nglep.com

Source: NGL Energy Partners LP

FAQ

What is the purpose of the new term loan facility announced by NGL Energy Partners LP?

The purpose of the new term loan facility is to syndicate a seven-year $700 million senior secured loan to refinance existing debt and for general corporate purposes.

What are the preliminary financial estimates provided by NGL Energy Partners LP for the third quarter of 2023?

NGL Energy Partners LP estimates its consolidated adjusted EBITDA for the third quarter of 2023 to be $150 - $160 million, with capital expenditures of $30 - $40 million.

When is NGL Energy Partners LP planning to issue its fiscal third quarter ended December 31, 2023 earnings press release?

NGL Energy Partners LP plans to issue its fiscal third quarter ended December 31, 2023 earnings press release post-market close on Thursday, February 8, 2024.