Plains All American Announces Pricing of Public Offering of $650 Million of Senior Notes
Plains All American Pipeline (NYSE: PAA) has announced the pricing of a $650 million public offering of 5.700% senior unsecured notes due 2034. The notes were priced at 99.953% of their face value, and the offering is expected to close on June 27, 2024, subject to standard closing conditions.
The company plans to use the net proceeds of approximately $643.3 million to repay a portion of the $750 million outstanding principal of its 3.60% senior notes due 2024, and for general partnership purposes. The joint book-running managers for the offering are Citigroup Global Markets, MUFG Securities Americas, SMBC Nikko Securities America, and Truist Securities.
- Pricing of $650 million senior unsecured notes at 5.700% due 2034.
- Net proceeds of approximately $643.3 million from the offering.
- Intention to use proceeds to repay a portion of $750 million 3.60% senior notes due 2024.
- Structured underwritten public offering with reputable joint book-running managers.
- Offering expected to close shortly, providing near-term liquidity.
- Remaining $106.7 million of 3.60% senior notes due 2024 still unpaid.
- Potential risks related to general partnership purposes, including intra-group lending and repayment of indebtedness.
- Market conditions and customary closing conditions may affect the successful closing of the offering.
PAA's announcement of a $650 million public offering of senior notes with a 5.700% interest rate is noteworthy for a few reasons. Firstly, the proceeds from this offering are aimed at repaying a portion of the $750 million principal of 3.60% senior notes due in November 2024. This move reflects PAA's proactive approach in managing its debt maturity profile and leveraging current market conditions to refinance at a relatively competitive rate. By securing funds at 5.700% for a 10-year period, PAA shows confidence in its ability to service higher debt costs amid potentially rising interest rates.
From a financial health perspective, this offering suggests PAA is maintaining a strong liquidity position, which can be reassuring for investors concerned about debt repayments and cash flow stability. The slight difference in interest rates—3.60% for the old debt versus 5.700% for the new issuance—indicates a moderate increase in financing costs, yet it secures long-term capital that can support PAA’s strategic initiatives and operational needs.
This strategy often signals a stable long-term outlook, especially important in the capital-intensive energy sector. Investors might find this move as positive, but must also weigh the higher interest expense that comes with it.
From a market research perspective, PAA's decision to issue new notes and use the proceeds to repay existing debt aligns with industry norms, where companies take advantage of favorable market conditions to refinance. The terms of the new issuance—5.700% interest rate and a maturity date of 2034—suggest that PAA has secured relatively stable long-term financing. This is particularly significant in the midstream energy sector, which relies on substantial capital for infrastructure and operations.
For investors, understanding the demand for such notes can provide insights into market sentiment towards PAA. The involvement of major underwriters like Citigroup and MUFG Securities indicates strong institutional support, which can be seen as a vote of confidence in PAA's creditworthiness and business model. The market's acceptance of these notes at nearly face value (
Overall, this move can be seen as a strategic step to ensure financial stability and capitalize on current market conditions, thereby supporting PAA's long-term growth and operational continuity.
HOUSTON, June 17, 2024 (GLOBE NEWSWIRE) -- Plains All American Pipeline, L.P. (NYSE: PAA) today announced that it and PAA Finance Corp., a wholly-owned subsidiary of PAA, as co-issuer, have priced an underwritten public offering (the “Offering”) of
PAA intends to use the net proceeds of approximately
Citigroup Global Markets Inc., MUFG Securities Americas Inc., SMBC Nikko Securities America, Inc. and Truist Securities, Inc. are acting as joint book-running managers for the offering.
The Offering is being made pursuant to an effective shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission and may only be made by means of a base prospectus and accompanying prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933, as amended, copies of which may be obtained from the underwriters as follows:
| Citigroup Global Markets Inc. 388 Greenwich Street New York, NY 10013 Telephone: 1-800-831-9146 | MUFG Securities Americas Inc. 1221 Avenue of the Americas, 6th Floor New York, New York 10020 Attention: Capital Markets Group Telephone: 1-877-649-6848 |
| SMBC Nikko Securities America, Inc. 277 Park Avenue New York, New York 10172 Attention: Debt Capital Markets Telephone: 1-888-868-6856 | Truist Securities, Inc. 3333 Peachtree Road NE, 11th Floor Atlanta, Georgia 30326 Attention: Investment Grade Debt Capital Markets Telephone: 1-800-685-4786 |
This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, 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.
PAA is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil and natural gas liquids (NGL). PAA owns an extensive network of pipeline gathering and transportation systems, in addition to terminalling, storage, processing, fractionation and other infrastructure assets serving key producing basins, transportation corridors and major market hubs and export outlets in the United States and Canada. On average, PAA handles over 8 million barrels per day of crude oil and NGL. PAA is headquartered in Houston, Texas.
Forward-Looking Statements
This news release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law, including without limitation statements regarding the offering. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. An extensive list of factors that can affect future results are discussed in PAA’s Annual Report on Form 10-K, the registration statement as discussed herein and other documents filed from time to time with the U.S. Securities and Exchange Commission. PAA undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.
Investor Relations Contacts:
Blake Fernandez
Michael Gladstein
(866) 809-1291
FAQ
What is the purpose of Plains All American's $650 million senior notes offering?
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What will Plains All American do with the remaining $106.7 million of the 3.60% senior notes due 2024?
