Pembina Pipeline Corporation Announces Closing of $950 Million Public Note Offering

Rhea-AI Summary

Pembina Pipeline (TSX: PPL; NYSE: PBA) has successfully closed a $950 million public note offering. The offering consists of three tranches: $650 million in Series 23 Notes with a 5.22% coupon maturing in 2033, $150 million in Series 20 Notes with a 5.02% coupon maturing in 2032, and $150 million in Series 22 Notes with a 5.67% coupon maturing in 2054. The proceeds will be used to repay debt under Pembina's revolving credit facility, fund the redemption of $150 million of Series 19 Notes due in 2026, and for general corporate purposes. The notes were offered via a short form base shelf prospectus dated December 20, 2023, and related pricing supplements dated June 26, 2024.

Positive

• Closed a $950 million public note offering.
• Proceeds will repay indebtedness under a $1.5 billion revolving credit facility.
• Funds will also support the redemption of $150 million of Series 19 Notes due in 2026.

Negative

• None.

Financial Analyst

Pembina Pipeline Corporation's recent note offering of $950 million is a significant move with multiple facets for investors to consider. Firstly, the purpose of the financing is to refinance existing debt, repay part of the revolving credit facility and cover general corporate expenses. This practice is common in corporate finance and often signifies a strategy to manage debt more effectively by locking in current interest rates, which is particularly important in a fluctuating rate environment.

The coupons on the new notes are fixed at 5.22%, 5.02% and 5.67% for the Series 23, Series 20 and Series 22 notes respectively. These rates are in line with recent market trends for investment-grade bonds. However, the differing maturities—ranging from 2032 to 2054—provide a diversified timeline for debt repayment. This staggered maturity profile can help the company manage its cash flows more predictably over the long term, providing stability to its financial planning.

Short-term implications: The proceeds earmarked for repaying existing indebtedness under its revolving credit facility and the partial redemption of Series 19 notes suggest that Pembina is focusing on reducing its short-term liabilities, which can positively affect its balance sheet. This move likely aims to enhance liquidity and financial flexibility, making Pembina better positioned to capitalize on opportunities or weather downturns.

Long-term outlook: For retail investors, it's important to note that while the new notes come with relatively high coupon rates, they reflect the cost of borrowing in the current economy. High rates could translate into higher interest expenses for Pembina in the future, but the decision to secure long-term financing indicates a confidence in the company's ability to generate sufficient cash flows to service this debt.

Market Research Analyst

The issuance of $950 million in new notes by Pembina Pipeline Corporation offers insights into the company's strategic financial management. For investors, understanding the market context is essential. The fixed coupon rates of 5.22%, 5.02% and 5.67% are reflective of broader market conditions where interest rates have been rising. This move suggests that Pembina is locking in rates now to avoid potential increases in the future.

From a market perspective, issuing debt to repay existing loans often indicates a focus on maintaining or enhancing credit ratings. By refinancing at these rates, Pembina may be seeking to optimize its debt structure, potentially leading to a more favorable view from credit rating agencies. This can impact investor sentiment positively, as a strong credit rating often correlates with lower perceived risk.

Furthermore, the use of proceeds to redeem part of the Series 19 notes, due in 2026, highlights Pembina's proactive management in aligning its debt maturity timeline. Such steps can be interpreted as a measure to prevent potential refinancing risks and interest rate volatility in the nearer term.

For retail investors, it's beneficial to observe how the company balances its debt portfolio. In this case, Pembina's approach indicates a strategic blend of addressing immediate financial obligations while securing long-term funding. This dual approach can provide a buffer against economic variance and contribute to the company's resilience.

CALGARY, Alberta--(BUSINESS WIRE)-- Pembina Pipeline Corporation ("Pembina" or the "Company") (TSX: PPL; NYSE: PBA) is pleased to announce that it has closed its previously announced offering of $950 million aggregate principal amount of senior unsecured medium-term notes (the "Offering"). The Offering was conducted in three tranches consisting of: (i) $650 million principal amount of senior unsecured medium-term notes, series 23 (the "Series 23 Notes") having a fixed coupon of 5.22% per annum, paid semi-annually, and maturing on June 28, 2033; (ii) $150 million principal amount to be issued through a re-opening of the Company's senior unsecured medium-term notes, series 20 (the "Series 20 Notes") having a fixed coupon of 5.02% per annum, paid semi-annually, and maturing on January 12, 2032; and (iii) $150 million principal amount to be issued through a re-opening of the Company's senior unsecured medium-term notes, series 22 (the "Series 22 Notes") having a fixed coupon of 5.67% per annum, paid semi-annually, and maturing on January 12, 2054.

The net proceeds of the Offering are anticipated to be used: (i) to repay indebtedness of the Company under its unsecured $1.5 billion revolving credit facility maturing in June 2029; (ii) to fund the previously announced redemption by the Company of $150 million aggregate principal amount of its $300 million aggregate principal amount of 5.72% Medium Term Notes, Series 19 (the "Series 19 Notes") due June 22, 2026; and (iii) for general corporate purposes.

The Series 23 Notes and the re-opened Series 20 Notes and Series 22 Notes were offered through a syndicate of dealers under Pembina's short form base shelf prospectus dated December 20, 2023, as supplemented by related pricing supplements dated June 26, 2024.

This news release does not constitute an offer to sell or the solicitation of an offer to buy the notes in any jurisdiction. The notes have not been approved or disapproved by any regulatory authority. The notes have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities law, and may not be offered or sold within the United States.

About Pembina

Pembina Pipeline Corporation is a leading energy transportation and midstream service provider that has served North America's energy industry for more than 65 years. Pembina owns an integrated network of hydrocarbon liquids and natural gas pipelines, gas gathering and processing facilities, oil and natural gas liquids infrastructure and logistics services, and an export terminals business. Through our integrated value chain, we seek to provide safe and reliable energy solutions that connect producers and consumers across the world, support a more sustainable future and benefit our customers, investors, employees and communities. For more information, please visit www.pembina.com.

Purpose of Pembina: We deliver extraordinary energy solutions so the world can thrive.

Pembina is structured into three Divisions: Pipelines Division, Facilities Division and Marketing & New Ventures Division.

Pembina's common shares trade on the Toronto and New York stock exchanges under PPL and PBA, respectively. For more information, visit www.pembina.com.

Forward-Looking Information and Statements

This news release contains certain forward-looking statements and forward-looking information (collectively, "forward-looking statements"), including forward-looking statements within the meaning of the "safe harbor" provisions of applicable securities legislation that are based on Pembina's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as "expect", "intend", "will", "shall", and similar expressions suggesting future events or future performance.

In particular, this news release contains forward-looking statements relating to: the Offering, including the anticipated closing date of the Offering and the expected use of the net proceeds of the Offering; and the partial redemption of the Series 19 Notes. These forward-looking statements are based on certain assumptions that Pembina has made in respect thereof as at the date of this news release, including: oil and gas industry exploration and development activity levels and the geographic region of such activity; that favourable market conditions exist; the success of Pembina's operations; prevailing commodity prices, interest rates, carbon prices, tax rates and exchange rates; the ability of Pembina to maintain current credit ratings; the availability of capital to fund future capital requirements relating to existing assets and projects; future operating costs; geotechnical and integrity costs; that all required regulatory and environmental approvals can be obtained on the necessary terms in a timely manner; prevailing regulatory, tax and environmental laws and regulations; maintenance of operating margins; and certain other assumptions in respect of Pembina's forward-looking statements detailed in Pembina's Annual Information Form for the year ended December 31, 2023 (the "AIF") and Management's Discussion and Analysis for the year ended December 31, 2023 (the "Annual MD&A"), which were each filed on SEDAR+ on February 22, 2024, in Pembina's Management's Discussion and Analysis for the three months ended March 31, 2024 (the "Interim MD&A"), which was filed on SEDAR+ on May 9, 2024 and from time to time in Pembina's public disclosure documents available at www.sedarplus.ca, www.sec.gov and through Pembina's website at www.pembina.com.

These forward-looking statements are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties, including, but not limited to: the regulatory environment and decisions and Indigenous and landowner consultation requirements; the impact of competitive entities and pricing; reliance on third parties to successfully operate and maintain certain assets; the strength and operations of the oil and natural gas production industry and related commodity prices; non-performance or default by counterparties; actions taken by governmental or regulatory authorities; the ability of Pembina to acquire or develop the necessary infrastructure in respect of future development projects; fluctuations in operating results; adverse general economic and market conditions in Canada, North America and worldwide; the ability to access various sources of debt and equity capital; changes in credit ratings; counterparty credit risk; and certain other risks and uncertainties detailed in the AIF, Annual MD&A, Interim MD&A and from time to time in Pembina's public disclosure documents available at www.sedarplus.ca, www.sec.gov and through Pembina's website at www.pembina.com. In addition, the closing of the Offering and the partial redemption of the Series 19 Notes may not be completed, or may be delayed, if the conditions to the closing thereof are not satisfied on the anticipated timeline or at all. Accordingly, there is a risk that the Offering will not be completed and the Series 19 Notes may not be redeemed within the anticipated time, on the terms currently proposed, or at all. The intended use of the net proceeds of the Offering by Pembina may change if the board of directors of Pembina determines that it would be in the best interests of Pembina to deploy the proceeds for some other purpose and there can be no guarantee as to how or when such proceeds may be used.

Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected. The forward-looking statements contained in this news release are expressly qualified by the above statements. Pembina does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240628899093/en/

Investor Relations

(403) 231-3156

1-855-880-7404

investor-relations@pembina.com

www.pembina.com

Source: Pembina Pipeline Corporation

FAQ

What is the total amount raised by Pembina Pipeline 's public note offering?

Pembina Pipeline raised $950 million through its public note offering.

What will the proceeds from Pembina Pipeline 's note offering be used for?

The proceeds are intended to repay indebtedness under a $1.5 billion revolving credit facility, redeem $150 million of Series 19 Notes due in 2026, and for general corporate purposes.

What are the details of the Series 23 Notes issued by Pembina Pipeline ?

The Series 23 Notes amount to $650 million with a fixed coupon of 5.22% per annum, maturing on June 28, 2033.

What are the interest rates and maturity dates of the notes issued in Pembina's offering?

The Series 23 Notes have a 5.22% coupon maturing in 2033, Series 20 Notes have a 5.02% coupon maturing in 2032, and Series 22 Notes have a 5.67% coupon maturing in 2054.