Summit Midstream Partners, LP Announces Expiration and Results for Asset Sale Offer to Purchase up to $215,000,000 Aggregate Principal Amount of Outstanding 8.500% Senior Secured Second Lien Notes Due 2026

Rhea-AI Summary

Summit Midstream Partners, LP (NYSE: SMLP) announced the results of its Asset Sale Offer to purchase up to $215 million of its outstanding 8.500% Senior Secured Second Lien Notes due 2026. The offer expired on June 5, 2024, with only $6.91 million, or approximately 0.90%, of the Notes tendered and accepted for payment. Payment will be made on June 6, 2024.

Positive

• Completion of the Asset Sale Offer indicates proactive financial management.
• Payment for tendered Notes ensures fulfillment of financial obligations.
• Maintaining liquidity by not expending the full $215 million allocation.

Negative

• Only 0.90% of the Notes were tendered, indicating low investor interest.
• The company still holds a significant amount of debt maturing in 2026.
• Potential lack of confidence from investors in the company's financial strategy.

Insights

Financial Analyst

The expiration and results of Summit Midstream Partners, LP's tender offer to purchase up to $215,000,000 of their 8.500% Senior Secured Second Lien Notes due 2026 can be seen as a mixed signal for investors. The tender offer's low uptake—only $6,910,000 or about 0.90% of the Notes being tendered—indicates that many noteholders prefer to keep their high-yielding securities. This implies that investors might have confidence in the company's ability to meet its debt obligations or believe the yield is currently more attractive compared to other investment opportunities.

From a financial standpoint, the low participation rate means that Summit Midstream will not need to use a significant amount of cash to repurchase notes, which helps in preserving liquidity. However, it also means that the company will continue to carry a relatively high-cost debt on its balance sheet, which may impact future profitability and financial flexibility. The high interest rate of 8.500% on these notes is a notable expense that could affect net income.

Moreover, the offer price at 100% of the aggregate principal amount plus accrued interest signals that there are no additional incentives for noteholders to sell, highlighting a potential disconnect between the company's offer and market expectations. For retail investors, this action can be interpreted as a non-event in the short term but may have longer-term implications regarding the firm’s debt management strategy.

Market Research Analyst

The tender offer's acceptance rate provides insights into investor sentiment and market conditions. A low acceptance rate of 0.90% is quite telling; it suggests that bondholders might perceive the risk associated with holding Summit Midstream’s notes as acceptable, despite the high interest rate. This could mean that investors believe the company's prospects are stable enough to justify the high yield.

From a market perception perspective, the outcome of the tender offer can also serve as a barometer for the company’s reputation and creditworthiness. If investors thought there were significant risks on the horizon, we would likely see a higher tender rate as investors seek to exit their positions. Instead, the low tender rate could indicate confidence in Summit Midstream’s operational outlook and financial health.

For retail investors, this outcome might underline the importance of understanding market sentiment and macroeconomic factors that influence such decisions. It’s essential to note that the broader energy market conditions and interest rate environment could also play a role in this decision-making process. Investors should keep an eye on future actions the company might take to manage its debt, as well as any potential updates on their operational performance.

HOUSTON, June 6, 2024 /PRNewswire/ -- Summit Midstream Partners, LP (NYSE: SMLP) ("Summit," "SMLP" or the "Partnership") today announced the expiration and results of the previously announced cash tender offer (the "Asset Sale Offer") of Summit Midstream Holdings, LLC ("Holdings") and Summit Midstream Finance Corp. (together with Holdings, the "Issuers"), which are subsidiaries of the Partnership, to purchase up to $215,000,000 aggregate principal amount of their outstanding 8.500% Senior Secured Second Lien Notes due 2026 (the "Notes") at a purchase price of 100% of the aggregate principal amount thereof, plus accrued and unpaid interest to, but not including, the purchase date.

The Asset Sale Offer expired at 5:00 p.m., New York City time, on June 5, 2024 (the "Expiration Time"). As of the Expiration Time, an aggregate principal amount of $6,910,000, or approximately 0.90%, of the Notes were validly tendered and not validly withdrawn. The Issuers have accepted for payment all Notes validly tendered and not validly withdrawn prior to the Expiration Time pursuant to the Asset Sale Offer and will make payment for such Notes on June 6, 2024.

Requests for documents relating to the Asset Sale Offer may be directed to D.F. King & Co., Inc., at (800) 347-4826 (Toll-Free) or (212) 269-5550, or by email at smlp@dfking.com.

This press release is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell any Notes.

About Summit Midstream Partners, LP

SMLP is a value-driven limited partnership focused on developing, owning and operating midstream energy infrastructure assets that are strategically located in the core producing areas of unconventional resource basins, primarily shale formations, in the continental United States. SMLP provides natural gas, crude oil and produced water gathering, processing and transportation services pursuant to primarily long-term, fee-based agreements with customers and counterparties in four unconventional resource basins: (i) the Williston Basin, which includes the Bakken and Three Forks shale formations in North Dakota; (ii) the Denver-Julesburg Basin, which includes the Niobrara and Codell shale formations in Colorado and Wyoming; (iii) the Fort Worth Basin, which includes the Barnett Shale formation in Texas; and (iv) the Piceance Basin, which includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in Colorado. SMLP has an equity method investment in Double E Pipeline, LLC, which provides interstate natural gas transportation service from multiple receipt points in the Delaware Basin to various delivery points in and around the Waha Hub in Texas. SMLP is headquartered in Houston, Texas.

Forward Looking Statements 

This press release includes certain statements concerning expectations for the future that are forward-looking within the meaning of the federal securities laws. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements and may contain the words "expect," "intend," "plan," "anticipate," "estimate," "believe," "will be," "will continue," "will likely result," and similar expressions, or future conditional verbs such as "may," "will," "should," "would," and "could." In addition, any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies and possible actions taken by SMLP or its subsidiaries are also forward-looking statements. Forward-looking statements also contain known and unknown risks and uncertainties (many of which are difficult to predict and beyond management's control) that may cause SMLP's actual results in future periods to differ materially from anticipated or projected results. An extensive list of specific material risks and uncertainties affecting SMLP is contained in its 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 15, 2024, as amended and updated from time to time, including by SMLP's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024 filed with the SEC on May 6, 2024 and by Exhibit 99.1 to SMLP's Current Report on Form 8-K filed with the SEC on June 3, 2024. Any forward-looking statements in this press release are made as of the date of this press release and SMLP undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.

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SOURCE Summit Midstream Partners, LP

FAQ

What is the result of Summit Midstream Partners’ recent Asset Sale Offer?

Summit Midstream Partners announced that $6.91 million or 0.90% of their 8.500% Senior Secured Second Lien Notes due 2026 were tendered and accepted for payment.

How much debt did Summit Midstream Partners aim to purchase in their Asset Sale Offer?

Summit Midstream Partners aimed to purchase up to $215 million of their outstanding 8.500% Senior Secured Second Lien Notes due 2026.

When did the Asset Sale Offer by Summit Midstream Partners expire?

The Asset Sale Offer expired at 5:00 p.m., New York City time, on June 5, 2024.

What was the tender amount of the Notes in Summit Midstream Partners' Asset Sale Offer?

An aggregate principal amount of $6.91 million of the Notes were validly tendered and accepted.

When will payment for the tendered Notes be made by Summit Midstream Partners?

Payment for the tendered Notes will be made on June 6, 2024.