Suburban Propane Partners, L.P. Announces Refinancing of Revolving Credit Facility

Rhea-AI Summary

Suburban Propane Partners, L.P. (NYSE:SPH) announced the refinancing of a $500 million senior secured credit facility, extending the maturity date and enhancing financial flexibility. The new five-year Revolving Credit Facility aims to support long-term strategic growth initiatives.

Insights

Financial Analyst

Refinancing of existing debt, especially one as substantial as a $500 million credit facility, is a significant financial move for any company. It's important to note that Suburban Propane Partners, L.P. has not only managed to extend the maturity of their debt but also retained the same interest rate pricing grid and financial covenants. This indicates a stable cost of borrowing and suggests confidence from lenders in the company's financial health. The ability to increase the facility size to $850 million provides additional liquidity that could be important for strategic investments or to weather unforeseen financial challenges.

From an investor's perspective, this refinancing could be seen as a proactive measure to manage debt obligations efficiently. It potentially staves off refinancing risk and interest rate risk that could arise from a rising rate environment or credit market disruptions. Moreover, the involvement of a diverse group of reputable banks in the syndication, with Bank of America leading, implies a strong banking relationship and a favorable view of the company's creditworthiness.

Energy Sector Analyst

For a company like Suburban Propane Partners, which operates in the energy sector distributing propane and investing in low carbon fuel alternatives, financial flexibility is key to navigating the volatile energy market. The extended maturity of their Revolving Credit Facility until 2029, with an option to refinance their senior notes due in 2027, provides them with a stable financial runway. This is particularly relevant as the energy sector is capital-intensive and often subject to regulatory changes and market fluctuations.

The ability to upsize the facility to $850 million could support the company's strategic growth initiatives, such as expanding its renewable energy offerings. As the energy industry moves towards more sustainable sources, Suburban Propane's investment in renewable propane and natural gas positions it well to capitalize on the transition to cleaner fuels. The refinancing may thus facilitate the company's growth in a sector that is increasingly focused on reducing carbon emissions.

WHIPPANY, N.J., March 18, 2024 /PRNewswire/ -- Suburban Propane Partners, L.P. (NYSE:SPH) (the "Partnership"), a nationwide distributor of propane, renewable propane, renewable natural gas, fuel oil and related products and services, as well as a marketer of natural gas and electricity and investor in low carbon fuel alternatives, today announced the refinancing of the $500 million senior secured credit facility (the "Revolving Credit Facility") of its operating partnership, Suburban Propane, L.P. The new five-year Revolving Credit Facility amends and restates the previous revolving credit facility dated March 5, 2020 to, among other things, extend the maturity date from March 5, 2025 to the earlier of (A) the date that is ninety-one (91) days prior to maturity of the 5.875% senior notes, due March 1, 2027, of Suburban Propane Partners, L.P. and Suburban Energy Finance Corporation (unless the notes have been refinanced prior to such date) or (B) March 15, 2029. As with the current Revolving Credit Facility, Suburban Propane, L.P. retains the ability to increase the facility size to $850 million.

In announcing the refinancing, Chief Financial Officer Michael Kuglin said, "We are very pleased with the outcome of this opportunistic refinancing, which we have completed in advance of the expiration of our previous credit facility. This new facility further extends our debt maturities, maintains the interest rate pricing grid and financial ratio covenants, and provides enhanced financial flexibility in support of our long-term strategic growth initiatives. We are very appreciative of the support provided by our bank group."

The bank syndication supporting the new facility is comprised of a diverse group of eight banks led by Bank of America, N.A. as Joint Lead Arranger and Joint Book Runner, Wells Fargo Bank, National Association, JP Morgan Chase Bank, N.A., Citizens Bank, National Association, Capital One, National Association, and M&T Bank as Joint Lead Arrangers, Joint Book Runners and Co-Syndication Agents, and HSBC Bank USA, N.A and CoBank, ACB as Co-Documentation Agents. Bank of America, N.A. is serving as Administrative Agent.

About Suburban Propane Partners, L.P.

Suburban Propane Partners, L.P. is a publicly traded master limited partnership listed on the New York Stock Exchange. Headquartered in Whippany, New Jersey, the Partnership has been in the customer service business since 1928 and is a nationwide distributor of propane, renewable propane, renewable natural gas ("RNG"), fuel oil and related products and services, as well as a marketer of natural gas and electricity and producer of and investor in low carbon fuel alternatives, servicing the energy needs of approximately 1 million residential, commercial, governmental, industrial and agricultural customers through approximately 700 locations across 42 states. The Partnership is supported by three core pillars: (1) Suburban Commitment – showcasing the Partnership's 95-year legacy, and ongoing commitment to the highest standards for dependability, flexibility, and reliability that underscores the Partnership's commitment to excellence in customer service; (2) SuburbanCares – highlighting continued dedication to giving back to local communities across the Partnership's national footprint; and (3) Go Green with Suburban Propane – promoting the clean burning and versatile nature of propane and renewable propane as a bridge to a green energy future and investing in the next generation of innovative, renewable energy alternatives.  For additional information on the Partnership, please visit www.suburbanpropane.com.

Forward Looking Statements

This press release contains certain forward-looking statements relating to future business expectations and financial condition and results of operations of the Partnership, based on management's current good faith expectations and beliefs concerning future developments.  These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed or implied in such forward-looking statements.  Some of these risks and uncertainties are discussed in more detail in the Partnership's Annual Report on Form 10-K for its fiscal year ended September 30, 2023 and other periodic reports filed with the SEC.  Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's view only as of the date made. The Partnership undertakes no obligation to update any forward-looking statement, except as otherwise required by law.

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SOURCE Suburban Propane Partners, L.P.

FAQ

What did Suburban Propane Partners announce regarding refinancing?

Suburban Propane Partners announced the refinancing of a $500 million senior secured credit facility.

What is the ticker symbol for Suburban Propane Partners?

The ticker symbol for Suburban Propane Partners is SPH.

Who led the bank syndication supporting the new facility?

The bank syndication supporting the new facility was led by Bank of America, N.A.

What is the maturity date extension for the new Revolving Credit Facility?

The maturity date of the new facility has been extended to the earlier of (A) ninety-one days prior to maturity of the 5.875% senior notes due March 1, 2027, or (B) March 15, 2029.

What is the maximum facility size that Suburban Propane, L.P. can increase to?

Suburban Propane, L.P. retains the ability to increase the facility size to $850 million.