- The stock price of Summit Midstream Partners LP (NYSE: SMLP) increased by over 7% today. This is why it happened.
The stock price of Summit Midstream Partners LP (NYSE: SMLP) increased by over 7% today. Investors are responding positively to Summit Midstream Partners announcing that its entities commenced a private offering of up to $700 million aggregate principal amount of Senior Secured Second Lien Notes due 2026.
These notes are expected to pay interest semi-annually and will be jointly and severally guaranteed, on a senior second-priority secured basis, by the partnership and each restricted subsidiary of the partnership (other than the co-Issuers) that is an obligor under the credit agreement by and among Summit Holdings, as borrower, Bank of America, N.A., administrative agent and trustee and the several lenders and other agents party thereto, which Summit Holdings expects to enter into on or about the date on which the notes are issued, or under the Co-Issuers’ 5.75% Senior Notes due 2025 on the issue date of the Notes.
The co-issuers intend to use the net proceeds from the offering – together with cash on hand and borrowings under the ABL Credit Agreement to 1.) repay in full all of Summit Holdings’ obligations under the Third Amended and Restated Credit Agreement, dated as of May 26, 2017 (as amended or otherwise modified from time to time), among Summit Holdings, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent, 2.) redeem all of the $234,047,000 in aggregate principal amount outstanding of the Co-Issuers’ 5.50% Senior Notes due 2022, 3.) pay accrued and unpaid interest on the Revolving Credit Facility and 2022 Notes and 4.) for general corporate purposes, including fees and expenses associated with the offering.
In connection with the offering, the co-issuers also announced that they plan to deliver a notice of conditional redemption calling for redemption on November 12, 2021, of all the 2022 Notes at a redemption price equal to 100% of the principal amount of the 2022 Notes to be redeemed, plus accrued and unpaid interest, if any, on the 2022 Notes to be redeemed on the Redemption Date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the Redemption Date).
The co-issuers intend to finance the redemption of the 2022 Notes with a portion of the net proceeds from the offering. And the co-issuers’ obligation to redeem the 2022 notes will be conditioned upon the consummation, on or prior to the redemption, of certain financing transactions that result in net cash proceeds, after repayment of the revolving credit facility, in an amount at least sufficient to pay the redemption price, all accrued and unpaid interest and all other amounts owing under the indenture governing the 2022 notes. The co-issuers will publicly announce and notify the holders of the 2022 Notes and the trustee for the 2022 Notes if any of the foregoing conditions are not satisfied, whereupon the redemption notice will be revoked and the 2022 Notes will remain outstanding.
U.S. Bank National Association is the trustee for the 2022 Notes and is serving as the paying agent for the redemption. And the redemption of the 2022 Notes will be made solely pursuant to the Redemption Notice.
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