EPD announces new pipeline, $2.25 bill senior unsecured notes. . That's about a 4% dilution. Will the stock fall 4% or will the news that EPD is increasing future profitability offset this?
Enterprise Products Partners L.P. (EPD) announced today that it has received transportation commitments to support development of a new 270-mile pipeline header system that will deliver ethane to petrochemical plants in the U.S. Gulf Coast region. As designed, the Enterprise Aegis Pipeline (“Aegis”) will originate at Enterprise’s Mont Belvieu, Texas liquids storage complex and have the capacity to transport purity ethane to multiple petrochemical facilities in Texas and Louisiana. The final design, including capacity and delivery points, will be determined once any further binding commitments are received at the conclusion of the project’s open commitment period.
Scary post! The new pipeline will be accretive to existing and any future units issued. THe refinancing saves for $30M a year. Both are positive and as Mktply stated the bonds save $$. The problem is that to keep expanding the company and acquiring and building new assets - bond holders require a combination that is about 50% equity.
With rates at/near historic lows for corp. issuers I hope EPD favors debt issuance to fund the $7B in projects in development. With an EV of $67B and debt of only $16.4B they certainly aren't over-levered and the new bonds were only $1B of net new capital. When rates do turn up they'll probably move sharply, so lock in these low rates on a few billion $ more while money's cheap.