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A guide to Martin Midstream Partners’ debt financing activity

Avik Chowdhury

Key takeaways from Martin Midstream Partners' analyst meeting (Part 7 of 7)

(Continued from Part 6)

Martin Midstream Partners’ debt financing

Martin Midstream Partners has increased its borrowing capacity under a revolving credit facility and has also been refinancing senior notes. In February 2013, MMLP issued a private placement of $250.0 million senior secured notes. In March 2013, it made certain strategic amendments to its credit facility, which increased its borrowing capacity from $400.0 million to $600.0 million and extended the maturity date of the facility from 2016 to 2018. In February 2014, MMLP announced that it will redeem 2018 senior unsecured notes of $182.8 million. MMLP increased its maximum amount of borrowing under its revolving credit facility from $600.0 million to $637.5 million.

MMLP is well positioned to capitalize on various investment opportunities, which will mostly be funded with credit facilities. As we see in the table above, all the acquisitions in 2013 were funded by revolving credit facility. Currently, MMLP has $384.0 million under its revolver. In addition to the revolving credit facility and senior notes, MMLP commenced a $300 million at-the-market equity program, providing additional access to equity capital markets. On April 1, 2014, MMLP announced private placement of $150 million senior unsecured notes due 2021.

In 2013, a total of $99.0 million expansion capital expenditures were made primarily in the Terminalling and Storage segment related to the Corpus Christi crude terminal, Smackover refinery, and certain smaller organic growth projects. For 2014, MMLP plans to invest $61.0 million in growth capital expenditure. Approximately $10.0 million will be used to complete the Phase III build-out of the Corpus Christi Crude Terminal. The company has also earmarked additional capital expenditure if more growth opportunities are identified. So, we find that MMLP has sufficient liquidity to finance any growth capital expenditure and distribution.

On January 23, 2014, MMLP declared a quarterly distribution of $0.785 per unit, or $3.14 per unit annualized. As of March 31, 2014, MMLP’s share price was $43.05, resulting in a current yield of 7.3%. The company has maintained steady growth in per-unit distribution since 2003, as the graph above shows.

Martin Midstream Partners (MMLP) is a limited partnership that has an integrated distribution network consisting of transportation, terminaling, and storage and midstream logistical services. Other major companies that also operate in the same sector as MMLP include Sunoco Logistics Partners (SXL), Enterprise Products Partners (EPD), Genesis Energy (GEL), and NGL Energy Partners (NGL). Some of these companies are components of the Alerian MLP ETF (AMLP).

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