Summary
Enterprise Products Partners L.P. (EPD) announced the completion of a public offering of $500 million in aggregate principal amount of Enterprise Products Operating LLC's (EPO) 4.60% Senior Notes due 2012. These notes are unsecured and unsubordinated, with guarantees provided by the Partnership (EPD). The issuance represents a significant financing event, allowing the company to raise substantial capital through debt issuance with a moderate interest rate and a fixed maturity date of August 1, 2012. Investors should note the redemption provisions, which allow EPO to call the notes early at a price that includes accrued interest and a make-whole premium, offering flexibility to the issuer but potential reinvestment risk for bondholders.
Key Highlights
- 1EPD's subsidiary, EPO, successfully issued $500 million in aggregate principal amount of 4.60% Senior Notes due 2012.
- 2The notes are guaranteed on an unsecured and unsubordinated basis by Enterprise Products Partners L.P.
- 3The interest rate on the notes is 4.60% per annum.
- 4Interest payments are scheduled semi-annually on February 1 and August 1, commencing February 1, 2010.
- 5The notes mature on August 1, 2012.
- 6EPO has the option to redeem some or all of the notes prior to maturity, subject to a make-whole premium.
Frequently Asked Questions
This 8-K filing informs investors about the completion of a material definitive agreement, specifically the public offering and issuance of $500 million of 4.60% Senior Notes due 2012 by EPD's subsidiary, EPO. It details the terms of the debt, including interest rate, maturity, and guarantee provisions by the parent partnership.
The issuance of $500 million in debt increases EPD's leverage and future interest expense. However, it also provides significant capital that can be used for operations, expansion projects, or refinancing existing debt. The 4.60% interest rate is relatively moderate, suggesting favorable borrowing terms at the time.
The primary risks include the credit risk of EPD and its subsidiary, as the notes are guaranteed by the parent. Additionally, the notes are callable by EPO at a premium. This means that if interest rates fall, EPO could redeem the notes and refinance at a lower rate, forcing bondholders to reinvest their principal at potentially lower yields.
Interest payments will accrue from June 10, 2009, and the first payment is scheduled for February 1, 2010, with subsequent payments on February 1 and August 1 of each year thereafter.