Summit Midstream Corp (NYSE:SMC), a player in the natural gas transmission industry with annual revenues of $450.86 million, has increased its financial obligations through the issuance of additional senior secured notes, as per a recent filing with the Securities and Exchange Commission.
According to InvestingPro analysis, the company currently maintains a FAIR financial health score, with its stock trading near its Fair Value. On Friday, Summit Midstream Holdings, LLC, a subsidiary of Summit Midstream Corporation, issued an additional $250 million in aggregate principal amount of 8.625% Senior Secured Second Lien Notes due 2029.
These additional notes are part of the same series as the existing notes which were originally issued on July 26, 2024, totaling $575 million. With the latest issuance, the total aggregate principal amount of the notes now stands at $825 million. This adds to Summit's existing total debt load, which InvestingPro data shows reached $956.97 million as of the last quarter, with a debt-to-capital ratio of 0.60. The new notes will be treated as a single class with the existing ones and will be fully fungible post-February 19, 2025.
The notes, guaranteed by Summit Midstream Corporation and certain subsidiaries, are secured on a second-priority basis by collateral pledged for the company's asset-based revolving credit facility. The proceeds from this offering are intended to repay a portion of the outstanding borrowings under this facility and will also be used for general corporate purposes.
The notes are set to mature on October 31, 2029, with interest payable semi-annually. Summit Midstream has the option to redeem up to 40% of the aggregate principal amount of the notes at a redemption price of 108.625% before July 31, 2026, under certain conditions. Full or partial redemption of the notes is also possible at set prices after this date.
The indenture governing the notes stipulates certain covenants restricting the company's actions, including limitations on incurring additional indebtedness, asset sales, and transactions with affiliates.
This financial maneuvering by Summit Midstream is part of its broader strategy to manage its debt portfolio and liquidity needs, with the company maintaining an EV/EBITDA ratio of 7.34x and generating EBITDA of $178.33 million in the last twelve months. For deeper insights into Summit Midstream's financial health and detailed analysis, investors can access the comprehensive Pro Research Report available on InvestingPro, which provides expert analysis and actionable intelligence for smarter investment decisions. The details of the indenture and associated financial instruments are available in the exhibits of the SEC filing, which provide the legal framework for these financial obligations.
In other recent news, Summit Midstream Corporation has announced plans for a $250 million offering of senior secured second lien notes due in 2029, aiming to repay a portion of its asset-based lending credit facility and cover general corporate expenses. Following an acquisition, Summit Midstream has also finalized a key transaction, expanding its operational capacity and securing a guarantee for $575 million in aggregate principal amount of 8.625% Senior Secured Second Lien Notes due in 2029.
In addition, the company received stockholder approval for a significant stock issuance to Tall Oak Midstream Holdings, LLC, allowing for the issuance of up to 7,471,008 shares of Class B common stock.
These developments coincide with the company's acquisition of Tall Oak Midstream Operating, LLC, which extends Summit's operational range into the Arkoma Basin, involving a $155 million upfront cash payment and approximately 7.5 million shares of Class B common stock.
In financial news, Summit Midstream reported strong Q1 results, with a net income of $132.9 million and adjusted EBITDA of $70.1 million. These are among the recent developments that have been shaping the company's operations and financial structure.
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