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Genesis Energy paves way for reduced pricing under credit agreement
By Wendy Van Sickle
Columbus, Ohio, Sept. 23 – Genesis Energy LP amended its $1.5 billion credit agreement on Thursday to reduce its applicable margin and commitment fee, if and when the company achieves specified investment grade ratings, according to an 8-K with the Securities and Exchange Commission.
The agreement’s existing leverage-based interest is Libor plus 150 basis points to 250 bps. The ratings-based interest would drop to Libor plus 112.5 bps to 225 bps.
The commitment fee would drop to 17.5 bps to 37.5 bps under the ratings-based fee schedule from 25 bps to 37.5 bps under the leverage-based one.
The amendment also provides the company more operational flexibility by relaxing certain covenants, including by increasing certain applicable limits and baskets.
Also, the amendment increases to $200 million from $150 million the agreement’s inventory financing sublimit, which is designed to allow Genesis to more efficiently finance crude oil and petroleum products inventory in the normal course of its operations by allowing it to exclude the amount of inventory loans from its total indebtedness when determining its applicable interest rate.
The amendments are in connection with the completion of the company’s acquisition of the offshore pipelines and services business of Enterprise Products Operating LLC, which “meaningfully” expanded Genesis’ size and is expected to improve its credit ratings, according to the filing.
The credit agreement matures July 28, 2019. Wells Fargo Bank, NA is the administrative agent.
Genesis is a Houston-based diversified midstream energy master limited partnership.
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