Summit Midstream talks $700 million five-year secured notes at 98 to yield 8½%-8¾%

By Paul A. Harris

Portland, Ore., Oct. 19 – Summit Midstream Holdings LLC and Summit Midstream Finance Corp. talked their $700 million offering of five-year senior secured second-lien notes (B3/BB-/B+) at an issue price of 98 to yield 8½% to 8¾%, according to market sources.

Official talk comes tight to initial guidance that had the notes pricing at a discount to yield in the high-8% area.

The notes are being be sold with tenor of five years, coming due in 2026. However, the maturity springs forward to Jan. 14, 2025 if $50 million or more of the company’s notes due 2025 remain outstanding.

Books close at noon ET on Tuesday, and the deal is set to price thereafter.

BofA Securities Inc. is the left bookrunner. RBC Capital Markets LLC, ING Financial Markets LLC, Regions Securities LLC and TD Securities (USA) LLC are the joint bookrunners.

Truist Securities Inc. and CIT Capital Securities LLC are the co-managers.

The Rule 144A for life notes come with two years of call protection and feature a 35% equity clawback at par plus the full coupon during the non-call period and a 101% poison put.

The notes also feature an excess cash flow sweep provision with a waterfall structure, enforced by interest rate step-ups in years one, two and three. The excess cash flow sweep terminates at $300 million.

The Houston-based energy midstream company plans to use the proceeds plus cash on hand and borrowings under its ABL facility to pay off and terminate its revolver, to redeem all of the approximately $234 million 2022 notes outstanding and for general corporate purposes.

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