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Hess Midstream unit buy cuts ratio to 3x; leverage to fall even more
By Devika Patel
Knoxville, Tenn., Oct. 28 – Hess Midstream LP used funds from a debt sale last quarter to repurchase approximately 31 million class B units from affiliates of Hess Corp. and Global Infrastructure Partners, bringing its leverage down to approximately 3x.
Leverage is expected to fall further, reaching below 3x in 2022, management reports, after reporting high adjusted EBITDA of $205 million last quarter and delivering $119.8 million of free cash flow for the quarter.
“During August, we completed a $750 million repurchase of units from our sponsors, optimizing our capital structure, and bringing our leverage to approximately 3x adjusted EBITDA on a full-year 2021 basis,” chief financial officer Jonathan C. Stein said on the company’s third quarter ended Sept. 30 earnings conference call on Wednesday.
“We have visibility to continued growth in adjusted EBITDA and generation of adjusted free cash flow after distributions and expect to de-lever below our conservative 3x adjusted EBITDA leverage target in 2022, providing continuing flexibility,” he said.
On Aug. 2, company subsidiary Hess Midstream Operations LP priced $750 million of 8.5-year senior notes (Ba3/BB+/BB+) at par to yield 4¼% in a drive-by.
The yield printed at the tight end of the 4¼% to 4½% yield talk.
Goldman Sachs & Co. LLC was the left bookrunner.
The Houston-based oil and gas midstream services provider earmarked the proceeds to repurchase approximately 31 million class B units from affiliates of Hess Corp. and Global Infrastructure Partners.
Hess Midstream LP is a Houston-based oil and gas midstream services provider.
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