|ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018|
Significant Recent Developments
Issuance of $2.0 Billion of Senior Notes and $700 Million of Junior Subordinated Notes in February 2018
In February 2018, EPO issued $2.7 billion aggregate principal amount of notes comprised of (i) $750 million principal amount of senior notes due February 15, 2021 (“Senior Notes TT”), (ii) $1.25 billion principal amount of senior notes due February 15, 2048 (“Senior Notes UU”) and (iii) $700 million principal amount of junior subordinated notes due February 15, 2078 (“Junior Subordinated Notes F”).
Net proceeds from these offerings were used by EPO for the temporary repayment of amounts outstanding under its commercial paper program, general company purposes, and the expected redemption of all $682.7 million outstanding aggregate principal amount of its 7.034% Junior Subordinated Notes B (the “7.034% Notes”).
Senior Notes TT were issued at 99.946% of their principal amount and have a fixed-rate interest rate of 2.80% per year. Senior Notes UU were issued at 99.865% of their principal amount and have a fixed-rate interest rate of 4.25% per year. Enterprise Products Partners L.P. has guaranteed the senior notes through an unconditional guarantee on an unsecured and unsubordinated basis.
The Junior Subordinated Notes F are redeemable at EPO’s option, in whole or in part, on one or more occasions, on or after February 15, 2028 at 100% of their principal amount, plus any accrued and unpaid interest thereon, and bear interest at a fixed rate of 5.375% per year through February 14, 2028. Beginning February 15, 2028, the Junior Subordinated Notes F will bear interest at a floating rate based on a three-month LIBOR rate plus 2.57%, reset quarterly. Enterprise Products Partners L.P. has guaranteed the Junior Subordinated Notes F through an unconditional guarantee on an unsecured and subordinated basis.
The redemption of the 7.034% Notes and the issuance of the 5.375% Junior Subordinated Notes F will result in annual interest savings to EPO of approximately $11.3 million. On February 1, 2018, EPO notified its trustee and paying agent to redeem all of the $682.7 million outstanding aggregate principal amount of its 7.034% Notes. EPO anticipates that the 7.034% Notes will be redeemed on or about March 5, 2018, in accordance with the terms of the 7.034% Notes, at a price equal to 100% of the principal amount of the notes being redeemed, plus all accrued and unpaid interest thereon to, but not including, the redemption date.
Plans to Build Ethylene Export Dock and Related Projects
In January 2018, we announced the formation of a new 50/50 joint venture with Navigator Holdings Ltd. (“Navigator”) to construct, own and operate an ethylene export facility along the U.S. Gulf Coast. The export facility is expected to have the capacity to export approximately 1 million tons of ethylene per year, with loading rates of approximately 1,000 tons per hour. In addition, the facility is expected to include refrigerated storage for 30,000 tons of ethylene. The project, which is underwritten by long-term contracts with customers, is expected to be completed in the first quarter of 2020. The location and final investment decisions for the terminal are subject to reaching acceptable arrangements with local taxing authorities.
In April 2017, we announced two expansion projects that will further develop our ethylene infrastructure in the Houston, Texas area. First, we plan to repurpose a large, high-capacity ethane storage well at our Mont Belvieu, Texas complex into ethylene storage. Following completion of this project, which is expected in the fourth quarter of 2018, the 5.3 MMBbl cavern will be able to inject/withdraw ethylene at a rate of 210,000 pounds per hour (or approximately 2,000 barrels per hour) and is expandable to 420,000 pounds per hour (or approximately 4,000 barrels per hour). There are eight third party ethylene pipelines within a half-mile of the ethylene storage system, providing significant connectivity opportunities for the high-capacity system.
Further supporting our ethylene capabilities, we also plan to build a 24-mile, 12-inch or larger diameter ethylene pipeline extending from Mont Belvieu to Bayport, Texas. The new pipeline would have the potential to connect both producing and consuming customers located south of the Houston Ship Channel to our facility in Mont Belvieu.