Chemtrade Logistics Income Fund Announces $125 Million Reopening of Senior Unsecured Notes
Monday, Jan 13, 2025 9:45 pm ET
1min read Chemtrade Logistics Income Fund (TSX: CHE.UN) has announced the pricing of a $125 million reopening of senior unsecured notes by its wholly-owned subsidiary, Chemtrade Logistics Inc. The notes, which are due in 2029, will be issued at a price of $1,002.50 per $1,000 principal amount, with a yield to call of 6.294%. The net proceeds from the offering will be used to reduce indebtedness and for general corporate purposes.
Chemtrade's decision to reopen its senior unsecured notes offering comes on the heels of robust cash flow generation and a strengthened balance sheet in the second half of 2024. The company has also recently increased its monthly distribution by approximately 5% to 5.75 cents per month, effective with the distribution that will be paid on January 15, 2025. This increase reflects Chemtrade's confidence in its improved financial performance and cash flow generation.
The reopening of the offering provides Chemtrade with additional balance sheet flexibility and opportunities to optimize its capital structure and reduce outstanding convertible debt. The company has successfully managed its debt levels through senior note offerings and debt redemptions, ultimately reducing its net debt to Adjusted EBITDA ratio and improving its financial health.
Chemtrade's long-term objectives include delivering sustainable earnings growth and generating value for investors. The use of proceeds from the offering for general corporate purposes aligns with these objectives, as it allows the company to invest in organic growth initiatives and potential mergers and acquisitions that fit strategically within its portfolio and have synergistic value.
In conclusion, Chemtrade Logistics Income Fund's $125 million reopening of senior unsecured notes demonstrates the company's commitment to optimizing its capital structure and reducing debt levels. The offering comes at a time of improved financial performance and cash flow generation, and the proceeds will be used to reduce indebtedness and fund general corporate purposes, ultimately supporting Chemtrade's long-term objectives.
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