Ferrellgas Partners L.P
) along with its subsidiaries has decided to raise funds through
the issue of senior notes. The funds will be raised through a
private placement of $325 million 6.25% senior notes due in 2022.
The partnership expects to close the issue of notes by Nov 4,
2013, subject to customary closing conditions.
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Ferrellgas intends to utilize the proceeds from the new notes to
repay its $300 million 9.125% notes due in 2017. The partnership
also expects to utilize the balance to partially repay amounts
outstanding under the revolving credit facility, and to pay
related costs and expenses.
This is a smart move by the partnership to lower its interest
burden. It gives the partnership the cushion to recycle the funds
in its business for a longer period. The financial strength of
the partnership will enable it to easily meet the annual interest
burden of $20.3 million resulting from the new issue.
The rating agency Moody's Investors Service assigned a B2 rating
to Ferrellgas' proposed $325 million senior unsecured notes due
2022. The rating agency retained Ferrellgas' other ratings along
with a stable outlook.
Ferrellgas Partners is working on enhancing its business through
strategic acquisitions. The partnership has already completed
several acquisitions in fiscal 2013 and continues to reap the
benefits from an acquisition-based growth strategy. We expect the
contribution from the acquired assets will aid the partnership to
report earnings in the green going forward.
Ferrellgas Partners has a Zacks Rank #3 (Hold). Other operators
in the sector that are performing well and have a Zacks Rank #2
Phillips 66 Partners L.P.
Piedmont Natural Gas Co. Inc.