NuStar Logistics, L.P., a subsidiary of publicly traded energy
master limited partnership
NuStar Energy L.P.
), declared pricing of 7.625% fixed-to-floating rate subordinated
notes due 2043 worth $350 million. NuStar offered a 30-day option
to underwriters to purchase additional notes worth $52.5 million
by exercising their full over-allotment option.
The public offering, excluding underwriter allotment, will fetch
approximately $340.6 million. The net proceeds from this offering
will be utilized by the partnership to reduce debt under its
revolving credit facility and for other partnership purposes.
NuStar may re-borrow the same to pay for a part of the purchase
price of TexStar NGL assets or growth capital related to the
TexStar Midstream Services LP acquisition.
NuStar expects the proceedings to be complete on January 22,
2013, subject to the fulfillment of customary closing conditions.
San Antonio, Texas-based NuStar Energy engages in the
transportation and storage of crude oil as well as refined
products in the U.S., the Netherlands Antilles, Canada, Mexico,
and the U.K. The company has three business segments: Storage,
Transportation and Asphalt and Fuels Marketing.
NuStar, which was spun off from the U.S. refiner
Valero Energy Corp.
) in 2006, currently retains a Zacks Rank #3 (Hold).
Over the last few years, NuStar has consolidated its business
through a combination of organic efforts and accretive
acquisitions. However, we believe the higher operating expenses
associated with this expanded asset base may lead to reduced
returns going forward.
We also remain concerned about NuStar's high debt levels, which
leave the partnership vulnerable to an extended downturn. As of
September 30, 2012, NuStar had long-term debt (including current
portion) of more than $2 billion, representing a
debt-to-capitalization ratio of around 43%.
NUSTAR ENERGY (NS): Free Stock Analysis
VALERO ENERGY (VLO): Free Stock Analysis
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