Buckeye Partners L.P. (BPL - Analyst Report) announced that it will issue 6,000,000 limited partnership ("LP") units priced at $52.54 per unit to refinance the outstanding debt under its revolving credit facility. The partnership also granted the underwriters the option to purchase up to 900,000 supplementary LP units.
Buckeye Partners has been a major operator in the pipeline business and has occasionally engaged in the issuance of units. In 2011, the company publicly offered to sell 4,800,000 LP units pricing them each at $59.41 with an option given to the underwriters to purchase up to 720,000 units.
The offering was made due to the increasing long-term debt of the company, which rose 12% year over year to $2,672.7 million at the end of the third quarter 2012. The cash balance also declined a substantial 77.2% to $2.9 million at the end of the third quarter 2012.
The partnership’s high quality stake acquisition in the WesPac Pipelines–Memphis LLC, the Perth Amboy terminal project and Bahamas Oil Refining Company International (BORCO) facility are expected to be key draws in the near term. The partnership’s consistent cash distribution of $1.0375 per unit will further make its stock attractive to unit holders.
Conversely, Buckeye Partners’ operations are widely exposed to weather irregularities and unplanned outages which often lead to cost pressure thereby impacting margins. These possibilities are reflected in the partnership’s Zacks Rank #3 (Hold).
Within the past three months other partnership pipeline stocks which have offered units to the public include MarkWest Energy Partners L.P. (MWE - Analyst Report), NuStar Energy L.P. (NS - Analyst Report) and Atlas Pipeline Partners L.P. (APL - Snapshot Report).
Based in Houston Texas, Buckeye Partners, L.P. owns and operates refined petroleum products pipeline systems in the United States. It’s Pipelines and Terminals segment transports refined petroleum products and provides bulk storage and terminal throughput services in the continental United States.