EnLink Midstream amends credit terms and prepares for equity deal with ONEOK By Investing.com

EnLink Midstream, LLC (NYSE:ENLC), a leader in natural gas transmission, announced significant financial developments on Monday. On September 12, 2024, EnLink entered into a credit agreement amendment that makes material adjustments to the existing credit terms. This amendment allows for up to $500 million of obligations under EnLink’s accounts receivable securitization facility to be excluded from the leverage ratio calculation.

In addition, the amendment to the change of control provisions applies by recognizing ONEOK, Inc. and its subsidiaries as qualified owners. This means that ONEOK’s new acquisition of equity interests in EnLink and its managing member will not trigger a change of control for the purposes of the Credit Agreement.

In parallel with the Acquisition, EnLink has notified the GIP Entities of its decision to terminate the Share Repurchase Agreement effective October 2, 2024. This termination will enable EnLink to repurchase Common Units from the GIP Entities consistent with Common Unit repurchase activities in the third quarter of 2024.

These strategic financial actions are part of EnLink’s comprehensive efforts to optimize its financial structure and prepare for the upcoming equity transaction with ONEOK, which will reshape the Company’s ownership structure.

In other recent news, EnLink Midstream has seen a number of significant developments in its corporate structure and financial performance. ONEOK, Inc. has agreed to acquire Global Infrastructure Partners’ controlling interest in EnLink Midstream. This deal includes the acquisition of all equity interests in both EnLink Midstream and its subsidiaries. The transaction, expected to close in late 2024, marks a significant expansion of ONEOK’s midstream services.

Concurrently, EnLink Midstream entered into an agreement for a public offering of $500 million of senior notes guaranteed by its subsidiary EnLink Midstream Partners, LP. The proceeds from this offering are to be used for general corporate purposes, including the repayment of indebtedness.

In terms of financial performance, EnLink Midstream reported a strong second quarter of 2024 with adjusted EBITDA of $306 million and a $50 million share repurchase.

On the analyst side, EnLink Midstream stock was downgraded from Overweight to Equalweight by both Morgan Stanley and Wells Fargo, with a price target of $15.00. These changes come amid expectations of a takeover bid for EnLink Midstream, estimated at approximately $14.90 per share in the first quarter of 2025.

InvestingPro Insights

As EnLink Midstream, LLC (NYSE:ENLC) navigates through these recent financial developments, real-time data from InvestingPro offers insights into the company’s current market position. With a market capitalization of $6.74 billion, EnLink trades at a high earnings multiple, with a price-to-earnings (P/E) ratio of 45.34 and an adjusted P/E for the trailing twelve months to Q2 2024 of 39.15. This suggests that the market has high expectations for the company’s future earnings growth. In addition, the price-to-book ratio is at 7.35, suggesting that the stock is trading at a premium to the book value of assets.

InvestingPro Tips highlights that EnLink’s share price movements have been quite volatile, consistent with the stock trading near its 52-week high, at 99.19% of that peak. This volatility could be of concern to investors looking for short-term trading opportunities or concerned about market timing. Despite a -14.01% decline in revenue over the trailing twelve months to Q2 2024, EnLink has maintained dividend payments for 11 consecutive years, with a current dividend yield of 3.65% and dividend growth of 6.0%. This commitment to creating value for shareholders could be a reassuring factor for income-seeking investors.

For those interested in deeper analysis, additional InvestingPro Tips are available on Investing.com Pro, which provide further guidance on the company’s financial health and investment potential.

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