Phillips 66 plans $1.1 billion notes to fund pipeline acquisition

New York, Feb. 17 – Phillips 66 Partners LP plans to sell up to $1.1 billion of senior notes to help fund its acquisition of pipelines from Phillips 66 Co. and Phillips 66 Pipeline LLC, according to a 424B2 filing with the Securities and Exchange Commission.

The timing and size of the senior notes offering will depend on market conditions, the company said.

If Phillips 66 Partners is unable to access the debt markets on acceptable terms, then it will use revolver borrowings or other debt financing transactions instead of the notes offering.

In addition to financing the acquisition, proceeds from the note offering will be used to repay debt, including outstanding loans from its sponsor, Phillips 66 Co.

Phillips 66 Partners will pay $1.01 billion for the pipeline assets, including $880 million in cash and 1,726,914 of Partners’ units.

Closing is expected in early March.

Phillips 66 Partners announced on Tuesday the sale of 5.25 million common units in a public offering via bookrunners Barclays and JPMorgan to raise funds for the acquisition.

As announced on Friday, the assets to be acquired are a 19.46% equity interest in Explorer Pipeline Co., which owns and operates the Explorer pipeline, a 1,830-mile refined petroleum product pipeline running from the Texas Gulf Coast to Indiana that transports gasoline, diesel, fuel oil and jet fuel; a 100% equity interest in Phillips 66 Sand Hills LLC, the owner of a one-third equity interest in DCP Sand Hills Pipeline, LLC, which owns the 720-mile Sand Hills NGL pipeline that transports natural gas liquids from plants in the Permian Basin and Eagle Ford Shale to the Texas Gulf Coast and the Mont Belvieu market hub; and a 100% equity interest in Phillips 66 Southern Hills LLC, the owner of a one-third equity interest in DCP Southern Hills Pipeline, LLC, which owns the 800-mile Southern Hills NGL pipeline that transports natural gas liquids from the Midcontinent region to the Mont Belvieu market hub.

Phillips 66 Partners is a Houston-based company formed in 2013 to own, operate, develop and acquire crude oil, refined petroleum product and natural gas liquids pipelines, terminals and other transportation and midstream assets.

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