PAA Launches Junior Subordinated Notes Offering to Redeem $2.3B of Preferred Units

summarizeSummary

PAA is offering junior subordinated notes due 2056 to redeem all outstanding Series A and Series B preferred units, replacing high-cost preferred equity with long-dated debt.

check_boxKey Events · Financing and Capital Events · PAA

• Junior Subordinated Notes Offering

  PAA is offering Series A and Series B Junior Subordinated Notes due 2056 with fixed-to-fixed reset rates. Series A resets December 15, 2031; Series B resets December 15, 2036.

• Preferred Unit Redemption

  Proceeds will redeem all 58,411,908 Series A Preferred Units at 110% of par ($26.25 per unit) and all 800,000 Series B Preferred Units at 100% of par ($1,000 per unit).

• Interest Deferral Option

  PAA may defer interest payments for up to 20 consecutive semi-annual periods (10 years) per series, with deferred interest compounding semi-annually.

• Capital Structure Simplification

  The redemption eliminates $1.25B of Series A preferred equity and $787M of Series B preferred equity, replacing them with subordinated debt.

auto_awesomeAnalysis · PAA · Energy & Transportation

Plains All American Pipeline is issuing two series of junior subordinated notes due 2056 to fund the redemption of all outstanding Series A and Series B preferred units. The Series A preferred units carry a 9.375% distribution rate and are being redeemed at 110% of par, while the Series B preferred units are being redeemed at par. This refinancing replaces high-cost preferred equity with long-dated subordinated debt, which should reduce the cost of capital and simplify the capital structure. The notes include an optional interest deferral feature of up to 10 years, which provides financial flexibility but also introduces risk for noteholders. The offering is being led by J.P. Morgan, Citigroup, Mizuho, MUFG, and Truist Securities.