Hess Midstream LP Announces Signing Of Accretive $100M Sponsor Unit Repurchase
Portfolio Pulse from Benzinga Newsdesk
Hess Midstream LP (HESM) has announced a definitive agreement to repurchase $100 million of Class B units from its sponsors, Hess Corporation and Global Infrastructure Partners. The repurchase will reduce the total unit count by approximately 20% and is expected to provide immediate accretion to shareholders. The transaction, which will be funded through borrowings, is expected to close on November 16, 2023, and will result in increased distributable cash flow per Class A share, supporting distribution growth above the annual target of at least 5% through 2025.
November 14, 2023 | 1:21 pm
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Hess Midstream's $100M unit repurchase from its sponsors is expected to be accretive to shareholders, reducing total unit count by 20% and increasing distributable cash flow per Class A share.
The repurchase of units is typically seen as a positive signal to the market, indicating that the company believes its stock is undervalued and is confident in its financial position. The reduction in the total unit count should increase the value of the remaining shares, and the expectation of increased distributable cash flow per share is likely to be viewed favorably by investors. The funding of the repurchase through borrowings does not seem to raise immediate concerns, given the company's statement of maintaining financial flexibility through 2025.
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