DT Midstream, Inc. (NYSE:DTM), a natural gas transmission company, has entered into an amendment of its existing credit agreement, as disclosed in a recent 8-K filing with the U.S. Securities and Exchange Commission. The amendment, made on November 25, 2024, allows the company to secure additional bridge loans to fund its acquisition of Guardian Pipeline, L.L.C., Midwestern Gas Transmission Company, and Viking Gas Transmission Company.
The Amendment No. 3 to the Credit Agreement modifies the debt covenant to enable DT Midstream to incur bridge loans, including a $700 million 364-day bridge loan facility from Barclays (LON:BARC) Bank PLC. As of the filing date, DT Midstream has $293.7 million in commitments under the bridge loan facility. This strategic move is part of the company's efforts to expand its asset portfolio and strengthen its position in the natural gas transmission sector.
The credit agreement, originally dated June 10, 2021, involves the company as the borrower, various lenders, and Barclays Bank PLC as the administrative and collateral agent. The recent amendment is a testament to DT Midstream's proactive financial management as it seeks to ensure adequate funding for its growth initiatives.
In other recent news, DT Midstream has been the subject of several significant developments. The company's recent acquisition of three natural gas pipelines from ONEOK (NYSE:OKE), Inc. for $1.2 billion, is expected to significantly enhance its business profile. The deal, which includes the Guardian Pipeline, Midwestern Gas Transmission, and Viking Gas Transmission, is slated to close between late 2024 and early 2025.
Citi has upgraded DT Midstream's stock from Neutral to Buy, following the announcement of the acquisition. The firm sees this strategic move as a potential model for future deals that could expand DT Midstream's size and close the valuation gap with its peers. The acquisition is also expected to result in an approximate 4% accretion to distributable cash flow per share and around an 8% accretion to earnings before interest, taxes, depreciation, and amortization per share.
Goldman Sachs (NYSE:GS), on the other hand, has revised its price target for DT Midstream to $74, while maintaining a sell rating. This adjustment follows DT Midstream's recent third-quarter results, which revealed improved gathering margins that balanced weaker pipeline contributions. DT Midstream has also increased its adjusted EBITDA guidance for 2024 to a range of $950 million to $980 million.
In addition to these developments, DT Midstream is exploring new power and data center opportunities, with six potential projects currently under discussion. These are recent developments that investors should be aware of as they consider the company's future growth prospects.
InvestingPro Insights
DT Midstream's recent credit agreement amendment aligns with its strong financial performance and growth trajectory. According to InvestingPro data, the company boasts a market capitalization of $10.71 billion and has demonstrated impressive revenue growth of 5.97% over the last twelve months as of Q3 2024. This growth is complemented by a robust operating income margin of 50.82%, highlighting DT Midstream's operational efficiency.
InvestingPro Tips reveal that DT Midstream has raised its dividend for 4 consecutive years, with a current dividend yield of 2.75%. This consistent dividend growth, coupled with the company's strong return over the last year, suggests a commitment to shareholder value that may be attractive to income-focused investors.
The company's stock performance has been particularly noteworthy, with a 96.19% price total return over the past year and a substantial 101.37% return year-to-date. These figures indicate significant market confidence in DT Midstream's strategic direction, including its recent acquisition plans.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on DT Midstream, providing deeper insights into the company's financial health and market position.
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