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TD Bank, CIBC Provide $400MM to Support Superior Plus Acquisition of NGL Energy Partners

May 31, 2018, 08:00 AM
Filed Under: Energy

Superior Plus Corp. announced that it has entered into an agreement with NGL Energy Partners LP to acquire all of the outstanding equity interest in NGL Propane, LLC, NGL Energy’s retail propane distribution business, for total cash consideration of $900 million subject to customary closing adjustments.

“The acquisition of NGL Propane is a highly strategic and transformative transaction for Superior and represents an exciting opportunity to leverage our current core competencies and integrated supply capacities with NGL Propane’s strong Eastern U.S. retail platform,” said Luc Desjardins, CEO of Superior. “The acquisition of NGL Propane significantly expands our U.S. propane distribution business and solidifies Superior as a leading North American propane distributor. I am looking forward to working with the management and employees of NGL Propane and the many brands it operates under.”
NGL Propane sells propane and distillates to over 316,000 residential, commercial and industrial customers. NGL Propane, with over 1,000 employees in 151 locations (including 61 satellite distribution locations) and a fleet in excess of 1,000 trucks, services 22 states in the Northeast U.S., Southeast U.S. and Upper Midwest U.S. NGL Propane, trades under prominent regional brands, including Osterman Propane, Downeast Energy, Eastern Propane, Atlantic Propane, Anthem Propane, Gas Inc. and Brantley Gas.

During the twelve months ended March 31, 2018, NGL Propane sold approximately 182 million gallons of fuel generating approximately US$85 million (Cdn$111 million) in Adjusted EBITDA4. On a normalized basis, including contributions from acquisitions completed during the year Adjusted EBITDA would have been approximately US$90 million5 (Cdn$117 million). With estimated run-rate synergies of approximately US$20-25 million (Cdn$26-32 million), the Transaction is expected to be double digit accretive to AOCF on a run-rate basis6.

Closing of the Transaction, which is expected to occur in Q3 2018, is subject to customary closing conditions, including antitrust approvals in the United States. The Transaction is not subject to any due diligence or financing conditions.

In conjunction with the Transaction, Superior also announced that it has entered into an agreement with a syndicate of underwriters co-led by TD Securities Inc. and CIBC Capital Markets to issue, on a bought deal basis, approximately Cdn$400 million of subscription receipts to finance a portion of the purchase price in respect of the Transaction (the “Offering”) with the remainder being financed with a combination of a draw on Superior's revolver and a senior secured bridge credit facility.

In order to finance a portion of the purchase price in respect of the Transaction, Superior has entered into an agreement with a syndicate of underwriters (the “Underwriters”) co-led by TD Securities Inc. and CIBC Capital Markets to sell 32,000,000 Subscription Receipts on a bought deal basis.

Each Subscription Receipt represents the right of the holder to receive, upon closing of the Transaction, without payment of additional consideration, one common share of Superior plus an amount per common share equal to the amount per common share of Superior of any dividends for which record dates have occurred during the period from the closing date of the Offering to the date immediately preceding the closing date of the Transaction, less withholding taxes, if any.

On or before June 1, 2018, Superior will file with the securities commissions or other similar regulatory authorities in each of the provinces and territories of Canada, a prospectus supplement to Superior’s short form base shelf prospectus relating to the issuance of the Subscription Receipts. Closing of the Offering is expected to occur on or about June 8, 2018, subject to TSX and other necessary regulatory approvals. The net proceeds from the Offering will be used to finance, in part, the Transaction once the proceeds are released from escrow.
In order to finance the remainder of the Transaction, Superior’s wholly owned subsidiaries, Superior Plus US Financing Inc. and Superior Plus LP , have entered into a commitment letter with The Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, pursuant to which such lenders have committed, subject to customary conditions, to provide a $400 million 12-month senior secured bridge credit facility. For the remainder, Superior intends to draw on its current revolving credit facilities. Superior is also considering implementing longer term debt financing alternatives.
TD Securities Inc. and CIBC Capital Markets are acting as financial advisors to Superior. Orrick, Herrington & Sutcliffe LLP and Torys LLP are acting as legal counsel to Superior.

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