Under the terms of the acquisition, NTR will pay cash consideration of $286.5 million. In addition, NTR will acquire inventory and other net working capital of Kern at the time of closing, currently estimated by the seller to be $35 million. The acquisition, which was unanimously approved by NTR’s board of directors, is subject to NTR shareholder approval, applicable regulatory approvals and other customary closing conditions. NTR anticipates completing the transaction in the first quarter of 2008.
In connection with this acquisition, Occidental Petroleum has agreed to make a $35 million investment in NTR in the form of a convertible preferred security. Occidental, currently a crude oil supplier to Kern has significant oil production operations in California.
Mario Rodriguez, CEO of NTR, said: Kern provides an ideal platform for NTR to execute its business plan with the availability of heavy crude oil, reliable operations and an experienced management team. Working closely with Kern management, we have already identified strategic initiatives to expand the conversion capacity of the refinery and to improve its product yield, which represent exciting growth opportunities in the short and long term.
We are pleased to have agreed to our first acquisition within nine months of our IPO and we look forward to capitalizing on additional acquisition opportunities that, like Kern, fit within our stated investment criteria. In addition, our partnership with Occidental Petroleum will help us build on Kern’s success.
