Magnum owns and operates a natural gas liquids storage facility with multiple existing salt caverns and a potential capacity of greater than 10 million barrels. The facility is strategically located southwest of Salt Lake City, Utah with rail and truck access to Western U.S. markets. This acquisition will enhance NGL’s existing asset footprint to better support Western U.S customers, while increasing the Partnership’s fee-based revenue stream from current and future contracts on the facility.
The definitive agreement contemplates the purchase of Magnum NGLs, LLC on a debt-free basis for a purchase price of $280 million plus working capital adjustments at closing. The transaction is fully-financed and will be paid through a combination of $80 million cash and $200 million in NGL Common Units issued to seller and subject to certain lock-up provisions. The transaction is expected to be DCF neutral in the first year and significantly accretive to NGL’s DCF / LP unit thereafter, with an EBITDA multiple expected to be 7.1x in FY2017. The consummation of the transaction is subject to customary closing conditions and is expected to close in the first quarter of 2015.
RBC Capital Markets LLC is serving as the exclusive financial advisor to NGL and McGrath North Mullin & Kratz, PC LLO and Winston & Strawn LLP are serving as NGL’s legal counsel in connection with this transaction.
Simmons & Company International is serving as the exclusive financial advisor to Magnum Development and Haddington Ventures and King & Spalding is serving as their legal counsel in connection with this transaction.
