NGL Energy Partners will use the proceeds from the sale to reduce debt under the partnership’s revolving credit facility
Image: NGL Energy Partners sells TransMontaigne Product Services. Photo: Courtesy of Markus Naujoks/Pixabay
NGL Energy Partners has completed the sale of its TransMontaigne Product Services (TPSL) and associated assets to a strategic partner for $275.5m (£224m).
The sale was announced in August this year, when the proceeds were estimated to be about $300m (£244m).
NGL also monetised about $15.6m (£12.7m) in derivative assets associated with the business and reduced letter of credit exposure by about $35.6m (£29m).
The transaction included equity consideration, inventory and net working capital, which was based on the values calculated in June.
NGL said that it will use the net proceeds from the sale and monetisation of derivatives to reduce its debt under the Partnership’s revolving credit facility.
NGL claims that TPSL makes up a portion of its refined products reporting segment. The divested assets include TPSL Terminaling Services Agreement with TransMontaigne Partners, including the exclusive rights to use 18 terminals, line space along colonial and plantation pipelines, two wholly-owned refined products terminals in Georgia and multiple third-party throughput agreements, and all associated customer contracts, inventory and other working capital associated with the assets.
NGL will continue to focus on its core areas
When the deal was announced in August, NGL Energy Partners CEO Mike Krimbill said: “NGL continues to focus on its core areas where we have competitive strength. These focus areas generate stable and predictable cash flows as we grow our mix of long-term contracted revenues. The sale of TPSL is part of this strategy and a result of the strategic review of the Refined Products business announced earlier this year.
“Along with the significant reduction in inventory and working capital associated with this business, this transaction reduces borrowings on our working capital revolver and enhances the Partnership’s liquidity and overall leverage profile. Managing our leverage and cost of capital are fundamental to our business strategy as we continue our strategic growth plan while maintaining focus on a strong balance sheet.”
TD Securities (USA) and Credit Suisse Securities (USA) acted as financial advisors, and Winston & Strawn provided legal counsel to NGL.
Last month, NGL Energy Partners signed an agreement to acquire Hillstone Environmental Partners from Golden Gate Capital for about $600m.
Hillstone offers water pipeline and disposal infrastructure solutions to producers with a core operational focus in the state line area of southern Eddy and Lea Counties, New Mexico and northern Loving County, Texas, in the Delaware Basin.