NGL Energy Partners has signed a definitive agreement to sell retail propane distribution business, NGL Propane, to Canadian specialty chemicals firm Superior Plus for $900m.


Image: NGL intends to sell retail propane business to simplify its operations. Photo: Photo by rawpixel on Unsplash.

NGL Propane, which employees over 1,000 people in 151 locations including 61 satellite distribution locations, sells propane and distillates to over 316,000 residential, commercial and industrial customers.

The firm operates a fleet in excess of 1,000 trucks, services 22 states in the Northeast US, Southeast US and Upper Midwest US.

NGL Propane is traded under regional brands including Osterman Propane, Downeast Energy, Eastern Propane, Atlantic Propane, Anthem Propane, Gas Inc. and Brantley Gas.

Under the terms of the deal, NGL Energy will sell all of its remaining retail propane business to a subsidiary of Superior Plus.

Proceeds from the sale will be used by NGL to invest in its primary growth platforms Water Solutions and Crude Logistics. It will also be used to significantly reduce leverage and enhance liquidity.

The sale is part of NGL’s plan to simplify its operations by narrowing its business lines to four segments.

NGL CEO Mike Krimbill said: “Retail Propane has been a stable asset for NGL and has grown through bolt-on acquisitions over time, but it is not a growth driver for the Partnership in the future.”

Scheduled to be completed in Q3 2018, the transaction is subject to customary closing conditions, including antitrust approvals in the US.

Superior CEO Luc Desjardins said: “The acquisition of NGL Propane significantly expands our U.S. propane distribution business and solidifies Superior as a leading North American propane distributor.”

The transaction is expected to help in significantly reducing the seasonality and weather-dependency of NGL’s earnings.

NGL Energy Partners CFO Trey Karlovich said: “The recent divestitures of all of the Partnership’s retail propane assets generated over $1.1bn of gross cash proceeds, which equates to a 2018 EBITDA multiple of over 10x.

“The energy infrastructure investor base is calling for a self-funding model and this sale transaction strengthens our balance sheet and allows us to fund all of our near-term internal growth prospects without relying on the equity or debt capital markets.”