Under the terms of the Agreement, Trecora will sell its 33.3% equity interests in AMAK for $70 million
Trecora Resources (“Trecora” or the “Company”) (NYSE: TREC), a leading provider of specialty hydrocarbons and waxes, today announced that it has entered into a definitive share sale and purchase agreement (“Agreement”) with certain existing shareholders of Saudi Arabian closed joint stock company, Al Masane Al Kobra Mining Company (“AMAK”), who will acquire Trecora’s entire equity interest in AMAK. AMAK itself will also participate in this transaction through its share repurchase authorization program. Under the terms of the Agreement, Trecora will sell its 33.3% equity interests in AMAK for $70 million. Trecora expects to receive net proceeds of approximately $60 million in cash, net of both US and Saudi taxes, as well as transaction expenses. The consideration will be payable in US Dollars.
This transaction, which has no financing conditions, is subject to government approvals and closing conditions, and is targeted to close in the fourth quarter 2019, assuming receipt of all necessary government approvals. Trecora has received a 5% non-refundable deposit of $3.5 million from the purchasers.
“We are pleased to achieve this important strategic milestone and fulfill our longstanding commitment to deliver significant shareholder value, through the sale of our AMAK ownership. AMAK has been a meaningful but non-core asset for many years. Over the past two years, AMAK has accomplished significant operational restructuring and upgrades thus greatly enhancing its value, and allowing for a transaction that we believe achieves a good outcome for all shareholders,” said Pat Quarles, Trecora’s President and Chief Executive Officer.
Sami Ahmad, Trecora’s Chief Financial Officer stated, “Trecora intends to use the proceeds from the transaction in accordance with its disciplined capital allocation strategy. The approximately $60 million of net proceeds to be received will allow us to accelerate debt reduction thus substantially strengthening our balance sheet. Additionally, we are exploring options to use remaining proceeds to fund share repurchases, targeted growth opportunities as well as general corporate purposes.”
Mr. Quarles concluded, “Our priorities to deliver improved results and enhanced shareholder return remains unchanged: improved safety performance, reliable operations, productivity improvements and capturing additional value from our commercial activities. The completion of this transaction will enable us to fully focus on our operating businesses with a stronger balance sheet and greater financial flexibility. In addition, the Company will now have more opportunities to maximize both growth and long-term shareholder value. Trecora will provide an update on the transaction during the third quarter 2019 earnings call, which is expected to be held in early November.”
In connection with the transaction, Citi acted as financial advisors to Trecora and Baker & McKenzie LLP acted as legal counsel.
Source: Company Press Release