Martin Midstream Partners (ticker: MMLP) announced yesterday that it entered into an agreement to sell six liquefied natural gas barges for a total price of $41.25 million. MMLP has decided to exit the natural gas liquids floating storage and trans-loading business. The company purchased the six barges in 2013 when it entered the floating storage and loading business.
All proceeds from the divestiture will be used to repay outstanding debt on the company’s revolving credit facility. In addition to helping pay down debt on the credit facility, MMLP’s management expects the sale to have a positive impact on the distributable cash flow. The barges, which were part of the Natural Gas Services segment as floating storage, generated negative cash flow in 2014.
Based on information from EnerCom’s MLP Weekly, Martin Midstream Partners’ Q3 2014 debt was $910 million. The company has an above average distribution yield of 10.8% with the average yield of the 55 MLPs covered being 6.5%. The company also has strong cash flow from operations with $1.51 of free cash flow per unit as compared to the average of -$0.05 of free cash flow per unit for the 55 company group.
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