NGL Energy Partners LP (NYSE:NGL) today announced that it has entered
into an agreement with an affiliate of ArcLight Capital Partners
(“ArcLight”) to sell TransMontaigne GP LLC (“TLPGP”) for $350 million in
cash. TLPGP is the general partner of TransMontaigne Partners L.P.
(“TLP”) and holds the 2% general partner (“GP”) interest and incentive
distribution rights (“IDRs”) of TLP. NGL expects to close the
transaction by the end of January 2016 and will use the cash proceeds to
repay borrowings outstanding on its revolving credit facility.
Mike Krimbill, CEO of NGL Energy Partners stated: “I believe this is a
very positive transaction for both NGL and ArcLight. NGL will remain the
long-term exclusive tenant in the TLP Southeast terminal system and we
look forward to our ongoing partnership with ArcLight. ArcLight has been
great to work with and NGL will enter into certain commercial
transactions with, as well as provide various transition services for,
“We are excited to acquire a leading refined products platform that is
complementary to our recent activity in the refined product storage and
logistics segment,” said Dan Revers, Managing Partner and co-founder of
ArcLight. “The acquisition of TransMontaigne GP will mark the fourth
major refined product terminals acquisition in the last twelve months
and is emblematic of a concerted strategy to acquire and develop
infrastructure along the refined products value chain. We are also
pleased to continue the long-term relationship with NGL as a significant
customer and look forward to expanding the relationship as we grow the
The TransMontaigne marketing business is a significant part of NGL’s
refined products business (and will remain with NGL) uninterrupted by
this transaction. NGL will retain TransMontaigne Product Services LLC,
its customer contracts and its line space on the Colonial and Plantation
With respect to the impact on NGL’s EBITDA, the transaction results in
an increase of an estimated $20 million annually from cost reductions
and revenue enhancements. NGL will no longer receive $7.6 million of
distributions associated with the IDRs and GP interest it owns in TLP,
resulting in a net increase of about $12 million going forward.
NGL will retain approximately 3.2 million common units it owns in TLP
and has granted an option to ArcLight to purchase 800,000 of those
common units at a future date.
Mike Krimbill added: “Within a 75-day period, NGL will have reduced
capital requirements by approximately $200 million through the
previously announced Grand Mesa / Saddlehorn transaction, and raised
$350 million in cash in this transaction, while generating additional
EBITDA and DCF. These recent actions provide many benefits to NGL and
position it to successfully execute its growth plans in what continues
to be a challenging market environment for MLPs.”
The net sale proceeds fund NGL’s growth capital expenditures for the
next 18 months, and therefore, NGL does not expect to access the debt
and equity capital markets to provide such growth capital.
The net proceeds from this transaction will significantly reduce
leverage and increase liquidity.
NGL can reduce leverage further through the sale of its approximately
3.2 million TLP common units.
NGL has no significant debt maturities until the fourth calendar
quarter of 2018.
Beginning in the 4th calendar quarter of 2016, NGL
anticipates significant additional EBITDA from its Grand Mesa pipeline
project, which will further strengthen NGL’s credit profile and
enhance unitholder value.
In conclusion, this transaction positions NGL to complete its growth
projects at an attractive cost of capital, reduce leverage, bridge to
the Grand Mesa pipeline in-service date and continue paying its $2.56
annual common unit distribution.
UBS Investment Bank is serving as NGL’s financial advisor and Winston &
Strawn LLP is serving as NGL’s legal counsel.
BofA Merrill Lynch is serving as the exclusive financial advisor to
ArcLight and Andrews Kurth, LP is serving as the exclusive legal advisor
About NGL Energy Partners LP
NGL Energy Partners LP is a Delaware limited partnership. NGL owns and
operates a vertically integrated energy business with five primary
businesses: crude oil logistics, water solutions, liquids, retail
propane and refined products and renewables. For further information
visit NGL’s website at www.nglenergypartners.com.
About ArcLight Capital Partners
ArcLight is one of the leading private equity firms focused on North
American and Western European energy assets. Since its establishment in
2001, ArcLight has invested over $13.9 billion across multiple energy
cycles in more than 90 investments. Headquartered in Boston, MA with an
additional office in Luxembourg, the firm’s investment team brings
extensive energy expertise, industry relationships and specialized value
creation capabilities to its portfolio. More information about ArcLight,
as well as a complete list of ArcLight’s portfolio companies, can be
found at http://arclightcapital.com.
This press release includes “forward-looking statements.” All statements
other than statements of historical facts included or incorporated
herein may constitute forward-looking statements. Actual results could
vary significantly from those expressed or implied in such statements
and are subject to a number of risks and uncertainties. While NGL
believes its expectations as reflected in the forward-looking statements
are reasonable, NGL can give no assurance that such expectations will
prove to be correct. The forward-looking statements involve risks and
uncertainties that affect operations, financial performance, and other
factors as discussed in filings with the Securities and Exchange
Commission. Other factors that could impact any forward-looking
statements are those risks described in NGL’s annual report on Form
10-K, quarterly reports on Form 10-Q, and other filings with the
Securities and Exchange Commission. You are urged to carefully review
and consider the cautionary statements and other disclosures made in
those filings, specifically those under the heading “Risk Factors.” NGL
undertakes no obligation to publicly update or revise any
forward-looking statements except as required by law.
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