Sprague acquires two refined product terminals on Long Island
PORTSMOUTH, NH – Sprague Resources LP announced that its operating subsidiary, Sprague Operating Resources LLC, has signed a definitive agreement to purchase the Lawrence and Inwood, NY refined product terminal assets of Carbo Industries, Inc. and Carbo Realty, L.L.C.
Sprague will pay total consideration of approximately $70 million, plus payments for inventory and other customary items. The consideration is comprised of approximately $30 million of SRLP units to be issued at closing, $10 million in cash paid at closing and the balance in cash, paid ratably over ten years.
The Carbo terminals are located in Inwood and Lawrence, NY, with a combined gasoline, ethanol and distillate storage capacity of 157,000 barrels. The terminals are supplied primarily by pipeline, and also have the ability to accept product deliveries by barge and truck.
Located next to the region’s major transportation networks, Carbo provides the storage, blending and additive injection capabilities to serve major branded gasoline marketers, as well as unbranded gasoline/distillate marketers focused on the New York City and Long Island markets, in addition to functioning as a key pillar of Sprague’s extensive service to New York’s governmental/municipal transportation fuel users and heating oil retailers. The Carbo transaction is expected to be accretive to distributable cash flow and generate approximately $8 to $10 million of adjusted EBITDA annually.
“I am excited to announce our fourth acquisition of 2017,” said David Glendon, President and CEO of Sprague. “The Carbo facilities have long been an integral component of our distribution network and we’re thrilled to convert our position from tenant to owner in this critical location, further solidifying our status as one of New York’s premier refined products terminal operators and marketers. I’m also pleased that Cliff Hochhauser, who has been central to Carbo’s success, will be joining Sprague and continuing to lead operations at these facilities.”
Sprague intends to fund the transaction with borrowings from its senior secured credit facility; closing is expected to occur in the second quarter.
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