SemGroup completes acquisition of Houston Fuel Oil Terminal Company
TULSA, Okla. — SemGroup Corporation announced the closing of its acquisition of Houston Fuel Oil Terminal Company (HFOTCO) from investment funds managed by Alinda Capital Partners. HFOTCO, one of the largest oil terminals in the US, establishes SemGroup’s position in the premier energy market, the Houston Ship Channel, and provides a strategic platform to refinery-facing growth.
The 16.8-MMbbl terminal is strategically located on the US Gulf Coast with crude pipeline delivery connectivity to the local refining complex, deep water marine access and inbound crude receipt pipeline connectivity, as well as rail/truck loading and unloading capabilities from major producing basins.
The assets are located on 330 acres on the Houston Ship Channel, one of the world’s most active trading centers for residual fuel oil, clean products, LPGs and crude oil. The business is supported by take-or-pay contracts with primarily investment-grade counterparties that have been customers for an average of 15 yr. HFOTCO is currently executing on contractually supported growth projects, including a new ship dock, a new pipeline and connections, as well as an additional 1.45 MMbbl of crude oil storage, expected to be in service mid-2018.
In conjunction with the closing of the transaction, SemGroup completed the initial payment, which consisted of a $301 MM cash payment, funded from SemGroup’s revolving credit facility, issuance of 12.4 MM common shares to Alinda, at a predetermined price of $32.30 per share, and the assumption of $761 MM of existing HFOTCO net debt, subject to customary post-closing adjustments. SemGroup will fund the second payment of $600 MM in cash before the end of 2018.
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