Gibson Energy Inc. ("Gibsons" or the "Company"), (TSX:GEI), announced today that it has entered into an agreement to sell its Industrial Propane Business for cash consideration of $412 million to Superior Plus LP ("Superior").
The sale will be completed through a series of transactions. Pursuant to an option purchase agreement, dated February 13, 2017, subject to the fulfilment of customary conditions, Gibsons and Superior are obligated to complete the initial transaction pursuant to which Superior pays non-refundable cash consideration of $412 million and Gibsons grants an irrevocable option (the "Option") to Superior to acquire 100% of the partnership units and shares (the "Securities") of the Canwest and Stittco businesses.
The cash payment of $412 million is expected to be received by Gibsons, concurrent with the granting of the Option, no later than April 3, 2017. Following granting of the Option by Gibsons, closing risk transfers to Superior. Upon exercise of the Option by Superior, and receipt of regulatory approvals, the Securities will be transferred to Superior for nominal consideration.
Gibsons will continue to operate the business under the direction of the current management team, with no disruption to its employee base and customer service levels, until the final closing of the divestiture, which is expected to occur no later than the fourth quarter of 2017.
As part of the sale, Superior has agreed to 5-year wholesale supply and truck transportation agreements that offer Gibsons an ability to continue procuring propane volumes for Canwest and Stittco and provide bulk delivery rights to the associated branch distribution locations.
"We are pleased with the outcome of this transaction, highlighted by the attractive sales proceeds which we believe fully value the underlying business, and the wholesale supply and transportation agreements which offer cash flow support to our Wholesale and Logistics operations. Importantly, this transaction accelerates the strategic shift of our Company, which has been advancing over the past couple of years through our concentrated deployment of capital into the Infrastructure segment, and will result in Gibsons becoming a more focused, integrated midstream operator," said Stewart Hanlon, Gibsons' President and Chief Executive Officer. "The transaction will allow us to strengthen our capital structure through debt reduction and will enable us to support previously announced 2017 and 2018 capital programs within our Infrastructure business."
Source: Gibson Energy Inc.
Date: Feb 13, 2017