Genesis Energy, L.P. Enters into Agreement to Acquire Tronox Limited’s Alkali Business
03 August 2017 - 3:40AM
Business Wire
Genesis Energy, L.P. (NYSE: GEL) today announced that it has
entered into a stock purchase agreement with a subsidiary of Tronox
Limited (“Tronox”) (NYSE:TROX) to acquire all of Tronox’s trona and
trona-based exploring, mining, processing, producing, marketing and
selling business (the “Alkali Business”) for approximately $1,325
million in cash.
The Alkali Business is the world’s largest producer of natural
soda ash, also known as sodium carbonate (Na2CO3), a basic building
block for a number of ubiquitous products, including flat glass,
container glass, dry detergent and a variety of chemicals and other
industrial products. The Alkali Business produces approximately
four million tons of natural soda ash per year, representing
approximately 28% of all the natural soda ash produced in the world
and, based on current production rates, has an estimated reserve
life remaining of over 100 years. Having been in continuous
operations for almost 70 years, it sells its products to a broad,
industry-diverse and worldwide customer base, including numerous
long-term relationships.
In conjunction with the transaction, Genesis has received
binding commitments for the purchase of approximately $750 million
of 8.75% Class A Convertible Preferred Units from investment
vehicles affiliated with KKR Global Infrastructure Investors II,
L.P. (“KKR”) and GSO Capital Partners LP (“GSO”). KKR and GSO will
acquire approximately 22.2 million units at a price of $33.71 per
unit.
The acquisition and the sale of the preferred units are subject
to customary closing conditions, including obtaining regulatory
approvals. The acquisition is expected to close in the second half
of 2017.
Grant E. Sims, the Chief Executive Officer of Genesis,
commented, “The acquisition of Tronox’s Alkali Business is an
exciting growth opportunity for us. We believe the acquisition to
be immediately deleveraging and will provide further
diversification and substantial scale to the partnership.
“The business is a great strategic fit with our current asset
base and shares many characteristics with our existing refinery
services business. It is a market leader with high barriers to
entry, and generates stable and predictable cash flow, with
production sold out each of the last seven years and an estimated
EBITDA for the last twelve month period ending June 30, 2017 of
$166 million.
“We are excited to partner with KKR and GSO, two leading global
investment firms. We believe their investment not only validates
our view of the Alkali Business opportunity but also underscores
the quality of Genesis’ existing diverse asset footprint including
industry-leading positions in multiple businesses.”
Michael Zawadzki, Senior Managing Director and Co-Head of GSO’s
Energy business, stated, “We are delighted to partner with Genesis
on this exciting transaction, which adds another highly strategic
asset with strong cash flow characteristics to the Genesis
portfolio. We believe the acquisition will not only enhance unit
holder value but also strengthen the Company’s balance sheet. We
look forward to working with the Genesis team to help them achieve
their future growth initiatives.”
Brandon Freiman, Member and Head of North American
Infrastructure at KKR, added, “The Genesis management team has a
strong track record of successfully acquiring and integrating
industry-leading businesses into its portfolio. We look forward to
partnering with them on their acquisition of the Alkali business
and supporting their long-term growth.”
A slide presentation supplementing this press release is posted
on the Partnership’s website at
http://genesisenergy.com/investors/presentations/ under “Current
Presentation.”
Genesis Energy, L.P. is a diversified midstream energy master
limited partnership headquartered in Houston, Texas. Genesis’
operations include offshore pipeline transportation, onshore
facilities and transportation, refinery services and marine
transportation. Genesis’ operations are primarily located in Texas,
Louisiana, Arkansas, Mississippi, Alabama, Florida, Wyoming and the
Gulf of Mexico.
This press release includes forward-looking statements as
defined under federal law. Although we believe that our
expectations are based upon reasonable assumptions, we can give no
assurance that our goals will be achieved, including statements
regarding the closing of the acquisition and the expected benefits
of the acquisition. Actual results may vary materially. We
undertake no obligation to publicly update or revise any
forward-looking statement.
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version on businesswire.com: http://www.businesswire.com/news/home/20170802006614/en/
Genesis Energy, L.P.Bob Deere, 713-860-2516Chief Financial
Officer
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