Blueknight Energy Partners is paying $32.5m for two asphalt terminals in Bainbridge, GA, and Muskogee, OK. The Bainbridge facility will be acquired from Ergon Asphalt & Emulsions and Ergon Terminaling. ETI and EA&E are subsidiaries of Ergon, Inc. which owns 100% of the outstanding membership interests of the General Partner of BKEP.
In addition, Ergon will assign a long-term storage, throughput and handling agreement with a third-party for the Bainbridge facility. The Muskogee facility will be acquired from Frontier Terminal and Cummins Investment Corporation. BKEP has also entered into two third-party storage, throughput and handling agreements associated with the Muskogee terminal that will be effective upon closing of the transaction.
The price of $32.5m consists of $10.5m of BKEP common units to be issued to a subsidiary of Ergon in a private placement at a market price and $22m in cash.
Both transactions are expected to close in the fourth quarter. Once the transactions are complete Blueknight will own a network of 56 asphalt terminals in 26 states with a combined capacity of 10.3 million barrels of asphalt and residual fuel oil storage.
BKEP CEO, Mark Hurley said: “We are pleased to announce the expected acquisition of the Bainbridge, GA, and Muskogee, OK, asphalt terminals. The Bainbridge, GA, terminal represents the first of two anticipated drop-downs discussed at the time of the Ergon acquisition of BKEP’s General Partner in October 2016. The facility includes approximately 200,000 barrels of storage and comes with a long-term contract with a credit-worthy third-party customer. The Muskogee terminal includes 500,000 barrels of storage and 245 acres of property, 150 of which we expect to further develop in the future. BKEP has entered into two long-term storage, throughput and handling contracts with credit-worthy third-party customers. Both customers will continue to market asphalt products out of the Muskogee facility and both are well established in the asphalt industry. We have enjoyed long-standing, mutually beneficial relationships with each of them and we look forward to further developing and expanding our relationships. These transactions total $32.5 million at an expected EBITDA multiple of less than 9.0x, and will be immediately accretive and leverage neutral. These acquisitions primarily represent the reinvestment of proceeds received from 2017 asset sales and include high-quality long-term contracts at very reasonable acquisition multiples. We will provide more details on these acquisitions on tomorrow afternoon’s earnings conference call.”
For more information visit www.bkep.com
2nd Nov 2017
