UPDATE 1-Canada's Superior Plus to buy NGL Energy's retail propane unit
(Adds details on financing, cost savings and shares)
May 30 (Reuters) - Canadian specialty chemicals firm Superior Plus Corp said on Wednesday it would buy NGL Energy Partners’ retail propane unit for $900 million in cash to boost its presence in the United States.
NGL’s shares surged 14 percent to 12.20 in trading after the bell.
NGL Propane sells propane and distillates to over 316,000 residential, commercial and industrial customers in the U.S. Northeast, Southeast and Upper Midwest under regional brands, including Osterman Propane, Downeast Energy and Eastern Propane.
In the 12 months to March 31, NGL Propane sold about 182 million gallons of fuel, generating about $85 million in adjusted earnings before interest, taxes, depreciation, and amortization.
Superior said the deal would help save about $20 million to $25 million within the first two years of its closure, which is expected in the third quarter, and immediately add to its adjusted cash flow. The Toronto-based company said it planned to raise C$400 million ($310.68 million) by issuing 32 million subscription receipts at a price of $12.50 per piece to finance a portion of the acquisition.
TD Securities Inc and CIBC Capital Markets are leading a syndicate of underwriters for the offering, Superior said, adding the rest of the purchase price will be funded through a $400 million bridge facility.