NGL Energy Partners has firmed up its ability to pay for its future projects by selling TransMontaigne GP LLC (TLPGP) to an affiliate of ArcLight Capital Partners for $350 million in cash. The deal would move the two percent general partner interest and incentive distribution rights of TransMontaigne Partners (TLP) owned by TransMontaigne GP to ArcLight.
“I believe this is a very positive transaction for both NGL and ArcLight. NGL will remain the long-term exclusive tenant in the TLP Southeast terminal system and we look forward to our ongoing partnership with ArcLight. ArcLight has been great to work with and NGL will enter into certain commercial transactions with, as well as provide various transition services for, ArcLight,” said NGL Energy Partners Chief Executive Officer Mike Krimbill.
Parts of TransMontaigne will remain with NGL, including the TransMontaigne marketing business and TransMontaigne Product Services LLC. NGL also will hold onto about 3.2 million common units of TLP, but has given ArcLight an option to purchase 800,000 common units at a future date. The move, combined with previous transactions by NGL, will keep the company moving forward.
“Within a 75-day period, NGL will have reduced capital requirements by approximately $200 million through the previously announced Grand Mesa/ Saddlehorn transaction, and raised $350 million in cash in this transaction, while generating additional EBITDA and DCF. These recent actions provide many benefits to NGL and position it to successfully execute its growth plans in what continues to be a challenging market environment for MLPs,” said Krimbill.
NGL doesn’t expect to access the debt and equity capital markets because the net sale proceeds will fund the company’s capital expenditures for the next year and a half. The transaction is expected to close by the end of the month.
