USD Partners LP has announced that it has entered into an agreement to acquire entities owning the Hardisty South terminal assets from USD Group LLC; exchange USD Group LLC's economic general partner interest in USD Partners LP for a non-economic GP interest; and eliminate the USD Group LLC's incentive distribution rights in USD Partners LP for total consideration of US$75 million in cash and approximately 5.75 million common units. The cash portion of this transaction is expected to be funded with borrowings under USD Partners LP’s US$275 million senior secured credit facility.
Transaction highlights:
- Increases size, scale and growth capacity of USD Partners LP’s asset base.
- Expected to provide double-digit accretion to USD Partners LP’s distributable cash flow per unit in 2023, improving the potential for distribution per unit growth.
- Supports Management’s focus on delivering sustainable, long-term distributable cash flow to USD Partners LP’s unitholders by improving contract profile tenor, anchored by a long-term contract with ConocoPhillips.
- Optimises operational and commercial synergies of Hardisty Terminal and consolidates benefits of blue-chip diluent recovery unit (DRU) asset growth at the MLP for the benefit of all of USD Partners LP’s unitholders.
- Elimination of IDRs and economic GP interest simplifies USD Partners LP’s financial structure and better aligns the interests of its unitholders with USD Group LLC, who will continue to own a substantial number of common units post-transaction.