Tesoro Corporation (Tesoro) and Tesoro Logistics LP (TLLP) have announced that subsidiaries of Tesoro have executed an agreement for the sale of storage and terminalling assets in Alaska to TLLP for a total consideration of US$444 million.
The Alaska storage and terminalling assets include:
- Storage: crude oil, feedstock and refined product storage tanks with combined capacity of approximately 3.5 million bbls in Kenai, Alaska, with connectivity with TLLP's Tesoro Alaska pipeline and Nikiski products terminal and Tesoro's Kenai refinery.
- Terminals: refined product terminals in Anchorage and Fairbanks with combined storage capacity of over 600 000 bbls, expected throughput of 10 400 bpd and rail loading of 7000 bpd.
The transaction is expected to close in two stages. The storage portion of the acquisition closed 1 July 2016. The acquisition of the Anchorage and Fairbanks terminals is expected to close later in the 3Q16 once the Consent Decree with the State of Alaska becomes effective. This agreement is related to Tesoro's acquisition of the Flint Hills Resources assets, which closed on 20 June 2016.
The acquisition price of US$444 million includes cash proceeds to Tesoro of US$400 million and the issuance of common and general partner units to Tesoro, valued at approximately US$44 million.
In consideration for the first closing (storage assets), Tesoro received US$239 million of cash and US$27 million of common and general partner units of TLLP. The cash consideration was borrowed on TLLP's revolving credit facility. The equity consideration was based on the average daily closing price of TLLP's common units for the 10 trading days prior to closing, or US$48.06 per unit, with 390 282 units in the form of common units and 162 375 units in the form of general partner units.
In consideration for the second closing (terminal assets), Tesoro will receive US$160 million of cash and US$18 million of common and general partner units of TLLP. The cash consideration is expected to be borrowed on TLLP's revolving credit facility and the equity consideration will be based on the average daily closing price of TLLP's common units for the 10 trading days prior to closing.
Adapted from press release by Francesca Brindle
Read the article online at: https://www.hydrocarbonengineering.com/tanks-terminals/06072016/tesoro-corp-to-sell-storage-assets-to-tesoro-logistics-3657/