February 23, 2018 [Houston Business Journal] - Just a few months after lining up a major acquisition of a Dallas company, Houston-based American Midstream Partners LP (NYSE: AMID) has sold assets to a newly formed joint venture.
The midstream company has agreed to sell two refined product terminals for about $138.5 million in cash to DKGP Energy Terminals LLC, according to a Feb. 20 press release. The transaction is expected to close in the first half of 2018.
DKGP Energy Terminals is a newly formed 50-50 joint venture between Brentwood, Tennessee-based Delek Logistics Partners LP (NYSE: DKL) and Green Plains Partners LP (Nasdaq: GPP), a subsidiary of Omaha, Nebraska-based Green Plains Inc. (NASDAQ: GPRE), per a separate Feb. 20 press release about the deal.
The two terminals that American Midstream is selling are located in Caddo Mills, Texas, and North Little Rock, Arkansas.
The terminal in Texas has approximately 770,000 barrels of light product storage capacity, five truck loading lanes and ethanol blending capability, per the second release. It has a total throughput capacity of 28,000 barrels per day.
The terminal in Arkansas has approximately 550,000 barrels of storage capacity, eight truck loading lanes, ethanol blending capabilities and the means to unload ethanol unit trains. Its total throughput capacity is approximately 45,000 barrels per day.
American Midstream’s divestiture “represents meaningful progress towards redeploying capital to complementary assets,” per the release. Additionally, the sale simplifies the company’s business profile and creates capital flexibility.
“This transaction demonstrates AMID’s continued execution on its capital optimization strategy of simplifying its business and redeploying capital from non-core assets toward complementary and strategic opportunities,” Lynn Bourdon III, president and CEO of American Midstream, said in the release.
The Houston company is planning to sell additional terminal assets, such as marine and specialty chemical storage facilities, to focus on higher growth assets, per the release.
U.K.-based Barclays PLC (NYSE: BCS) acted as the financial adviser to American Midstream for the deal, and the Houston office of Chicago-based Sidley Austin LLP served as legal counsel. Delek Logistics and Green Plains did not provide their advisers in their press release.
In addition to the acquired terminals from American Midstream, DKGP Energy will also consist of additional terminals and cash from Delek Logistics as well as cash from Green Plains Partners, per the second release. The joint venture is expected to generate $19.2 million in earnings before interest, taxes, depreciation and amortization in 2019.
American Midstream announced in November that it would acquire Dallas-based master limited partnership Southcross Energy Partners LP (NYSE: SXE) and certain assets of Southcross Holdings LP, which indirectly owns all of the equity interest in the general partner of SXE and other assets.
The two transactions are valued at $815 million, including the assumption of debt, and are expected to close in the second quarter of 2018.
Last July, American Midstream sold its propane marketing and services business to the Netherlands-based SHV Energy NV for $170 million in cash shortly after acquiring the Viosca Knoll system from Houston-based Genesis Energy LP for about $32 million.
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