SemGroup’s acquisition of Houston Fuel Oil Terminal expected to generate high-yield deal

By Paul A. Harris

Portland, Ore., Aug. 25 – SemGroup Corp.'s $2.1 billion acquisition of Houston Fuel Oil Terminal Co. is expected to generate a high-yield bond deal, according to a buyside source.

Credit Suisse served as financial adviser to SemGroup, the source added.

As reported, the total purchase consideration to acquire Houston Fuel Oil Terminal will consist of two payments. The first payment will be $1.5 billion at closing, including the assumption of an estimated $785 million of existing Houston Fuel debt, and issuance of between $300 million to $400 million in common shares, at SemGroup’s election, to Alinda at $32.30 per share. The remainder of the initial payment will be funded in cash from SemGroup’s revolving credit facility. The second payment will consist of an additional $600 million, which will be paid in cash before the end of 2018 and which aligns consideration with EBITDA growth.

Closing is expected in the third quarter, subject to the receipt of governmental approvals and the satisfaction of other customary conditions.

Houston Fuel is a Houston-based marine terminal for storage of residual fuel oil and crude oil. SemGroup is a Tulsa, Okla.-based midstream service company.

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