Houston Fuel Oil Terminal seeks amendment to permit change of control

By Sara Rosenberg

New York, June 7 – Houston Fuel Oil Terminal Co. is in market with an amendment proposal to its credit facilities that would allow for a change of control with its sale to SemGroup Corp., according to a market source.

As part of the amendment, pricing on the company’s term loan will be increased to Libor plus 350 basis points with a 1% Libor floor from Libor plus 325 bps with a 1% Libor floor, the source said.

The Houston Fuel credit box will remain separate as an unrestricted subsidiary of SemGroup.

Lenders are being offered a 25 bps amendment fee.

Credit Suisse Securities (USA) LLC is leading the amendment, which launched with a call on Tuesday. Morgan Stanley Senior Funding Inc. is the administrative agent.

Consents are due by 3 p.m. ET on Tuesday, the source added.

The total purchase consideration to acquire Houston Fuel HFOTCO 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, 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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