Sprague Operating Resources, a unit of Sprague Resources, has completed the acquisition of Capital Terminal Company’s refined product terminal asset located in East Providence, Rhode Island, the US.
Sprague Operating Resources purchased the assets at a consideration of $23m in cash in addition to the payment of other customary items.
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The acquired terminal holds a combined capacity of more than one million barrels. The terminal has been under lease exclusively by Sprague since April 2014.
Following this acquisition, Sprague will invest $11m to expand and optimise the Providence terminal.
Sprague president and CEO David Glendon said: “I’m excited to announce the closing of our third transaction this month, which highlights our commitment to growth and the successful execution of that strategy.
“These acquisitions continue our natural gas marketing and electricity brokerage roll up strategy, while expanding our portfolio of refined product terminals and material handling assets.
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By GlobalData“The value of these acquisitions is enhanced by leveraging our unique supply and logistics capabilities, as we further expand our footprint and increase customer penetration within our core business segments.”
These additions are expected to be accretive to distributable cash flow and generate an estimated $10m to $13m of adjusted EBITDA annually.
Glendon further added: “Sprague’s financial performance has allowed us to grow distributions while maintaining healthy distribution coverage, and simultaneously de-levering our balance sheet.
“Our existing credit facility provides sufficient liquidity to finance these acquisitions, and we expect our permanent leverage ratio to remain within our targeted 2.5 to 3.5 times.”
Sprague Resources also recently purchased Global Partners’ natural gas marketing and electricity brokerage assets for nearly $17.3m and acquired L. E. Belcher’s refined product terminal assets in Springfield for $20m.
