Oil and natural gas transportation company SemGroup has completed the previously announced transaction to divest a 49% stake in Maurepas Pipeline, a pipeline system serving refineries in the Gulf Coast region of Louisiana, US, for a $350m consideration.
The company sold the minority interest in the pipeline system to investment funds managed by Alinda Capital Partners through the sale of Class B interests.
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The transaction value represents around 13 times Maurepas’ earnings before interest, taxes and depreciation.
According to the terms of the deal, SemGroup can buy Alinda’s interest before the fifth anniversary of the completion of the transaction.
SemGroup president and CEO Carlin Conner said: “This high-value sale of a minority interest in Maurepas moves SemGroup significantly closer toward achieving our leverage goals.
“In addition to paying down debt and de-levering our balance sheet with a very efficient cost of capital transaction, we plan to reinvest some of the proceeds in high-return areas surrounding our footprint.
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By GlobalData“Additionally, the terms of the transaction give us the ability to buy back Alinda’s interest in Maurepas, a cash flow-stable pipeline serving Gulf Coast refineries, at favourable terms.”
Maurepas comprises three separate transportation pipes, including a 24in, 34.2-mile crude oil pipeline connected to LOCAP pipeline, as well as two intermediates pipeline between Shell’s Norco and Convent refineries.
Despite the sale, SemGroup will continue to be the operator of the pipeline system.
The company will use the proceeds from the transaction to cut debt and for general corporate purposes.
The agreement for the sale was reached in August.
SemGroup has a network of pipelines, processing plants, refinery-connected storage facilities and deep-water marine terminals across North America.
