Susser Petroleum Partners (SUSP) and Energy Transfer Partners (ETP) announced today the first dropdown transaction between ETP and SUSP. In addition, SUSP announced an agreement to acquire Hawaii-based Aloha Petroleum Ltd., closing of a new $1.25 billion revolving credit facility, and its plan to change the partnership’s name to Sunoco LP.
Dropdown of MACS and acquisition of Aloha Petroleum
SUSP will acquire Mid-Atlantic Convenience Stores from ETP in a transaction valued at approximately $768 million. The consideration payable by SUSP will consist of approximately four million newly issued SUSP common units and $556 million of cash, subject to customary closing adjustments. SUSP plans to initially finance the cash portion by utilizing availability under the revolving credit facility, with longer term financing through a combination of debt and equity. The transaction is expected to be immediately accretive to distributable cash flow per unit for both SUSP and ETP.
The assets owned by Mid-Atlantic Convenience Stores include the Mid-Atlantic Convenience Stores (MACS) locations and the Tigermarket locations that were previously acquired by ETP. Both businesses are currently operated and supplied by ETP’s Sunoco subsidiary.
The dropdown will include approximately 110 company-operated retail convenience stores and 210 dealer-operated and consignment sites from the MACS/Tigermarket businesses. The combined portfolio includes locations in Virginia, Washington, D.C., Maryland, Tennessee and Georgia. It features convenience store offerings and motor fuel brands, including Sunoco, Exxon and Shell.
SUSP also has signed a definitive agreement to acquire Honolulu, Hawaii-based Aloha Petroleum. Aloha Petroleum is the largest independent gasoline marketer and one of the largest convenience store operators in Hawaii, with an extensive wholesale fuel distribution network and six fuel storage terminals on the islands. Aloha currently markets through approximately 100 Shell, Aloha and Mahalo branded fuel stations throughout the state, about half of which are company operated. The base purchase price for Aloha is approximately $240 million, subject to a post-closing earn-out, certain closing adjustments and before-transaction costs and expenses.
“Hawaii is a great new market for us with an economy that has grown faster than the overall U.S. economy in the last few years,” said Bob Owens, CEO of Susser Petroleum Partners. “Aloha Petroleum has an impressive legacy of growth, profitability and operational excellence. The overall transaction is compelling in that the price represents an approximate seven-times run-rate EBITDA multiple. Additionally, most of the cash flow is expected to constitute qualifying income.
“Aloha Petroleum will allow us to expand our current geographic footprint and extend our overall business capabilities into refined products terminals,” he added. “We see the integration of terminals, retail and wholesale operations within Aloha as a strong platform in Hawaii as well as a model for the expansion of our overall core business. On behalf of our partnership, I would like to extend a very warm welcome to Aloha Petroleum’s management team, employees and customers.”
Both transactions are expected to close in the fourth quarter of 2014 and are subject to customary closing conditions, required consents and other regulatory approvals.
New revolving credit facility
Susser Petroleum Partners has closed a new revolving credit facility with a syndicate of banks that provides a base $1.25 billion revolving credit facility and includes an accordion feature that provides flexibility to increase the facility by an additional $250 million, subject to certain conditions. The facility matures in September 2019.
The expansion of the revolver from a current $400 million credit facility limit will allow the partnership to finance dropdowns and acquisitions and provide significant liquidity for ongoing organic growth.
Susser Petroleum Partners also plans to change its name to Sunoco LP and its ticker symbol to SUN. The change in name and ticker symbol is intended to align the partnership’s legal and marketing name with that of ETP’s iconic brand, Sunoco. The change is expected to occur in the fourth quarter of 2014.