Parkland Fuel Corporation ("Parkland") (TSX:PKI) announced today that it has entered into an agreement with Chevron Canada Limited ("CCL") to acquire all of the shares of Chevron Canada R&M ULC, which operates its Canadian integrated downstream fuel business (the "Acquisition").
The Acquisition places important British Columbia infrastructure under experienced Canadian ownership. The business acquired as part of the Acquisition (collectively, the "Acquired Business") consists of: i) 129 Chevron-branded retail service stations principally located in Metro Vancouver, which complement Parkland's existing 44 Chevron-branded sites in British Columbia (the "Retail Business"), ii) 37 commercial cardlock and three marine fueling locations (the "Commercial Business"), iii) a complimentary refinery in Burnaby, terminals located in Burnaby, Hatch Point, and Port Hardy, British Columbia, and a wholesale business which includes aviation fuel sales to the Vancouver International Airport (collectively, the "Supply and Wholesale Business").
Subject to satisfaction of customary closing conditions, Parkland will pay approximately $1,460 million (US$1,100 million), plus an estimated $186 million in working capital for the Acquired Business.
"This accretive acquisition further strengthens our supply-focused business model and adds significant scale with the premier Chevron retail brand and network in British Columbia," said Bob Espey, President and Chief Executive Officer of Parkland. "Parkland is acquiring a highly integrated business which adds significant supply infrastructure and logistics capability to support Parkland's existing operations. The refinery in Burnaby is an important asset to Metro Vancouver and British Columbia and we will continue to operate it with the capable and experienced professionals who manage the refinery today. We look forward to welcoming the Chevron team to our company, and to deepening our relationships in British Columbia."
Strategic Rationale for the Acquisition
Retail and Commercial Businesses
Supply and Wholesale Business
Synergies and Accretion
Other Transaction Details
The Acquisition and related fees and expenses will be financed with a fully underwritten financing package including:
"The scale of the pro-forma business combined with the strong cash flow from operations and operational synergies expected from the Acquired Business will further strengthen Parkland's balance sheet and capital structure," said Mike McMillan, Chief Financial Officer. "The transaction financing structure we have put in place enables Parkland's pro forma leverage ratio to be approximately 3.5x and is expected to be reduced further in 2019."
In order to finance a portion of the Acquisition, Parkland has entered into an agreement with a syndicate of underwriters (the "Underwriters") bookrun by TD Securities Inc. and National Bank Financial Inc., to sell approximately 24 million Shares on a bought deal private placement basis. The Shares will be sold at a price of $27.70 per Share (the "Offering Price") for gross proceeds to Parkland of approximately $660 million (the "Offering").
The Shares will be offered by way of private placement exemptions to accredited investors in all provinces of Canada, and in the United States on a private placement basis pursuant to exemptions from the registration requirements of the United States Securities Act of 1933, as amended. The Shares will be subject to a four month hold period, under applicable securities laws in Canada. Closing of the Offering is expected to occur on or about May 9, 2017, subject to Toronto Stock Exchange and other necessary regulatory approvals.
The Acquisition is subject to the receipt of customary third-party consents and regulatory approvals, including approval from the Competition Bureau of Canada. Closing of the Acquisition is expected to be in the Q4 2017.
Update on CST Acquisition
Parkland expects to close the CST transaction in Q2 2017.
Investor Event and Conference Call Information
Parkland Fuel Corporation will host a webcast and conference call on 2:45 p.m. MT (4:45 p.m. ET) on April 18, 2017 to discuss the Acquisition. Parkland's Senior Leadership Team will be available to take questions from securities analysts, and investors following their formal comments.
Please log into the webcast slide presentation 10 minutes prior to start time at:
To access the conference call by telephone, dial toll-free: 1 844-889-7784 (Conference ID: 10377960). Please connect approximately 10 minutes before the beginning of the call. The webcast will be available for replay one hour after the conference call ends. It will remain available at the link above for one year and will be posted to www.parkland.ca.
A link to the live webcast and investor presentation will be available on the Investors section of Parkland's website. http://www.parkland.ca/investors/.
If you are unable to participate in the call, a replay will be available by dialing 1 855-859-2056 (Conference ID: 10377960) (Canada and USA toll-free). For international callers, please dial 1 404-537-3406 (Conference ID: 10377960). A transcript of the broadcast will be posted on the website once it becomes available.
BofA Merrill Lynch, TD Securities Inc. and National Bank Financial Inc. are serving as financial advisors to Parkland. McCarthy Tétrault LLP is serving as Parkland's legal advisor for the Acquisition and Bennett Jones LLP is serving as Parkland's legal advisor in respect of the Offering and competition matters relating to the Acquisition.
About Parkland Fuel Corporation
Parkland Fuel Corporation is one of North America's largest marketers of fuel and petroleum products. We deliver gasoline, diesel, propane, lubricants, heating oil and other high-quality petroleum products to motorists, businesses, households and wholesale customers in Canada and in the United States. Our mission is to be the partner of choice for our customers and suppliers, and we do this by building lasting relationships through outstanding service, reliability, safety and professionalism.
We are unique in our ability to provide customers with dependable access to fuel and petroleum products, utilizing a portfolio of supply relationships, storage infrastructure, and third-party rail and highway carriers to rapidly respond to supply disruptions in order to protect our customers.
SOURCE: Parkland Fuel Corporation
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.