Dakota Plains Holdings Inc. (NYSE MKT:DAKP) has acquired all the ownership interests in its oil transloading joint venture, sand transloading joint venture, and oil marketing joint venture. The previously announced sale of the company’s interest in its trucking joint venture closed on Nov. 24.
Under the terms of the agreement, Dakota Plains paid its former joint venture partner a cash consideration of $43 million and will make future contingent payments equal to $0.225 per barrel for crude oil actually loaded at the Pioneer Terminal, up to a limit of 80,000 barrels per day, paid quarterly through Dec. 31, 2026 (the duration of the prior joint ventures). Dakota Plains receives, among other things, $8.9 million in cash distribution from the termination of the joint ventures.
SunTrust Robinson Humphrey Inc. served as financial adviser to Dakota Plains in connection with this transaction.
Dakota Plains also announced a new $57.5 million credit facility provided by SunTrust Bank to fund the transaction and to refinance $7.7 million in senior unsecured promissory notes and $6.4 million in debt related to the construction of the Pioneer Terminal.
Craig McKenzie, chairman and CEO of Dakota Plains, said, “This transaction is accretive to earnings, increases our transloading business two-fold, allows us to exit our marketing joint venture, and provides a simpler capital structure comprising common stock and a fully secured $57.5 million credit facility, which significantly lowers our weighted average cost of debt. We are now focused on increasing the throughput at Pioneer via long-term, fee-based contracts, and on completing the construction of our storage tank expansion.”