NGL Energy Partners LP (NYSE: NGL) has entered into an agreement with an affiliate of ArcLight Capital Partners to sell TransMontaigne GP LLC (TLPGP) for $350 million in cash. TLPGP is the general partner of TransMontaigne Partners LP (TLP) and holds the 2% general partner (GP) interest and incentive distribution rights (IDRs) of TLP.
NGL expects to close the transaction by the end of January and will use the cash proceeds to repay borrowings outstanding on its revolving credit facility.
The TransMontaigne marketing business is part of NGL’s refined products business (and will remain with NGL) uninterrupted by this transaction. NGL will retain TransMontaigne Product Services LLC, its customer contracts and its line space on the Colonial and Plantation pipelines.
With respect to the impact on NGL’s EBITDA, the transaction results in an increase of an estimated $20 million annually from cost reductions and revenue enhancements. NGL will no longer receive $7.6 million of distributions associated with the IDRs and GP interest it owns in TLP, resulting in a net increase of about $12 million going forward.
NGL will retain approximately 3.2 million common units it owns in TLP and has granted an option to ArcLight to purchase 800,000 of those common units at a future date.