American Midstream Enters $60 Million Acquisition Of Blackwater
To acquire the developer and operator of terminal storage facilities.
American Midstream Partners LP (NYSE: AMID) announced Dec. 10 the execution of a merger agreement to acquire Blackwater Midstream Holdings LLC, a developer and operator of terminal storage facilities, from an affiliate of ArcLight Capital Partners LLC for $60 million.
The Denver-based company's acquisition includes Blackwater’s three operating terminal sites located in Westwego, Louisiana; Brunswick, Georgia; and Salisbury, Maryland. The sites are multimodal, with access to deepwater dock, barge, rail and truck transportation. The three operating terminals have a total of 1.3 million barrels of storage capacity and store a variety of products including chemical, agricultural, and petroleum liquid products.
The transaction also includes a brownfield development opportunity in Harvey, La., located near Blackwater’s Westwego terminal. The Harvey development site is expected to commence operations in 2014, with the potential for up to two million barrels of capacity when fully developed, which would increase Blackwater’s total barrels of storage by more than 100%.
The acquisition is expected to be immediately accretive to American Midstream’s current distribution and creates a strong and competitive position in a segment of the midstream industry that is characterized by fee-based contracts that are not directly subject to commodity price volatility.
“The strategic acquisition of Blackwater Midstream provides an attractive platform for American Midstream in a growing segment of the midstream industry that is fee-based and not directly correlated to commodity prices,” Steve Bergstrom, executive chairman, president and CEO, said in the release. “Blackwater is located near our assets in southern Louisiana, and we expect to leverage our customer relationships to benefit both Blackwater and our existing operations.”
“The Blackwater acquisition will mark the first drop-down from our sponsor ArcLight since the transformational transaction in April of this year wherein ArcLight acquired a controlling interest in our general partner and we acquired the High Point assets,” Bergstrom said. “We believe the Blackwater transaction reflects the substantial value ArcLight adds as a partner and its commitment to supporting the long-term, sustainable growth of American Midstream.”
The purchase price is payable in a combination of cash and $3 million of American Midstream common units, and the aggregate consideration includes the payoff of existing indebtedness of Blackwater. The transaction is expected to close in 4Q 2013.
American Midstream Partners LP engages in gathering, treating, processing, and transporting natural gas in the Gulf Coast and Southeast regions of the U.S.