MRMC Sells Assets To Midstream MLP

Purchase of the remaining Class A equity interests in Redbird Gas Storage LLC for $150 million in cash.

Martin Resource Management Corp. has sold two companies to its midstream master limited partnership, Martin Midstream Partners LP (Nasdaq: MMLP) for a total of nearly 272 million.

In the first transaction, MMLP bought certain specialty lubricant product packaging assets from Cross Oil Refining and Marketing Inc., a wholly-owned subsidiary of the parent, for $121.8 million in cash. The purchase of the packaging assets was funded under MMLP’s existing credit facility.

In the second transaction, MMLP bought all the remaining Class A equity interests in Redbird Gas Storage LLC for $150 million in cash. Redbird was formed by the partnership and MRMC to invest in Cardinal Gas Storage partners, a joint venture between Redbird and Energy Capital Partners.

Prior to closing, MMLP owned 10.7% of the Class A shares and 100% of the class B shares in Redbird. After closing Redbird is not a wholly-owned subsidiary of MMLP. In conjunction with the Redbird transaction, MMLP’s general partner has agreed to give up the next $18.0 million in incentive distributions that it would otherwise be entitled to receive. In addition, the general partner has agreed to give up another $7.5 million in incentive distributions if certain cash distribution targets are not achieved in 2015 and 2016.

The following advisors served in their respective roles for both transactions: Simmons & Co. International provided fairness opinions to the Conflicts Committee and to the Board of Directors of the general partner. Munsch, Hardt, Kopf & Harr P.C. acted as legal counsel to the Conflicts Committee and Locke Lord LLP acted as legal counsel to the partnership. Strasburger Price LLP acted as legal counsel to MRMC.