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Kilgore firm announces deal to acquire Arkansas lubricants processing assets
Kilgore-based Martin Midstream Partners on Wednesday announced that it has signed a definitive agreement to acquire certain specialty lubricants processing assets from Cross Oil Refining & Marketing for $45 million.
Cross is a wholly-owned subsidiary of Martin Resource Management Corp., the owner of Martin Midstream’s general partner. In consideration for the Cross assets, Martin Midstream Limited Partners will issue 804,721 common units and 894,134 subordinated units to the management corporation at a price of $27.96 and $25.16 per limited partner unit, respectively.
“We are excited to announce that we have entered into a definitive contribution agreement with MRMC (Martin Resource Management Corp.) and its wholly-owned subsidiary, Cross, whereby the partnership will receive certain specialty lubricant processing assets in exchange for $45.0 million in common and subordinated partnership units,” said Ruben Martin, president and chief executive officer of Martin Midstram GP, the general partner of Martin Midstream Partners, in a prepared statement.
Martin said the agreement positions the partnership’s terminalling and storage segment to become its largest and most stable cash flow contributor.
“We are also pleased to announce that MRMC will make a direct $20 million equity investment into the partnership in exchange for common units,” he said. “This equity injection will positively impact the partnership’s balance sheet in advance of our planned credit facility refinancing.
“This investment further reiterates the general partner’s publicly conveyed support and long-standing commitment to the partnership,” Martin said.
The Cross assets consist primarily of a 7,500 barrel per day naphthenic lubricant refinery located in Smackover, Ark., with more than 475,000 barrels of related storage capacity. Under the terms of the transaction, Martin Resources Management will continue to own all other Cross assets and working capital associated with the retained Cross business, including all crude oil, raw material, in-process and finished product inventories
In connection with the deal the two business entities have agreed to enter into a long-term, fee-for-services-based tolling agreement whereby Martin Resources agrees to pay Martin MIdstream Partners for the processing of its crude oil into finished products, including naphthenic lubricants, distillates, asphalt and other intermediate cuts.
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