Superior Plus hones propane growth strategy

March 1, 2021 By    

Superior Plus Corp. completed its long-term transformation into a pure-play energy distribution company through the divestiture of its specialty chemicals division.

With this divestiture, Superior reinforces its focus on growing its North American retail propane distribution platform. According to the company, proceeds from the sale will accelerate its acquisition strategy in the retail propane space.

“The sale of specialty chemicals is an important component of our strategic plan and provides us with additional capital to further accelerate our accretive growth strategy in the U.S. propane market,” says Luc Desjardins, president and CEO of Superior Plus Corp.

In 2020, Superior acquired more than 285 million Canadian dollars ($226.7 million) of energy distribution assets, and it has completed three acquisitions in the U.S. and Canada in 2021.

The company says it has a robust pipeline of acquisition opportunities and anticipates more than doubling its U.S. propane distribution EBITDA from operations over the next five years.

Superior Plus LP, a subsidiary of Superior Plus Corp., entered into the definitive agreement to sell the specialty chemicals business to Birch Hill Equity Partners for total consideration of CA$725 million. Under the terms of the transaction, Superior will receive CA$600 million in cash proceeds from Birch Hill and CA$125 million in the form of a 6 percent unsecured note issued by an affiliated entity of Birch Hill that is acquiring Specialty Chemicals.

Superior plans to use the net proceeds from the transaction initially to reduce debt, including paying down the outstanding balance on its revolving credit facility.

“Through the transaction structure, we have increased our financial flexibility, focused our business portfolio on energy distribution and preserved an ability to share in the potential upside in the chemicals business over the next three years,” adds Desjardins.

The transaction, which has been approved by Superior’s board of directors, is subject to customary closing conditions and is expected to close in the first or second quarter of 2021.

Orrick, Herrington & Sutcliffe LLP is acting as legal counsel to Superior on the transaction. Barclays acted as financial adviser to Superior.

Featured photo by Nick Bellucco, Superior Plus

Comments are currently closed.