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Inter Pipeline Enters Agreement to Sell Majority of its Business

Source: 9/22/2020, Location: Europe

Inter Pipeline Ltd. announced that it has entered into a definitive agreement to divest a major portion of its European bulk liquid storage business to the CLH Group, the leading bulk liquid product logistics company in Europe. Proceeds from the transaction will be £420 million, or approximately $715 million at current exchange rates, before customary closing adjustments. The transaction is expected to be completed in the fourth quarter of 2020, subject to the satisfaction of closing conditions and regulatory approvals typical for the industry.

The divestiture includes all Inter Pipeline's bulk liquid storage and handling assets in the United Kingdom, Ireland, Netherlands and Germany, totalling 15 storage terminals and approximately 18 million barrels of storage capacity. In 2019, these terminals generated approximately £42 million of EBITDA representing about two thirds of Inter Pipeline's cashflow from its European operations.

"This is a very positive transaction for Inter Pipeline," stated Christian Bayle President and Chief Executive Officer. "Monetizing a significant portion of our European asset base enables us to focus resources on developing our higher growth Canadian businesses. As such, proceeds from the sale will be used to reduce debt, strengthen our balance sheet and assist with financing our large capital expenditure program, including the Heartland Petrochemical Complex."

Inter Pipeline will retain its 8 terminals in Sweden and Denmark comprising approximately 19 million barrels of aggregate storage capacity. Over the 3-year period from 2017 through 2019, these assets generated average annual EBITDA of approximately $40 million at an average utilization rate of 82 percent. In the first half of 2020, utilization rates have averaged 98 percent.

Morgan Stanley acted as financial advisor to Inter Pipeline for this transaction.

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