Research Desk Line-up: American Midstream Partners Post Earnings Coverage
LONDON, UK / ACCESSWIRE / June 8, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for SemGroup Corp. (NYSE: SEMG). The Company announced on June 6, 2017, that it has executed a definitive agreement, pursuant to which, it will acquire Houston Fuel Oil Terminal Company (HFOTCO), one of the largest oil terminals in the US, from investment funds managed by Alinda Capital Partners. This acquisition enabled SemGroup to penetrate into the Houston Ship channel, a premier energy market. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Details of the Announcement
The Company will acquire HFOTCO for an initial consideration of $1.5 billion, of which $300 million- $400 million will be issued in common shares, at SemGroup's election, at $32.30 per share. The remainder of the initial price will be paid in cash from SemGroup revolver. The Company will also assume HFOTCO debt of $785 million, which remains in place, and is included in the $1.5 billion initial payment. The Company will additionally make a second payment comprised of $600 million in cash, due on or before the end of 2018.
The transaction is expected to be accretive to the Company's cash flow available for dividends per share, immediately while offering shareholders increased value now and into the future. The transaction is expected to be complete in Q3 FY17, and is subject to certain governmental approvals and customary closing conditions. Assuming an early Q3 FY17 close, SemGroup's management expects HFOTCO to contribute between $60 million and $65 million of additional adjusted EBITDA during 2017.
Houston Fuel Oil Terminal Assets
The terminal is located strategically on the US Gulf Coast and includes 330 acres of waterfront land on the Houston Ship Channel. The terminal holds 16.8 mmbls of residual fuel oil, crude oi,l and asphalt storage capacity, and is linked by inbound and outbound pipeline and connections. The terminal has four ship docks and seven barge docks, and includes multiple truck and rail facilities. Under the contractually supported growth projects, a fifth ship dock will be developed at HFOTCO while the crude storage capacity will be increased by 1.46 mmbls, by mid-2018.
This transaction is set to deliver SemGroup, an enhanced presence on the Houston Ship Channel and offer connectivity to the local refinery complex and inbound receipt capabilities from all major producing basins. The Company can significantly enhance its scale and diversify its business with refinery facing take-or-pay cash flows. SemGroup will be uniquely positioned to capitalize on the shifting global commodity market trend, and will be far more capable to capture low-risk growth opportunities.
The Company announced on May 03, 2017, that it plans to build a natural gas pipeline to connect its processing complex in northern Oklahoma to the active STACK pay in the central portion of the state. The 24-inch-diameter pipeline will extend about 50 miles from SemGroups' Rose Valley processing facility in Woods County to north central Blaine city. The pipeline is expected to be completeD and operational by the end of 2017.
SemGroup recently announced its Q1 FY17 results on May 04, 2017. The Company reported net revenues of $456.1 million with net attributable loss of $10.3 million, or $0.16 per diluted share, for Q1 FY17 versus revenues of $402.2 million for Q4 FY16, where net attributable income was $12 million, or $0.32 per share. Net loss in Q1 FY17 was primarily due to a $19.9 million charge related to the refinancing of bonds, according to the Company.
Last Close Stock Review
On Wednesday, June 07, 2017, SemGroup's stock closed the trading session at $26.35, tumbling 8.67% from its previous closing price of $28.85. A total volume of 4.25 million shares were exchanged during the session, which was above the 3-month average volume of 610.19 thousand shares. Shares of the Company have a PE ratio of 204.26 and have a dividend yield of 6.83%. The stock currently has a market cap of $1.75 billion.
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