NuStar Energy L.P. Announces Closing of Sale of 50% of its Asphalt Operations to Lindsay Goldberg and Creation of Joint Venture
Transaction Deconsolidates Asphalt Operations, Reduces Earnings Volatility and Allows for Debt Reduction/ Investment in High-Return Pipeline and Terminal Assets
NuStar Energy L.P. (NYSE: NS) today announced that it has closed on the sale of a 50% voting interest in its asphalt operations to an affiliate of Lindsay Goldberg LLC, a private investment firm. In conjunction with the sale, a joint venture was created that owns and operates NuStar’s asphalt refining assets, including asphalt refineries located in Paulsboro, New Jersey and Savannah, Georgia, and related working capital. NuStar and Lindsay Goldberg each have a 50% voting interest.
At closing, Lindsay Goldberg paid NuStar $175 million for its interest in the joint venture and the joint venture purchased the inventory of the asphalt operations from NuStar based on current market prices. The joint venture funded the inventory purchase with borrowings under a third-party asset-based revolving credit facility and an unsecured revolving credit facility provided by NuStar.
Initial cash proceeds received by NuStar as a result of this transaction, including the $175 million paid by Lindsay Goldberg, were approximately $270 million. This transaction should eventually allow NuStar to reduce its debt balances by $400 to $500 million, depending on the joint venture’s working capital requirements. NuStar intends to use the proceeds from this transaction for general corporate purposes including the repayment of outstanding borrowings under its revolving credit facility, working capital purposes and to finance potential future acquisitions.
The Board of Managers of the joint venture is chaired by Bill Greehey, currently Chairman of the Board for NuStar Energy L.P. and NuStar GP Holdings, LLC. Michael Pesch, previously Vice President of Regional Operations for NuStar Energy L.P., is the Chief Executive Officer of the joint venture.
We are pleased that we were able to close this transaction, as previously announced, prior to the end of the third quarter, said Curt Anastasio, president and CEO of NuStar. This transaction monetizes a portion of NuStar’s asphalt operations and allows us to still maintain a 50% voting interest in a business that has the potential to generate significant cash flows as the U.S. economy improves.
Anastasio went on to say, The transaction also allows NuStar to reduce its earnings volatility, and reduce debt, and it provides additional opportunities to invest in stable, high-return, pipeline and terminal assets, while simultaneously giving the Asphalt JV the flexibility it needs to prosper in a more robust margin environment.