Parkland Completes Acquisition of the Majority of CST’s Canadian Assets
June 28, 2017
(Business Wire) Parkland Fuel Corporation (“Parkland”) (TSX:PKI), Canada’s largest and one of North America’s fastest growing independent marketers of fuel and petroleum products, announced today the closing of its acquisition (the "Acquisition") of the majority of the Canadian business and assets of CST Brands, Inc. (“CST”) from Couche-Tard Inc. (“Couche-Tard”).
“I am extremely excited to welcome the CST Canada team to the Parkland family. This transaction represents a large scale expansion into Québec and Atlantic Canada and will increase the company’s footprint to over 1,700 sites and expand our cardlock and home heat business significantly.” said Bob Espey, President and Chief Executive Officer of Parkland. “CST is a prominent fuel marketer under the Ultramar brand with a strong reputation for customer service which aligns with Parkland’s mission of being the partner of choice for our customers and suppliers.”
Parkland will maintain CST’s current corporate presence in Montréal and will continue to use the highly recognizable Ultramar brand.
Parkland has funded the adjusted purchase price of approximately $985M plus transaction fees from the following:
- $231M gross proceeds from the previously announced September 7, 2016 issuance of 9.4M Subscription Receipts;
- $300M gross proceeds from the previously announced September 16, 2016 issuance of 5.75% Senior Notes; and
- the remainder drawn from Parkland’s new senior secured revolving credit facility that has replaced the existing credit facility.
The purchase price is subject to change and will be finalized upon completion of customary post-closing working capital and other adjustments.
As a result of the closing of the Acquisition, the holders of the 9.4M subscription receipts previously issued on September 7, 2016 have been automatically exchanged for Parkland common shares in accordance with the terms of the subscription receipt agreement and the outstanding cash commission was released to the syndicate of underwriters led by TD Securities Inc. and National Bank Financial Inc.
Trading of the subscription receipts will be halted on the Toronto Stock Exchange ("TSX") prior to market opening on Thursday, June 29, 2017 and Parkland expects that the subscription receipts will be delisted by the TSX after close of trading on June 29, 2017.
Holders of subscription receipts as of June 28, 2017 will receive a dividend equivalent payment of $0.8556 per subscription receipt held representing the dividends earned since September 2016. Subscription receipt holders will also be entitled to receive payment of the dividend declared by Parkland on June 13, 2017 for shareholders of record on June 22, 2017 and payable on July 14, 2017 as the remaining dividend equivalent payment under the terms of the subscription receipt agreement.
Parkland will update its 2017 Adjusted EBITDA guidance concurrently with the release of its Q2 2017 financial results.
SUMMARY OF ACQUIRED ASSETS
Parkland has acquired the following assets pursuant to the Acquisition:
- 495 dealer and commissioned agent retail fuel sites;
- 73 commercial cardlock sites;
- 30 commercial and home heating sites;
- 159 company-operated retail fuel sites representing approximately 45% of the expected company-operated retail fuel EBITDA; and
- a French speaking corporate presence in Montréal.
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES
Certain information included herein is forward-looking. Many of these forward looking statements can be identified by words such as “expects”, “expected”, “will”, “anticipate”, “continue”, or similar words. Parkland believes the expectations reflected in such forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties some of which are described in Parkland's annual information form and other continuous disclosure documents. Such forward-looking statements necessarily involve known and unknown risks and uncertainties and other factors, which may cause Parkland's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Such factors include, but are not limited to: the failure to achieve the anticipated benefits (including, but not limited to, the expected EBITDA) of the Acquisition; the halting and delisting of the subscription receipts; general economic, market and business conditions; industry capacity; competitive action by other companies; refining and marketing margins; the ability of suppliers to meet commitments; actions by governmental authorities including increases in taxes; changes in environmental and other regulations; and other factors, many of which are beyond the control of Parkland.
Any forward-looking statements are made as of the date hereof and Parkland does not undertake any obligation, except as required under applicable law, to publicly update or revise such statements to reflect new information, subsequent or otherwise. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
ABOUT PARKLAND FUEL CORPORATION
Parkland Fuel Corporation delivers gasoline, diesel, propane, lubricants, heating oil and other high-quality petroleum products to motorists, businesses, households and wholesale customers in Canada and the United States. Our mission is to be the partner of choice for our customers and suppliers, and we do this by building lasting relationships through outstanding service, reliability, safety and professionalism.
We are unique in our ability to provide customers with dependable access to fuel and petroleum products, utilizing a portfolio of supply relationships, storage infrastructure, and third-party rail and highway carriers to rapidly respond to supply disruptions in order to protect our customers.