• PKI
  • TMX
Contact Us Search
Media Inquiries 1-403-567-2573

Parkland Enters into an Agreement to Acquire the Majority of CST Brands, Inc.'s Canadian Business and Assets

RED DEER, AB--(Marketwired - August 22, 2016) -

(All amounts in Canadian dollars unless specified otherwise)


Parkland Fuel Corporation ("Parkland") (TSX: PKI), Canada's largest independent marketer of fuel and petroleum products, announced today that it has entered into an agreement with Alimentation Couche-Tard Inc. ("Couche-Tard") to acquire the majority of the Canadian business and assets of CST Brands, Inc. ("CST") (the "Acquisition"). Couche-Tard has announced a definitive merger agreement with CST under which Couche-Tard will acquire CST in an all-cash transaction which is subject to customary conditions including approval by CST shareholders and receipt of regulatory approvals (the "CST Transaction"). The Acquisition is conditional upon closing of the CST Transaction, among other conditions, which is expected to occur in early 2017.

The assets acquired as part of the Acquisition will consist of: (i) CST's Dealer and Commissioned Agents retail business, (ii) CST's Commercial Cardlock business, (iii) CST's Commercial and Home Heat businesses, (iv) a number of CST's company-operated stores to be determined following the Competition Bureau of Canada's review of the CST Transaction, and (v) corporate presence in Montreal (collectively, the "Acquired Assets").

Subject to the satisfaction of customary closing conditions and adjustments, Parkland will pay approximately $965 million for the Acquired Assets.

"This highly-accretive acquisition extends Parkland's network coverage with a premier fuel network in Québec and Atlantic Canada and enhances our presence in Ontario. We expect pre-synergy accretion of over 20% to Distributable Free Cash Flow per Share on a trailing 12 months basis at June 30, 2016," said Bob Espey, President and Chief Executive Officer of Parkland. "CST is a prominent fuel marketer in North America with a strong reputation for quality customer service. The Acquisition allows Parkland to add the Ultramar brand which is one of the most recognized retail fuel brands in Québec and Atlantic Canada. We look forward to welcoming the Canadian CST employees, agents and dealers to the Parkland team as we will be looking to leverage their deep expertise and knowledge of these markets."



  • Parkland becomes Canada's leading fuel retailer with over 1,555 sites in communities across Canada;
  • Expands Parkland's retail geographic coverage and creates critical mass in Québec and Atlantic Canada;
  • Adds more than 3.0 billion litres of annual fuel volume and between $105 million and $115 million in estimated annual Adjusted EBITDA before synergies representing an increase of over 44% to Adjusted EBITDA on a pro-forma basis for the trailing 12 month period ending June 30, 2016;
  • Adds approximately 490 Dealer and Commissioned Agent retail sites;
  • Adds 72 Commercial Cardlock sites;
  • Adds 27 Commercial and Home Heat sites;
  • Adds high quality company-operated retail sites to be determined following the Competition Bureau of Canada's review of the CST Transaction;
  • Adds a corporate presence in Montreal with a French language support structure;
  • Many of the sites are in prime urban locations; and
  • Adds the Ultramar brand to Parkland's brand portfolio.


  • Adds more than 3.0 billion litres of fuel volume, taking Parkland's annual fuel volume run rate to over 13.3 billion litres; and
  • Adds scale and diversity to Parkland's supply portfolio in Québec and Atlantic Canada and enhances Parkland's supply relationships.


  • Expected to be immediately accretive to Distributable Cash Flow Per Share by over 20% pre-synergies on a trailing 12 months basis at June 30, 2016;
  • Parkland expects to realize additional accretion in the 36 months following closing through synergies consistent with Parkland's historical run rate;
  • Pro-forma Payout Ratio for Parkland post-acquisition is expected to decrease below 70%; and
  • Pro-forma Total Funded Debt to EBITDA ratio of approximately 3.5 times with a strong deleveraging profile.


The Acquisition and related fees and expenses will be financed as follows:

  • Bought deal private placement of subscription receipts at a price of $24.50 per subscription receipt for gross proceeds of approximately $200 million;
  • $545 million drawn on a new secured revolving credit facility replacing Parkland's existing credit facility and a $300 million bridge facility (collectively, the "Credit Facilities") which have been fully underwritten by The Toronto-Dominion Bank and National Bank of Canada as Co-Lead Arrangers and Joint Bookrunners; and
  • Parkland intends to replace the bridge financing with alternative longer term debt prior to closing of the Acquisition in order to maintain senior funded debt capacity for future acquisitions.

"With our last 12 months Total Funded Debt to EBITDA ratio of 1.7 times, Parkland has flexibility within its capital structure to finance a significant portion of the Acquisition using existing leverage capacity. Parkland's Total Funded Debt to EBITDA is expected to be approximately 3.5 times on a pro-forma basis which is consistent with Parkland's previously-communicated guidance to investors. The Acquired Assets are expected to generate strong cash flow from operations and synergies which will reduce our leverage ratio", said Mike McMillan, Chief Financial Officer.

In order to finance a portion of the Acquisition, Parkland has entered into an agreement with a syndicate of underwriters (the "Underwriters") co-led by TD Securities Inc. and National Bank Financial Inc. to sell 8,200,000 subscription receipts exchangeable into common shares of Parkland ("Shares") upon the closing of the Acquisition (the "Subscription Receipts") on a bought deal private placement basis. The Subscription Receipts will be offered at a price of $24.50 per Subscription Receipt (the "Offering Price") for gross proceeds to Parkland of approximately $200 million (the "Offering"). Parkland has also granted the Underwriters an option, exercisable at any time prior to 48 hours before the closing of the Offering, to purchase up to an additional 1,230,000 Subscription Receipts, on the same terms and conditions as the Offering.

Each Subscription Receipt represents the right to receive one Share, at no additional consideration upon the closing of the Acquisition. If the closing of the Acquisition (the "Acquisition Closing") occurs on or before August 22, 2017, and record dates for one or more cash dividends on the Shares shall have occurred since the closing of the Offering and the Acquisition Closing, each holder of a Subscription Receipt will be entitled to receive cash payments per Subscription Receipt equal to the amount of such per-Share dividends, and paid on the later of the Acquisition Closing or the date the applicable dividend is paid to shareholders.

The net proceeds from the Offering will be deposited in escrow pending the Acquisition Closing. If the Acquisition Closing occurs on or before August 22, 2017, the escrowed proceeds from the offering of Subscription Receipts will be released to the Company and used by the Company to pay a portion of the purchase price for the Acquired Assets. If the Acquisition Closing does not occur by August 22, 2017, holders of the Subscription Receipts will receive the full purchase price of such Subscription Receipts together with their pro rata portion of the interest earned on the escrowed proceeds.

The Subscription Receipts will be offered by way of private placement exemptions to accredited investors in all provinces of Canada, and in the United States on a private placement basis pursuant to exemptions from the registration requirements of the United States Securities Act of 1933, as amended. The Subscription Receipts are subject to a four month hold period, under applicable securities laws in Canada. Closing of the Offering is expected to occur on or about September 7, 2016, subject to Toronto Stock Exchange and other necessary regulatory approvals.

The securities to be offered have not been and will not be registered under the United States Securities Act of 1933, as amended, or under any state securities laws, and may not be offered, sold, directly or indirectly, or delivered within the United States of America and its territories and possessions or to, or for the account or benefit of, United States persons except in certain transactions exempt from the registration requirements of such Act. This release does not constitute an offer to sell or a solicitation to buy such securities in the United States, Canada or in any other jurisdiction where such offer is unlawful.

The Acquisition is subject to the receipt of customary third party consents and regulatory approvals, including approval from the Competition Bureau of Canada and the completion of the CST Transaction. Closing of the Acquisition is expected to be in the first quarter of 2017.


Parkland Fuel Corporation will host a webcast and conference call at 6:00 a.m. MT (8:00 a.m. ET) on August 22nd, 2016 to discuss the Acquisition. Parkland's Senior Leadership Team will be available to take questions from securities analysts, brokers and investors following their formal comments.

Please log into the webcast slide presentation 10 minutes before the start time at:

To access the conference call by telephone, dial toll-free 1-866-225-0198. Callers from the Toronto area should use 416-340-2218. Please connect approximately 10 minutes before the beginning of the call. The webcast will be available for replay one hour after the conference call ends. It will remain available at the link above for one year and will also be posted to

A link to the live webcast and investor presentation will be available on the Investors section of Parkland's website.

If you are unable to participate in the call, a replay will be available by dialing 1-800-408-3053, passcode 9607466 (Canada and USA toll-free). For international callers, please click here to find your dial-in number and use passcode 9607466. A transcript of the broadcast will be posted on the website once it becomes available.


Certain information included herein is forward-looking. Many of these forward looking statements can be identified by words such as "believe", "expects", "expected", "will", "intends", "projects", "projected", "anticipates", "estimates", "continues", "objective" or similar words and include, but are not limited to, statements regarding Parkland's expectation of its future financial position, business and growth strategies and objectives, sources of growth, capital expenditures, financial results, future financing and the terms thereof, future acquisitions and the efficiencies to be derived therefrom, Parkland's leverage and payout ratio pro-forma the Acquisition, and the contribution to EBITDA and/or Adjusted EBITDA and from the Acquisition, timing for completion of the Acquisition, Offering and CST Transaction, the number of company owned locations to be acquired pursuant to the Acquisition, the pro-forma site counts and volumes expected to be derived from the Acquisition, accretive impacts of the Acquisition, expected synergies from the Acquisition, size of the Offering and sources of financing for the Acquisition. 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.

The forward-looking statements contained herein are based upon certain assumptions and factors including, without limitation: historical trends, current and future economic and financial conditions, and expected future developments. Parkland believes such assumptions and factors are reasonably accurate at the time of preparing this press release. However, 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, risks associated with: closing of the Acquistion, closing of the Offering, the failure to achieve the anticipated benefits of acquisitions, including the Acquisition; failure to obtain necessary regulatory or other third party consents and approvals required to complete the Acquisition, CST Transaction and/or the Offering; failure to complete the Acquisition, CST Transaction or the Offering, ability to secure alternative sources of funding to the bridge facility on terms acceptable to Parkland, failure to meet financial, operational and strategic objectives and plans; general economic, market and business conditions; industry capacity; the operations of Parkland's assets, competitive action by other companies; refining and marketing margins; the ability of suppliers to meet commitments; actions by governmental authorities and other regulators including increases in taxes; changes and developments in environmental and other regulations; and other factors, many of which are beyond the control of Parkland. There is a specific risk that Parkland may be unable to complete the Acquisition or the Offering in the manner described in this press release or at all. If Parkland is unable to complete the Acquisition or the Offering there could be a material adverse impact on Parkland and on the value of its securities.

Readers are directed to, and are encouraged to read, Parkland's management discussion and analysis for the six months ended June 30, 2016 (the "Q2 MD&A"), including the disclosure contained under the heading "Risk Factors" therein. The Q2 MD&A is available by accessing Parkland's profile on SEDAR at and such information is incorporated by reference herein.

This press release refers to certain financial measures that are not determined in accordance with International Financial Reporting Standards ("IFRS"). Adjusted EBITDA, Adjusted Gross Profit, Distributable Cash Flow, Distributable cash flow per share, Payout Ratio, Earnings Per Share, Senior Funded Debt and Total Funded Debt to Credit Facility EBITDA are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. Management considers these to be important supplemental measures of Parkland's performance and believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industries. See "Non-GAAP financial measures, reconciliations and advisories" section of the Q2 MD&A. Investors are encouraged to evaluate each adjustment and the reasons Parkland considers it appropriate for supplemental analysis. Investors are cautioned, however, that these measures should not be construed as an alternative to net income determined in accordance with IFRS as an indication of Parkland's performance. The financial measures that are not determined in accordance with IFRS in this press release are expressly qualified by this cautionary statement. Additionally, the estimated annual Adjusted EBITDA contribution from the assets Parkland will acquired pursuant to the Acquisition are based on the financial statements and comparative information of CST which were prepared in accordance with United States (U.S.) generally accepted accounting principles (U.S. GAAP) and converted to Canadian dollars at averaged historical exchange rates on a quarterly basis. Parkland believes such Parkland believes its estimation of annual Adjusted EBITDA, Adjusted Gross Profit, and Distributable Cash Flow per share based on such information is reasonable and but no assurance can be given that these expectations will prove to be correct and such figures should not be unduly relied upon.

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.


Parkland Fuel Corporation is one of North America's fastest growing independent marketers of fuel and petroleum products. We deliver 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.

Contact Information:

Investor and Media Inquiries – French and English
Wendie Godbout
Email contact

To sign up for Parkland news alerts please go to or visit

Return to News Release Listing
24H Emergency