Calgary, Alberta, October 10, 2018 (GLOBE NEWSWIRE) — Parkland Fuel Corporation (“Parkland”, “We”, “Our” or “Us”), (TSX:PKI) Canada’s largest and one of North America’s fastest growing independent marketers of fuel and petroleum products and a leading convenience store operator, and SOL Limited have entered into an agreement to complete a business combination (the “Business Combination” or “Transaction”) between Parkland and SOL Investments Limited (“SIL”) and its subsidiaries (collectively, “SOL”). A privately-held company owned by the Simpson Group, SOL is the largest independent fuel marketer in the Caribbean and a wholly-owned subsidiary of SOL Limited.
SOL supplies and markets a total of 4.8 billion liters of fuel volume annually across 23 countries in the Caribbean and generated US$215 million (approximately C$280 millioni) in adjusted earnings before taxes, depreciation and amortization (“Adjusted EBITDA”) in the 12-month period ending June 2018.
The Transaction will result in Parkland acquiring 75% of the issued and outstanding shares in the capital of SIL (the “SIL Shares”) for total consideration of US$1.21 billion (approximately C$1.57 billion) plus customary post-closing adjustments on a cash-free and debt-free basis (the “Purchase Price”), and SOL Limited acquiring 12.16 million common shares in the capital of Parkland (the “Parkland Shares”).
This equates to a purchase price multiple on the 75% equity interest in SOL of approximately 7.5x Adjusted EBITDA, excluding working capital. Upon closing the Simpson Group, through its ownership in SOL Limited, will own approximately 9.9% of the issued and outstanding shares in Parkland and its intention is to remain a long-term investor in Parkland. The Transaction is expected to be immediately accretive to Parkland’s distributable cash flow per share by approximately 17% (pre-synergies).
The remaining 25% of the shares outstanding in SIL are subject to the Minority Purchase/Sale Right (as defined below) pursuant to which Parkland may elect to acquire or SOL Limited may elect to sell the remaining shares in the capital of SIL. Based on SOL’s Adjusted EBITDA for the 12-month period ending June 2018, the Adjusted EBITDA attributable to Parkland from the 75% ownership stake in SOL would have been US$161 million (approximately C$210 million), representing 75% of SOL’s Adjusted EBITDA for the period.
Parkland President and CEO Bob Espey said, “The addition of SOL will extend our global supply reach and enable us to continue to build our supply advantage to benefit our entire business. With its integrated supply chain backed by an extensive distribution network, fortress assets, a premier brand portfolio and an exceptional team, SOL has built a strong market position with unparalleled regional scale.
Together, Parkland and SOL create a significant North American and Caribbean growth platform. We are delighted to partner with the Simpson Group and welcome the opportunity to work with SOL’s strong management team to optimize and grow SOL’s industry leading retail and supply network through our combined scale and expertise.”
Sir Kyffin Simpson, CBE, Founder of SOL Limited said, “I am exceptionally pleased to announce the coming together (Business Combination) of Parkland and SOL, which will ensure an exciting and dynamic future for everyone.
With a desire to continue to develop and grow the business through expansion in new areas, I am extremely blessed to bring in our good friends Parkland of Canada to the Caribbean. I have long admired Parkland as a company with their futuristic vision and energy, and I have been tremendously impressed with Bob Espey’s strong leadership along with his exceptional management team.”