CALGARY, Dec. 8, 2011 /CNW/ - Keyera Corp. (TSX:KEY) (TSX:KEY.DB.A)
("Keyera") announced today it has entered into an agreement to purchase
Alberta EnviroFuels ("AEF"), an iso-octane manufacturing business
jointly owned by Chevron Standard Ltd. ("Chevron") and Neste Canada
Inc. ("Neste"). Iso-octane is a low emission, high octane gasoline
blending component derived from butane, a key component of Keyera's
natural gas liquids ("NGL") business.
The acquisition includes: a 13,600 barrel per day iso-octane
manufacturing facility located one kilometre south of Keyera's Edmonton
Terminal; pipelines associated with the facility; and iso-octane sales
agreements with major refiners. Keyera has also entered into multi-year
agreements with Chevron and its affiliates relating to sales,
transportation, downstream processing, and shipping of iso-octane. The
purchase price is US$198 million, subject to closing adjustments, plus
working capital estimated at US$50 million primarily related to butane
and iso-octane inventories. Closing of the acquisition is subject to
regulatory approvals. Keyera is targeting closing in early 2012 and
has the capacity to finance the acquisition with its recently increased
bank credit facility.
"AEF is another long-term, strategic asset that will add value to our
integrated business strategy," said Jim Bertram, CEO of Keyera Corp.
"We are experienced operators of large facilities and have a successful
track record marketing energy products across North America. AEF is a
world class asset and the personnel joining our team will be a great
addition to our organization."
AEF is the largest iso-octane manufacturing facility in the world. The
facility uses butane as the primary feedstock and is connected by
pipeline through Keyera's Edmonton Terminal with the rest of Keyera's
NGL infrastructure in the Edmonton/Fort Saskatchewan area. Keyera has
been a supplier of butane feedstock to AEF for over a decade and plans
to use its pipeline, rail and storage infrastructure to create
synergies with AEF's operations. Iso-octane manufactured at AEF is
shipped via the Trans Mountain Pipeline to Chevron's Burnaby, B.C.
refinery and onward to customers in California. AEF also sells
iso-octane to refiners in Alberta.
The AEF organization is a high-performing team with an excellent track
record of safe and reliable operations. AEF has a modern and
well-maintained facility, and the site includes approximately 80 acres
of undeveloped land available for future development.
AEF's operating margin is sensitive to the prices of butane (the primary
feedstock), iso-octane (the primary product) and the other gasoline
blendstocks that compete with iso-octane. As a result, the financial
performance can vary considerably from season to season and from year
to year. Financial performance can also be affected by apportionment
issues on the Trans Mountain Pipeline and by turnarounds at the AEF
plant scheduled every four years. Keyera estimates that AEF's average
annual EBITDA for the period January 2008 through June 2011 was
approximately Cdn$37 million. Annual maintenance costs are expected to
average between Cdn$6 million and Cdn$9 million per year, excluding
turnaround costs which are budgeted at approximately Cdn$18 million for
2012.
About Keyera Corp.
Keyera Corp. (TSX:KEY) (TSX: KEY.DB.A) operates one of the largest
natural gas midstream businesses in Canada. Its business consists of
natural gas gathering and processing as well as the processing,
transportation, storage and marketing of natural gas liquids (NGLs) and
crude oil midstream activities.
Keyera's gas processing plants and associated facilities are
strategically located in the west central and foothills natural gas
production areas of the Western Canada Sedimentary Basin. Its NGL and
crude oil infrastructure includes pipelines, terminals and processing
and storage facilities in Edmonton and Fort Saskatchewan, Alberta, a
major North American NGL hub. Keyera markets propane, butane and
condensate to customers in Canada and the United States.
Disclaimer
This document contains forward-looking statements based on management's
current expectations and assumptions relating to Keyera's business, the
environment in which it operates, anticipated timing and closing of the
acquisition and the future operations and performance of the assets.
As Keyera does not yet own the assets to be acquired, all information
regarding such assets contained herein has been derived by necessity
from information provided by the vendors and other third parties.
Because the AEF business was run as a joint venture, the estimated
historical average EBITDA is based on extrapolated financial data
adjusted for an unusual inventory write down in 2008.
The forward-looking statements contained in this document depend upon
future events and as a result, actual outcomes may differ materially
depending on factors such as: satisfaction or waiver of all conditions
to closing of the acquisitions, including obtaining all necessary
regulatory approvals; closing of the transactions occurring on time and
without amendment; future operating results of the assets; future
operating results of Keyera's business segments and the components of
those results; Keyera's ability to execute its strategic initiatives;
commodity and product supply/demand balances and prices; interest
rates; activities of producers, refiners, competitors, customers,
business partners and others; overall economic conditions; access to
capital and financing alternatives; operational risks; potential delays
in planned growth projects; turnaround costs, maintenance costs and
capital expenditures associated with the assets to be acquired; the
legislative, regulatory and tax environment; potential legislative
changes with respect to gasoline emissions and the associated impact on
demand for gasoline and gasoline blending products; availability and
cost of product pipeline, shipping and other transportation
alternatives; the weather; as well as other known or unknown factors.
Estimated annual maintenance costs are based on Keyera's analysis of
AEF's historic costs and its experience as an operator of complex
facilities. The anticipated working capital adjustment is based on an
analysis of trends in AEF's inventory levels and anticipated feedstock
and product prices at the time of closing. Specific regulatory
approvals required in order for Keyera to close the acquisition of AEF
include approvals or clearances under the Competition Act (Canada) and the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (US). There is no guarantee that these approvals will be received on a
timely basis, on acceptable conditions or at all. Further, there can
be no assurance that the results or developments anticipated by Keyera
in connection with this acquisition will be realized or that the
acquisition will have the expected consequences or effects on Keyera.
For additional information on the risks associated with Keyera's
business see Keyera's public filings on www.sedar.com.
The forward looking statements contained in this document speaks only as
of the date hereof.
