Tesoro Logistics Buys Alaska Storage, Terminalling Assets From Tesoro For $444 Million

Tesoro Logistics LP (NYSE: TLLP) disclosed it agreed to buy storage and terminalling assets in Alaska owned by subsidiaries of Tesoro Corporation (NYSE: TSO), for a consideration of $444 million. According to the company, the Alaska storage and terminalling assets included crude oil, as well as, refined product storage at Tesoro's Kenai Refinery apart from the two refined product terminals.

Tesoro said the assets are expected to provide net earnings of $36 million and EBITDA of $51 million on an annualized basis. The company expects the transaction to close in two stages. While the storage portion of the acquisition was closed on Friday, the company expects the acquisition of the Anchorage and Fairbanks terminals to close in the third quarter once the Consent Decree with the Alaska state becomes effective.

The company's chairman and CEO, Greg Goff, commented, "The acquired assets serve as a critical component in the Alaska supply chain and enable TLLP to provide an integrated, full-service logistics solution in the region while contributing stable fee-based cash flows. We remain committed to achieving our 2017 target of $650 million in net earnings and $1 billion of annual EBITDA and expect this transaction to be immediately accretive to unitholder distributions."

Tesoro paid $266 million in consideration for the first closing, i.e. storage assets), financed with $239 million of borrowings on its revolving credit facility and $27 million of common and general partner units to Tesoro. As far as the second closing of the terminal assets, the company would pay $178 million comprising $160 million cash and $18 million general partner units.

At time of writing, Tesoro Logistics was down 0.1 percent on the day, trading at $49.48.

Market News and Data brought to you by Benzinga APIs

To add Benzinga News as your preferred source on Google, click here.