Genesis Energy, L.P. Completes Joint Venture to Enter Into Marine Transportation Business
HOUSTON--(Business Wire)--
Genesis Energy, L.P. (AMEX:GEL) announced today that it has
completed the previously announced transaction to form an inland barge
transportation joint venture with an entity ("TD Marine") owned and
controlled by certain principals of the Davison family of Ruston,
Louisiana. The joint venture, DG Marine Transportation, LLC ("DG
Marine") acquired the inland marine transportation of Grifco
Transportation, Ltd. and certain related entities ("Grifco"). TD
Marine owns 51% and Genesis owns 49% of DG Marine.
Grifco received initial purchase consideration of approximately
$80 million comprised of $63.3 million in cash and $16.7 million in
Genesis common units, a portion of which are subject to certain
lock-up restrictions. DG Marine has acquired from Grifco twelve
existing barges, seven existing push boats, the economic benefits of
certain commercial agreements, and office space. Additionally, DG
Marine has acquired the rights and obligations to take delivery of
four new barges in the third quarter of 2008 and four additional
barges in the first quarter of 2009 (for a total contract price of
approximately $27 million). Upon delivery of the eight new barges, the
acquisition of three additional push boats (at an estimated cost of
approximately $6 million), and the placing in commercial operations of
all such newly acquired assets, DG Marine will be obligated to pay
Grifco an additional $12 million in cash as additional purchase
consideration bringing the total value of the joint venture investment
to approximately $125 million.
The operations of the acquired business will serve refineries and
storage terminals along the Gulf Coast, Intracoastal Canal and western
river systems of the United States, including the Red, Ouachita and
Mississippi Rivers on which Genesis has significant existing
terminals.
The fleet will continue to conduct business as "Grifco" and be
operated by its existing employees under the leadership of Mr. E.C.
"Red" Griffin. Clay Griffin will continue in his role as President,
and Rick Alexander will continue as Vice President - Sales.
$32.9 million of the initial purchase consideration described
above was drawn under a $75 million bank-syndicated revolving credit
facility, arranged jointly by SunTrust Robinson Humphrey and BMO
Capital Markets, at the DG Marine level, non-recourse to either of the
joint venture participants other than their equity investments in DG
Marine, Under the new credit facility there remains $42.1 million of
availability to fund working capital needs, future growth, and future
consideration described above.
Genesis Energy, L.P. is a diversified midstream energy master
limited partnership headquartered in Houston, Texas. Genesis is
engaged in four business segments. The Pipeline Transportation
Division is engaged in the pipeline transportation of crude oil,
carbon dioxide, and, to a lesser extent, natural gas. The Refinery
Services Division primarily processes sour gas streams to remove
sulfur at refining operations, principally located in Texas, Louisiana
and Arkansas. The Supply and Logistics Division is engaged in the
transportation, storage and supply of energy products, including crude
oil and refined products. The Industrial Gases Division produces and
supplies industrial gases such as carbon dioxide and syngas. Genesis'
operations are primarily located in Texas, Louisiana, Arkansas,
Mississippi, Alabama, and Florida.
This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Act of 1934. Although we believe that our
expectations are based upon reasonable assumptions, we can give no
assurance that our goals will be achieved. Important factors that
could cause actual results to differ materially from those in the
forward looking statements herein include the timing and extent of
changes in commodity prices for oil, ability to obtain adequate credit
facilities, managing operating costs, completion of capital projects
on schedule and within budget, consummation of accretive acquisitions,
capital spending, environmental risks, government regulation, our
ability to meet our stated business goals and other risks noted from
time to time in our Securities and Exchange Commission filings. Actual
results may vary materially. We undertake no obligation to publicly
update or revise any forward looking statement.
Genesis Energy, L.P.
Ross A. Benavides, 713-860-2528
Chief Financial Officer
Copyright Business Wire 2008
