* Deal valued at $2.1 billion, including debt
* To pay minority shareholders $14 in cash for each
* To pay $12 per unit to majority shareholders
(Adds background on U.S. petrochemical plants)
May 28 A Koch Industries Inc unit
will take PetroLogistics LP private in a deal worth $2.1
billion, including debt, gaining control of a plant that can
convert cheap U.S. shale gas into propylene, a key petrochemical
used to make plastics.
PetroLogistics' propane dehydrogenation plant produces about
1.45 billion pounds of propylene per year. Propylene is also
used to make paints, coatings, building materials, clothing,
automotive parts and packaging, among other things.
The unit, Flint Hills Resources LLC, a refining,
chemicals and biofuels company, will also buy all of the
membership interests in PetroLogistics general partner
PetroLogistics GP LLC.
"(PetroLogistics') capabilities are well aligned with our
existing chemical and refining business," Flint Hills Chief
Executive Brad Razook said in a statement.
A number of companies, including Dow Chemical Co,
Enterprise Products Partners LP and BASF SE,
are building plants in the United States to convert natural gas
Natural gas is about three times cheaper in the United
States than in Europe, thanks to the shale boom, giving U.S.
petrochemical companies a significant advantage over their
oil-dependent European rivals.
Propylene has traditionally been made from the oil
distillate naphtha, but cheap shale is gaining importance as a
Koch, with annual revenue of $115 billion, was the
second-largest private company in the United States in 2013,
according to Forbes. The company is led by brothers David and
Charles Koch, two of the world's richest men.
Flint Hills will pay $14 in cash for each PetroLogistics
unit to minority shareholders who own 27 percent of the company.
A group of shareholders who control the remaining 73 percent
stake will get $12 per unit.
This group includes Lindsay Goldberg LLC, York Capital
Management, PetroLogistics' executive chairman, David Lumpkins,
and its chief executive, Nathan Ticatch.
The minority shareholders will get $526.2 million, while the
majority shareholders will get $1.22 billion, according to
PetroLogistics' units closed at $12.93 on the New York Stock
Exchange on Tuesday.
Goldman Sachs & Co is Flint Hills' financial adviser, while
Morgan Stanley & Co LLC and Evercore Partners are financial
advisers to PetroLogistics.
Jones Day is Flint Hills' legal adviser, while Weil, Gotshal
& Manges LLP and Vinson & Elkins LLP are legal advisers to
(Reporting by Swetha Gopinath in Bangalore; Editing by Savio
D'Souza and Simon Jennings)