/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/ TSX: SPB
CALGARY, Sept. 2 /CNW/ - Superior Plus Corp. ("Superior") is pleased to announce that it has entered into an agreement to acquire certain assets which make up a retail heating oil and propane distribution business ("Sunoco Retail Heat") from Sunoco, Inc. (R&M), and Sunoco, Inc. both Pennsylvania corporations, for an aggregate purchase price of approximately US$82.5 million in cash plus working capital. Closing of the acquisition is subject to customary regulatory and commercial closing conditions and is anticipated to be completed in September 2009.
Sunoco Retail Heat is a US distributor of a broad range of liquid fuels and propane gas serving markets in Pennsylvania and New York which also provides comprehensive services to its customers. Sunoco Retail Heat has a distribution network which includes the operation of two pipeline-supplied fuel terminals and 22 retail bulk plants providing up to 20 million gallons of storage capacity in its core markets. In 2008, Sunoco Retail Heat delivered approximately 160 million gallons of heating oil, gasoline, diesel fuel, kerosene and propane to a diversified customer base of 97,000 residential and commercial customers including residential homeowners, agriculture and construction companies, municipalities and schools. Sunoco Retail Heat services its customers through a modernized fleet of approximately 356 delivery and service vehicles with an average age of less than 7.5 years. Sunoco Retail Heat's management team has demonstrated significant growth both organically and through acquisitions by completing 37 transactions since 1999 while successfully managing through various economic cycles.
Grant Billing, Chairman and Chief Executive Officer of Superior, stated that, "We are very pleased to enter into this transaction to expand our fuel distribution business as part of Superior's growth strategy. Sunoco Retail Heat's business operations in Pennsylvania and New York are an excellent strategic fit and are complementary to Superior's existing propane distribution operations in Canada. In addition to increasing residential and commercial heating oil products and services, Sunoco Retail Heat's distribution network will expand Superior's fuel distribution footprint into the United States."
The heating oil and propane distribution business is highly fragmented throughout the north-eastern United States and eastern Canada. Superior intends to pursue additional acquisition and consolidation opportunities in the industry, enhance Sunoco Retail Heat's propane and service offerings as well as expand heating oil distribution at some of Superior Propane's current locations.
Sunoco Retail Heat's fuel distribution mix consists of approximately 81% distillates (principally heating oil and diesel fuel), 15% gasoline, and 4% propane based upon 2008 volumes. Sunoco Retail Heat has a diversified customer profile consisting of 88% residential customers and 12% commercial customers. Similar to Superior Propane's operations, Sunoco Retail Heat provides its customers with a full service offering of reliable fuel delivery and high quality heating, ventilation, and air conditioning support services.
The transaction after accounting for the equity offering is expected to be accretive to Adjusted Operating Cash Flow per share ("AOCF") adding approximately 2 cents per share based on 2010 forecasted projections. The 12 month trailing EBITDA up to June 30, 2009 was approximately US$14 million. The proposed acquisition of Sunoco Retail Heat is expected to increase Superior's AOCF and expand its geographic and market diversification providing additional support for a stable dividend in the future.
In addition, Superior is pleased to announce that it has entered into an agreement, on a bought deal basis, with a syndicate of underwriters co-led by TD Securities Inc., Scotia Capital Inc., and National Bank Financial Inc., and including CIBC, BMO Capital Markets and Cormark Securities Inc. for an offering of 3,970,000 common shares at $11.35 per share to raise gross proceeds of approximately $45 million. Closing is expected to occur on or about September 23, 2009 and is subject to customary regulatory approvals. Superior has also granted the underwriters a 15% over-allotment option to purchase, on the same terms, up to an additional 595,500 of Superior shares. This option is exercisable, in whole or in part, by the underwriters at any time up to 30 days after closing. If the option is exercised in full, the total gross proceeds raised under this offering will be approximately $52 million. Closing of the financing is not subject to the successful completion of the Sunoco acquisition. The remainder of the purchase price will be financed by Superior drawing on its $570 million syndicated credit facility.
Conference Call ---------------
Superior will be conducting a conference call and webcast for investors, analysts, brokers and media representatives to discuss the acquisition of Sunoco Retail Heat at 7:30 a.m. MST on September 2, 2009. To participate in the call, dial: 1-800-731-5319. A recording of the call will be available for replay until midnight, October 3, 2009. To access the recording, dial: 1-877-289-8525 and enter pass code: 21313980, followed by the pound key. Internet users can listen to the call live, or as an archived call, on Superior's website at www.superiorplus.com.
Corporate Presentation ---------------------- A corporate presentation discussing the acquisition of Sunoco Retail Heat can be found on Superior's website at www.superiorplus.com under the presentation section. About the Corporation ---------------------
Superior is a diversified corporation. Superior holds 100% of Superior Plus LP, a limited partnership formed between Superior General Partner Inc., as general partner and Superior as limited partner. Superior Plus is focused on stability of dividends with value growth and has four Canadian based operating businesses: Superior Propane is Canada's largest distributor of propane and related products and services; ERCO Worldwide is a leading supplier of chemicals and technology to the pulp and paper industries and a regional Midwest supplier of chloralkali and potassium products; Winroc is a leading distributor of walls and ceilings construction products in North America; and Superior Energy Management provides fixed-price natural gas supply services in Ontario, Quebec, and British Columbia along with fixed-price electricity supply services in Ontario.
Superior's shares and convertible debentures trade on the TSX as follows: Trading Symbol Security Issued and Outstanding ------------------------------------------------------------------------- SPB Common Shares 88.4 million SPB.db.b 5.75% Debentures, Series 1 $174.9 million principal amount SPB.db.c 5.85% Debentures, Series 1 $75.0 million principal amount SPB.db.d 7.5% Debentures $60.0 million principal amount -------------------------------------------------------------------------
Forward Looking Information
Certain information included in this Press Release is forward-looking, within the meaning of applicable Canadian securities laws. Much of this information can be identified by looking for words such as "believe", "expects", "expected", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words. In particular, this press release includes forward-looking information pertaining to the completion and proposed timing of the acquisition of Sunoco Retail Heat (the "Acquisition"), Superior's business strategy including future plans to expand the acquired Sunoco Retail Heat's facilities; the perceived benefits of the Acquisition, future adjusted operating cash flows and future dividends. Superior believes the expectations reflected in such forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.
Forward-looking information is based on current information and expectations that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to, risks associated with the ability to satisfy regulatory and commercial closing conditions of the Acquisition, the uncertainty associated with accessing capital markets and the risks related to Superior's businesses including those identified in Superior's 2008 Annual Information Form under the heading "Risk Factors". Reference should be made to this additional information prior to making any investment decision. Forward looking information contained in this press release is made as of the date hereof and is subject to change. The company assumes no obligation to revise or update forward looking information to reflect new circumstances, except as required by law.