Private Equity: Superior Plus Announces Investment Deal with Brookfield Asset Management
Superior Plus Corp. (TSX: SPB, SUIIF OTC) announced that Brookfield Asset Management Inc., through its Special Investments program, agreed to make a US$260 million equity investment. The deal comes through the purchase of newly created perpetual exchangeable Series 1 Preferred Stock of a U.S. subsidiary of Superior on a private placement basis.
About Superior Plus Deal
Superior Plus Corp. is in the energy distribution and specialty chemical businesses in Canada, the United States, and Chile. The company’s Energy Distribution segment provides distribution, wholesale procurement, and related services for propane, heating oil, and other refined fuels. Its Specialty Chemicals segment supplies sodium chlorate and technology to the pulp and paper industries, as well as potassium and Chlor-alkali products.
There are several immediate benefits to Superior from the equity infusion. I t will enable the company to make acquisitions in the fractured U.S. Propane Industry. Weakness from the economic shut down has caused many propane companies to become available at valuations that offer the prospect for high returns for buyers.
The deal also strengthens Superior’s balance sheet with an immediate reduction in the Total Debt to Adjusted EBITDA Leverage Ratio to approximately 3.2x based on the trailing twelve months Adjusted EBITDA as of April 30, 2020, placing Superior in its long-term targeted leverage range of 3.0x to 3.5x.
Superior also gains a deep-pocketed partner with substantial experience in making acquisitions as Brookfield is one of the biggest deal-making companies in the world today and has experience in energy and private equity.
The shares of Preferred Stock may be exchanged, at Brookfield’s option, into common shares of Superior at a Canadian dollar equivalent exchange price of $11.63 per Common Share, representing a 24% premium to the 20-day volume-weighted average trading price of the Common Shares on the Toronto Stock Exchange as of June 5, 2020. On an as-exchanged basis, the Brookfield Investment currently represents approximately 15% of the pro forma fully diluted outstanding Common Shares.
The closing date is expected to occur by the end of July 2020, subject to receipt of TSX approval and other necessary regulatory approvals.
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