Blueknight Energy Partners, L.P. (NASDAQ: BKEP - Common Units) (NASDAQ:
BKEPP - Preferred Units) ("BKEP" or the "Partnership"), announced today
that a wholly-owned subsidiary of BKEP is expected to acquire two
asphalt terminalling facilities located in Bainbridge, GA, and Muskogee,
OK. The Bainbridge, GA, facility will be acquired from Ergon Asphalt &
Emulsions, Inc., a Mississippi corporation ("EA&E"),
and Ergon Terminaling, Inc., a Mississippi corporation ("ETI").
ETI and EA&E are subsidiaries of Jackson, Mississippi-based Ergon, Inc.
("Ergon"), which owns 100% of the outstanding membership interests of
the General Partner of BKEP. In addition, Ergon will assign a long-term
storage, throughput and handling agreement with a third-party for the
Bainbridge facility. The Muskogee, OK, facility will be acquired from
Frontier Terminal, LLC ("Frontier") and
Cummins Investment Corporation ("CIC").
BKEP has also entered into two third-party storage, throughput and
handling agreements associated with the Muskogee terminal that will be
effective upon closing of the transaction.
Purchase price for the two terminals is expected to total $32.5 million,
consisting of $10.5 million of BKEP common units to be issued to a
subsidiary of Ergon in a private placement at a market price and $22.0
million in cash. The acquisition of the Bainbridge, GA, facility is
still subject to the execution of definitive agreements, which is
expected prior to December 1st, but the principal terms of
the transaction are finalized. The Muskogee acquisition definitive
agreements have been entered into and the closing of the transaction is
subject to the assignment of certain leases and other customary closing
conditions. Both transactions are expected to close in the fourth
quarter. Once the transactions described are closed, Blueknight will own
a network of 56 asphalt terminals in 26 states with a combined capacity
of 10.3 million barrels of asphalt and residual fuel oil storage.
Mark Hurley, BKEP CEO, stated, "We are pleased to announce the expected
acquisition of the Bainbridge, GA, and Muskogee, OK, asphalt terminals.
The Bainbridge, GA, terminal represents the first of two anticipated
drop-downs discussed at the time of the Ergon acquisition of BKEP's
General Partner in October 2016. The facility includes approximately
200,000 barrels of storage and comes with a long-term contract with a
credit-worthy third-party customer. The Muskogee terminal includes
500,000 barrels of storage and 245 acres of property, 150 of which we
expect to further develop in the future. BKEP has entered into two
long-term storage, throughput and handling contracts with credit-worthy
third-party customers. Both customers will continue to market asphalt
products out of the Muskogee facility and both are well established in
the asphalt industry. We have enjoyed long-standing, mutually beneficial
relationships with each of them and we look forward to further
developing and expanding our relationships. These transactions total
$32.5 million at an expected EBITDA multiple of less than 9.0x, and will
be immediately accretive and leverage neutral. These acquisitions
primarily represent the reinvestment of proceeds received from 2017
asset sales and include high-quality long-term contracts at very
reasonable acquisition multiples. We will provide more details on these
acquisitions on tomorrow afternoon's earnings conference call."
The Conflicts Committee of the Board of Directors of Blueknight Energy
Partners G.P., L.L.C., the General Partner of BKEP, approved the
acquisition of the Bainbridge, GA, facility.
About Blueknight Energy Partners, L.P.
BKEP owns and operates a diversified portfolio of complementary
midstream energy assets consisting of approximately 9.6 million barrels
of combined asphalt product and residual fuel oil storage located at 54
terminals in 26 states, 7.0 million barrels of crude oil storage located
in Oklahoma and Texas, approximately 6.6 million barrels of which are
located at the Cushing, Oklahoma, Interchange, approximately 670 miles
of crude oil pipeline located primarily in Oklahoma and Texas and
approximately 200 crude oil transportation and oilfield services
vehicles deployed in Kansas, Oklahoma and Texas. BKEP provides
integrated services for companies engaged in the production,
distribution and marketing of crude oil, asphalt and other petroleum
products. BKEP is headquartered in Oklahoma City, Oklahoma. For more
information, visit the Partnership's web site at www.bkep.com.
This release includes forward-looking statements. Statements included in
this release that are not historical facts are forward-looking
statements. These statements are based on certain assumptions made by
the Partnership and its general partner based upon management's
experience and perception of historical trends, current conditions,
expected future developments and other factors the Partnership and its
general partner believe are appropriate in the circumstances. These
statements include, but are not limited to, statements about the
consummation and benefits of the acquisitions of the asphalt terminals
and other statements about future financial and operating results,
objectives, expectations and intentions that are not historical facts.
Such forward-looking statements are subject to various risks and
uncertainties. These risks and uncertainties include, among other
things, satisfaction of the closing conditions to the transactions
described above, uncertainties relating to the Partnership's future cash
flows and operations, the Partnership's ability to pay future
distributions, future market conditions, current and future governmental
regulations, future taxation and other factors discussed in the
Partnership's filings with the SEC. If any of these risks or
uncertainties materializes, or should underlying assumptions prove
incorrect, actual results or outcomes may vary materially from those
expected. The Partnership undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
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Investor Relations, 918-237-4032
Brent Gooden, 405-715-3232 or 405-818-1900