Genesis Energy has announced the sale of its soda ash manufacturing and related operations, known as the Alkali Business, to an indirect affiliate of WE Soda.
The transaction’s implied enterprise value is $1.42bn, inclusive of working capital at closing, marking a significant development in the industry.
Genesis Energy will retain the overriding royalty interest (ORRI) bonds, which have approximately $390m of remaining principal net of restricted cash. These bonds will remain an ongoing obligation of the Alkali Business.
Genesis Energy CEO Grant Sims said: “This transaction gives Genesis the financial flexibility to accelerate the process of simplifying our capital structure. With the sale of the Alkali Business, our primary focus will once again be on the midstream energy space and our industry-leading businesses therein.
“We anticipate using these cash proceeds to pay down our senior secured revolving credit facility, to permanently retire unsecured debt and to repurchase corporate convertible preferred equity securities, each in amounts yet to be finally determined. We believe this transaction gives us immediate financial flexibility to look at ways to further drive value for our unitholders, as well as everyone else in the capital structure.”
As a result of the transaction, Genesis Energy has received approximately $1.01bn in cash, net of all adjustments and after the payment of anticipated transaction-related fees and expenses.The transaction could potentially generate a tax gain for holders of Genesis Energy’s common units.
Citi served as the exclusive financial advisor, while Paul Hastings provided legal counsel to Genesis Energy during the transaction.
Genesis Energy is a diversified midstream energy master limited partnership headquartered in Houston, Texas. The company’s operations are primarily situated in the Gulf Coast region of the US and the Gulf of Mexico.
The company’s operations include offshore pipeline transportation, sulphur services, onshore facilities and transportation, and marine transportation.
