Brookfield Asset Management has closed a US$260 million preferred stock equity investment in Superior Plus.
Toronto-headquartered Superior (TSX: SPB) provides delivery, wholesale procurement and retail marketing of propane-related products, and distributes fuels including heating oil and propane gas, to customers in Canada and the northeastern United States.
The company also operates ERCO Worldwide, a producer of specialty chemicals including sodium chlorate and chlor-alkali products that are used in the pulp and paper, food, energy, agriculture, water treatment, airport de-icing, and fertilizer sectors. Toronto-based ERCO operates eight production facilities in North America and one in Chile and is the second-largest producer of sodium chlorate in North America.
The investment in Superior will be used for add-on acquisitions in the consolidating US propane market which is seeing lower valuations as a result of the COVID-19 pandemic; and repayment of debt that will lower the company’s TTM total debt to adjusted EBITDA leverage ratio to approximately 3.2x.
“Acquisitions are becoming increasingly attractive as fewer competing buyers are pursuing growth at the current time,” said Luc Desjardins, CEO of Superior. “We are excited to partner with Brookfield on the execution of our strategy. Our differentiated business platform, combined with the improved financial strength and enhanced liquidity resulting from the Brookfield investment, positions Superior to become the leading consolidator in the US propane industry, which we view as a highly opportunistic environment.”
With the close of the investment from Brookfield, Superior has added Angelo Rufino, a managing partner of Brookfield, to its board of directors. The newly issued preferred stock will initially pay a 7.25% cash dividend through 2027 and can be exchanged into common shares of Superior at a price of US$8.67 per share. This represents approximately 15% of the pro forma fully diluted outstanding common shares of Superior.
“We are pleased to partner with Superior as they continue to execute on their proven strategy of accretive tuck-ins and larger-scale acquisitions,” said David Levenson, a managing partner at Brookfield. “We believe Superior is well-positioned to benefit from the ongoing consolidation of the North American propane market and look forward to supporting the business as it pursues growth opportunities.”
Brookfield Asset Management (NYSE: BAM) is an alternative asset management company with a focus on real estate, renewable power, infrastructure, and private equity. The company, with $515 billion in assets under management, is headquartered in Toronto with additional offices in New York City, London, Rio de Janeiro, and Sydney.
CIBC Capital Markets was the financial advisor and private placement agent to Superior.
Private Equity Professional | July 16, 2020