Tuesday 11 December, 2018

Sir Kyffin: Sol purchase by Parkland will boost investor confidence

The Sol name is supposed to remain.

The Sol name is supposed to remain.

Canada's Parkland Fuel Corporation will acquire 75 per cent of SOL Investments Limited (SOL).

Parkland Fuel Corporation is Canada's largest and one of North America's fastest growing independent marketers of fuel and petroleum products and a leading convenience store operator. The business transcation is between Parkland and SOL Investments Limited (“SIL”) and its subsidiaries (collectively, “SOL”).  A privately-held company owned by the Simpson Group, SOL is the largest independent fuel marketer in the Caribbean and a wholly-owned subsidiary of SOL Limited.

In a news release issued today on the Parland.ca website, it stated that Sir Kyffin Simpson, CBE, Founder of SOL Limited said: 

“I am exceptionally pleased to announce the coming together (Business Combination) of Parkland and SOL, which will ensure an exciting and dynamic future for everyone.  With a desire to continue to develop and grow the business through expansion in new areas, I am extremely blessed to bring in our good friends Parkland of Canada to the Caribbean.  I have long admired Parkland as a company with their futuristic vision and energy, and I have been tremendously impressed with Bob Espey’s strong leadership along with his exceptional management team.”

“I am truly confident that this coming together with the fantastic team at SOL will be a complementary blend of cultures, ideas, technology and innovation.  I am convinced that Parkland and SOL are perfectly matched to develop new and exciting opportunities, with renewed energy that will provide excellent avenues for the development of our people that will in turn enhance our customer experience and open new doors for great synergies and improved logistics.  With forty-three million people and a GDP of more than US$200 billion, this is the perfect time to take advantage of the tremendous opportunities that abound in the Caribbean.”

“This coming together will also provide a big boost of confidence for regional investment opportunities and we are happy to do our part in this regard.  Please therefore join with me in welcoming this wonderful team and organization to the region.   I pray God’s richest blessings on this coming together and I look forward to what the future has in store for us all.”

And on the flip side, SOL’s Simpson Group is set to own 9.9 per cent of Parkland as part of the transaction.

SOL supplies and markets a total of 4.8 billion liters of fuel volume annually across 23 countries in the Caribbean and generated US$215 million  in adjusted earnings before taxes, depreciation and amortization in the 12-month period ending June 2018. 

The Transaction will result in Parkland acquiring 75 per cent of the issued and outstanding shares in the capital of SIL (the “SIL Shares”) for total consideration of US$1.21 billion plus customary post-closing adjustments on a cash-free and debt-free basis (the “Purchase Price”), and SOL Limited acquiring 12.16 million common shares in the capital of Parkland (the “Parkland Shares”). This equates to a purchase price multiple on the 75% equity interest in SOL of approximately 7.5x

Upon closing the Simpson Group, through its ownership in SOL Limited, will own approximately 9.9% of the issued and outstanding shares in Parkland and its intention is to remain a long-term investor in Parkland. The Transaction is expected to be immediately accretive to Parkland’s distributable cash flow per share by approximately 17% (pre-synergies).

The remaining 25% of the shares outstanding in SIL are subject to the Minority Purchase/Sale Right (as defined below) pursuant to which Parkland may elect to acquire or SOL Limited may elect to sell the remaining shares in the capital of SIL. 

 

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