SPRAGUE RESOURCES LP (NYSE:SRLP) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On March 13, 2017, Sprague Operating Resources LLC (“Sprague”), a
wholly owned subsidiary of Sprague Resources LP (“Sprague
Resources”), entered into an Asset Purchase Agreement (the
“Agreement”) with Carbo Industries, Inc. (“Carbo Industries”),
Carbo Realty, LLC, and Paul Hochhauser (collectively, “Carbo”) to
acquire Carbo’s Inwood and Lawrence, New York refined product
terminal assets (the “Purchased Assets”). Terms used but not
otherwise defined herein are used as defined in the Asset Purchase
Agreement. On March 13, 2017, Sprague Resources and Carbo
Industries also entered into a Unit Purchase Agreement (the “Unit
Purchase Agreement”) relating to the issuance of common units of
Sprague Resources in connection with the transactions contemplated
by the Agreement, as described in greater detail below.
wholly owned subsidiary of Sprague Resources LP (“Sprague
Resources”), entered into an Asset Purchase Agreement (the
“Agreement”) with Carbo Industries, Inc. (“Carbo Industries”),
Carbo Realty, LLC, and Paul Hochhauser (collectively, “Carbo”) to
acquire Carbo’s Inwood and Lawrence, New York refined product
terminal assets (the “Purchased Assets”). Terms used but not
otherwise defined herein are used as defined in the Asset Purchase
Agreement. On March 13, 2017, Sprague Resources and Carbo
Industries also entered into a Unit Purchase Agreement (the “Unit
Purchase Agreement”) relating to the issuance of common units of
Sprague Resources in connection with the transactions contemplated
by the Agreement, as described in greater detail below.
The aggregate purchase price for the Purchased Assets will be (i)
$70,000,000, plus (ii) the Seller Petroleum Products Inventory
Amount, plus (iii) the Buyer Employee Obligations, plus (iv) the
assumption of the Assumed Liabilities, plus (v) the Bonus Units.
Subject to the terms of the Agreement, $38,184,000 will be paid in
120 equal monthly installments over a period of ten years following
the Closing Date. In partial payment of the purchase price, Sprague
Resources will issue common units to Carbo Industries having a
value equal to $30,000,000 to the terms of the Unit Purchase
Agreement. The price at which the common units will be issued, and
the number of common units that will be issued, will be based on
the volume weighted average closing price for the common units on
the New York Stock Exchange for the ten trading days ending on the
date of the announcement of the execution of the Agreement and the
ten trading days following the announcement of the execution of the
Agreement. Sprague Resources will also issue an additional number
of common units equal to 1.5% of the number of common units
determined in accordance with the immediately preceding sentence.
The purchase price shall be subject to adjustment to the terms of
the Agreement.
$70,000,000, plus (ii) the Seller Petroleum Products Inventory
Amount, plus (iii) the Buyer Employee Obligations, plus (iv) the
assumption of the Assumed Liabilities, plus (v) the Bonus Units.
Subject to the terms of the Agreement, $38,184,000 will be paid in
120 equal monthly installments over a period of ten years following
the Closing Date. In partial payment of the purchase price, Sprague
Resources will issue common units to Carbo Industries having a
value equal to $30,000,000 to the terms of the Unit Purchase
Agreement. The price at which the common units will be issued, and
the number of common units that will be issued, will be based on
the volume weighted average closing price for the common units on
the New York Stock Exchange for the ten trading days ending on the
date of the announcement of the execution of the Agreement and the
ten trading days following the announcement of the execution of the
Agreement. Sprague Resources will also issue an additional number
of common units equal to 1.5% of the number of common units
determined in accordance with the immediately preceding sentence.
The purchase price shall be subject to adjustment to the terms of
the Agreement.
Each of the parties has agreed to certain customary
representations, warranties and covenants in the Agreement. The
consummation of the transaction is subject to the satisfaction or
waiver of customary conditions, as set forth in the Agreement,
including, among other things, receipt of third party and any
applicable regulatory approvals.
representations, warranties and covenants in the Agreement. The
consummation of the transaction is subject to the satisfaction or
waiver of customary conditions, as set forth in the Agreement,
including, among other things, receipt of third party and any
applicable regulatory approvals.
The Agreement may be terminated at any time prior to the Closing
under a number of conditions that include, but are not limited to,
the following: (i) by mutual written agreement of the parties; (ii)
by Sprague if there has been a breach, inaccuracy in or failure to
perform any representation, warranty, covenant or agreement made by
Carbo that would give rise to the failure of certain closing
conditions; (iii) by Carbo if there has been a breach, inaccuracy
in or failure to perform any representation, warranty, covenant or
agreement made by Sprague that would give rise to the failure of
certain closing conditions; (iv) by either party if the Closing has
not occurred before May 15, 2017, unless such failure was due to
the terminating partys failure to perform or comply with any of the
covenants, agreements or conditions required by the Agreement; or
(v) by either party if the transactions contemplated by the
Agreement become illegal or are prohibited by law.
under a number of conditions that include, but are not limited to,
the following: (i) by mutual written agreement of the parties; (ii)
by Sprague if there has been a breach, inaccuracy in or failure to
perform any representation, warranty, covenant or agreement made by
Carbo that would give rise to the failure of certain closing
conditions; (iii) by Carbo if there has been a breach, inaccuracy
in or failure to perform any representation, warranty, covenant or
agreement made by Sprague that would give rise to the failure of
certain closing conditions; (iv) by either party if the Closing has
not occurred before May 15, 2017, unless such failure was due to
the terminating partys failure to perform or comply with any of the
covenants, agreements or conditions required by the Agreement; or
(v) by either party if the transactions contemplated by the
Agreement become illegal or are prohibited by law.
A copy of the Agreement is attached hereto as Exhibit 2.1, a copy
of the Unit Purchase Agreement is attached hereto as Exhibit 10.1
and a copy of the press release of Sprague Resources regarding such
agreements is attached hereto as Exhibit 99.1. Each of the
foregoing exhibits is incorporated herein by reference. The
descriptions of the Agreement and the Unit Purchase Agreement
contained in this Current Report on Form 8-K are qualified in their
entirety by reference to the full text of the Agreement and the
Unit Purchase Agreement.
of the Unit Purchase Agreement is attached hereto as Exhibit 10.1
and a copy of the press release of Sprague Resources regarding such
agreements is attached hereto as Exhibit 99.1. Each of the
foregoing exhibits is incorporated herein by reference. The
descriptions of the Agreement and the Unit Purchase Agreement
contained in this Current Report on Form 8-K are qualified in their
entirety by reference to the full text of the Agreement and the
Unit Purchase Agreement.
The Agreement and the Unit Purchase Agreement have been included to
provide security holders with information regarding their terms.
These agreements are not intended to provide any other factual
information about the parties thereto. The representations,
warranties and covenants contained in such agreements were made
solely for purposes of such agreements and as of specific dates,
are solely for the benefit of the parties to such agreements, and
may be subject to limitations agreed upon by the contracting
parties, including being qualified by confidential disclosures made
for the purposes of allocating contractual risk between the parties
to such agreements instead of establishing these matters as facts,
and may be subject to standards of materiality applicable to the
contracting parties that differ from those applicable to security
holders. Security holders are not third-party beneficiaries under
such agreements and should not rely on the representations,
warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the
parties thereto. Moreover, information concerning the subject
matter of the representations and warranties may change after the
date of such agreements which subsequent information may or may not
be fully reflected in Sprague Resources LPs public disclosures.
provide security holders with information regarding their terms.
These agreements are not intended to provide any other factual
information about the parties thereto. The representations,
warranties and covenants contained in such agreements were made
solely for purposes of such agreements and as of specific dates,
are solely for the benefit of the parties to such agreements, and
may be subject to limitations agreed upon by the contracting
parties, including being qualified by confidential disclosures made
for the purposes of allocating contractual risk between the parties
to such agreements instead of establishing these matters as facts,
and may be subject to standards of materiality applicable to the
contracting parties that differ from those applicable to security
holders. Security holders are not third-party beneficiaries under
such agreements and should not rely on the representations,
warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the
parties thereto. Moreover, information concerning the subject
matter of the representations and warranties may change after the
date of such agreements which subsequent information may or may not
be fully reflected in Sprague Resources LPs public disclosures.
Item 3.02 Unregistered Sale of Equity Securities.
The description of the Unit Purchase Agreement set forth in Item
1.01 above is incorporated herein by reference. The Unit Purchase
Agreement was entered into on March 13, 2017. Sprague Resources
will be obligated to issue common units to Carbo Industries having
a value of $30,000,000 to the terms of the Unit Purchase Agreement.
The exact number of common units to be issued has not yet been
determined, but will be equal to $30,000,000 divided by the volume
weighted average closing price for the common units on the New York
Stock Exchange for the ten trading days ending on the date of
announcement of the execution of the Agreement and the ten trading
days following the announcement of the execution of the Agreement.
Sprague Resources will also issue an additional number of common
units equal to 1.5% of the number of common units determined in
accordance with the immediately preceding sentence. The common
units are being issued as partial payment for the purchase price
for the assets to be acquired by Sprague to the terms of the
Agreement. The common units will be issued to the exemption set
forth in Section 4(a)(2) of the Securities Act of 1933, as amended,
and/or Rule 506 of Regulation D promulgated thereunder, based upon
the investment representations made by Carbo Industries in the Unit
Purchase Agreement, including its representation that it is an
accredited investor within the meaning of Rule 501(a) of Regulation
D and will be acquiring the common units for its own account and
not with a view toward any distribution in violation of any
securities laws.
1.01 above is incorporated herein by reference. The Unit Purchase
Agreement was entered into on March 13, 2017. Sprague Resources
will be obligated to issue common units to Carbo Industries having
a value of $30,000,000 to the terms of the Unit Purchase Agreement.
The exact number of common units to be issued has not yet been
determined, but will be equal to $30,000,000 divided by the volume
weighted average closing price for the common units on the New York
Stock Exchange for the ten trading days ending on the date of
announcement of the execution of the Agreement and the ten trading
days following the announcement of the execution of the Agreement.
Sprague Resources will also issue an additional number of common
units equal to 1.5% of the number of common units determined in
accordance with the immediately preceding sentence. The common
units are being issued as partial payment for the purchase price
for the assets to be acquired by Sprague to the terms of the
Agreement. The common units will be issued to the exemption set
forth in Section 4(a)(2) of the Securities Act of 1933, as amended,
and/or Rule 506 of Regulation D promulgated thereunder, based upon
the investment representations made by Carbo Industries in the Unit
Purchase Agreement, including its representation that it is an
accredited investor within the meaning of Rule 501(a) of Regulation
D and will be acquiring the common units for its own account and
not with a view toward any distribution in violation of any
securities laws.
Item 7.01 Regulation FD Disclosure.
Beginning on March 16, 2017, Sprague Resources will be sharing a
presentation with its investors highlighting key points associated
with Carbo’s Inwood and Lawrence, New York refined product
terminal assets. The presentation will be posted to the Investor
Relations section of Sprague Resources’ website,
www.spragueenergy.com. A copy of the presentation is furnished
herewith as Exhibit 99.2 and incorporated herein by reference in
its entirety.
presentation with its investors highlighting key points associated
with Carbo’s Inwood and Lawrence, New York refined product
terminal assets. The presentation will be posted to the Investor
Relations section of Sprague Resources’ website,
www.spragueenergy.com. A copy of the presentation is furnished
herewith as Exhibit 99.2 and incorporated herein by reference in
its entirety.
The information in this Item 7.01 and in Exhibit 99.2 attached to
this Current Report on Form 8-K shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the Exchange Act), nor shall this Item 7.01, such Exhibit
99.2 or any of the information contained herein or therein be
deemed incorporated by reference in any filing under the Exchange
Act or the Securities Act of 1933, as amended, except as shall be
expressly set forth by specific reference in such filing.
this Current Report on Form 8-K shall not be deemed filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the Exchange Act), nor shall this Item 7.01, such Exhibit
99.2 or any of the information contained herein or therein be
deemed incorporated by reference in any filing under the Exchange
Act or the Securities Act of 1933, as amended, except as shall be
expressly set forth by specific reference in such filing.
Cautionary Note Regarding Forward-Looking Statements
Any statements in this Current Report on Form 8-K or press release
about future expectations, plans and prospects for Sprague
Resources LP, including statements about the expected timetable for
consummation of the proposed transaction, and any other statements
about Sprague Resources LP, or about Sprague Resources LPs future
expectations, beliefs, goals, plans or prospects, constitute
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. Any statements that are not
statements of historical fact (including statements containing the
words believes, plans, anticipates, expects, estimates and similar
expressions) should also be considered forward-looking statements.
A number of important factors could cause actual results or events
to differ materially from those indicated by such forward-looking
statements, including the parties ability to consummate the
transaction; the conditions to the completion of the transaction,
including the receipt of certain consents required in connection
with the transaction which may not be obtained on the terms
expected or on the anticipated schedule; the parties ability to
meet expectations regarding the timing, completion and accounting
and tax treatments of the transaction; the possibility that the
parties may be unable to achieve expected synergies and operating
efficiencies within the expected time-frames or at all or be unable
to successfully integrate Carbo’s operations into those of
Sprague; the possibility that the integration of Carbo into Sprague
may be more difficult, time consuming or costly than expected;
resulting increases in operating costs, customer loss and business
disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers or suppliers);
and, the ability of Sprague Resources GP LLC to retain certain key
employees of Carbo. Other applicable risks and uncertainties
related to our business have been described more fully in Sprague
Resources LPs most recent Annual Report on Form 10-K filed with the
U.S. Securities and Exchange Commission (SEC) on March 10, 2016,
and in subsequent Form 10-Q and Form 8-K filings, and other
documents filed with the SEC. Sprague undertakes no obligation and
does not intend to update any forward-looking statements to reflect
new information or future events. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release.
about future expectations, plans and prospects for Sprague
Resources LP, including statements about the expected timetable for
consummation of the proposed transaction, and any other statements
about Sprague Resources LP, or about Sprague Resources LPs future
expectations, beliefs, goals, plans or prospects, constitute
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. Any statements that are not
statements of historical fact (including statements containing the
words believes, plans, anticipates, expects, estimates and similar
expressions) should also be considered forward-looking statements.
A number of important factors could cause actual results or events
to differ materially from those indicated by such forward-looking
statements, including the parties ability to consummate the
transaction; the conditions to the completion of the transaction,
including the receipt of certain consents required in connection
with the transaction which may not be obtained on the terms
expected or on the anticipated schedule; the parties ability to
meet expectations regarding the timing, completion and accounting
and tax treatments of the transaction; the possibility that the
parties may be unable to achieve expected synergies and operating
efficiencies within the expected time-frames or at all or be unable
to successfully integrate Carbo’s operations into those of
Sprague; the possibility that the integration of Carbo into Sprague
may be more difficult, time consuming or costly than expected;
resulting increases in operating costs, customer loss and business
disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers or suppliers);
and, the ability of Sprague Resources GP LLC to retain certain key
employees of Carbo. Other applicable risks and uncertainties
related to our business have been described more fully in Sprague
Resources LPs most recent Annual Report on Form 10-K filed with the
U.S. Securities and Exchange Commission (SEC) on March 10, 2016,
and in subsequent Form 10-Q and Form 8-K filings, and other
documents filed with the SEC. Sprague undertakes no obligation and
does not intend to update any forward-looking statements to reflect
new information or future events. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release.
Non-GAAP Measures
To supplement the financial information presented in accordance
with United States generally accepted accounting principles (GAAP),
Sprague Resources LPs management uses certain non-GAAP financial
measurements. You can find disclosures on our use of these non-GAAP
measures, as well as reconciliations between GAAP and these
non-GAAP measures, in Sprague Resources LP’s “Non-GAAP Measures
Quarterly Supplement” located in the Investor Relations section of
our website, www.spragueenergy.com.
with United States generally accepted accounting principles (GAAP),
Sprague Resources LPs management uses certain non-GAAP financial
measurements. You can find disclosures on our use of these non-GAAP
measures, as well as reconciliations between GAAP and these
non-GAAP measures, in Sprague Resources LP’s “Non-GAAP Measures
Quarterly Supplement” located in the Investor Relations section of
our website, www.spragueenergy.com.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
|
EXHIBIT
|
|
DESCRIPTION
|
|
2.1
|
|
Asset Purchase Agreement, dated March 13, 2017, by and
among Carbo Industries, Inc., Carbo Realty, LLC, and Paul Hochhauser and Sprague Operating Resources, LLC.* |
|
10.1
|
|
Unit Purchase Agreement dated March 13, 2017, by and
among Carbo Industries, Inc. and Sprague Resources LP |
|
99.1
|
|
Press Release of Sprague Resources LP dated March 16,
2017 |
|
99.2
|
|
Sprague Resources LP – Carbo Terminal Transaction
presentation dated March 16, 2017 |
|
*
|
to Item 601(b)(2) of Regulation S-K promulgated by the
SEC, certain schedules to the Asset Purchase Agreement have been omitted. The registrant hereby agrees to furnish supplementally to the SEC, upon its request, any or all omitted schedules. |
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
|
SPRAGUE RESOURCES LP
|
|
|
|
|
|
By:
|
Sprague Resources GP LLC, its General Partner
|
|
|
|
|
By:
|
/s/ Paul A. Scoff
|
|
|
Paul A. Scoff
|
|
|
Vice President, General Counsel, Chief Compliance Officer
and Secretary |
Dated: March 16, 2017
EXHIBIT INDEX
|
EXHIBIT
|
|
DESCRIPTION
|
|
2.1
|
|
Asset Purchase Agreement, dated March 13, 2017, by and
among Carbo Industries, Inc., Carbo Realty, LLC, and Paul Hochhauser and Sprague Operating Resources, LLC.* |
|
10.1
|
|
Unit Purchase Agreement dated March 13, 2017, by and
among Carbo Industries, Inc. and Sprague Resources LP |
|
99.1
|
|
Press Release of Sprague Resources LP dated March 16,
2017 |
|
99.2
|
|
Sprague Resources LP – Carbo Terminal Transaction
presentation dated March 16, 2017 |
|
*
|
About SPRAGUE RESOURCES LP (NYSE:SRLP)
Sprague Resources LP is engaged in the purchase, storage, distribution and sale of refined products and natural gas, and provides storage and handling services for a range of materials. The Company operates through four segments: refined products, natural gas, materials handling and other operations. Its refined products segment purchases a range of refined products, such as heating oil, diesel fuel, residual fuel oil, asphalt, kerosene, jet fuel and gasoline from refining companies, trading organizations and producers, and sells them to its customers. Its natural gas segment purchases, sells and distributes natural gas to commercial and industrial customers in the Northeast and Mid-Atlantic United States. Its materials handling segment offloads, stores and prepares for delivery a range of customer-owned products, including asphalt, clay slurry, salt and gypsum. The Company’s other operations segment includes sale of coal and commercial trucking activity. SPRAGUE RESOURCES LP (NYSE:SRLP) Recent Trading Information
SPRAGUE RESOURCES LP (NYSE:SRLP) closed its last trading session 00.00 at 26.25 with 52,241 shares trading hands.