News Americas, CALGARY, Alberta, Jan. 16, 2020: Parkland Fuel Corporation (“Parkland”, “We”, “Our” or “Us”) (TSX:PKI) announced today that through its wholly owned U.S. subsidiaries (collectively, “Parkland USA”), it has entered into an agreement to acquire the entities and assets comprising Kellerstrass Oil Company (collectively, “Kellerstrass”).
Based in Salt Lake City, Kellerstrass is a regional retail dealer and commercial fuel business with branches in Utah, Idaho and Wyoming. In addition to highly efficient trucking, routing and distribution practices, Kellerstrass brings a strategic 17-car rail spur and storage assets, commercial card locks and an 84-location dealer business. Kellerstrass will complement and strengthen Parkland’s existing Rockies Regional Operating Center.
“We continue to deliver on our growth strategy and expand our U.S. footprint,” said Doug Haugh, President of Parkland USA. “We expect this acquisition will support the growth of our North America diesel platform, create supply efficiencies and deliver logistical benefits. We are delighted to enter the Idaho market and expand our presence in Wyoming and look forward to welcoming the Kellerstrass team to Parkland.”
This acquisition is at valuation metrics consistent with Parkland’s prior U.S. transactions and will be funded out of existing credit facility capacity. Pro forma the acquisition and reflecting our previously disclosed third quarter results and subsequent acquisition of the assets of Mort Distributing, Inc. and its affiliates, Parkland expects annual run-rate adjusted EBITDA of approximately C$70 million for its USA segment. The transaction is subject to customary closing conditions and is expected to close in the first quarter of 2020.
Parkland is an independent supplier and marketer of fuel and petroleum products and a leading convenience store operator. Parkland services customers across Canada, the United States, the Caribbean region and the Americas through three channels: Retail, Commercial and Wholesale. Parkland optimizes its fuel supply across these three channels by operating and leveraging a growing portfolio of supply relationships and storage infrastructure. Parkland provides trusted and locally relevant fuel brands and convenience store offerings in the communities it serves.
Parkland creates value for shareholders by focusing on its proven strategy of growing organically, realizing a supply advantage and acquiring prudently and integrating successfully. At the core of our strategy are our people, as well as our values of safety, integrity, community and respect, which are embraced across our organization.
Certain statements contained in this news release constitute forward-looking information and statements (collectively, “forward-looking statements”). When used in this news release the words “expect”, “will”, “could”, “would”, “believe”, “continue”, “pursue” and similar expressions are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, the successful completion of the acquisition of Kellerstrass and the timing thereof; expected benefits of the acquisition, including potential synergies, organic growth and acquisition opportunities; and expected run-rate adjusted EBITDA of Parkland USA following the acquisition.
These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These forward-looking statements speak only as of the date of this news release. Parkland does not undertake any obligations to publicly update or revise any forward-looking statements except as required by securities law. Actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous risks and uncertainties including, but not limited to, failure to complete the acquisition of Kellerstrass; failure to satisfy the conditions to closing of the acquisition; failure to achieve the anticipated benefits of the acquisition; general economic, market and business conditions; industry capacity; competitive action by other companies; refining and marketing margins; the ability of suppliers to meet commitments; actions by governmental authorities and other regulators including but not limited to increases in taxes or restricted access to markets; changes and developments in environmental and other regulations; and other factors, many of which are beyond the control of Parkland. See also the risks and uncertainties described in “Forward-Looking Information” and “Risk Factors” included in Parkland’s Annual Information Form dated March 27, 2019 and in “Forward-Looking Information” and “Risk Factors” in the Q3 2019 MD&A and annual MD&A dated February 28, 2019, each as filed on SEDAR and available on the Parkland website at www.parkland.ca
Annual run-rate adjusted EBITDA is an internally-prepared estimate of annualized adjusted EBITDA which assumes full year contributions from the acquisitions to date. Annual run-rate adjusted EBITDA is a non-GAAP financial measure and may not be comparable to similar measures used by other issuers. See Parkland’s Q3 2019 MD&A and annual MD&A for further information on how Parkland calculates adjusted EBITDA and a reconciliation to the nearest IFRS measure.
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