Rose Rock Midstream (RRMS) Acquires Interest in White Cliffs Pipeline

January 9, 2013 8:49 AM EST
Rose Rock Midstream, L.P. (NYSE: RRMS) and SemGroup® Corporation (NYSE: SEMG) (SemGroup) announced today that Rose Rock Midstream has agreed to acquire a 33.3 percent interest in SemCrude Pipeline, L.L.C., which owns 51 percent of the White Cliffs Pipeline, from SemGroup for $273.9 million. Following the acquisition, Rose Rock Midstream will effectively own 17 percent of White Cliffs Pipeline.

The White Cliffs Pipeline is a 527-mile common carrier, crude oil pipeline system that originates in Colorado and terminates in Cushing, Oklahoma. It has a current capacity of 70,000 barrels per day and has announced an expansion project for an additional 80,000 barrels per day resulting in total capacity of 150,000 barrels per day. This expansion is expected to be completed in the first half of 2014.

The acquisition, which is expected to close by January 14, 2013, will be immediately accretive to distributable cash flow on a per unit basis and will be funded with approximately:

$130.3 million of cash borrowings under Rose Rock Midstream's revolving credit facility,

$59.3 million of equity from the private placement of common units,

$44.4 million of equity from the issuance of common units to SemGroup, and

$37.0 million of equity from the issuance of Class A units to SemGroup. The Class
A units will not receive any distributions, but are convertible into common units on a one-for-one basis once the White Cliffs Pipeline achieves an average monthly volume of 125,000 barrels per day.

SemGroup will maintain its two percent general partner interest in Rose Rock Midstream.

In connection with the transaction, Rose Rock Midstream exercised the accordion on its revolving credit agreement which increased the total borrowing capacity from $150 million to $385 million.

The terms of the acquisition were approved by the Conflicts Committee of the Board of Directors of Rose Rock Midstream's general partner.

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