Upgrade to SI Premium - Free Trial

Form 8-K/A Calumet Specialty Produc For: Nov 21

March 19, 2018 8:11 AM








 


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K/A
(Amendment No. 1)
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): November 21, 2017
 
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
 
DELAWARE
(State or other jurisdiction
of incorporation)
 
000-51734
(Commission File Number)
 
35-1811116
(IRS Employer
Identification No.)
2780 Waterfront Pkwy E. Drive
Suite 200
Indianapolis, Indiana 46214
(Address of principal executive offices) (Zip Code)
 
Registrant’s telephone number, including area code (317) 328-5660
 
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o







Item 2.01 Completion of Acquisition or Disposition.

On November 28, 2017, Calumet Specialty Products Partners, L.P. (the “Company”) filed a Current Report on Form 8-K (the
“Original Form 8-K”) to report under Item 2.01 the November 21, 2017 closing of the sale of all of the issued and outstanding membership interests in Anchor Drilling Fluids USA, LLC, a Delaware limited liability company (“Anchor”), to a subsidiary of Q’Max Solutions Inc. (“Q’Max”), pursuant to a membership interest purchase agreement, dated November 21, 2017, by and between the Company and Q’Max.

The Company is filing this Amendment No. 1 on Form 8-K/A to amend the Original Form 8-K to provide pro forma financial
information reflecting the sale of Anchor to Q’Max, which pro forma financial information was unavailable at the time of filing the Original Form 8-K. This pro forma financial information is included in Exhibit 99.1 to this Form 8-K/A.

Item 9.01. Financial Statements and Exhibits.

(b) Pro Forma Financial Information

The Company’s Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2017, Unaudited Pro Forma Consolidated Statement of Operations for the years ended December 31, 2014, 2015 and 2016 and the nine months ended September 30, 2017 (collectively, the “Unaudited Pro Forma Consolidated Financial Statements”) together with the notes thereto, are attached hereto and incorporated herein as Exhibit 99.1.

(d) Exhibits
 
Exhibit Number
 
Description
Exhibit 99.1
 
Unaudited Pro Forma Financial Statements and accompanying notes.

 






SIGNATURES
 
Pursuant 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.
 
 
 
 
 
 
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
 
 
 
By:
 
CALUMET GP, LLC, its General Partner
 
 
 
 
March 19, 2018
By:
 
/s/ D. West Griffin
 
 
 
Name: D. West Griffin
 
 
 
Title: Executive Vice President and Chief Financial Officer
 






 

EXHIBIT INDEX
 
Exhibit Number
 
Description
 
 



Exhibit 99.1
CALUMET SPECIALTY PRODUCTS PARTNERS L.P.
Index of Financial Statements
Calumet Specialty Products Partners, L.P. Unaudited Pro Forma Consolidated Financial Statements:
 





CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
INTRODUCTION
On November 21, 2017, a wholly owned subsidiary of Calumet Specialty Products Partners, L.P. (the “Company”), completed the sale to a subsidiary of Q’Max Solutions Inc. (“Q’Max”) of all of the issued and outstanding membership interests in Anchor Drilling Fluids USA, LLC (“Anchor”) pursuant to a membership interest purchase agreement (“Purchase Agreement”), for total consideration of approximately $83.8 million (“Anchor Transaction”). Anchor provides drilling and completion fluids, solids control services and equipment, drilling and completion fluid engineering services, and other related onsite services to the oil and gas exploration industry. The total consideration consists of $50.0 million in cash (which includes approximately $25.8 million for the repayment of intercompany indebtedness of Anchor, $5.0 million in cash that will be paid within six months and $3.0 million in cash that will be paid in twelve months), approximately $13.1 million to be paid over two years for net working capital and other items and approximately $25.4 million in value attributable to a 10% equity ownership interest in Fluid Holding Corp, the parent company of Q’Max. The cash consideration is subject to certain purchase price adjustments relating to, among other things, final net working capital adjustments. The Anchor Transaction qualifies as discontinued operations as it represents a strategic shift as a result of the Company’s exit out of the oilfield services industry.
On August 11, 2017, the Company entered into a membership interest purchase agreement with Husky Superior Refining Holding Corp. (“Husky”), pursuant to which, Husky acquired all of the issued and outstanding membership interests in Calumet Superior, LLC (“Superior”), which owns a refinery located in Superior, Wisconsin (the “Superior Refinery”) and associated inventories, the Superior Refinery’s wholesale marketing business and related assets, including certain owned or leased product terminals, and certain crude gathering assets and line space in North Dakota for $435.0 million in cash plus an additional payment for net working capital and reimbursement of certain capital spending (the “Superior Transaction”). The Company closed the Superior Transaction on November 8, 2017. The Superior Transaction does not qualify as discontinued operations as it did not represent a strategic shift that would have a major effect on the Company’s operations or financial results.
Following are Company’s Unaudited Pro Forma Consolidated Balance Sheet and Statements of Operations for the nine months ended September 30, 2017 and years ended December 31, 2014, 2015 and 2016 (collectively, the “Unaudited Pro Forma Consolidated Financial Statements”).
The Unaudited Pro Forma Consolidated Financial Statements and accompanying notes should be read together with the Company’s related historical consolidated financial statements and notes thereto included on Form 10-K for the year ended December 31, 2016 and the Quarterly Report on Form 10-Q for the period ended September 30, 2017 as filed with the Securities and Exchange Commission. Beginning in the fourth quarter of fiscal 2017, the historical financial results attributable to the Anchor Transaction for periods prior to the transaction will be reflected in the Company’s consolidated financial statements as discontinued operations. The Unaudited Pro Forma Financial Statements were derived by adjusting the historical consolidated financial statements of the Company. These adjustments are based on currently available information and certain estimates and assumptions and, therefore, the actual effects of the Anchor Transaction and Superior Transaction may differ from the effects reflected in the Unaudited Pro Forma Consolidated Financial Statements. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the Anchor Transaction and Superior Transaction and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the Unaudited Consolidated Pro Forma Financial Statements.
The Unaudited Consolidated Pro Forma Financial Statements are not necessarily indicative of the consolidated financial condition or results of operations of the Company had the Anchor Transaction and Superior Transaction actually been completed at the beginning of the period or as of the date specified. Moreover, the Unaudited Pro Forma Consolidated Financial Statements do not project the consolidated financial position or results of operations of the Company for any future period or at any future date.

2



CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(in millions)
 
As of September 30, 2017
 
Historical
 
Superior Transaction
Pro Forma Adjustments
 
Anchor Transaction
Pro Forma Adjustments
 
Pro Forma
ASSETS
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
26.5

 
$
129.5

(a) (b) (c) 
$
36.6

(f) 
$
192.6

Restricted cash
 
 
350.0

(a) 
 
 
350.0

Accounts receivable:
 
 
 
 
 
 


Trade
338.8

 

 
(69.5
)
(g) 
269.3

Other
2.9

 

 
7.9

(g) (h) 
10.8

 
$
341.7

 
$

 
$
(61.6
)
 
$
280.1

Inventories
$
324.4

 
$

 
$
(38.1
)
(g) 
$
286.3

Derivative assets
0.3

 

 

 
0.3

Prepaid expenses and other current assets
15.8

 

 
(0.4
)
(g) 
15.4

Current assets held for sale

125.0

 
(125.0
)
(d) 

 

Total current assets
$
833.7

 
$
354.5

 
$
(63.5
)
 
$
1,124.7

Property, plant and equipment, net
$
1,410.4

 
$

 
$
(40.8
)
(g) 
$
1,369.6

Investment in unconsolidated affiliate
9.9

 

 
25.0

(g) (h) 
34.9

Goodwill
172.0

 

 

 
172.0

Other intangible assets, net
153.9

 

 
(38.5
)
(g) 
115.4

Other noncurrent assets, net
18.4

 

 
13.1

(h) 
31.5

Noncurrent assets held for sale
215.1

 
(215.1
)
(d) 

 

Total assets
$
2,813.4

 
$
139.4

 
$
(104.7
)
 
$
2,848.1

LIABILITIES AND PARTNERS’ CAPITAL
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
Accounts payable
$
261.3

 
$

 
$
(38.5
)
(g) 
$
222.8

Accrued interest payable
55.4

 

 
 
 
55.4

Accrued salaries, wages and benefits
32.3

 

 
(0.2
)
(g) 
32.1

Other taxes payable
24.1

 

 
(0.8
)
(g) 
23.3

Obligations under inventory financing agreements
92.8

 

 

 
92.8

Other current liabilities
59.7

 

 

 
59.7

Current portion of long-term debt
4.3

 

 

 
4.3

Derivative liabilities
8.3

 

 

 
8.3

Current liabilities held for sale
74.5

 
(74.5
)
(d) 

 

Total current liabilities
$
612.7

 
$
(74.5
)
 
$
(39.5
)
 
$
498.7

Deferred income taxes
$
1.0

 
$

 
$

 
1.0

Pension and postretirement benefit obligations
3.6

 

 

 
3.6

Other long-term liabilities
0.8

 

 

 
0.8

Long-term debt, less current portion
1,986.6

 
(0.1
)
(b) 

 
1,986.5

Noncurrent liabilities held for sale
7.1

 
(7.1
)
(d) 

 

Total liabilities
$
2,611.8

 
$
(81.7
)
 
$
(39.5
)
 
$
2,490.6

Commitments and contingencies
 
 
 
 
 
 
 
Partners’ capital:
 
 
 
 
 
 
 
Limited partners’ interest
$
194.3

 
$
217.4

(e) 
$
(63.9
)
(i) 
$
347.8

General partner’s interest
15.5

 
4.4

(e) 
(1.3
)
(i) 
18.6

Accumulated other comprehensive loss
(8.2
)
 
(0.7
)
(d) 

 
(8.9
)
Total partners’ capital
$
201.6

 
$
221.1

 
$
(65.2
)
 
$
357.5

Total liabilities and partners’ capital
$
2,813.4

 
$
139.4

 
$
(104.7
)
 
$
2,848.1


See accompanying notes to Unaudited Pro Forma Consolidated Financial Statements.

3



CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in millions except unit and per unit data)
 
Nine Months Ended September 30, 2017
 
Historical 
 
Superior Transaction
Pro Forma Adjustments
 
Anchor Transaction
Pro Forma Adjustments
 
Pro Forma 
Sales
$
3,065.7

 
$
(574.6
)
(j)
$
(185.7
)
(m)
$
2,305.4

Cost of sales
2,614.3

 
(481.2
)
(j) (k)
(135.2
)
(m)
1,997.9

Gross profit
451.4

 
(93.4
)
 
(50.5
)
 
307.5

Operating costs and expenses:
 
 
 
 
 
 
 
Selling
83.7

 
(0.6
)
(j)
(37.9
)
(m)
45.2

General and administrative
107.0

 
(1.9
)
(j)
(3.7
)
(m)
101.4

Transportation
117.8

 
(7.7
)
(j)
(16.4
)
(m)
93.7

Taxes other than income taxes
17.4

 
(1.1
)
(j)
(0.5
)
(m)
15.8

Asset impairment
0.4

 

 

 
0.4

Other
6.8

 
(1.8
)
(j)

 
5.0

Operating income
118.3

 
(80.3
)
 
8.0

 
46.0

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(135.8
)
 
0.8

(l)

 
(135.0
)
Loss on derivative instruments
(5.0
)
 

 

 
(5.0
)
Loss from unconsolidated affiliates
(0.4
)
 

 
0.3

(m)
(0.1
)
Other
1.6

 
(0.1
)
(j)

 
1.5

Total other expense
(139.6
)
 
0.7

 
0.3

 
(138.6
)
Net loss before income taxes
(21.3
)
 
(79.6
)
 
8.3

 
(92.6
)
Income tax benefit
(1.1
)
 

 
0.9

(m)
(0.2
)
Net loss
$
(20.2
)
 
$
(79.6
)
 
$
7.4

 
$
(92.4
)
Allocation of Net loss:
 
 
 
 
 
 
 
Net loss
(20.2
)
 


 
 
 
(92.4
)
Less:
 
 
 
 
 
 
 
General partner’s interest in net loss
(0.4
)
 


 
 
 
(1.8
)
Net loss available to limited partners
$
(19.8
)
 


 
 
 
$
(90.6
)
Weighted average limited partner units outstanding:
 
 
 
 
 
 
 
        Basic and Diluted
77,537,531

 
 
 
 
 
77,537,531

Limited partners’ interest basic and diluted net loss per unit
$
(0.25
)
 
 
 
 
 
$
(1.17
)
See accompanying notes to Unaudited Pro Forma Consolidated Statement of Operations.

4



CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in millions except unit and per unit data)
 
Year Ended December 31, 2016
 
Historical 
 
Superior Transaction Pro Forma Adjustments
 
Anchor Transaction Pro Forma Adjustments
 
Pro Forma 
Sales
$
3,599.4

 
$
(681.3
)
(j)
$
(125.1
)
(m)
$
2,793.0

Cost of sales
3,191.1

 
(612.5
)
(j)
(103.1
)
(m)
2,475.5

Gross profit
$
408.3

 
$
(68.8
)

$
(22.0
)
 
$
317.5

Operating costs and expenses:
 
 
 
 
 
 
 
Selling
$
110.7

 
$
(0.7
)
(j)
$
(40.9
)
(m)
$
69.1

General and administrative
110.6

 
(0.9
)
(j)
(4.8
)
(m)
104.9

Transportation
169.2

 
(12.0
)
(j)
(14.9
)
(m)
142.3

Taxes other than income taxes
20.1

 
(1.6
)
(j)
(0.8
)
(m)
17.7

Asset impairment
35.7

 

 

 
35.7

Other
1.7

 
(0.6
)
(j)

 
1.1

Operating loss
$
(39.7
)
 
$
(53.0
)

$
39.4

 
$
(53.3
)
Other income (expense):
 
 
 
 
 
 
 
Interest expense
$
(161.7
)
 
$
0.9

(l)
$
0.3

(m)
$
(160.5
)
Loss on derivative instruments
(4.1)

 

 

 
(4.1)

Loss from unconsolidated affiliates
(18.7)

 

 
0.5

(m)
(18.2)

Loss on sale of unconsolidated affiliates
(113.4)

 

 

 
(113.4)

Other
1.3

 
(0.3
)
(j)
(0.1
)
(m)
0.9

Total other expense
$
(296.6
)
 
$
0.6


$
0.7

 
$
(295.3
)
Net loss before income taxes
$
(336.3
)
 
$
(52.4
)

$
40.1

 
$
(348.6
)
Income tax expense (benefit)
(7.7)

 

 
7.9

(m)
0.2

Net loss
$
(328.6
)
 
$
(52.4
)

$
32.2

 
$
(348.8
)
Allocation of Net loss:
 
 
 
 
 
 
 
Net loss
$
(328.6
)
 
 
 
 
 
$
(348.8
)
Less:
 
 
 
 
 
 
 
General partner’s interest in net loss
(6.6)

 
 
 
 
 
(7.0)

Net loss available to limited partners
$
(322.0
)
 
 
 
 
 
$
(341.8
)
Weighted average limited partner units outstanding:
 
 
 
 
 
 
 
        Basic and Diluted
77,043,935

 
 
 
 
 
77,043,935

Limited partners’ interest basic and diluted net loss per unit
$
(4.18
)
 
 
 
 
 
$
(4.44
)
Cash distribution declared per limited partner interest
$
0.685

 
 
 
 
 
$
0.685

See accompanying notes to Unaudited Pro Forma Consolidated Statement of Operations.

5



CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in millions except unit and per unit data)
 
Year Ended December 31, 2015
 
Historical 
 
Anchor Transaction Pro Forma Adjustments
 
Pro Forma 
Sales
$
4,212.8

 
$
(282.5
)
(m)
$
3,930.3

Cost of sales
3,618.2

 
(224.3
)
(m)
3,393.9

Gross profit
$
594.6

 
$
(58.2
)
 
$
536.4

Operating costs and expenses:
 
 
 
 
 
Selling
$
146.0

 
$
(74.1
)
(m)
$
71.9

General and administrative
135.5

 
(9.7
)
(m)
125.8

Transportation
175.5

 
(22.0
)
(m)
153.5

Taxes other than income taxes
17.7

 
(0.6
)
(m)
17.1

Asset impairment
33.8

 
(33.8
)
(m)

Other
11.1

 
(0.2
)
(m)
10.9

Operating income
$
75.0

 
$
82.2

 
$
157.2

Other income (expense):
 
 
 
 
 
Interest expense
$
(104.9
)
 
$

 
$
(104.9
)
Debt extinguishment costs
(46.6)

 

 
(46.6)

Loss on derivative instruments
(31.4)

 

 
(31.4)

Loss from unconsolidated affiliates
(61.5)

 
0.4

(m)
(61.1)

Other
1.6

 

 
1.6

Total other expense
$
(242.8
)
 
$
0.4

 
$
(242.4
)
Net loss before income taxes
$
(167.8
)
 
$
82.6


$
(85.2
)
Income tax expense (benefit)
(28.4)

 
28.6

(m)
0.2

Net loss
$
(139.4
)
 
$
54.0

 
$
(85.4
)
Allocation of Net loss:
 
 
 
 
 
Net loss
$
(139.4
)
 
 
 
$
(85.4
)
Less:
 
 
 
 
 
General partner’s interest in net loss
(2.8)

 
 
 
(1.7)

General partner’s incentive distribution rights
16.8

 
 
 
16.8

Net loss available to limited partners
$
(153.4
)
 
 
 
$
(100.5
)
Weighted average limited partner units outstanding:
 
 
 
 
 
        Basic and Diluted
74,896,096

 
 
 
74,896,096

Limited partners’ interest basic and diluted net loss per unit
$
(2.05
)
 
 
 
$
(1.34
)
Cash distribution declared per limited partner interest
$
2.74

 
 
 
$
2.74

See accompanying notes to Unaudited Pro Forma Consolidated Statement of Operations.

6



CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in millions except unit and per unit data)
 
Year Ended December 31, 2014
 
Historical 
 
Anchor Transaction Pro Forma Adjustments
 
Pro Forma 
Sales
$
5,791.1

 
$
(368.5
)
(m)
$
5,422.6

Cost of sales
5,261.4

 
(246.5
)
(m)
5,014.9

Gross profit
$
529.7

 
$
(122.0
)
 
$
407.7

Operating costs and expenses:
 
 
 
 
 
Selling
$
149.6

 
$
(69.0
)
(m)
$
80.6

General and administrative
98.3

 
(4.1
)
(m)
94.2

Transportation
171.4

 
(28.1
)
(m)
143.3

Taxes other than income taxes
13.4

 
(0.4
)
(m)
13.0

Asset impairment
36.0

 
(36.0
)
(m)

Other
14.2

 
(0.2
)
(m)
14.0

Operating income
$
46.8

 
$
15.8

 
$
62.6

Other income (expense):
 
 
 
 
 
Interest expense
$
(110.8
)
 
$

 
$
(110.8
)
Debt extinguishment costs
(89.9
)
 

 
(89.9
)
Gain on derivative instruments
43.2

 

 
43.2

Loss from unconsolidated affiliates
(3.4
)
 
0.2

(m)
(3.2
)
Other
1.1

 
0.3

(m)
1.4

Total other expense
$
(159.8
)
 
$
0.5

 
$
(159.3
)
Net loss before income taxes
$
(113.0
)
 
$
16.3

 
$
(96.7
)
Income tax expense (benefit)
(0.8
)
 
1.4

(m)
0.6

Net loss
$
(112.2
)
 
$
14.9

 
$
(97.3
)
Allocation of Net loss:
 
 
 
 
 
Net loss
$
(112.2
)
 
 
 
$
(97.3
)
Less:
 
 
 
 
 
General partner’s interest in net loss
(2.2
)
 
 
 
(1.9
)
General partner’s incentive distribution rights
15.4

 
 
 
15.4

Net loss available to limited partners
$
(125.4
)
 
 
 
$
(110.8
)
Weighted average limited partner units outstanding:
 
 
 
 
 
        Basic and Diluted
69,671,827

 
 
 
69,671,827

Limited partners’ interest basic and diluted net loss per unit
$
(1.80
)
 
 
 
$
(1.59
)
Cash distribution declared per limited partner interest
$
2.74

 
 
 
$
2.74

See accompanying notes to Unaudited Pro Forma Consolidated Statement of Operations.

7



 Note 1. Basis of Presentation
On November 21, 2017, a wholly owned subsidiary of Calumet Specialty Products Partners, L.P. (the “Company”), completed the sale to a subsidiary of Q’Max Solutions Inc. (“Q’Max”) of all of the issued and outstanding membership interests in Anchor Drilling Fluids USA, LLC (“Anchor”) pursuant to a membership interest purchase agreement (“Purchase Agreement”), for total consideration of approximately $83.8 million (“Anchor Transaction”). Anchor provides drilling and completion fluids, solids control services and equipment, drilling and completion fluid engineering services, and other related onsite services to the oil and gas exploration industry. The total consideration consists of $50.0 million in cash (which includes approximately $25.8 million for the repayment of intercompany indebtedness of Anchor, $5.0 million in cash that will be paid within six months and $3.0 million in cash that will be paid in twelve months), approximately $13.1 million to be paid over two years for net working capital and other items and approximately $25.4 million in value attributable to a 10% equity ownership interest in Fluid Holding Corp, the parent company of Q’Max. The cash consideration is subject to certain purchase price adjustments relating to, among other things, final net working capital adjustments. The Anchor Transaction qualifies as discontinued operations as it represents a strategic shift as a result of the Company’s exit out of the oilfield services industry.
On August 11, 2017, the Company entered into a membership interest purchase agreement with Husky Superior Refining Holding Corp. (“Husky”), pursuant to which, Husky acquired all of the issued and outstanding membership interests in Calumet Superior, LLC (“Superior”), which owns a refinery located in Superior, Wisconsin (the “Superior Refinery”) and associated inventories, the Superior Refinery’s wholesale marketing business and related assets, including certain owned or leased product terminals, and certain crude gathering assets and line space in North Dakota for $435.0 million in cash plus an additional payment for net working capital and reimbursement of certain capital spending (the “Superior Transaction”). The Company closed the Superior Transaction on November 8, 2017. The Superior Transaction does not qualify as discontinued operations as it did not represent a strategic shift that would have a major effect on the Company’s operations or financial results.
The Unaudited Pro Forma Consolidated Balance Sheet of the Company was derived from historical consolidated financial statements. The Unaudited Pro Forma Consolidated Balance Sheet assumes the Superior Transaction and the Anchor Transaction occurred on September 30, 2017. The Unaudited Pro Forma Consolidated Statements of Operations for the years ended December 31, 2014 and 2015 give effect to the Anchor Transaction as it qualifies for discontinued operations as it represents a strategic shift as a result of the Company’s exit out of the oilfield services industry. The Unaudited Pro Forma Consolidated Statements of Operations for December 31, 2016 and the Unaudited Pro Forma Consolidated Statements of Operations for the nine months ended September 30, 2017 give effect to the Superior Transaction and the Anchor Transaction as if it occurred as of January 1, 2016. The following unaudited pro forma consolidated financial information should be read in conjunction with the Company’s historical financial statements and accompanying notes.
Assumptions and estimates underlying the pro forma adjustments are described in the notes below, which should be read in conjunction with the Unaudited Pro Forma Consolidated Statements of Operations and the Unaudited Pro Forma Consolidated Balance Sheet. Since the Unaudited Pro Forma Consolidated Statements of Operations and the Unaudited Pro Forma Consolidated Balance Sheet have been prepared based upon estimates and assumptions, the final amounts recorded may differ materially from the information presented.
Note 2. Pro Forma Adjustments and Assumptions
Adjustments to Unaudited Consolidated Balance Sheet

(a) Reflects the net sale proceeds received from the completed Superior Transaction.
 
Net Sale Proceeds
Sale price - base price
$
435.0

Sale price - working capital
50.5

Total proceeds
485.5

 
 
Restricted cash (1) 
$
(350.0
)
Closing and transaction costs
(3.9)

Pension plan contribution
(2.0)

Repayment of revolving credit facility borrowings
(0.1)

Unrestricted cash
$
129.5



8



(1) Restricted cash totaled $350.0 million based upon the value of collateral under the Company’s debt agreements. Under the indentures governing the Company’s senior notes, proceeds from Asset Sales (as defined in the indentures) can only be used for, among other things:

•    repay, redeem or repurchase debt;

•    make certain acquisitions or investments; and

•    make capital expenditures.

(b) Reflects the use of a portion of the net cash proceeds from the completed Superior Transaction to repay revolving credit facility borrowings.

(c) Reflects a $2.0 million contribution to the pension plan as agreed to with Husky.

(d) Reflects the adjustment to remove assets and liabilities sold in the Superior Transaction.

(e) Reflects the net gain of $221.9 million as a result of the completed Superior Transaction.

(f) Reflects the net sale proceeds received from the completed Anchor Transaction.

(g) Reflects the adjustment to remove assets and liabilities sold in the Anchor Transaction.

(h) Reflects the following: (1) an $8.0 million current receivable related to the deferred purchase price, (2) a $13.1 million long-term receivable related to payment of working capital and (3) a $25.4 million investment representing a 10% equity ownership in Fluid Holding Corp.

(i) Reflects the net loss of $65.2 million as a result of the completed Anchor Transaction.
Adjustments to Unaudited Consolidated Statements of Operations
(j) Reflects the elimination of operating results of Superior. Selling and general and administrative expenses do not include expected reductions that will be realized once the transition services agreement is complete.
(k) Includes a “small refinery exemption” of approximately 37 million Renewable Identification Numbers granted by the Environmental Protection Agency under the Renewable Fuel Standard for the full-year 2016, as provided for under the federal Clean Air Act, as amended.
(l) Reflects reduction of interest expense as a result of the repayment of borrowings under the revolving credit facility with a portion of the proceeds from the Superior Transaction.
(m) Reflects the elimination of operating results of Anchor.
 

9

Categories

SEC Filings