Chemtrade sells sulfur removal business to Suncor
Chemtrade Logistics agreed to sell its Montreal East business to Suncor Energy for approximately $120 million, officials said on Monday.
The business, which for a number of years provided services to other refineries in the Montreal area, now provides sulfur removal and compliance services only to Suncors Montreal refinery.
Chemtrade acquired the operation in 2011 as part of its acquisition of Marsulex, and will realize a gain of approximately $24 million on the sale. Chemtrade will also recognize the remaining amounts receivable (approximately $11 million) pursuant to an agreement with a previous customer of this facility.
Chemtrade says it will continue to market sulfur and sodium bisulphite produced by the Montreal plant and use net proceeds of the sale to reduce debt.
The sale, which is subject to normal closing conditions, is expected to close in June.
It was the right time for us to sell the operation to Suncor, as owner of the sole refinery being served by our Montreal facility," said Mark Davis, CEO of Chemtrade.
"The sale price represents essentially the same multiple we paid as part of the Marsulex transaction almost three years ago," he continued. "Additionally, using the net proceeds to reduce debt improves our debt to EBITDA ratio following the recent acquisition of General Chemical, and the on-going marketing agreements will continue to generate revenue for Chemtrade.
Operationally, the Montreal facility is in excellent shape and Suncor is gaining a skilled team that has provided outstanding service for many years. We thank them for their dedication and commitment to operational excellence.
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