Parkland Income Fund is extending its fuel distribution network to the West Coast, with a $34.5-million deal with a British Columbia company.
The Red Deer-based fund (TSX: PKI.UN) announced after the stock market closed Monday that it has an agreement in principle to acquire the fuel distribution business of Columbia Fuels Ltd.
Columbia, which is headquartered in Victoria, specializes in the distribution of home heating oil, bulk petroleum and biofuels.
It operates bulk fuel terminals on Vancouver Island and the Sunshine Coast region of British Columbia.
“The proposed acquisition of Columbia is exciting as it is expected to provide a strong operating platform on Vancouver Island, including a strong customer base and storage and delivery capability,” said Parkland president and CEO Mike Chorlton in a news release.
“It is expected to be accretive to Parkland earnings immediately.”
The sale is expected to close around June 16, with an effective date of June 1, said the release. It’s still subject to the finalization of documentation and third-party consents.
The purchase price is to be satisfied through the issuance of limited partnership units, valued at $2 million, and cash. The limited partnership units will generate the same monthly distributions as regular fund units, carry voting rights and be convertible into regular fund units.
A year ago, Parkland bought the fuel supply and marketing business of NOCO Energy Canada Inc. That deal, valued at $8.5 million at the time, included approximately 56 independently owned and operated Esso, Sunoco and NOCO branded locations and 69 wholesale accounts outside the Greater Toronto Area.
In February 2008, Parkland announced the purchase of Wiebe Transport Inc. — a Grande Prairie company that hauls fuel, fertilizer, grain and other commodities in Western Canada and the United States. In 2007, the fund acquired Neufeld Petroleum and Propane Ltd., Neufeld Holdings Ltd., Joy Propane Ltd., United Petroleum Products Inc. and Roblyn Bulk Sales Ltd.
Parkland also announced on Monday that it has entered into a credit agreement that will increase its available credit line to $265 million from $169 million. That amount will include a capital facility for further acquisitions and organic growth, it said.
Parkland operates retail and wholesale fuels and convenience store businesses under its Fas Gas Plus, Fas Gas, Race Trac Fuels and Short Stop Food Stores brands, and through independent branded dealers. It also transports fuel and other products, supplies propane, bulk fuel, heating oil, industrial fluids, agricultural inputs and other products, and it operates the Bowden refinery near Olds as a storage and processing site.