Toronto-based Chemtrade Logistics Income Fund announced on Sept. 30 that it has entered into a definitive agreement to sell its Potassium Chloride (KCl) and Vaccine Adjuvants businesses to Vertellus, a manufacturer of specialty products for various consumer goods, food and agriculture, healthcare, and industrial markets.
The sale price was reported at approximately US$155 million. The transaction is expected to close during the fourth quarter of 2021 and is subject to customary closing conditions. BMO Capital Markets is acting as financial advisor to Chemtrade in connection with the transaction.
“These are both good businesses, which have benefited from our recent capital investment that expanded and upgraded both plants,” said Scott Rook, President and CEO of Chemtrade. “As a strategic buyer, Vertellus will be able to add further value and will benefit from the skilled teams at both locations. We are confident that Vertellus and PPC will take the strong platform that we have built and make the businesses even stronger.”
The businesses, which had been classified as Assets Held for Sale in Chemtrade’s financial statements, are part of Chemtrade’s Water Solutions and Specialty Chemicals segment and are located in Midlothian, Texas, and Berkeley Heights, N.J.
Vertellus is a Pritzker Private Capital company and is headquartered in Indianapolis, Ind. The businesses that the company is acquiring from Chemtrade produce specialty ingredients essential in the efficacy of medications for hypertension and diabetes, production of next-generation biologics, and improving the effectiveness of certain vaccines.
Chemtrade said it will use the net proceeds of the sale to reduce bank debt. Based upon the midpoint of guidance for 2021 provided by Chemtrade in August 2021, and after making a pro-forma adjustment for the loss of a full year’s EBITDA of the disposed businesses, this repayment will reduce Chemtrade’s senior Debt:EBITDA ratio by approximately 0.7 times.
Due to the anticipated timing of the closing of the transaction, Chemtrade said the sale will not have a material impact on its 2021 reported distributable cash after maintenance capital expenditures. The businesses generated approximately US$14.3 million of EBITDA during the twelve months ended June 30, 2021.