Parkland Fuel entered into an agreement with Chevron Canada to acquire all of the shares of Chevron Canada R&M, which operates its Canadian integrated downstream fuel business.

Subject to satisfaction of customary closing conditions, Parkland will pay approximately C$1.460 billion ($1.1 billion), plus an estimated $186 million in working capital for the acquired business.

The acquisition and related fees and expenses will be financed with a fully underwritten financing package including:

  • Approximately $660 million from a bought deal private placement of common shares in Parkland
  • $268 million drawn on revolving credit facility and $500 million from a bridge facility, both of which have been fully underwritten by TD Bank and National Bank of Canada as co-lead arrangers and joint bookrunners
  • $40 million of non-debt sources, the majority of which is expected to be cash flows from operations

Parkland expects to replace the bridge facility with alternative longer term debt prior to the closing of the acquisition. Furthermore, Parkland intends to enter into a working capital financing agreement with Merrill Lynch Commodities to finance the hydrocarbon inventory and receivables, which are estimated to be $258 million at the close of the acquisition.

“This accretive acquisition further strengthens our supply-focused business model and adds significant scale with the premier Chevron retail brand and network in British Columbia,” said Bob Espey, president and CEO of Parkland. “Parkland is acquiring a highly integrated business which adds significant supply infrastructure and logistics capability to support Parkland’s existing operations. The refinery in Burnaby is an important asset to Metro Vancouver and British Columbia and we will continue to operate it with the capable and experienced professionals who manage the refinery today. We look forward to welcoming the Chevron team to our company, and to deepening our relationships in British Columbia.”

BofA Merrill Lynch, TD Securities and National Bank Financial are serving as financial advisors to Parkland. McCarthy Tétrault is serving as Parkland’s legal advisor for the acquisition, and Bennett Jones is serving as Parkland’s legal advisor in respect of the offering and competition matters relating to the acquisition.

Calgary-based Parkland Fuel is one of North America’s largest marketers of fuel and petroleum products.