Martin Midstream Partners LP is moving closer to achieving its strategic goals with another multimillion-dollar sale on Aug. 12 of noncore assets which have been idle for nearly a year.
An undisclosed buyer agreed to buy Martin Midstream’s East Texas Pipeline for about $17.5 million. The proceeds will be used to reduce outstanding borrowings under the Kilgore, Texas-based company’s revolving credit facility, which stood at $225 million as of June 30.
The divestiture follows a strategy set forth by Martin Midstream last year to delever the balance sheet and simplify its portfolio through noncore asset sales.
Pro forma the East Texas Pipeline sale, the company has received net proceeds since mid-2018 of about $283 million from a series of divestitures and the dropdown acquisition of Martin Transport Inc. More recently, Martin Midstream closed the sale of its Gulf Coast gas storage assets, which helped refocus its operational expertise on the refinery services industry, according to the company.
“The East Texas Pipeline sale is one more step along the partnership’s strategic path of selling noncore assets and using the proceeds to reduce leverage,” Ruben Martin, president and CEO of Martin Midstream’s general partner, said in a statement on Aug. 12.
In his statement, Martin also noted the pipeline had been idle since September 2018 and negatively weighing on net loss by roughly $1.6 million and about $900,000 on EBITDA on a trailing 12-month basis.
The East Texas Pipeline is a 200-mile NGL pipe from Kilgore, Texas, to Beaumont, Texas, according to analysts with Capital One Securities Inc. in an Aug. 13 research note.
“We think [Martin Midstream] may have similarly idle or noncore asset sales to further improve the balance sheet before year-end,” the Capital One analysts added.
In its press release on Aug. 12, Martin Midstream listed its primary business lines include:
- Terminalling, processing, storage, and packaging services for petroleum products and by-products;
- Land and marine transportation services for petroleum products and by-products, chemicals, and specialty products;
- Sulfur and sulfur-based products processing, manufacturing, marketing and distribution; and
- NGL transportation, distribution and marketing services.
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