Ergon contributed nine asphalt terminals plus $22.1 million in cash in return for 18,312,968 Series A preferred units in BKEP (valued at approximately $130.9 million), and purchased 847,457 common units of BKEP for approximately $5 million in a private placement. BKEP also repurchased 13,335,390 of its Series A preferred units previously owned by Blueknight Energy Holding, Inc. (“Vitol”) and CB-Blueknight, LLC (“Charlesbank”) for approximately $95.3 million, leaving each of Vitol and Charlesbank with 2,488,789 Series A preferred units. In a separate transaction that closed concurrently with the transactions described above, Ergon acquired of 100% of the membership interest of Blueknight GP Holding, L.L.C., which owns 100% of the outstanding membership interests of the general partner of BKEP.
BEKP also entered into a seven-year storage throughput and handling agreement with Ergon under which BKEP will provide storage and terminalling services at the nine terminals in exchange for payment of fees by Ergon.
The nine terminals acquired by BKEP are located in Wolcott, Kansas; Ennis, Texas; Chandler, Arizona; Mt. Pleasant, Texas; Pleasanton, Texas; Birmingport, Alabama; Memphis, Tennessee; Nashville, Tennessee; and Yellow Creek, Mississippi, and include approximately 2.0 million barrels of storage capacity. This transaction closed October 5, 2016 and leaves BKEP owning a network of 54 asphalt terminals across 26 states with a combined capacity of 10.2 million barrels of asphalt and residual fuel oil storage.
Upon conclusion of the deal, BKEP CEO Mark Hurley stated: “We are excited to announce the completion of this transaction. It is a transformative event for Blueknight and is anticipated to result in immediate and long-term growth for our unitholders. Ergon is an exceptional company with a solid track record and a like-minded disciplined approach to management. We are excited to have them as a valued strategic partner.”
BKEP owns and operates a diversified portfolio of complementary midstream energy assets and provides integrated services for companies engaged in the production, distribution, and marketing of crude oil, asphalt, and other petroleum products. BKEP is headquartered in Oklahoma City, Oklahoma.
About Jackson Walker
Jackson Walker’s corporate and securities group has extensive experience representing clients in mergers, acquisitions, dispositions, joint ventures, and other strategic alliances, as well as securities offerings, corporate governance, executive compensation, and securities laws compliance.
About the Team
Alden S. Crow is a Dallas transactional lawyer with extensive experience in mergers and acquisitions, outside counsel representation, and general corporate matters. Jim Ryan’s Dallas-based transactional practice helps clients with business acquisitions and divestitures, capital formation and investments, and joint venture transactions. Joe Guajardo has worked closely with transactional clients in mergers and acquisitions, debt and equity securities offerings, and general corporate matters across a broad range of industries.