HOUSTON--(BUSINESS WIRE)--Flint Hills Resources, LLC (“Flint Hills Resources” or the “company”) announced it is moving forward with a significant expansion of its chemicals business with the completion of its acquisition of PetroLogistics LP (NYSE: PDH) (“PetroLogistics”) and its general partner, PetroLogistics GP LLC (“MLP GP”). The $2.1 billion transaction is the largest in the company’s history and the first chemical asset it has acquired since purchasing Huntsman Corporation’s U.S. commodity chemical business in 2007.
The acquisition was finalized through the merger of Flint Hills Resources’ subsidiary, FHR Propylene, LLC, with and into PetroLogistics. As a result of the merger, all of PetroLogistics’ outstanding common units were converted into the right to receive $14.00 per common unit in cash, except for those common units owned by Lindsay Goldberg LLC, York Capital Management, MLP GP’s Executive Chairman and its President and Chief Executive Officer, which were acquired for $12.00 per common unit in cash. Additionally, all holders of record of common units on July 15, 2014 will receive a special, one-time distribution of $0.40 per common unit.
Flint Hills Resources will operate PetroLogistics’ propylene facility, which is located in Houston, as part of its chemical and refining business.
“The PetroLogistics Houston plant is one of the most advanced facilities of its kind in the world and an exciting addition to our chemicals business,” said Brad Razook, Flint Hills Resources President and Chief Executive Officer. “Its capabilities are well aligned with our existing chemical and refining operations and will strengthen our ability to compete globally and create additional value for our customers.”
PetroLogistics began operations in 2010 and has an annual production capacity of approximately 1.45 billion pounds. Propylene is one of the basic building blocks for petrochemicals and is used in the production of a variety of end uses including paints, coatings, building materials, clothing, automotive parts, packaging and a range of other consumer and industrial products.
“The facility has a very talented workforce, many of whom have been there from the start, and are credited with helping establish a world-class operation,” said Razook. “We’re pleased to welcome them to Flint Hills Resources as we work together to build on their success.”
Flint Hills Resources is a leading refining, chemicals and biofuels company with operations primarily in Texas and the Midwest. Its manufacturing capability is built upon six decades of refining experience. The company has expanded its production capacity through acquisitions and capital projects worth more than $8.6 billion since 2002. Flint Hills Resources is a subsidiary of Koch Industries Inc., one of America’s largest private companies.
As a result of the merger, PetroLogistics will cease to be a publicly traded company and its common units will no longer be traded on the New York Stock Exchange or any other securities exchange.
PetroLogistics is a major producer of propylene with operations in the vicinity of the Houston Ship Channel. The company owns and operates the only propane dehydrogenation facility in the US, and its plant is among the largest of its kind in the world. The facility employs about 100 people.
The opportunity for the development of the facility was identified in 2003 by MLP GP’s Executive Chairman and its President and Chief Executive Officer. After identifying and purchasing the project site and completing front end engineering and design work, construction of the facility began in 2008 and was completed in 2010. The facility was constructed using equity capital from Lindsay Goldberg LLC and York Capital Management.
About Flint Hills Resources
Flint Hills Resources, through its subsidiaries, is a leading refining, biofuels and chemicals company. Its subsidiaries market products such as gasoline, diesel, jet fuel, ethanol, biodiesel, olefins, polymers and intermediate chemicals, as well as base oils and asphalt.
The refining business operates refineries in Minnesota (Rosemount) and Texas (Corpus Christi), with a combined crude oil processing capacity of approximately 600,000 barrels per day. The petrochemical business includes production facilities in Illinois (Peru; Joliet), Michigan (Marysville) and Texas (Port Arthur; Longview). The asphalt business produces and markets product in the Midwest and Alaska. A subsidiary owns an interest in a lubricants base oil facility in Louisiana. Flint Hills Resources operates six ethanol plants that have a combined annual capacity of 650 million gallons of ethanol (Fairbank, Iowa Falls, Menlo, Shell Rock, and Arthur, Iowa and Fairmont, Nebraska). It also operates a biodiesel plant in Nebraska (Beatrice).