This is compared with $200 million paid in cash by NGL for TransMontaigne GP in 2014. NGL also paid $347 million for products inventory. Morgan Stanley was the previous owner of TransMontaigne.

TLPGP is the general partner of TransMontaigne Partners LP (TLP) and holds the 2% general partner (GP) interest and incentive distribution rights (IDRs) of TLP.

TransMontaigne is a terminaling and transportation company based in Denver, Colo., with operations along the Gulf Coast, in the Midwest, in Brownsville, Texas, along the Mississippi and Ohio rivers and in the Southeastern United States.

NGL said that the TransMontaigne sale would allow NGL to successfully execute growth plans in a challenging operating environment for MLPs.

NGL expects to close the transaction by the end of January 2016 and will use the cash proceeds to repay borrowings outstanding on its revolving credit facility.

OPIS notes that ArcLight has been very aggressive in the merger and acquisition market recently. ArcLight took over Gulf Oil on Dec. 29. Many Gulf Oil personnel are veterans of the TransMontaigne and Louis Dreyfus joint-venture that became the TransMontaigne Group.

Also, ArcLight took over the bankrupt Hovensa terminal at St. Croix in the Caribbean.

Mike Krimbill, CEO of NGL Energy Partners said that NGL will remain the long- term exclusive tenant in the TLP Southeast terminal system.

“NGL will enter into certain commercial transactions with, as well as provide various transition services for, ArcLight,” he said.

The acquisition of TransMontaigne GP will mark the fourth major refined product terminals acquisition for ArcLight in the last 12 months, said Dan Revers, managing partner and co-founder of ArcLight.

The TransMontaigne marketing business is a significant part of NGL’s refined products business (and will remain with NGL) uninterrupted by this transaction.

NGL will retain TransMontaigne Product Services LLC, its customer contracts and its line space on the Colonial and Plantation pipelines.

With respect to the impact on NGL’s EBITDA, the transaction results in an increase of an estimated $20 million annually from cost reductions and revenue enhancements.

NGL will no longer receive $7.6 million of distributions associated with the IDRs and GP interest it owns in TLP, resulting in a net increase of about $12 million going forward.

NGL will retain approximately 3.2 million common units it owns in TLP and has granted an option to ArcLight to purchase 800,000 of those common units at a future date.

“Within a 75-day period, NGL will have reduced capital requirements by approximately $200 million through the previously announced Grand Mesa/Saddlehorn transaction, and raised $350 million in cash in this transaction, while generating additional EBITDA and DCF,” Krimbill said.

The net sale proceeds fund NGL’s growth capital expenditures for the next 18 months, and therefore, NGL does not expect to access the debt and equity capital markets to provide such growth capital.

The net proceeds from this transaction will significantly reduce leverage and increase liquidity.

NGL can reduce leverage further through the sale of its approximately 3.2 million TLP common units.