Par Pacific Holdings Inc. is starting the new year by entering a new market, the Pacific Northwest.
The company entered into an agreement with CHS Inc. to acquire 33 Cenex Zip Trip-branded convenience stores in the Pacific Northwest for $70 million, plus the value of inventory.
The transaction is expected to close during the first quarter.
"This is an important strategic step as we build on the success of our Wyoming refinery acquisition, which we expect will generate adjusted EBITDA of $50 million in the first full year of our operations," Par Pacific President and CEO William Pate said during a company conference call held Jan. 10.
According to Pate, Par Pacific expects the c-store acquisition will be immediately accretive to adjusted earnings per share and free cash flow.
In addition, it expects that the business, including incremental overhead costs, will contribute approximately $7 million to $7.5 million in adjusted EBITDA in the first full year after the acquisition.
"We found that the stores to be acquired are in good physical shape due to a recent capital investment program by CHS to refurbish and modernize the store locations," Pate explained.
"We expect average maintenance capital expenditures to be between $1 million and $1.5 million per year, driving strong free cash flow from this acquisition."
Par Pacific does not foresee any need for additional capital to complete the transaction.
The company anticipates funding the deal with available liquidity, recently augmented by its December senior note offering, according to the CEO.
This move will give Houston-based Par Pacific a foothold in the eastern Washington and northwest Idaho markets and expand its retail presence outside of Hawaii.
It will also further diversify the company's business unit earnings profile by increasing the contribution of its retail business segment.