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Sprague Resources To Acquire Retail Supplier, Broker

January 3, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Sprague Resources LP announced today that its wholly owned subsidiaries, Sprague Operating Resources LLC and Sprague Energy Solutions Inc., signed a definitive agreement with Global Companies LLC to acquire the assets of Global’s natural gas marketing and electricity brokerage businesses for approximately $17.3 million in cash, subject to customary closing adjustments.

Global’s natural gas marketing and electricity brokerage businesses serve approximately 4,000 commercial, industrial, municipal and institutional customer locations across New York, New Jersey, Massachusetts, Rhode Island, New Hampshire and Maine.

Global’s retail natural gas supplier was organized as Global Energy Marketing LLC and did business as GMG Energy Marketing

The acquired customer portfolio is expected to increase Sprague’s annual natural gas sales volume by approximately 8 billion cubic feet and expand annual electricity brokerage by 1 billion kWh. After the purchase is closed, Sprague will supply natural gas to an estimated 20,000 customer locations.

The Global transaction is expected to be accretive to distributable cash flow and generate approximately $3 million of adjusted EBITDA annually, Sprague said

"The purchase deepens Sprague’s offering within our core Northeast footprint and continues our focused strategy of increasing the number of smaller commercial customers we serve. In addition, Global’s significant New York City presence accelerates our recent growth in this key market. Sprague’s natural gas supply and scheduling expertise also present an opportunity for us to optimize logistics and enhance margins across a larger customer base," said David Glendon, Sprague's President and Chief Executive Officer, who noted that the transaction is the third strategic acquisition for Sprague’s natural gas business in the past three years.

Sprague intends to fund the transaction with borrowings from its senior secured credit facility; closing is expected in the first quarter of 2017.

"As we work to close this acquisition Sprague’s financial position remains very strong. Coverage is more than sufficient to meet our stated cash distribution growth goals, our credit facility has ample liquidity available to fund additional near term acquisition growth, and we expect Sprague’s permanent leverage will remain within our long term target range between 2.5 and 3.5 times," said Glendon. Global Companies LLC is a wholly owned subsidiary of Global Partners LP

"The sale of our natural gas marketing and electricity brokerage businesses reflects our ongoing program to monetize assets that are not fundamental to our growth strategy," said Mark Romaine, Global Partners' Chief Operating Officer.

Global Partners is a midstream logistics and marketing master limited partnership that owns or controls terminal networks of petroleum products and renewable fuels in the Northeast, and distributes gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers in New England and New York.

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