Sprague Resources readies $170m IPO
Portsmouth-based energy firm expects shares to be traded on NYSE
Portsmouth-based Sprague Resources LP – one of the region’s largest wholesale fuel distributors, with more than $4 billion in sales – disclosed Tuesday that it is selling off a large chunk of the company to the public for about $170 million, or about $20 a share.
The stock is expected be traded on the New York Stock Exchange under the symbol SRLP, probably by the end of this month and as early as the end of this week, according to Taylor Hudson, a company spokesperson.
Shareholders won’t have any say in running the company, which will remain firmly in control of Axel Johnson Group, the Swedish owners of the company, the company disclosed in a prospectus for the initial public offering.
Indeed, shareholders – who are expected to snap up the approximately 8.5 million units for sale – won’t have all of the normal protections under Securities and Exchange Commission rules because they will be buying a piece of a partner of the company, as opposed to the company itself.
Sprague also anticipates granting the option for the underwriters to purchase up to an additional 1.275 million shares at the IPO price as set by the underwriters.
Shareholders will own 42.2 to 48.5 percent of the company depending on the amount of options exercised, while Sprague Holdings, a subsidiary of Axel Johnson, will get the rest.
The company, which recently changed its name from Sprague Energy, distributes some 1.1 billion gallons of petroleum products and 50 billion cubic feet of natural gas through some 15 of its own terminals and about 50 third-party facilities that are located throughout the Northeast. Two of them are Newington: a facility with 29 storage tanks and another with 12. Sprague also has facilities in Maine, Massachusetts, New York and Connecticut.
When Charles Sprague founded the company in 1870, it distributed coal, but it has since focused primarily on oil – both home heating and gasoline – and more recently got into natural gas. Sprague distributes a substantial amount of the state’s home heating oil, diesel and kerosene. Irving Oil supplies the Granite State with much of its gasoline.
It also has a materials handling unit that handles everything from asphalt to windmill parts. The company moved to the Pease International Tradeport in 1999.
As a private company, Sprague kept its finances to itself, but that ended Tuesday with its required disclosures for an IPO under Securities and Exchange Commission regulations.
Sprague, with net sales of over $4 billion, lost $12.8 million in its last fiscal year (though the “pro forma” company – as it will be configured after the IPO – would have lost $9.2 million, or 42 cents a share). On the positive side, the company made $11.6 million (the pro forma numbers were $26.4 million, or $1.21 a share) in the first six months of 2013, with net sales of $2.5 billion.
Axel Johnson will get $72.6 million for services rendered as the general partner out of the deal, including the $2.1 million expense of setting up the IPO.
CEO David Glendon and CFO Gary Rinaldi were each compensated $858,000 in 2012 calendar year, down from the $1.3 million each made in 2011.