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Calumet to sell 50,000 bbl/d Wis. refinery to Husky Energy for $435M

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Calumet to sell 50,000 bbl/d Wis. refinery to Husky Energy for $435M

Calumet Specialty Products Partners LP agreed to divest its 50,000-barrel-per-day refinery in Superior, Wis., and other related assets to the Husky Energy Inc. unit Husky Superior Refining Holding Corp. for $435 million in cash.

The total consideration includes net working capital, inventories and reimbursement of capital spending, according to an Aug. 14 news release.

The Superior refinery processes light and heavy crude supplied by Bakken Shale producers in North Dakota and western Canada, producing gasoline, diesel, asphalt and heavy fuel oils. The other assets include a refinery terminal, truck or rail racks, two offsite asphalt terminals and truck racks, an offsite product terminal and truck rack, a marine terminal, a pipeline connection to the Magellan Midstream Partners LP system, crude gathering assets in North Dakota and rail logistics assets.

"Acquiring the Superior Refinery will increase Husky's downstream crude processing capacity, keeping value-added processing in lockstep with our growing production," said Rob Peabody, CEO of Husky Energy. With the acquisition, the company expects to drive value from its heavy oil production in western Canada and increase its total downstream capacity to about 395,000 bbl/d.

DBRS Ltd. in an Aug. 14 note said the deal "modestly strengthens" Husky Energy's North American downstream business and diversifies its portfolio of refining assets, with minimal impact on its credit metrics. While the rating agency views the transaction as credit positive, it is not enough to have a marked impact on Husky Energy's overall credit ratings, DBRS said.

The deal is scheduled to close in the fourth quarter of 2017. Tudor Pickering Holt & Co. is acting as the exclusive financial adviser for Calumet, while Kirkland and Ellis LLP acted as legal adviser. BMO Capital Markets acted as Husky Energy's financial adviser and Milbank LLP acted as legal adviser.

Calumet is an Indiana-based producer of hydrocarbon products such as gasoline, diesel, lubricating oils and solvents and provides oilfield services. Husky Energy is based in Calgary, Alberta, and operates natural gas, NGL and refineries in the U.S. Midwest and western Canada.