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Canada's largest propane distributor, Superior Propane Inc., has agreed to buy the Canadian pulp chemicals business of Sterling Chemicals Inc., after Sterling's Houston-based parent emerges from bankruptcy.
Superior, which announced the deal late Wednesday, Nov. 13, said the C$590 million ($375 million) acquisition will add 10% to the 2003 cash distributions of the Superior Propane Income Fund, the income trust that owns the Calgary, Alberta-based company.
Tax-advantaged income trusts distribute cash flow to unit holders. Generally, trusts own businesses that are market leaders in their sectors.
The deal is Superior's first since it became mired in a three- year antitrust battle with Canada's Competition Bureau over its C$175 million acquisition of ICG Propane from Petro-Canada Corp. in 1998.
Superior CEO Geoff Mackey said in an interview Thursday the company decided when it reorganized into a trust in 1998 to expand into other sectors but couldn't negotiate other deals while the ICG acquisition was in limbo. That takeover was finally allowed in April.
Mackey said Sterling's pulp chemicals unit fulfills the income trust criteria and will allow the company to continue to increase payouts to unit holders.