Engineering News

TPC Strikes Merger Deal with First Reserve, SK Capital
August 28, 2012

PC Group Inc. (TPCG), a leading fee-based processor and service provider of value-added products derived from niche petrochemical raw materials, on Monday announced that it has entered into a definitive merger agreement with investment funds sponsored by First Reserve Corporation, a leading global investment firm dedicated to the energy industry, and SK Capital Partners, a U.S. based private investment firm focused on the chemicals sector.

Under the terms of the merger agreement, TPC Group stockholders will receive $40.00 per share in cash for each share of TPC Group common stock that they own. The transaction, which is valued at approximately $850 million, including net debt, will result in TPC Group becoming a private company. The transaction is expected to close in the fourth quarter of 2012.

The $40.00 per share consideration represents a 20 percent premium to TPC Group's closing stock price on July 24, 2012, the last unaffected trading day prior to media reports of a possible acquisition of TPC Group.

Stockholders representing approximately 22 percent of TPC Group's outstanding shares have entered into agreements to vote in favor of the transaction.

"In late 2011, the Board of Directors formed a special committee in order to conduct a comprehensive review of the strategic and financial alternatives available to the Company," said Michael E. Ducey, Non-Executive Chairman of the TPC Group Board of Directors. "Acting in consultation with our advisors, our Board of Directors determined that this transaction with First Reserve and SK Capital, two companies with strong reputations and proven records of successfully completing comparable transactions, appropriately recognizes the value of TPC Group's business and prospects and provides our stockholders with an immediate cash premium for their valued investment."

"We are very pleased to enter into this agreement with First Reserve and SK Capital, and we believe this transaction is in the best interests of TPC Group's stockholders," said Michael T. McDonnell, President and Chief Executive Officer of TPC Group. "We are committed to the execution of our near- and long-term strategic initiatives and remain on schedule with our projects. As always, we will continue to do what we do best--consistently delivering mission-critical products and providing aggregation, processing and logistics services to our valued partners."

First Reserve Corporation Director Neil Wizel said, "As a growth equity investor, First Reserve is looking forward to helping TPC Group expand its core business to capitalize on the advent of the shale plays in North America and the resulting increase in supply of natural gas and natural gas liquids. First Reserve is delighted to partner with TPC Group management and SK Capital, as we together support the Company in its next stage of development."

"We firmly believe in management's strategy of enhancing TPC Group's ability to serve customers in structurally short markets through the restart of idled assets," said Jack Norris, a Managing Director of SK Capital. "Partnering with First Reserve in this acquisition leverages the strengths of our respective sector franchises and positions us well to support management's growth initiatives."

TPC Group's Board of Directors has approved the agreement with First Reserve and SK Capital and recommends that TPC Group stockholders adopt the merger agreement. TPC Group expects to hold a Special Meeting of Stockholders to consider and vote on the proposed merger and merger agreement as soon as practicable after the mailing of the proxy statement to its stockholders.

The transaction is subject to the approval of TPC Group's stockholders, antitrust clearances and other customary closing conditions. First Reserve and SK Capital have obtained commitment letters for debt and equity financing for the transaction, and the transaction is not subject to any condition with regard to the financing. Financing commitments have been provided by Bank of America Merrill Lynch, Morgan Stanley Senior Funding, Inc. and Jefferies and its affiliates.

Perella Weinberg Partners LP is serving as financial advisor to TPC Group, and Baker Botts L.L.P. is serving as legal counsel. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to the special committee of the TPC Group's Board of Directors. Jefferies & Company, Inc. is serving as financial advisor to First Reserve and SK Capital. Simpson Thacher & Bartlett LLP is serving as legal counsel to First Reserve and SK Capital.

TPC Group Inc. is a leading producer of value-added products derived from niche petrochemical raw materials, such as C4 hydrocarbons, and provider of critical infrastructure and logistics services along the Gulf Coast region. The Company sells its products into a wide range of performance, specialty and intermediate markets, including synthetic rubber, fuels, lubricant additives, plastics and surfactants. Headquartered in Houston, Texas, and with an operating history of over 68 years, the Company has manufacturing facilities in the industrial corridor adjacent to the Houston Ship Channel, Port Neches and Baytown, Texas and operates a product terminal in Lake Charles, Louisiana.

Source: TPC Group

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