PE-backed Superior Plus to acquire Freeman Gas for $170m

Superior Plus Corp has agreed to acquire the assets of a South Carolina-based retail propane distribution business operating under the tradename Freeman Gas and Electric Co. The deal, which reflects a purchase price of about $170 million (C$213 million), is expected to close by the end of June. Superior Plus, a Toronto-based energy distribution company, is backed by Brookfield Asset Management.

PRESS RELEASE

Superior Plus Announces US $170 million acquisition of Freeman Gas, further expanding Superior’s footprint in the Southeast U.S.

April 22, 2021

TORONTO–(BUSINESS WIRE)–Superior Plus Corp. (“Superior”) (TSX:SPB) is pleased to announce that one of its wholly-owned subsidiaries has entered into an agreement to acquire the assets of a retail propane distribution company based in South Carolina, operating under the tradename, Freeman Gas and Electric Co., Inc. (“Freeman”) for an aggregate purchase price of approximately US $170 million (CDN $213 million) before adjustments for working capital (the “Acquisition”). Superior anticipates using available cash to fund the amount of the purchase price due on closing.

The Acquisition, which is subject to customary regulatory and commercial closing conditions, is anticipated to close by June 30, 2021.

Acquisition Highlights

Aligned with Superior’s core strategy of investing in established businesses that are in desirable geographies and generate stable free cash flow.
Builds on Superior’s U.S. propane distribution footprint and scale in North Carolina, South Carolina, Georgia and Tennessee.
Leverages Superior’s existing expertise, integrated platform and operational effectiveness into a new customer base.
High-quality, stable cash flow and earnings profile from a business with loyal customers and consistent gross margin profile.
Expected synergies opportunity of at least 25% of the Adjusted EBITDA of the assets acquired.
Expected to modestly increase Superior’s 2021 Adjusted EBITDA.
Pro forma the Acquisition, Superior still expects to be within the long-term Total Debt to Adjusted EBITDA target range of 3.0x to 3.5x.
Founded in 1936 by J.R. Freeman Sr. and H.S. McKeown, Freeman is an established independent family owned and operated retail propane distributor servicing approximately 67,000 residential and commercial customers primarily in North Carolina, South Carolina and Georgia. Freeman has 23 retail branch offices and 38 bulk plants, approximately 7 million gallons of storage capacity, a fleet of 224 vehicles and approximately 275 employees.

On a normalized basis, including the achievement of expected synergies and weather consistent with the five-year average, we expect Freeman to generate approximately US $22 million (CDN $28 million) in Adjusted EBITDA on a run-rate basis 24 months following the close of the Acquisition.

“We are very pleased to enter into this transaction which expands our U.S. propane distribution business in the Southeast U.S.,” said Luc Desjardins, Superior’s President and CEO. “Freeman is a solid business and we look forward to welcoming the team to Superior and continuing to provide outstanding customer service to their customers. The acquisition of Freeman is our fourth acquisition in 2021 and our first acquisition following the sale of Specialty Chemicals. The acquisition of Freeman is representative of the acquisition opportunities we are seeing in the market today, which should enable us to double our U.S. Propane Distribution EBITDA in the next five years.”

About the Corporation

Superior is a leading North American distributor and marketer of propane and distillates and related products and services, servicing over 780,000 customer locations in the U.S. and Canada.

For further information about Superior, please visit our website at: www.superiorplus.com or contact: Beth Summers, Executive Vice President and Chief Financial Officer, Tel: (416) 340-6015, or Rob Dorran, Vice President, Investor Relations and Treasurer, Tel: (416) 340-6003, E-mail: investor-relations@superiorplus.com, Toll Free: 1-866-490-PLUS (7587).

Contacts
Beth Summers
Executive Vice President and Chief Financial Officer
Tel: (416) 340-6015

Rob Dorran
Vice President, Investor Relations and Treasurer
Tel: (416) 340-6003
Toll Free: 1-866-490-PLUS (7587)
E-mail: investor-relations@superiorplus.com