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BORCO purchaser raises$650 million

In an effort to allocate funds for the$1.36 billion purchase of the Bahamas Oil Refining Company(BORCO), Buckeye Partners has raised$650 million in a sale of senior secured notes to fund the transaction.

The announcement was made yesterday by the U.S.-based firm and it intents to use the net proceeds from the offering to finance a portion of the purchase price of an 80 percent interest in BORCO and for general business purposes.

“If the owner of the remaining 20 percent interest in BORCO exercises its right to sell that interest to Buckeye, the remainder of the net proceeds from the offering would instead be used to fund a portion of the purchase price of the acquisition of that 20 percent interest,”said a statement obtained byGuardian Business.”Pending such use, Buckeye intends to maintain the proceeds in cash or cash equivalents.”

The$1.36 billion sale of BORCO was announced last month, with the agreement between First Reserve Corp. and Buckeye Partners expected to close this month.First Reserve and Vopak, the world’s largest tank terminal operator, acquired the Freeport, Grand Bahama oil storage terminal in 2008.

The equity of the company was split 80:20 between affiliates of First Reserve Fund XI, L.P., a global private equity fund operated by First Reserve Corp., and Vopak at the time. Vopak has the option to sell its 20 percent ownership interest in BORCO to Buckeye at the same corresponding price and on the same terms and conditions established with First Reserve.

The transaction will provide a boost to Grand Bahama, with State Minister for Finance Zhivargo Laing tellingGuardian Businessin an earlier interview that the government will receive tens of millions of dollars in stamp tax from the purchase with 6 percent calculated on personalty and 12 percent on realty. BORCO is the fourth largest oil and petroleum products storage terminal in the world and the largest petroleum products facility in the Caribbean, with current storage capacity of 21.6 million barrels.

The BORCO terminal is expected to expand its capacity to 27.4 million barrels, advancing the terminal’s position as a key international hub for crude oil and petroleum products storage in the oil industry, as well as a best-in-class storage and trading platform for the region. The cost of that expansion is estimated at$350 million.

Buckeye now owns 69 refined petroleum products terminals, and operates and maintains approximately 2,400 miles of pipeline under agreements with major oil and chemical companies. It also owns a major natural gas storage facility in northern California, and markets refined petroleum products in some of the geographic areas served by its pipeline and terminal operations.

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