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UPDATE 1-NGL Energy to buy pipeline company Gavilon for $890 mln

Wednesday, 6 Nov 2013 | 8:24 AM ET

* Gavilon has oil storage and pipelines in Oklahoma, Texas, Louisiana

* Gavilon owned by Soros Fund Management, Ospraie Management and General Atlantic

* Price represents about 7.5 times Gavilon's estimated run-rate EBITDA for 2014

Nov 6 (Reuters) - Propane gas supplier NGL Energy Partners LP said it would buy Gavilon LLC, a pipeline company partly owned by funds managed by Soros Fund Management, for $890 million to expand its terminal business.

NGL sells propane to residential, agricultural and industrial customers and provides related storage to retailers, wholesalers and refiners.

Its midstream business takes delivery of propane from pipelines or trucks and transfers it to third-party trucks for delivery to customers.

Gavilon mainly operates integrated oil storage, terminal and pipeline assets in Oklahoma, Texas and Louisiana and has a complementary crude oil and refined products supply, marketing and logistics business, NGL said.

Gavilon was previously part of Gavilon Group, whose agriculture business stored and distributed grains and oilseeds to food manufacturers and farmers. That business was bought by Japan's Marubeni Corp last year for $2.6 billion.

Apart from George Soros's fund, other Gavilon shareholders are funds controlled by Dwight Anderson's hedge fund Ospraie Management and investment firm General Atlantic.

The purchase price, which represents about 7.5 times Gavilon's estimated run-rate earnings before interest, taxes, depreciation and amortization for 2014, includes about $200 million of working capital.

NGL said it would sell about $240 million of common units in a private placement and expects to use the proceeds to fund part of the acquisition.

The company also increased its revolving loan facility by $621 million to $1.67 billion, part of which it said would be used to fund the purchase.

UBS Investment Bank was NGL's financial adviser and Locke Lord LLP was its legal counsel. Barclays advised Gavilon and the sellers on financial matters. Jones Day and McGrath North provided legal advice to Gavilon.