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UPDATE 2-Oil trader Gavilon sold to NGL Energy for $890 mln

Wednesday, 6 Nov 2013 | 11:24 AM ET

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

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

Nov 6 (Reuters) - U.S. energy trader Gavilon LLC has been bought by propane gas supplier NGL Energy Partners LP for $890 million, marking the first deal in what is expected to be a broad ownership reshuffle of global trading firms.

The oil and gas division of Gavilon, which is partly owned by famed fund manager George Soros, was put on the block after the rest of the merchant was bought earlier this year by Japan's Marubeni Corp for $2.6 billion. At the time its value was pegged at around $1 billion, based on its network of oil tanks, pipelines and terminals.

The deal will heighten the focus on a handful of other trading houses that are also seeking buyers, including global physical energy trader Hess Trading (Hetco), the physical commodities arm of JPMorgan Chase & Co and Morgan Stanley's global oil, power and gas business.

The deal will expand the terminal business for NGL, which sells propane to residential, agricultural and industrial customers and provides related storage to retailers, wholesalers and refiners.

Gavilon LLC 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.

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

Gavilon was previously part of Gavilon Group, whose agriculture business stored and distributed agricultural products to food manufacturers and farmers.

Apart from George Soros' 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, it said.

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.