Boston, MA 06/13/2014 (wallstreetpr) – Morgan Stanley (NYSE:MS) now announced that the Firm will sell its 100% ownership interest in oil transportation company TransMontaigne Inc. (TransMontaigne) to NGL Energy Partners LP.
The sale includes both General Partner (TransMontaigne GP LLC) and Limited Partner (TransMontaigne Partners LP), physical inventories and obligations over certain storage contracts.
The transaction expects to gain for Morgan Stanley, but this will not change the Firm’s financial performance. Morgan Stanley expects to close the deal by 3Q20014 which is subject to some regulatory approval.
Reason for sale
Morgan Stanley purchased TransMontaigne in 2006 for $778 million. Since the purchase, the ownership structure in TransMontaigne has gone through several changes including divestment of few businesses.
The transaction includes Firm’s complete ownership in TransMontaigne for an expected price of ~$200 million as per Morgan Stanley. After the transaction, NGL will gain its stake over to 19.7% in TransMontaigne Partners LP. NGL believes that the addition Limited Partner’s petroleum assets and TransMontaigne’s oil transportation business will increase the opportunities in the midstream business.
In addition, NGL will also buy physical inventory from Morgan Stanley for $550 million that depends upon current commodity prices.
Firm’s advantage
In addition to current transaction, Morgan Stanley is divesting the physical oil businesses that help the Firm to improve its return over fixed income trading. The Firm also plans to avoid the regulatory hurdles over the ownership issues which are currently associated with such units.
The basic reason of the sales transaction is to reduce the Firm’s capital used in the commodities business. Morgan Stanley believes that the sale will make the commodity division leaner and client focused and in line with the other businesses.
Morgan Stanley (NYSE:MS) continues to provide financing and risk management support for the clients in oil, gas, power, and metal sector.
