By Chris Wack
Calumet Specialty Products Partners L.P. said Friday that Warburg Pincus has agreed to invest $250 million in Montana Renewables LLC, a renewable fuel business, in the form of a participating preferred equity security.
The deal values Montana Renewables at a pre-commissioning enterprise value of $2.25 billion.
Calumet shares were halted at $14.40 in premarket trading.
The preferred equity investment isn’t interest-bearing and carries certain minimum return thresholds. In connection with the investment, Warburg Pincus will have a representative on Montana Renewables’ four-member board of managers.
Calumet also said Stonebriar Commercial Finance has invested an additional $350 million through a pair of sale and leaseback contracts on top of its existing $50 million commitment to Montana Renewables.
The sale and leaseback transactions carry a 12.3% cost of capital and offer certain strategic early termination options. Concurrent with these transactions, a $300 million convertible investment from Oaktree Capital Management LP in Montana Renewables has been retired.
Once fully operational, Montana Renewables, based in Great Falls, Montana, will use waste feedstocks to produce low-emission alternatives to fossil-fuel products including renewable hydrogen, renewable diesel and sustainable aviation fuel, Calumet said.
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