Kirby Corp. announced today that it will purchase the fleet of Cenac Marine Services LLC for approximately $244 million. The deal will be financed through additional borrowings and is expected to close late this quarter.
Cenac’s fleet consists of 63 30,000-bbl. inland tank barges with approximately 1.9 million bbls. of capacity, 34 inland towboats, and two 3,200-hp offshore tugs. The average age of Cenac's barge fleet is four years, and the towboat/tug fleet averages six years. Of the 63 barges, 48 are clean, 14 are black oil and one is oceangoing. Twenty-six of the towboats are 1,800-2,400 hp, five are 2,800-3,900 hp, and three of the towboats are Z-drives.
Cenac moves petrochemicals, refined products, and black oil, including crude oil, residual fuels, feedstocks and lubricants on the Lower Mississippi River, its tributaries, and Gulf Intracoastal Waterway for major oil companies and refineries.
“The acquisition of Cenac’s young fleet of well-maintained inland tank barges and modern boats is an ideal complement to Kirby’s operations," David Grzebinski, Kirby’s president and CEO, said in a statement. "Cenac has a strong history of operational excellence, and is well respected by the industry and its customers. Cenac’s inland fleet of 30,000-barrel tank barges, of which approximately 80% are clean and 20% are heated black oil vessels, has an average age of only four years. Similarly, Cenac’s fleet of modern inland towboats and offshore tugboats has an average age of only six years. The addition of these vessels to Kirby’s fleet will not only further reduce our average age profile, but will also further enable us to avoid significant capital outlays for new vessels in the future."
Grzebinski commented on the deal during the company's fourth-quarter 2018 earnings call today. "This acquisition is a clear strategic win as it will improve our ability to service customers, lower the average age of the Kirby fleet, and reduce future capital expenditures," he said. "Beyond 2019 as existing contracts expire and we realize the benefits of anticipated synergies, this acquisition will provide enhanced earnings for Kirby and higher returns."
Grzebinski added that Cenac is a "great acquisition," and the company is receiving "really good equipment" and a "top-notch group of mariners." Cenac is a "very well-run company," he said. "It's a very young fleet ... and we are buying this at a significant discount to replacement value."
Cenac moves petrochemicals, refined products, and black oil, including crude oil, residual fuels, feedstocks and lubricants on the Lower Mississippi River, its tributaries, and Gulf Intracoastal Waterway for major oil companies and refineries.
Houma, La.-based Cenac said the deal will "enhance its marine construction operations, by focusing on its best in class shipyard at Main Iron Works while providing continued security for its loyal maritime employees."
"We welcome this opportunity for our vessels to integrate within Kirby Corporation’s fleet, while we independently foster growth for our company’s construction and maintenance operations,” Cenac CEO Arlen “Benny” Cenac said in a statement. “Our company has remained strong through the generations by adapting to new opportunities within the oil, gas and marine transport industries and this continues in that tradition.”
Cenac’s marine employees, from deckhands to captains, will be offered jobs by Kirby and the vessels they man will continue serving current routes in what the companies expect will be a seamless transition. Cenac Marine will remain headquartered in Houma. Kirby will occupy a small suite of on-site offices at Cenac headquarters.
Cenac said the agreement with Kirby for the purchase of its marine assets is consistent with the company’s philosophy of flexibility that has so far kept it in a profitable, secure and stable position despite the volatility of the industry it is associated with.
“We are in a different time in this business that takes new and different ways to make it all work,” Cenac said. “With all of us pulling the same way, we will continue our success. Every decision we make at our company is measured against the examples of entrepreneurship and courage of my great-great-grandfather. We are confident that Jock Cenac would be proud and pleased with this decision, and the good position it places us in for the future.”
