Inter Pipeline Ltd. announced that its European storage subsidiary, Inter Terminals Ltd., has entered into an agreement to acquire 100 percent of the issued share capital of NuStar Energy, L.P.'s European bulk liquid storage business ("NuStar Europe") for cash consideration of USD$270 million, or approximately CAD$354 million. The transaction is expected to close in the fourth quarter of 2018 and is subject to customary closing conditions.

"The addition of NuStar Europe is an exciting step forward for our European bulk liquid storage business," commented Christian Bayle, Inter Pipeline's President and Chief Executive Officer. "The acquisition materially increases our overall storage capacity and establishes Inter Terminals as the largest independent storage operator in the United Kingdom. Furthermore, the transaction provides an attractive entry into the Port of Amsterdam. The Port is the world's largest gasoline blending hub and has experienced significant storage growth over the years."

Transaction Highlights

NuStar Europe consists of seven coastal terminals totaling 9.1 million barrels of storage. One terminal is located in Amsterdam, Netherlands with the remaining facilities located in the United Kingdom (UK) near London, Runcorn, Eastham, Grangemouth, Clydebank and Belfast.

Key investment highlights related to the acquisition:

- High-quality, modern asset base of 321 tanks serving a diversified customer base, including integrated oil companies, chemical companies and major petroleum traders;

- Cost-of-service and fee-based storage business primarily focused on inland distribution and blending of petroleum and petrochemical products;

- Stable cash flows not materially impacted by backwardated commodity markets, historically;

- Historically strong utilization rates, averaging approximately 85 percent over the past three years;

- All terminals are strategically located along key waterways with proximity to large metropolitan areas, an important competitive advantage;

- Increases Inter Terminal's storage capacity by approximately 33 percent to 37 million barrels; and

- Strong integration potential with Inter Terminal's existing terminals in the UK, resulting in enhanced product storage and custom blending solutions for customers.

Business Overview

The NuStar Europe terminals operate as storage and blending hubs for the trans-shipment of refined products as well as the inland distribution of petroleum and petrochemical products. These facilities are well-positioned to facilitate the regional movement of products driven by the significant imbalances that exist between supply sources and demand locations.

In the UK, the 1.9 million barrel Grays terminal is strategically located on the River Thames and serves the greater London area. Grays is a key regional supply point, responsible for handling approximately 17 million barrels of refined products per year, and provides cost effective access to London's fuel distribution network. The 49 tank terminal has averaged approximately 100 percent utilization over the past three years.

The 3.8 million barrel state-of-the-art terminal in Amsterdam, Netherlands plays a key role in the Port of Amsterdam with approximately 10 percent of the independent storage capacity. The terminal provides gasoline, gas oil and fuel oil storage, and blending services, including those required to produce IMO 2020 compliant marine fuels. The 44 tank facility has averaged approximately 100 percent utilization over the past three years.

The smaller terminals at Belfast, Eastham, Grangemouth, Runcorn and Clydebank in the UK primarily support the distribution of petrochemicals, gasoline, diesel and sulphur to regional demand centres.

Cash flow in the business is supported by cost-of-service and fixed-fee contracts with major integrated oil companies, petrochemical companies and petroleum traders with terms typically ranging from one to five years. Additional revenue is generated through ancillary services such as product blending and throughput fees.

Historically, the business has experienced a high contract renewal rate with its customers. Storage utilization rates averaged approximately 90 percent in the first half of 2018.

Financial Performance

NuStar Europe has delivered stable financial results despite a challenging European storage market in recent years.

Inter Pipeline expects this business to continue providing reliable results, generating approximately CAD$40 million in average annual EBITDA, over the next several years. This implies a purchase price multiple of approximately 8.9 times future EBITDA.

Acquisition Financing

Inter Pipeline is committed to maintaining a strong balance sheet and financial flexibility. As such, funding for this acquisition will be provided by proceeds from a common share issuance and available capacity on its $1.5 billion committed revolving credit facility. No third party debt will be assumed under the terms of the transaction.

Concurrent with the acquisition, Inter Pipeline has entered into an agreement with a syndicate of underwriters whereby they will purchase from Inter Pipeline, on a bought deal basis, 9.62 million common shares at a price of $20.80 per common share for total gross proceeds of approximately $200 million (the "Offering"). The common shares will be issued under Inter Pipeline's short form base shelf prospectus dated January 18, 2018, and a prospectus supplement to such short form base shelf prospectus to be filed on or before October 31, 2018 in each of the provinces of Canada. The Offering is being led by TD Securities Inc. as the sole bookrunner, and co-led by BMO Capital Markets.

The offering of common shares is expected to close on or about November 7, 2018, subject to customary closing conditions and regulatory approvals.

About Inter Pipeline

Inter Pipeline (TSX: IPL) is a major petroleum transportation, natural gas liquids processing, and bulk liquid storage business based in Calgary, Alberta, Canada. Inter Pipeline owns and operates energy infrastructure assets in western Canada and Europe. Inter Pipeline is a member of the S&P/TSX 60 Index and its common shares trade on the Toronto Stock Exchange under the symbol IPL.

About NuStar Energy L.P.

NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar currently has more than 9,700 miles of pipeline and 82 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids. The partnership’s combined system has more than 97 million barrels of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and the United Kingdom.