Morgan Stanley Agrees to Sell TransMontaigne Stake to NGL

Morgan Stanley (MS) agreed to sell its stake in oil-transportation company TransMontaigne Inc. to NGL Energy Partners LP for $200 million as part of the bank’s effort to reduce capital used by the commodities business.

NGL, a Tulsa, Oklahoma-based propane company, will also buy physical inventory from Morgan Stanley for as much as $550 million depending on prevailing commodity prices, a person briefed on the terms of the agreement said today, asking not to be named because some details aren’t public.

Morgan Stanley is divesting physical oil businesses to improve returns in fixed-income trading and avoid increased regulatory scrutiny on banks’ ownership of those units. The New York-based firm agreed to sell its oil-merchanting business to Moscow-based OAO Rosneft in December.

“Following this transaction, Morgan Stanley’s leading commodities division will be leaner, more client-focused and better aligned with the rest of the firm’s businesses,” Colm Kelleher, head of the investment-banking and trading division, said in the statement. The bank will continue “to service the supply and risk-management needs of our clients across the oil, power and gas, and metals sectors.”

The sale, expected to be completed in the third quarter, will generate a gain that’s not material, Morgan Stanley said in a statement. NGL (NGL) will also assume obligations under terminal-storage contracts.

Ownership Structure

The deal includes Morgan Stanley’s 100 percent interest in TransMontaigne Inc., which is the indirect parent of TransMontaigne GP LLC, the general partner of publicly traded TransMontaigne Partners LP. (TLP) NGL is gaining a 19.7 percent stake in the public company, NGL said in a separate statement.

Morgan Stanley bought TransMontaigne Inc. in 2006 for $778 million. Since then, it has changed the structure of its holdings and divested some pieces, including the March sale of its Canadian terminal business for $110 million.

NGL, a master-limited partnership that began trading publicly in 2011, handles shipments of oil and natural-gas liquids, sells propane and offers water-treatment services. Atanas Atanasov, NGL’s chief financial officer and treasurer, didn’t immediately return an e-mail seeking comment.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net Steve Dickson, Steven Crabill

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