Hi-Crush Partners (HCLP)

[dan_s]

HCLP is in our High Yield Income Portfolio. At the current unit price the annual yield is approximately 10%. It is one of my favorite MLPs - Dan
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Hi-Crush Partners LP (NYSE: HCLP) said Tuesday it will acquire D&I Silica LLC, a frac sand distributor, for about $125 million.

The acquisition will allow Houston-based Hi-Crush, which produces frac sand, to become a producer, transporter and marketer of Northern White frac sand. Furthermore, the acquisition will double Hi-Crush’s employee size and geographic footprint. Frac sand is a type of proppant used to keep hydraulic fractures open during a fracking treatment.

Pennsylvania-based D&I Silica has 98 employees and it serves oil and gas customers throughout the Marcellus and Utica shale plays. The company has 12 destination terminals for frac sand that are serviced by rail.

“Proppants are playing a critical role in the shale gas revolution and demand for proppants is growing faster than shale drilling activities, creating attractive growth opportunities,” Jim Whipkey, co-CEO of Hi-Crush, said in a statement. “We are seeing increasing demand and market preference for premium white sand as well complexity continues to increase. With D&I, Hi-Crush will be even better positioned to gain market share and deliver unit holder value as we become a more nimble company that can readily meet our customers’ needs.”

The acquisition is also intended to grow distributions for Hi-Crush’s unit holders, Bob Rasmus, Hi-Crush’s co-CEO, said.

Hi-Crush plans to acquire D&I for $95 million in cash and 1.579 million units at the price of $19 a unit. The acquisition is expected to close during the second quarter of this year.