Contanda, formerly "Westway Group", is a premier provider of storage and logistics services to owners of bulk liquid products in North America. The Company has ~7 million barrels of storage capacity across 15 terminals in North America.
The company, headquartered in Houston, Texas, is focused on niche liquid products and customized service offerings and has a leading market position in the agricultural and chemical sectors. The majority of its terminals are located on the Gulf of Mexico and the East Coast. Contanda's terminals are strategically located near deep water ports and transportation infrastructure, providing customers access to critical shipping lanes and distribution networks. Key products stored include petroleum oils, specialty chemicals, caustics, asphalts, vegetable oils, methyl esters, chemicals and molasses products, among others.
The company has a 60 year operating history and was publicly listed in 2009. In 2012, the company divested its liquid feed supplement business and certain non-core terminals and was then taken private by EQT in 2013. Since EQT's investment, the Company has made significant investments expanding storage capacity in North America by over 570,000 barrels and has focused on its core North America market by divesting its European Terminals.
Market trends and drivers
The bulk liquid storage market in North America continues to exhibit strong fundamental demand. Changes in the U.S. energy market, such as the low cost of natural gas feedstock, have spurred increased industrial activity resulting in additional demand for bulk liquid storage capacity in the energy and chemical markets. In addition, increases in population and standard of living as well as agricultural growth also contribute to increased demand for feedstock and product storage. Unique product specifications and new developments require specialty storage solutions, which plays well to Contanda's niche product focus and tailored services. Furthermore, significant development costs and regulatory requirements in addition to a limited number of available sites with adequate infrastructure for bulk liquid storage provide high barriers to entry for new market participants.
Contanda's leading market position in the agricultural and chemical sectors has been demonstrated by its high historical capacity utilization and longstanding relationships with investment grade customers. In addition, Contanda is focused on expanding into higher margin specialty chemicals and expects significant further upside across a wide range of products driven by the US shale boom. Contanda generates stable, predictable cash flows, which are supported by take-or-pay contracts with CPI inflators and automatic rollover provisions.
EQT has extensive experience in the bulk liquid storage business through its ownership of two similar companies in Europe. The EQT value creation plan for Contanda includes capitalizing on the strong growth potential by expanding storage capacity at existing terminals, focusing on commercial excellence by providing the sales force with additional resources, the implementation of a more efficient cost structure by eliminating public company costs and diversifying into higher margin products in the company's core Houston market.