U.S. oil logistics firm Buckeye Partners LP (NYSE: BPL) is selling its 50% stake in Vitol-backed global energy storage company VTTI, the companies said Nov. 2, a move that will see existing shareholders Vitol and IFM Investors increase their stakes.

Buckeye said it would get $975 million in cash proceeds once the deal completes by the end of the year. The company originally acquired its stake in VTTI last year for roughly $1.2 billion.

Global energy trader Vitol said in a statement it would retain a 50% stake with its investment vehicle Vitol Investment Partnership following the sale. Global institutional fund manager IFM would own the other 50%.

Buckeye said the divestiture was the result of a strategic review of the Houston-based company, which will also include the sale of an asset package comprised of non-integrated domestic pipeline and terminal assets for $450 million cash.

“I am confident that the actions taken as a result of our strategic review will not only strengthen our balance sheet and solidify our investment grade rating but also meaningfully improve distribution coverage,” Clark C. Smith, chairman, president and CEO of Buckeye, said in a statement.

As a result, Smith said Buckeye is “well positioned” to fund its annual growth capital spend without accessing the public equity markets.

“In addition, the sales of our interest in VTTI and the domestic asset package allow us to reallocate available growth capital to higher return initiatives across our domestic assets, particularly the opportunities we are actively pursuing along the U.S. Gulf Coast,” he said.

The asset package includes: a jet fuel pipeline from Port Everglades, Fla., to the Ft. Lauderdale and Miami, Fla., airports; pipelines and terminal facilities serving the Reno, Nev., San Diego, Calif., and Memphis, Tenn., airports; and refined petroleum products terminals in Sacramento and Stockton, Calif.

The buyer of the asset package wasn’t disclosed.

The sale of both Buckeye’s VTTI equity interest and the asset package are expected to close by year-end, subject to customary closing conditions including regulatory approvals.

Buckeye also reported on Nov. 2 a net loss of $745.8 million for third-quarter 2018 compared to net income of $116.2 million the same quarter a year ago.

Smith said the company’s third-quarter results fell short of the prior year largely as a result of continued weakness in segregated storage, particularly in the Caribbean.

Intrepid Partners LLC and Wells Fargo Securities LLC were financial advisers to Buckeye in connection with the strategic review and the sale of its interest in VTTI and the asset package. In addition, Intrepid Partners, represented by Gibson, Dunn & Crutcher LLP, provided a fairness opinion to the board of directors of Buckeye GP LLC, the general partner of Buckeye, in connection with the VTTI transaction.

Reuters contributed to this article.

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