Valero Energy Partners LP (VLP) said Sept. 23 it has acquired the Corpus Christi Terminal Services Business in a dropdown from a subsidiary of Valero Energy Corp. (VLO).
The transaction is expected to close effective Oct. 1, and is valued at $465 million.
The business to be acquired includes two terminals that support Valero's Corpus Christi East and West refineries. The assets consist of 134 tanks with 10.1 million barrels of storage capacity for crude oil, intermediates, and refined petroleum products.
Upon closing, the partnership plans to enter into a 10-year terminaling agreement with a subsidiary of Valero. The business to be acquired is expected to contribute about $50 million of EBITDA in its first full year of operation.
"With transactions totaling $1.14 billion, we've exceeded our $1 billion target for acquisitions in 2015," said Joe Gorder, CEO of VLP's general partner, in a statement.
The partnership is on course to deliver year-over-year distribution growth in excess of 25%, he added.
The partnership expects to finance the acquisition with $395 million in borrowings under a subordinated loan agreement with Valero and the issuance of additional common units and general partner units to Valero subsidiaries. The newly issued units, valued at $70 million, will be allocated in a proportion allowing the general partner to maintain its 2% general partner interest.
The terms of the transaction were approved, subject to the execution of definitive documentation, by the board of directors of the general partner, following the approval and recommendation of the board's conflicts committee.
The conflicts committee is composed of independent directors and was advised by Evercore Group LLC, its financial adviser, and Akin Gump Straus Hauer & Feld LLP, its legal counsel.
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