Valero Energy Partners LP (NYSE: VLP) announced Feb. 27 it acquired certain businesses from subsidiaries of Valero Energy Corp. (NYSE: VLO) in a $670 million dropdown acquisition.
In the transaction, VLP, based in San Antonio, will receive the outstanding membership interests in Valero Partners Houston LLC and Valero Partners Louisiana LLC.
Highlights:
- Valero Partners Houston operates a crude oil, intermediates, and refined petroleum products terminal located on the Houston Ship Channel that supports Valero's Houston refinery. The assets consist of storage tanks with 3.6 million barrels (MMbbl) of storage capacity.
- Valero Partners Louisiana operates a crude oil, intermediates, and refined petroleum products terminal located on the Mississippi River in Norco, La., that supports Valero's St. Charles refinery. The assets consist of storage tanks with 10 MMbbl of storage capacity.
VLP said it expects to finance the acquisition with $211 million of cash, $200 million of borrowings under its revolving credit facility, $160 million in borrowings under a five-year subordinated loan agreement with VLO, and the issuance of about 1.9 million common units and 38,941 general partner units to a subsidiary of VLO valued, collectively, at $100 million.
The newly issued VLP units will be allocated between common units and general partner units in a proportion allowing the general partner to maintain its 2% general partner interest.
Upon closing, VLP said it plans to enter into 10-year terminaling agreements with subsidiaries of VLO. The businesses to be acquired are expected to contribute about $75 million of EBITDA in their first full year of operation.
The transaction is expected to be immediately accretive to VLP and its unitholders and is expected to close effective March 1.
Evercore Group LLC was financial adviser and Akin Gump Straus Hauer & Feld LLP was legal counsel.
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