MOSCOW (MRC) -- Valero Energy Partners’ (the Partnership) board of directors of its general partner has approved the Partnership’s acquisition of the Meraux and Three Rivers Terminal Services Business from a subsidiary of Valero Energy Corp. (Valero) for total consideration of approximately USD325 M, said Hydrocarbonprocessing.
In its first twelve months of operation, the business to be acquired is expected to contribute approximately USD25 M of net income and approximately USD39 M of earnings before interest, taxes, depreciation, and amortization (EBITDA). The transaction is expected to close effective September 1, 2016.
"With this next step in our growth strategy, we’re expanding our US Gulf Coast footprint and achieving our acquisition target for the year," said Joe Gorder, Chief Executive Officer of VLP’s general partner. "With solid operations, a strong balance sheet, and our supportive sponsor, we remain well-positioned to deliver annual distribution growth of 25% for 2016 and 2017."
The business to be acquired includes terminals that support Valero’s Meraux and Three Rivers refineries. The Meraux assets consist of 24 tanks with 3.9 MMbbl of storage capacity for crude oil, intermediates, and refined petroleum products. The Three Rivers assets consist of 62 tanks with 2.25 MMbbl of storage capacity for crude oil, intermediates, and refined petroleum products.
The Partnership expects to finance the USD325 M acquisition with borrowings under its revolving credit facility, cash on hand, and the issuance of additional common units and general partner units to Valero subsidiaries. The newly issued units will be allocated in a proportion allowing the general partner to maintain its 2% general partner interest.
Upon closing, the Partnership plans to enter into 10-year terminaling agreements with a subsidiary of Valero. The agreements are expected to include minimum volume commitments covering approximately 85% of planned throughput.
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.
As MRC informed earlier, Valero Energy Corp.’s previously-announced USD700 million methanol plant, planned at its existing St. Charles Parish, LA, facility, was shelved indefinitely in mid-March 2016.
MRC