Valero Energy Partners LP Announces Acquisition of McKee Terminal Services Business for $240 Million
March 28 2016 - 4:20PM
Valero Energy Partners LP (NYSE:VLP) (the Partnership) today
announced that the board of directors of its general partner has
approved the Partnership’s acquisition of the McKee Terminal
Services Business from a subsidiary of Valero Energy Corporation
(NYSE:VLO) (Valero) for total consideration of $240 million.
The transaction is expected to close effective April 1, 2016.
The business to be acquired is a terminal
business that supports Valero’s McKee refinery. The assets
consist of 75 tanks with 4.4 million barrels of storage capacity
for crude oil, intermediates, and refined petroleum products.
The Partnership expects to finance the
acquisition with $139 million of borrowings under its revolving
credit facility, $65 million of cash, and the issuance of
additional common units and general partner units to Valero
subsidiaries, valued collectively at approximately $36
million. The newly issued units will be allocated in a
proportion allowing the general partner to maintain its 2 percent
general partner interest.
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
approximately $28 million of EBITDA in its first twelve months of
operation.
“We’re pleased to announce this next step in our
growth strategy, which is complementary to the existing VLP McKee
Logistics System,” said Joe Gorder, Chief Executive Officer of
VLP’s general partner. “We remain well-positioned to deliver
our targeted year-over-year distribution growth of 25 percent for
2016 and 2017.”
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 L.L.C., its financial advisor, and Akin
Gump Straus Hauer & Feld LLP, its legal counsel.
About Valero Energy Partners
LPValero Energy Partners LP is a fee-based master limited
partnership formed by Valero Energy Corporation to own, operate,
develop and acquire crude oil and refined products pipelines,
terminals, and other transportation and logistics assets.
With headquarters in San Antonio, the Partnership’s assets include
crude oil and refined petroleum products pipeline and terminal
systems in the Gulf Coast and Mid-Continent regions of the United
States that are integral to the operations of nine of Valero’s
refineries. Please visit www.valeroenergypartners.com for
more information.
Contacts Investors: John Locke, Vice
President – Investor Relations, 210-345-3077 Karen Ngo, Manager –
Investor Relations, 210-345-4574 Media: Lillian Riojas, Director –
Media Relations and Communications, 210-345-5002
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Safe-Harbor StatementThis
release contains forward-looking statements within the meaning of
federal securities laws. These statements discuss future
expectations, contain projections of results of operations or of
financial condition or state other forward-looking information. You
can identify forward-looking statements by words such as
“anticipate,” “believe,” “estimate,” “expect,” “forecast,”
“project,” “could,” “may,” “should,” “would,” “will” or other
similar expressions that convey the uncertainty of future events or
outcomes. These forward-looking statements are not guarantees of
future performance and are subject to risks, uncertainties and
other factors, some of which are beyond the Partnership’s control
and are difficult to predict. These statements are often based upon
various assumptions, many of which are based, in turn, upon further
assumptions, including examination of historical operating trends
made by the management of the Partnership. Although the Partnership
believes that these assumptions were reasonable when made, because
assumptions are inherently subject to significant uncertainties and
contingencies, which are difficult or impossible to predict and are
beyond its control, the Partnership cannot give assurance that it
will achieve or accomplish these expectations, beliefs or
intentions. When considering these forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements contained in the Partnership’s filings with
the SEC, including the Partnership’s annual reports on Form 10-K
and quarterly reports on Form 10-Q available on the Partnership’s
website at www.valeroenergypartners.com. These risks could cause
the Partnership’s actual results to differ materially from those
contained in any forward-looking statement.
Use of Non-GAAP Financial
InformationThis earnings release includes the term
“EBITDA.” We define EBITDA as net income before income tax
expense, interest expense, and depreciation expense. EBITDA
is a supplemental financial measure that is not defined under
United States generally accepted accounting principles (GAAP).
We believe that the presentation of EBITDA provides useful
information to investors in assessing our financial condition and
results of operations. The GAAP measure most directly
comparable to EBITDA is net income. EBITDA should not be considered
an alternative to net income in accordance with GAAP. EBITDA
has important limitations as an analytical tool because it excludes
some, but not all, items that affect net income. EBITDA
should not be considered in isolation or as a substitute for
analysis of our results as reported under GAAP. Additionally,
because EBITDA may be defined differently by other companies in our
industry, our definition of EBITDA may not be comparable to
similarly titled measures of other companies, thereby diminishing
its utility.
VALERO
ENERGY PARTNERS LPRECONCILIATION OF FORECASTED NET
INCOME UNDER GAAP TO EBITDA(Unaudited, in
Thousands) |
|
|
|
Full Year Beginning April 1, 2016McKee
Terminal Services Business |
Forecasted net income |
$ |
20,300 |
|
Add: Forecasted depreciation
expense |
|
3,400 |
|
Add: Forecasted interest
expense |
|
4,500 |
|
Add: Forecasted income tax
expense |
|
100 |
|
Forecasted EBITDA |
$ |
28,300 |
|
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