Arc Logistics Partners LP (NYSE:ARCX) ("Arc Logistics" or the
"Partnership"), through a joint venture arrangement with GE Energy
Financial Services, a unit of General Electric Company (NYSE:GE),
has agreed to acquire all of the membership interests of Joliet
Bulk, Barge & Rail LLC ("JBBR") from CenterPoint Properties
Trust ("CenterPoint" or the "Seller") for $216 million. JBBR's
principal assets consist of a crude oil unloading terminal and a
4-mile crude oil pipeline, the Joliet Terminal, which are in the
final stages of construction in Joliet, Illinois and are expected
to be complete in mid to late April 2015. The acquisition
consideration also includes an earn-out payable by the JBBR joint
venture to CenterPoint based upon petroleum product throughput
volumes at the Joliet Terminal (including minimum volumes paid
under customer contracts irrespective of physical deliveries of
product thereunder). JBBR joint venture's earn-out obligations to
CenterPoint will terminate upon the payment, in the aggregate, of
$27 million.
At the closing of the acquisition, Arc Logistics will manage
ongoing operations of the Joliet Terminal and own a 60% interest in
the JBBR joint venture company. GE Energy Financial Services will
own the remaining 40%. The Joliet Terminal is expected to begin
commercial operations by mid to late April 2015, and the
acquisition will not close until the Joliet Terminal becomes
commercially operable.
Arc Logistics will finance its approximate $130 million portion
of the purchase price with net proceeds from the sale of common
units in a private placement and from borrowings under its
revolving credit facility. Institutional investors have committed
to acquire, concurrently with the closing of the acquisition,
approximately 4.4 million of Arc Logistics' common units in a
private placement at a price of $17.00 per unit, resulting in gross
proceeds (before fees and expenses) to the Partnership of $75
million.
Once complete, the Joliet Terminal will have the capability to
unload approximately 85,000 barrels of crude oil per day, and will
have approximately 300,000 barrels of storage and a 4-mile pipeline
connection to a common carrier crude oil pipeline. The facility
will have rail and marine access and capabilities as well as more
than 80 acres of land available for future expansion. At closing,
the Joliet Terminal will be supported by a terminal services
agreement as well as a throughput and deficiency agreement with a
major oil company, each with a term of three years based on minimum
throughput volume commitments. The estimated annual EBITDA of JBBR
is expected to be between $23 and $25 million, of which the
Partnership will receive 60% based upon its percentage ownership
interest in the JBBR joint venture company.
Based upon JBBR's estimated annual EBITDA, the transaction is
expected to be immediately accretive to the Partnership's
distributable cash flow per unit. In connection with the
acquisition of JBBR, the Partnership's management intends to
recommend to the Board of Directors of the Partnership's general
partner an increase in the Partnership's quarterly distribution by
$0.03 per limited partner unit (which represents an approximate 7%
increase from the current quarterly distribution) following the
first full quarter of operations of the Joliet Terminal.
The JBBR acquisition continues the Partnership's existing
business strategy to expand its market position and support the
expansion plans of new and existing customers, while generating
stable cash flows for its unit holders from quality assets
supported by long-term contracts.
For more information regarding the JBBR Acquisition, please see
Arc Logistics' current report filed on February 20, 2015 with the
Securities and Exchange Commission on Form 8-K.
Conference Call and Presentation Materials
A presentation concerning this transaction will be available on
the "Investors" section of Arc Logistics' website.
Arc Logistics will hold a conference call and webcast to discuss
the JBBR acquisition on Friday, February 20, 2015, at 10:00 a.m.
Eastern. Interested parties may join the conference call by dialing
(855) 433-0931, and international callers may join by dialing (484)
756-4279. The call may also be accessed live over the internet by
visiting the "Investors" page of the Arc Logistics website at
www.arcxlp.com and will be available for replay for approximately
one month.
About Arc Logistics Partners LP
Arc Logistics is a fee-based, growth-oriented limited
partnership that owns, operates, develops and acquires a
diversified portfolio of complementary energy logistics assets. Arc
Logistics is principally engaged in the terminalling, storage,
throughput and transloading of crude oil and petroleum products.
For more information, please visit www.arcxlp.com.
Forward-Looking Statements
Certain statements and information in this press release
constitute "forward-looking statements." Certain expressions
including "believe," "expect," "intends," or other similar
expressions are intended to identify Arc Logistics current
expectations, opinions, views or beliefs concerning future
developments and their potential effect on the Partnership. While
management believes that these forward-looking statements are
reasonable when made, there can be no assurance that future
developments affecting the Partnership will be those that it
anticipates. The forward-looking statements involve significant
risks and uncertainties (some of which are beyond the Partnership's
control) and assumptions that could cause actual results to differ
materially from the Partnership's historical experience and its
present expectations or projections. Important factors that could
cause actual results to differ materially from forward-looking
statements include: (i) adverse economic, capital markets and
political conditions; (ii) changes in the market place for the
Partnership's services; (iii) changes in supply and demand of crude
oil and petroleum products; (iv) actions and performance of the
Partnership's customers, vendors or competitors; (v) changes in the
cost of or availability of capital; (vi) unanticipated capital
expenditures in connection with the construction, repair or
replacement of the Partnership's assets; (vii) operating hazards,
unforeseen weather events or matters beyond the Partnership's
control; (viii) effects of existing and future laws or governmental
regulations; and (ix) litigation. Additional information concerning
these and other factors that could cause the Partnership's actual
results to differ from projected results can be found in the
Partnership's public periodic filings with the Securities and
Exchange Commission, including the Partnership's Annual Report on
Form 10-K for the year ended December 31, 2013 and any updates
thereto in the Partnership's subsequent quarterly reports on Form
10-Q and current reports on Forms 8-K.
In addition, there are significant risks and uncertainties
relating to the Partnership's potential acquisition and ownership
of JBBR, including: (a) the acquisition may not be consummated; (b)
the representations, warranties and indemnifications by the Seller
are limited in the JBBR purchase and sale agreement, and the
Partnership's diligence into the business has been limited and, as
a result, the assumptions on which its estimates of future results
of the business have been based may prove to be incorrect in a
number of material ways, which could result in the Partnership not
realizing the expected benefits of the acquisition and/or being
exposed to material liabilities; (c) using debt to finance, in
part, the acquisition will substantially increase the Partnership's
indebtedness; (d) the ability of the Partnership to successfully
integrate JBBR's operations and realize anticipated benefits of the
acquisition; (e) the potential impact of the announcement or
consummation of the proposed acquisition on relationships,
including with employees, suppliers, customers and competitors; (f)
the Partnership's obligation to close the acquisition is not
conditioned on the completion of its debt or equity financing, and
if the Partnership fails to satisfy its obligation to consummate
the acquisition after all conditions precedent to such obligation
have been satisfied, it is reasonably possible that such event
would have a material adverse effect on the Partnership's ability
to pay cash distributions to its unitholders (at least in the short
term); (g) following the consummation of the acquisition, JBBR will
depend on one customer for substantially all of its revenue, there
is no guarantee that JBBR will be able to attract and retain
additional customers or develop additional sources of revenue, and
the loss of this customer could materially adversely affect the
Partnership's results of operations and cash flow; (h) upon closing
of the acquisition, the Joliet Terminal will be a newly constructed
facility, and following commencement of operations, the facility
may not operate efficiently or reliably or as expected, which could
adversely affect the Partnership's results of operations and cash
flows; (i) the loading and unloading (including by rail) of crude
oil and other petroleum products is subject to many risks and
operational hazards, and the transportation of crude by rail may be
subject to increased regulation; and (j) following the closing of
the acquisition, the Partnership's 60% ownership interest in JBBR
will be held, indirectly, through the JBBR joint venture company,
which will own 100% of JBBR, and the consent of GE Energy Financial
Services (which will own the remaining 40% of the JBBR joint
venture company) will be required with respect to certain business
decisions relative to the operation, ownership and governance of
JBBR joint venture company as well as its wholly-owned
subsidiaries, including JBBR.
These factors are not necessarily all of the important factors
that could cause actual results to differ materially from those
expressed in any of the forward-looking statements contained
herein. Other unknown or unpredictable factors could also have
material adverse effects on the Partnership's future results.
Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date
thereof. The Partnership undertakes no obligation to publicly
update or revise any forward-looking statements after the date they
are made, whether as a result of new information, future events or
otherwise.
The Partnership does not, as a matter of course, disclose
projections as to future operations, earnings or other results.
However, the Partnership has included herein certain prospective
financial information, including estimated EBITDA with respect to
JBBR. This information was not prepared with a view toward
disclosure, but, in the view of the Partnership's management, was
prepared on a reasonable basis, reflects the best currently
available estimates and judgments and presents, to the best of the
Partnership's knowledge and belief, the expected course of action
and expected future financial performance of the assets. However,
this information is not fact and should not be relied upon as being
indicative of future results, and readers of this press release are
cautioned not to place undue reliance on the prospective financial
information.
This press release does not constitute an offer of any
securities for sale. The common units to be issued in the private
placement have not been registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United
States absent registration or an applicable exemption from the
registration requirements.
CONTACT: Investor Contact:
212-993-1290
IR@arcxlp.com
www.arcxlp.com
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