Valero Energy Partners LP Announces Acquisition of the Meraux and Three Rivers Terminal Services Business for $325 Million
August 22 2016 - 4:23PM
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 Meraux and Three
Rivers Terminal Services Business from a subsidiary of Valero
Energy Corporation (NYSE:VLO) (Valero) for total consideration of
approximately $325 million. In its first twelve months of
operation, the business to be acquired is expected to contribute
approximately $25 million of net income and approximately $39
million 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 U.S. 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 percent 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 million barrels of
storage capacity for crude oil, intermediates, and refined
petroleum products. The Three Rivers assets consist of 62
tanks with 2.25 million barrels of storage capacity for crude oil,
intermediates, and refined petroleum products.
The Partnership expects to finance the $325 million
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 percent 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 percent 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. 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 petroleum 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.
ContactsInvestors: John Locke,
Vice President – Investor Relations, 210-345-3077Karen Ngo, Manager
– Investor Relations, 210-345-4574Media: Lillian Riojas, Director –
Media Relations and Communications, 210-345-5002
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 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 U.S. 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 U.S. GAAP measure most directly comparable to EBITDA is
net income. EBITDA should not be considered an alternative to
net income in accordance with U.S. 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 U.S. 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 FOR THE FULL YEAR BEGINNING SEPTEMBER 1, 2016 UNDER U.S.
GAAP TO EBITDA(Unaudited, in
Thousands) |
|
|
|
|
|
|
|
Meraux and Three Rivers Terminal Services
Business |
Forecasted net income |
|
|
$ |
25,500 |
|
Add: Forecasted depreciation
expense |
|
|
|
2,600 |
|
Add: Forecasted interest
expense |
|
|
|
10,300 |
|
Add: Forecasted income tax
expense |
|
|
|
200 |
|
Forecasted EBITDA |
|
|
$ |
38,600 |
|
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