Valero Energy Partners LP Announces Acquisitions of the Port Arthur Terminal Assets and Parkway Pipeline LLC for $508 Million...
October 26 2017 - 6:43AM
Valero Energy Partners LP (NYSE:VLP) (the “Partnership”) today
announced that the board of directors of its general partner has
approved the Partnership’s acquisitions of the Port Arthur terminal
assets and Parkway Pipeline LLC (“Parkway Pipeline”) from Valero
Energy Corporation (NYSE:VLO) (“Valero”) for total consideration of
$508 million. In the first twelve months of operation, the
acquired operations are expected to contribute a total of
approximately $24 million and $60 million of net income
and EBITDA, respectively. The transaction is expected to
close effective November 1, 2017.
The Port Arthur terminal assets consist of 47
tanks with 8.5 million barrels of storage capacity for crude oil,
intermediates, and refined petroleum products, which support
Valero’s Port Arthur refinery. Parkway Pipeline is a
141-mile, 16-inch refined petroleum products pipeline linking
Valero’s St. Charles refinery with the Plantation and Colonial
pipeline systems in Collins, Mississippi. Parkway Pipeline
currently has 110,000 barrels per day of capacity, with the ability
to expand to more than 200,000 barrels per day.
The Partnership expects to finance the
acquisitions primarily 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.
“We are pleased to continue growing VLP’s
footprint in the Gulf Coast region,” said Joe Gorder, Chief
Executive Officer of VLP’s general partner. “This
transaction, combined with our organic growth projects, and strong
distribution coverage, positions the Partnership well to deliver
its targeted distribution growth without the need for additional
acquisitions.”
The Partnership continues to target annual
distribution growth of 25 percent for 2017 and at least 20 percent
for 2018.
Upon closing, the Partnership plans to enter
into separate 10-year terminaling and transportation agreements
with Valero. The agreements are each expected to include
minimum volume commitments covering approximately 85 percent of
expected throughput.
The terms of the transaction were approved,
subject to the execution of definitive documentation, by the board
of directors of VLP’s 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 10 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, Senior Manager – Investor Relations,
210-345-4574
Tom Mahrer, Manager – Investor Relations,
210-345-1953
Media:
Lillian Riojas, Director – Media 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, quarterly
reports on Form 10-Q and other reports filed with the SEC and 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 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 as 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 BeginningNov 1,
2017Port Arthur Terminal Assets and Parkway
Pipeline |
Forecasted net
income |
$ |
24,300 |
Add: Forecasted depreciation expense |
|
24,300 |
Add: Forecasted interest expense |
|
10,900 |
Add: Forecasted income tax expense |
|
100 |
Forecasted
EBITDA |
$ |
59,600 |
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