Westlake Chemical Partners LP Acquires Additional Interest in Westlake Chemical OpCo
September 26 2017 - 4:07PM
Business Wire
Westlake Chemical Partners LP (NYSE: WLKP) (the “Partnership”)
today announced that it has agreed to acquire an additional 5.0%
limited partner interest in Westlake Chemical OpCo LP (“OpCo”) for
approximately $229.2 million. The transaction, which is expected to
close in connection with the concurrently announced equity offering
by the Partnership, is expected to be immediately accretive to the
Partnership’s MLP distributable cash flow.
Consideration for the acquisition is expected to be funded with
borrowings under the Partnership’s revolving credit agreement (the
“MLP Revolver”) and proceeds from the concurrently announced equity
offering by the Partnership. This transaction will increase the
Partnership’s limited partner interest in OpCo from approximately
13.3% to approximately 18.3% and will represent the second purchase
of additional interests in OpCo by the Partnership since its
initial public offering. OpCo’s assets are comprised of three
ethylene production facilities, which primarily convert ethane into
ethylene and have an aggregate annual capacity of approximately 3.7
billion pounds, and a 200-mile ethylene pipeline. OpCo sells
approximately 95% of its ethylene production to Westlake Chemical
Corporation under a long-term supply agreement, which provides for
a stable $0.10 margin per pound. OpCo intends to use the proceeds
it receives in connection with this transaction to repay borrowings
under its intercompany debt agreements with Westlake Chemical
Corporation.
“This transaction demonstrates the sustainability of our
strategy to achieve annualized low-double-digit growth in
distributions,” said the Partnership’s President and Chief
Executive Officer, Albert Chao. “OpCo is unique in the MLP universe
given the long-term and stable nature of its key contracts and the
structure of its business. The acquisition of this additional
interest in OpCo, which provides a high-quality, stable, fee-based
earnings stream, represents just one of a number of levers we can
use to grow our distributions over time. In addition to purchasing
increased interests in OpCo, the Partnership can pursue organic
growth opportunities such as capacity expansions in OpCo’s ethylene
production facilities and acquisitions of other qualified assets
from third parties.”
The terms of the acquisition were approved by a Conflicts
Committee, which is comprised entirely of independent directors of
the board of directors of Westlake Chemical Partners GP LLC, the
general partner of the Partnership. This committee was advised by
Jefferies LLC as to financial matters and Akin Gump Strauss Hauer
& Feld LLP as to legal matters.
Westlake Chemical Corporation’s legal counsel was Vinson &
Elkins LLP.
The statements in this release that are not historical facts,
but forward-looking statements, including the impact of the
described acquisition on the Partnership’s cash available for
distribution, availability of funds and the expectation of
long-term distribution growth, could be adversely affected by,
among other things, operating difficulties; the volume of ethylene
that we are able to sell; the price at which we are able to sell
ethylene; changes in the price and availability of feedstocks;
changes in prevailing economic conditions; actions of Westlake
Chemical Corporation or other third parties; inclement or hazardous
weather conditions, including flooding, and the physical impacts of
climate change; environmental hazards; changes in laws and
regulations (or the interpretation thereof); inability to acquire
or maintain necessary permits; inability to obtain necessary
production equipment or replacement parts; technical difficulties
or failures; labor disputes; difficulty collecting receivables;
inability of our customers to take delivery; fires, explosions or
other industrial accidents; our ability to borrow funds and access
capital markets; and other risk factors. For more detailed
information about the factors that could cause actual results to
differ materially for the projections contained herein, please
refer to the Partnership’s Annual Report on Form 10-K for the year
ended December 31, 2016.
Westlake Chemical Partners LP
Westlake Chemical Partners is a limited partnership formed by
Westlake Chemical Corporation to operate, acquire and develop
ethylene production facilities and other qualified assets.
Headquartered in Houston, Texas, the Partnership, following the
closing of the acquisition described above, is expected to own an
approximately 18.3% limited partner interest in Westlake Chemical
OpCo LP. Westlake Chemical OpCo LP's assets consist of three
ethylene production facilities in Calvert City, Kentucky, and Lake
Charles, Louisiana and an ethylene pipeline.
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Westlake Chemical Partners LPMedia RelationsL. Benjamin
Ederington, 713.585.2900orInvestor RelationsSteve Bender,
713.585.2900
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