Valero Energy Partners acquires Valero terminaling businesses

Valero Energy Partners LP (NYSE: VLP) has acquired certain businesses from subsidiaries of Valero Energy Corp. (NYSE: VLO). In the transaction, the Partnership will receive the outstanding membership interests in Valero Partners Houston LLC and Valero Partners Louisiana LLC for a total consideration of about $671 million.  

Valero Partners Houston LLC operates a crude oil, intermediates, and refined petroleum products terminal located on the Houston ship channel that supports Valero's Houston refinery. The assets consist of storage tanks with 3.6 million barrels of storage capacity.

Valero Partners Louisiana LLC operates a crude oil, intermediates, and refined petroleum products terminal located on the Mississippi River in Norco, Louisiana, that supports Valero's St. Charles, Louisiana, refinery. The assets consist of storage tanks with 10 million barrels of storage capacity.

The Partnership expects to finance the acquisition with $211 million of cash, $200 million of borrowings under its revolving credit facility, $160 million in borrowings under a five-year subordinated loan agreement with Valero, and the issuance of 1,908,100 common units, representing limited partner interests, and 38,941 general partner units to a subsidiary of Valero valued, collectively, at $100 million. The newly issued VLP units will be allocated between common units and general partner units in a proportion allowing the general partner to maintain its 2% general partner interest.

Upon closing, the Partnership plans to enter into 10-year terminaling agreements with subsidiaries of Valero. The businesses to be acquired are expected to contribute approximately $75 million of EBITDA in their first full year of operation. 

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 LLC, its financial advisor, and by Akin Gump Straus Hauer & Feld LLP, its legal counsel.


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