PBF Logistics LP (the partnership) has announced that a wholly owned subsidiary has entered into an agreement to acquire four refined product terminals located in the greater Philadelphia region (the East Coast Terminals) from an affiliate of Plains All American Pipeline, L.P. for a total consideration of US$100 million.
This acquisition expands the partnership's storage and terminalling footprint and introduces third party customers to the partnership's revenue base. The acquisition is expected to be financed through a combination of cash on hand, borrowings from the partnership's senior secured revolving credit facility and equity, which may include common units sold to our sponsor, PBF Energy. The acquisition is expected to close in the 2Q16, subject to customary closing conditions.
PBFX Chief Executive Officer, Thomas Nimbley, said, "The acquisition of the East Coast Terminals is PBFX's first third-party acquisition, it adds meaningful third-party, fee-based revenue and represents an attractive acquisition multiple. The addition of the East Coast Terminals increases the partnership's total capacity by over 100% to approximately 8.1 million shell bbls and diversifies its customer and asset base. We expect the acquisition to be accretive to distributable cash flow upon closing." Mr. Nimbley continued, "PBF Logistics has been able to execute its strategy and deliver growth to our unitholders.
Located in the Philadelphia market, the East Coast Terminals are ideally situated in the sixth largest metropolitan area in the US with significant local demand for refined products. The terminals provide a critical link for the approximately 1.3 million bpd of refining capacity located within 100 miles of the terminals and associated downstream demand. With extensive pipeline, truck and deepwater marine connectivity, the East Coast terminals have the flexibility to accommodate a wide variety of potential customer requirements.
The East Coast Terminals are expected to allow PBF Logistics to leverage its expanded footprint and capitalise on commercial opportunities with new customers and leverage opportunities with PBF Energy due to the close proximity of PBF Energy's East Coast refining system. In conjunction with the transaction, the partnership expects to invest approximately US$5 million, from cash on hand, to improve infrastructure in order to increase throughput capability at the East Coast Terminals. Based on a total transaction cost of US$105 million, including the US$5 million investment and synergy opportunities, the partnership expects the East Coast Terminals to generate approximately US$15 million of pro forma EBITDA, of which approximately two-thirds is expected to be from third-party customers.
The assets to be acquired include a total of 57 product tanks with a total shell capacity of approximately 4.2 million shell bbls, pipeline connections to the Colonial, Buckeye, Sunoco Logistics and other proprietary pipeline systems, 26 truck loading lanes and marine facilities capable of handling barges and ships.
Adapted from press release by Francesca Brindle
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