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Valero Energy acquires McKee Terminal services

Published by , Editorial Assistant
Tanks and Terminals,

Valero Energy Partners LP (the partnership) has announced that the Board of Directors of its general partner has approved the partnership’s acquisition of the McKee Terminal Services Business from a subsidiary of Valero Energy Corporation (Valero) for total consideration of US$240 million.

The business to be acquired is a terminal business that supports Valero’s McKee refinery. The assets consist of 75 tanks with 4.4 million bbls of storage capacity for crude oil, intermediates, and refined petroleum products.The partnership expects to finance the acquisition with US$139 million of borrowings under its revolving credit facility, US$65 million of cash, and the issuance of additional common units and general partner units to Valero subsidiaries, valued collectively at approximately US$36 million. The newly issued units will be allocated in a proportion allowing the general partner to maintain its 2% general partner interest.

Upon closing, the partnership plans to enter into a 10 year terminalling agreement with a subsidiary of Valero. The business to be acquired is expected to contribute approximately US$28 million of EBITDA in its first 12 months of operation.

“We’re pleased to announce this next step in our growth strategy, which is complementary to the existing VLP McKee Logistics System,” said Joe Gorder, Chief Executive Officer of VLP’s general partner. “We remain well positioned to deliver our targeted year over year distribution growth of 25% for 2016 and 2017.”

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.

Adapted from press release by Francesca Brindle

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