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March 2017 Issue

Valero Energy Partners LP Announces Acquisition of McKee Terminal Services Business for $240 Million

April 6, 2016 •

Valero Energy Partners LP 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 for total consideration of $240 million.  The transaction is expected to close effective April 1, 2016.

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 barrels of storage capacity for crude oil, intermediates, and refined petroleum products.

The Partnership expects to finance the acquisition with $139 million of borrowings under its revolving credit facility, $65 million of cash, and the issuance of additional common units and general partner units to Valero subsidiaries, valued collectively at approximately $36 million.  The newly issued units will be allocated in a proportion allowing the general partner to maintain its 2 percent general partner interest.

Upon closing, the Partnership plans to enter into a 10-year terminaling agreement with a subsidiary of Valero.  The business to be acquired is expected to contribute approximately $28 million of EBITDA in its first twelve 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 percent 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.

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