Valero Energy Partners LP’s board of directors of its general partner has approved the partnership’s acquisition of the Corpus Christi Terminal Services Business from a subsidiary of Valero Energy Corporation for $465 million.
The business to be acquired includes two terminals that support Valero’s Corpus Christi East and West refineries in Texas, the company said on Sept. 23. The assets consist of 134 tanks with 10.1 million barrels of storage capacity for crude oil, intermediates and refined petroleum products.
The partnership said it will finance the acquisition with $395 million in borrowings under a subordinated loan agreement with Valero, as well as the issuance of additional common units and general partner units to Valero subsidiaries, valued collectively at approximately $70 million. In addition, 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 terminaling agreement with a subsidiary of Valero. The company expects the acquired business to contribute approximately $50 million of EBITDA in its first full year of operation.
“With transactions totaling $1.14 billion, we’ve exceeded our $1 billion target for acquisitions in 2015,” Joe Gorder, Chief Executive Officer of VLP’s general partner, said in a statement. “We’re on course to deliver year-over-year distribution growth in excess of 25%.” –JD