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Valero Energy acquires Corpus Christi terminal services business

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Hydrocarbon Engineering,

Valero Energy Partners LP (VLP) has announced that the Board of Directors of its general partner has approved the company's acquisition of the Corpus Christi Terminal Services Business from a subsidiary of Valero Energy Corporation. The total consideration is for US$465 million.

The business to be acquired includes two terminals that support Valero's Corpus Christi East and West refineries. The assets consist of 134 tanks with 10.1 million bbls of storage capacity for crude oil, intermediates, and refined petroleum products.

The company expects to finance the acquisition with US$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 US$70 million. The newly issued units will be allocated in a proportion allowing the general partner to maintain its 2% general partner interest.

The transaction is expected to close effective 1 October 2015.

Upon closing, VLP plans to enter into a 10-year terminaling agreement with a subsidiary of Valero. The business to be acquired is expected to contribute approximately US$50 million of EBITDA in its first full year of operation.

"With transactions totaling US$1.14 billion, we've exceeded our US$1 billion target for acquisitions in 2015," said Joe Gorder, CEO of VLP's general partner. "We're on course to deliver year-over-year distribution growth in excess of 25%."

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 Akin Gump Straus Hauer & Feld LLP, its legal counsel.

Edited from press release by

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