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

SAN ANTONIO, March 28, 2016 -- Valero Energy Partners LP (NYSE:VLP) (the Partnership) today 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 (NYSE:VLO) (Valero) 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.

About Valero Energy Partners LP
Valero Energy Partners LP is a fee-based master limited partnership formed by Valero Energy Corporation to own, operate, develop and acquire crude oil and refined products pipelines, terminals, and other transportation and logistics assets.  With headquarters in San Antonio, the Partnership’s assets include crude oil and refined petroleum products pipeline and terminal systems in the Gulf Coast and Mid-Continent regions of the United States that are integral to the operations of nine of Valero’s refineries.  Please visit www.valeroenergypartners.com for more information.

Contacts 
Investors:
John Locke, Vice President – Investor Relations, 210-345-3077
Karen Ngo, Manager – Investor Relations, 210-345-4574
Media:
Lillian Riojas, Director – Media Relations and Communications, 210-345-5002

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Safe-Harbor Statement
This release contains forward-looking statements within the meaning of federal securities laws. These statements discuss future expectations, contain projections of results of operations or of financial condition or state other forward-looking information. You can identify forward-looking statements by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “project,” “could,” “may,” “should,” “would,” “will” or other similar expressions that convey the uncertainty of future events or outcomes. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Partnership’s control and are difficult to predict. These statements are often based upon various assumptions, many of which are based, in turn, upon further assumptions, including examination of historical operating trends made by the management of the Partnership. Although the Partnership believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies, which are difficult or impossible to predict and are beyond its control, the Partnership cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions.  When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements contained in the Partnership’s filings with the SEC, including the Partnership’s annual reports on Form 10-K and quarterly reports on Form 10-Q available on the Partnership’s website at www.valeroenergypartners.com. These risks could cause the Partnership’s actual results to differ materially from those contained in any forward-looking statement.

Use of Non-GAAP Financial Information
This earnings release includes the term “EBITDA.”  We define EBITDA as net income before income tax expense, interest expense, and depreciation expense.  EBITDA is a supplemental financial measure that is not defined under United States generally accepted accounting principles (GAAP).  We believe that the presentation of EBITDA provides useful information to investors in assessing our financial condition and results of operations.  The GAAP measure most directly comparable to EBITDA is net income. EBITDA should not be considered an alternative to net income in accordance with GAAP.  EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income.  EBITDA should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Additionally, because EBITDA may be defined differently by other companies in our industry, our definition of EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.