BPL Announces Agreement to Acquire Liquid Petroleum Products Terminal in New York Harbor

abarrelfullabarrelfull wrote on 11 Feb 2012 09:56
Tags: chevron deals downstream usa

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Buckeye Partners, L.P. (“Buckeye”) (NYSE: BPL) announced today that its subsidiary, Buckeye Tank Terminals LLC, has signed a definitive agreement with Chevron U.S.A. Inc. (“Chevron”) to acquire a marine terminal facility for liquid petroleum products in New York Harbor for $260 million in cash. The facility, which sits on approximately 250 acres on the Arthur Kill in Perth Amboy, NJ, has over four million barrels of tankage, four docks, and significant undeveloped land available for potential expansion. The facility has water, pipeline, rail, and truck access, and is located only six miles from Buckeye’s Linden, NJ complex. The acquisition, which is subject to certain closing conditions, is expected to close in the latter half of the second quarter of 2012.

“This is a milestone acquisition for Buckeye that is integral to our vision and strategy for positioning Buckeye for long-term success,” said Clark C. Smith, Buckeye’s President and Chief Executive Officer. “We believe that adding the Perth Amboy facility to our existing portfolio of assets will unlock significant long-term value across the Buckeye enterprise.”

As a result of the acquisition, Buckeye’s inland pipeline and terminal networks will have a direct connection to a Buckeye owned and operated marine facility with water access to petroleum products imported from international and Gulf Coast suppliers. Additionally, the Perth Amboy facility will provide a link between Buckeye’s inland pipelines and terminals and Buckeye’s BORCO facility in The Bahamas, improving service offerings for Buckeye’s customers and providing further support to Buckeye’s planned clean products tankage expansion at the BORCO facility.

“Direct access to waterborne cargos will ensure security and diversity of product supply into the Buckeye system, and is part of a long-term strategy designed to provide sustainability and optionality for further growth in Buckeye’s domestic and international businesses,” continued Mr. Smith. “We believe the unparalleled connectivity we will now have to the full global product logistics chain, along with our best-in-class operations and exceptional service capabilities, truly differentiate us from the competition.”

Mr. Smith noted that Buckeye has near-term plans to transform the existing terminal operations at Perth Amboy into a highly-efficient, multi-product storage, blending, and throughput facility, through the investment of approximately $200-225 million of growth capital into the facility over the next three years at an attractive annual Adjusted EBITDA (as defined below) investment multiple of 4-5x, resulting in an all-in annual Adjusted EBITDA investment multiple of 7-8x.

“We expect to realize significant commercial and operational synergies by adding a marine terminal in New York Harbor to our existing pipeline and terminal assets in the region,” added Mr. Smith. “The Perth Amboy facility will allow Buckeye to play an integral role in connecting waterborne imports with end-destination markets beyond New York Harbor. We expect the transaction, which is supported by multi-year storage, blending, and throughput commitments from Chevron, to be accretive to distributable cash flow per unit in 2013.”

Robert A. Malecky, Senior Vice President of Buckeye and President of Buckeye’s Domestic Pipelines and Terminals business unit, noted that Buckeye intends to expand its capabilities to serve the Northeast markets through the construction of a new 16” pipeline between the Perth Amboy facility and Buckeye’s Linden, NJ complex and an expansion of Buckeye’s existing pipelines running from Linden, NJ into the Pennsylvania and New York markets.

“Buckeye plays a central role in serving the Northeast refined products markets and we are actively
working to provide our customers—who ultimately serve millions of individual end-users of gasoline,
diesel, heating oil, and jet fuel—with logistical solutions to meet Northeast supply challenges,” said
Mr. Malecky.
Morgan Stanley acted as the exclusive financial advisor to Chevron USA Inc. in connection with this

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