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IPO Preview: Valero Energy Partners (VLP)

By  +Follow December 10, 2013 5:05PM
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Valero Energy Partners (VLP) is a fee-based, growth-oriented, traditional master limited partnership recently formed by its parent, Valero (VLO), which has a $25 billion market cap.

Eight other IPOs are scheduled for this week. The full IPO calendar can be found at IPOpremium.

(VLP) scheduled a $300 million IPO with a market capitalization of $1.2 billion at a price range midpoint of $20 for Wednesday, December 11, 2013, on the NYSE.

S-1filings

The Manager & Joint managers are J.P. Morgan, Barclays, Citi, RBC Capital Markets, Wells Fargo Securities. The Co-Managers are Mitsubishi UFJ Securities, SunTrust Robinson Humphrey, Credit Agricole CIB, Credit Suisse, Jefferies & Co., Mizuho Investors, RBS, Scotiabank/Howard Weil

Overview

VLP expects to yield 4.25% at the price range mid-point of $20.  The parent VLO retains all incentive distribution rights.

“Valero will serve as a critical source of our future growth by providing us opportunities to purchase additional transportation and logistics assets that Valero currently owns or may acquire or develop in the future.”   Page 2 S-1.

Valuation

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

Dividend

12 mos, Sept '13

Cap (mm)

Sls

Erngs

BkVlue

TanBV

Yield

Valero Energy Partners LP (VLP)

$1,180

12.7

26.8

2.2

2.2

4.25%

Valero Energy (VLO)

$24,590

0.2

10.1

1.3

1.3

1.98%

Glossary

The rating ispositive.  These kind of parent/spinoffs generally work, because there is a segment of VLO’s shareholders who will be enticed by a 4.25% yield versus 1.98% from the parent company,VLO.

Business

VLP is a fee-based, growth-oriented, traditional master limited partnership recently formed by Valero -- $25 billion market cap (VLO) -- to own, operate, develop and acquire crude oil and refined petroleum products pipelines, terminals and other transportation and logistics assets. VLP will serve as Valero’s primary vehicle to expand the transportation and logistics assets supporting its business.

VLP’s initial assets consist of crude oil and refined petroleum products pipeline and terminal systems in the Gulf Coast and Mid-Continent regions of the United States (“U.S.”) that are integral to the operations of Valero’s refinery located in Port Arthur, Texas, its McKee refinery located in Sunray, Texas, and its refinery located in Memphis, Tennessee.

VLP generates revenue by charging tariffs and fees for transporting crude oil and refined petroleum products through its pipelines and terminals. Because VLP does not take ownership of or receive any payments based on the value of the crude oil or refined petroleum products that it handles and does not engage in the trading of any commodities, VLP has no direct exposure to commodity price fluctuations.

At the closing of this offering, VLP will enter into a master transportation services agreement with Valero with respect to VLP’s pipelines and a master terminal services agreement with Valero with respect to VLP’s terminals. These fee-based commercial agreements will initially be the source of all of VLP’s revenues and will have minimum quarterly throughput commitments, inflation escalators and initial terms of 10 years, which VLP believes will promote stable and predictable cash flows.

Competition

As a result of VLP’s contractual relationship with Valero under its commercial agreements and its direct connections to three of Valero’s refineries, VLP believes that its crude oil and refined petroleum product pipelines, terminals and storage facilities will not face significant competition from other pipelines, terminals and storage facilities for Valero’s crude oil or refined petroleum products transportation requirements to and from the refineries VLP supports.

Dividends

VLP intends to pay minimum quarterly distributions of $0.2125 per unit ($0.85 per unit on an annualized basis) to the extent it has sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including payments to VLP’s general partner..

5% stockholders

Valero (VLO) is the parent.

Use of proceeds

VLP expects to net $277.9 million from its IPO. Proceeds are allocated as follows:

to pay revolving credit facility issuance costs of $1.7 million, and VLP will retain the remainder of the net proceeds of this offering for general partnership purposes, which may include funding potential future acquisitions from Valero and third parties and potential future organic expansion capital expenditures.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for vlp
Debby Gerald
1 Aug 15 04:34:55
J.P. Morgan's top oversold high-quality MLPs: PAA, PAGP, ETP, SUN $PAA $PAGP $ETP $SUN $VLP $PSXP $NS $MIC http://t.co/gbwOMnAdOK
Shiraz Lakhi
30 Jul 15 10:15:07
Momentum Screener: ENERGY #Stocks Ranked by Highest # Positive Days /10 Days: $RIGP $TEP $VLP $YUMA ++ Full List: http://t.co/daftPhIeuC
Zacks.com
30 Jul 15 08:45:15
We focus on these 4 energy stocks following the recent decrease in oil supply. $EVEP $GLF $VLP $FTK http://t.co/ECCjTVcESx
dailystockplays.com
29 Jul 15 15:08:49
MACD Bullish http://t.co/OTXCuQ9QQn $SHW $COO $SRCL $ECL $JBHT $MSG $EQM $HDV $TTC $TCP $WGP $ETP $HXL $IPHS $VLP $PCL $OKE $SXL
Sleek Money
29 Jul 15 09:51:06
Valero Energy Partners LP To Go Ex-Dividend on July 30th $VLP http://t.co/pC6m9OjSn0
InvestWithConf
28 Jul 15 13:10:03
$VLP is rated BUY, 27.7% upside by Wall Street analysts based on average ratings/targets http://t.co/rINA2bxkCT http://t.co/6zr4hmWfdB
Penny Stock Secret
28 Jul 15 12:16:40
$71,000 in ONE TRADE!! By Follwing Their Signals More Info Here http://t.co/SVqoMkrw2z .. $VLO $VLP $VLRS
danrocks
27 Jul 15 22:31:34
Right now VLP is number 107 for the largest percentage gain out of 250 stocks. $VLP VLP is up +7.48% in the la http://t.co/LDffpuh6nx
King of investments
25 Jul 15 10:51:31
Valero Energy Partners declares $0.2925 dividend http://t.co/gcftia5Hn3 $VLP
ProVesting
25 Jul 15 09:28:05
$VLP: Valero Energy Partners LP To Go Ex-Dividend on July 30th (VLP): http://t.co/o7FJUBqseF
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25 Jul 15 00:31:05
$VLP: Valero Energy Partners Stock Price Up 3.2% After Dividend ...: http://t.co/P5nmFo9QQU
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24 Jul 15 16:57:05
Valero Energy Partners LP $VLP Declares Quarterly Dividend of $0.29 http://t.co/h8zHnEZbBL
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24 Jul 15 16:55:03
Valero Energy Partners LP $VLP Declares Quarterly Dividend of $0.29 http://t.co/p6kmkAP4DH
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24 Jul 15 16:54:03
$VLP: Valero Energy Partners LP (VLP) Declares Quarterly Dividend of $0.29: http://t.co/qW5u4TTvg8
The Legacy News
24 Jul 15 13:27:37
Valero Energy Partners Shares Up 3.2% After Dividend Announcement $VLP http://t.co/FblP3QPv80
Dakota Financial
24 Jul 15 12:25:02
Valero Energy Partners Stock Price Up 3.2% Following Dividend Announcement $VLP http://t.co/Tt7izIO1wF
InvestWithConf
24 Jul 15 11:42:03
$VLP is rated BUY, 29.6% upside by Wall Street analysts based on average ratings/targets http://t.co/rINA2bxkCT http://t.co/5l4YvBxtSm
Donald J Olive
24 Jul 15 10:45:02
RT @Briefingcom: $VLP: Valero Energy Partners increases its quarterly distribution by 5.4%, to $0.2925/unit http://t.co/bQKCLT2ZXC
Binary Signals
24 Jul 15 10:36:31
RT @Briefingcom: $VLP: Valero Energy Partners increases its quarterly distribution by 5.4%, to $0.2925/unit http://t.co/bQKCLT2ZXC
Briefing.com
24 Jul 15 10:30:40
$VLP: Valero Energy Partners increases its quarterly distribution by 5.4%, to $0.2925/unit http://t.co/bQKCLT2ZXC
US Banking News
24 Jul 15 09:13:37
Valero Energy Partners LP announces dividend of $0.2925. Payable on 8/11/2015. http://t.co/hu3nYDRwzs $VLP #VLP
Consumer News
24 Jul 15 09:13:22
Valero Energy Partners LP announces dividend of $0.2925. Payable on 8/11/2015. http://t.co/q7bu3u07s7 $VLP #VLP
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24 Jul 15 08:59:18
Valero Energy Partners declares $0.2925 dividend http://t.co/2upYgDoMTT $VLP
ProTradersNews
24 Jul 15 08:33:06
$VLP: Valero Energy Partners LP Increases Quarterly Cash Distribution by ...: http://t.co/mwM6PeaO29
TimeForGrowth
24 Jul 15 04:45:02
$VLP: Wall Street analysts bullish on VLP's earnings growth: http://t.co/iIUsSwYtH1 http://t.co/bwBDn4W21b
BreakingStocksNews
24 Jul 15 01:10:03
$VLP: Large Outflow of Money Witnessed in Valero Energy Partners LP: http://t.co/efs9KOQAKO
PrivateCapBlogger
23 Jul 15 22:29:07
J.P. Morgan's top oversold high-quality MLPs: PAA, PAGP, ETP, SUN $PAA $PAGP $ETP $SUN $VLP $PSXP $NS $MIC http://t.co/WxFHUcYzG3
				
				
By  +Follow December 10, 2013 5:05PM
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