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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

Results for vlp
Matthew Wagoner
19 Apr 14 17:34:13
RT @SeekingAlpha: Weekly Intelligence For MLP Investors http://t.co/ri1zGKnOYq $BWP $CMLP $GSJK $KMP $OCIR $VLP
OMAR  STOCKTRADER
19 Apr 14 16:58:34
Weekly Intelligence For MLP Investors http://t.co/86GMcEzJbx $BWP $CMLP $GSJK $KMP $OCIR $VLP”
Seeking Alpha
19 Apr 14 16:56:55
Weekly Intelligence For MLP Investors http://t.co/ri1zGKnOYq $BWP $CMLP $GSJK $KMP $OCIR $VLP
stockroads
19 Apr 14 14:02:17
$NQ Weekly review http://t.co/S9IZ9iAIAe $FANG $AA $AER $PLUG $XCO $VLP $TWTR $SAIC
Stock_Tracker
19 Apr 14 12:57:07
Valero Energy Partners LP (VLP) 43.20 $VLP Valero Energy Partners LP Declares Quarterly Cash Distribution PR N http://t.co/06iycz6QYn
Luther Cox
19 Apr 14 03:26:21
$VLP Valero Energy Partners LP Decl http://t.co/WZMuPNq8XE
Esau Braxton
19 Apr 14 03:11:17
$VLP Valero Energy Partners LP Decl http://t.co/kxmMmQrXDJ
Darryl Hudson
18 Apr 14 07:10:12
$VLP Valero Energy Partners LP http://t.co/13hzN37CqA
Ticker Report
18 Apr 14 05:57:34
Valero Energy Partners LP $VLP Plans Quarterly Dividend of $0.21 http://t.co/VPsGYjQiiE
4-traders.com
17 Apr 14 21:55:25
Valero Energy Partners : Sets Date to Report 1st Quarter 2014 Earnings Results http://t.co/VcOmk6AwSn $VLP $VLO
Major Brown
17 Apr 14 18:03:27
$VLP Valero Energy Partners LP http://t.co/vEUbZV69gu
Karl Rosoff
17 Apr 14 10:51:03
$VLP Valero Energy Partners declares quarterly cash distribution http://t.co/vIMjPZCBf2
stockroads
17 Apr 14 09:53:34
$VLP 21c dividend declared
Zolmax News
17 Apr 14 09:43:42
Valero Energy Partners LP $VLP Plans Quarterly Dividend of $0.21 http://t.co/PEkLxB8vdB
US Banking News
17 Apr 14 09:39:54
Valero Energy Partners LP $VLP Plans Quarterly Dividend of $0.21 http://t.co/dYhlZN5RSa
US Banking News
17 Apr 14 09:34:39
Valero Energy Partners LP announces quarterly dividend of $0.2125. Payable on 1/1/2100. 2.03% Yield. http://t.co/T2lTNTA5mA $VLP #VLP
Karl Rosoff
17 Apr 14 09:00:36
$VLP Valero Energy Partners LP Declares Quarterly Cash Distribution http://t.co/lzb2V5W9tM
4-traders.com
17 Apr 14 08:55:02
Valero Energy Partners : Declares Quarterly Cash Distribution http://t.co/JDmURF0AuT $VLP
MLP Data LLC
17 Apr 14 08:34:54
Putin barks, oil rises and #LNG exports and gulf refiners benefit as inventory hits record highs $NTI $VLP $ALDW $CQH http://t.co/ahPjbQ6YrB
م/فهد الحميدي
17 Apr 14 05:58:59
RT @MichaelGLamothe: Be ready for any way the market moves with a good watch list! Here's my "top 10 setups in bases": http://t.co/a6aCB7g6…
Rob McGavern
17 Apr 14 05:38:54
$VLP Valero Energy Partners to A http://t.co/uDO8a9RdZN
Michael Lamothe
17 Apr 14 04:29:25
Be ready for any way the market moves with a good watch list! Here's my "top 10 setups in bases": http://t.co/a6aCB7g6an $JLL $ATHL $VLP
Karl Rosoff
16 Apr 14 23:36:05
$VLP Port Corpus Christi emerges as a growing transportation and storage hub for ... http://t.co/tRIfcp1W5g
stockroads
16 Apr 14 08:29:42
$VLP On breakout watch
Gary Rosovsky
15 Apr 14 17:56:31
$VLP Valero Energy Partners to A http://t.co/vWKG1XRw35
4-traders.com
15 Apr 14 13:20:05
Valero Energy Partners : to Announce First Quarter 2014 Earnings Results on May 14, 2014 http://t.co/1uEC6TwBTd $VLP
stockroads
15 Apr 14 04:16:29
$VLP Entering long today
LT
14 Apr 14 16:33:46
RT @MichaelGLamothe: Are you ready for when the uptrend resumes? Here's my "Top 10 Setups in Bases" for the week: http://t.co/hhIj2ZH7AO $J…
Rodrigo D'Silva
14 Apr 14 15:26:26
$VLP A GOOD DAY rec. long
MLP Data LLC
14 Apr 14 12:09:36
High DCF Growth MLPs climb again $VLP $PSXP $MPLX $ENBL http://t.co/OdgZRDCuaP
Kermit Bailey
14 Apr 14 06:29:41
$VLP Valero Energy Corporatio http://t.co/9WvGyuLHLC
Michael Hurt
14 Apr 14 05:45:37
RT @MichaelGLamothe: Are you ready for when the uptrend resumes? Here's my "Top 10 Setups in Bases" for the week: http://t.co/hhIj2ZH7AO $J…
Sky Grady
13 Apr 14 17:27:08
$VLP Valero Energy Corporatio http://t.co/tCMLAUThfE
Edmond Flores
13 Apr 14 09:59:39
$VLP [$$] Oil Shale Boom Cou http://t.co/W27URqJEPr
Jaycob Keating
13 Apr 14 05:19:23
$VLP Valero Energy Corporatio http://t.co/yuqgM1cJ8F
Michael Lamothe
12 Apr 14 11:08:31
We must always be prepared for a resuming uptrend! Here are my "Top 10 Setups in Bases": http://t.co/obzbxof8wi $JLL $ATHL $VLP
				
				
By  +Follow December 10, 2013 5:05PM
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