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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.


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Results for vlp
MICHAEL FILLOON
29 Jan 15 14:25:52
Valero Energy posts Q4 beat as higher margins offset lower crude discounts http://t.co/YZdDrc1lVR $VLO, $VLP http://t.co/9kPCXXnldW
ProVesting
29 Jan 15 12:46:03
$VLP: Valero Energy posts Q4 beat as higher margins offset lower crude ...: http://t.co/SAkWa8ns0k
ABassili
29 Jan 15 09:32:05
RT @mlplongshort: @MLPData @MLP_Protocol TY. $VLP clearly stands out there.. pro-rated distributions are properly annualized, correct?
ABassili
29 Jan 15 09:31:10
RT @MLPData: @mlplongshort @MLP_Protocol Relative Comps in chart...they all have large EBITDA drops.. $VLP $SHLX $PSXP $MPLX http://t.co/1…
MLP Data LLC
29 Jan 15 07:48:14
$VLO states $VLP distributions will exceed 50% tier by Q4, which is an 18% minimum distribution increase http://t.co/GAdMLpcCHy
MLP Data LLC
29 Jan 15 07:11:24
@mlplongshort @MLP_Protocol Yes, yield is annualized latest ..VLP up 5% on $1B $VLO guidance of drops to $VLP
Master LP
29 Jan 15 07:03:22
@MLPData @MLP_Protocol TY. $VLP clearly stands out there.. pro-rated distributions are properly annualized, correct?
MLP Data LLC
29 Jan 15 06:51:04
@mlplongshort @MLP_Protocol Relative Comps in chart...they all have large EBITDA drops.. $VLP $SHLX $PSXP $MPLX http://t.co/1ZKYaQiiQO
Master LP
29 Jan 15 06:25:12
Any one have thoughts on valuation given growth here? How does it compare to $SHLX $DM $VLP etc.? Cc: @MLPData @MLPData @MLP_Protocol
InterCooler
29 Jan 15 06:20:14
Valero Energy Partners LP to Issue Quarterly Dividend of $0.27 on February 12th $VLP http://t.co/Lb5MCMDypX
Michael Maher
29 Jan 15 05:10:57
$VLO Valero is targeting an estimated $1 billion of drop-down transactions to $VLP in 2015.
MLP Data LLC
28 Jan 15 13:15:26
Market is expecting some comments on $VLO drops to $VLP on tomorrows earning call
Penny Stock Secret
28 Jan 15 10:54:08
This Guy Turned $100 into over $10,000 In Just 30 Days! http://t.co/vezCDY95do .. $VLO $VLP $VLRS
ProTradersNews
27 Jan 15 15:26:02
$VLP: Valero Energy Partners LP to Issue $0.27 Quarterly Dividend (VLP): http://t.co/hIuvLm0ikE
WKRB News
27 Jan 15 15:18:52
Valero Energy Partners LP to Issue $0.27 Quarterly Dividend $VLP http://t.co/NpVtCTLLwQ
Briefing.com
26 Jan 15 10:06:20
$VLP: Valero Energy Partners increases its fourth quarter 2014 cash distribution to $0.266 per unit, up 8.3% from... http://t.co/hYWqafGBxX
MLP Data LLC
26 Jan 15 09:48:58
$VLP moves to 15% IDR splits with distribution increase, earnings call on 2/5 looking for drop guidance $VLO http://t.co/GAdMLpcCHy
MLP Data LLC
26 Jan 15 08:30:43
RT @mlplongshort: $VLP Valero Energy Partners increases quarterly distribution by ~11%, 25% above the MQD.
Alexander Morris
26 Jan 15 08:29:04
$VLP: 1mRunaway+:1 [+4%,.3%offHi], allTFs+; TrdVol:3x:2x; TLM:3.7; ILM:1.1, DyVol:46T:0.3x:0.3x, DyRng:4.5%:0.6x:1x (PotLONG)
Ariane Randolph
26 Jan 15 08:22:19
Valero Energy declares $0.266/unit distribution $VLP http://t.co/pJWs1a7viX
ProVesting
26 Jan 15 08:21:07
$VLP: Valero Energy Partners LP Increases Quarterly Cash Distribution by ...: http://t.co/b1E9HsqzAv
Master LP
26 Jan 15 08:21:06
$VLP Valero Energy Partners increases quarterly distribution by ~11%, 25% above the MQD.
SA Breaking News
26 Jan 15 08:15:12
Valero Energy declares $0.266/unit distribution http://t.co/mWrgSpBayv $VLP
ProVesting
26 Jan 15 08:11:06
$VLP: Valero Energy Partners LP Increases Quarterly Cash Distribution by ...: http://t.co/dslVCeIF69
NASDAQ
26 Jan 15 08:06:02
$VLP - Valero Energy Partners LP Increases Quarterly Cash Distribution by Nearly 11 Percent http://t.co/v33FOjBHzI
BLUESPIDER
26 Jan 15 08:05:24
$VLP increases its fourth quarter 2014 cash distribution to $0.266 per unit, up 8.3% from $0.24
MLP Data LLC
25 Jan 15 08:33:30
MLPData Weekly: Sentiment and Slow Flows » MLPData http://t.co/j77ZvvOgDH $AM $VLO $VLP $PSXP $MPLX $SHLX $AMLP $AMJ #fundflows
DAG1996
23 Jan 15 11:27:10
Commented on: "Valero Energy: Cheap Oil Doesn't Stop Refiners" http://t.co/MWn45Mj3tM $VLO $VLP
StockNewsWires
23 Jan 15 11:06:05
$VLP: Brokerage Firm Price Target on Valero Energy Partners LP: http://t.co/yo1E3ixwBh
ProTradersNews
23 Jan 15 11:06:02
$VLP: Valero Energy Corporation Increases Regular Cash Dividend by 45 ...: http://t.co/unqsgpBieQ
NASDAQ
23 Jan 15 10:42:03
$VLP - Valero Energy Corporation Increases Regular Cash Dividend by 45 Percent http://t.co/TiNsC9bLSn
				
				
By  +Follow December 10, 2013 5:05PM
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