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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
Corporate Algorithm
27 Feb 15 20:39:34
$VLP is like Tom Brady. http://t.co/UdDsbJoSZB
Corporate Algorithm
27 Feb 15 20:35:10
$VLP always has and always will be my first buy. http://t.co/qYnvCL7TY3
Market Parse
27 Feb 15 20:00:19
@CorpAlgorithm Your tweet about $VLP had a sentiment of 5 and was featured on Market Parse. http://t.co/5WyUW68Klj
ProTradersNews
27 Feb 15 14:46:01
$VLP: Valero Energy Partners buys two subsidiaries in $671 million deal: http://t.co/Sdi95IwKl1
Thudder & Wicks
27 Feb 15 11:51:12
$VLP Valero Energy Partners to buy $VLO Houston, Louisiana Units for $671 mln http://t.co/EaRbILtOFw http://t.co/G5RtoIkhku
Briefing.com
27 Feb 15 11:23:30
$VLP: Valero Energy Partners announces the acquisition of certain businesses from subsidiaries of Valero Energy... http://t.co/9ESfqyc6mK
Breaking News
27 Feb 15 11:11:05
$VLP $VLO: Valero Energy Partners To Acquire Certain Valero Terminaling ...: http://t.co/wJbv1Qy2pD
NASDAQ
27 Feb 15 10:24:02
$VLP - Valero Energy Partners to Buy Houston, Louisiana Subsidiaries for $671 Million http://t.co/movJctt3gP
OptionsPlay
27 Feb 15 10:13:06
$VLP is in a bullish trend with resistance at $56.89. http://t.co/2KbuGbsWYJ
MICHAEL FILLOON
27 Feb 15 10:12:49
Valero Energy Partners to buy Houston, Louisiana terminals from Valero http://t.co/8WQeKuw1dU $VLP, $VLO http://t.co/wQxRXd7fof #Oil #WTI
CMCMFIN
27 Feb 15 10:08:04
RT @CalConfidence: UPDATE: Valero Energy Partners LP To Acquire Certain Valero Terminaling Businesses for $671M $VLO $VLP http://t.co/qPWr…
NASDAQ
27 Feb 15 10:05:04
$VLP - Annual Report (10-k) http://t.co/cDtcbGccjD
Perfor Mance
27 Feb 15 10:04:35
Option Millionaires: nlightn: $VLP,...Valero Energy Partners acquire terminals from Valero in http://t.co/kGDFEEZUuk
Instrumental Data
27 Feb 15 10:02:23
VALERO ENERGY PARTNERS LP $VLP 10-K now available
Marla
27 Feb 15 09:49:50
RT @MarketCurrents: Valero Energy Partners acquire terminals from Valero in $671M deal http://t.co/FwPp6tYIww $VLP $VLO
DJ Olive
27 Feb 15 09:38:00
RT @MarketCurrents: Valero Energy Partners acquire terminals from Valero in $671M deal http://t.co/FwPp6tYIww $VLP $VLO
Master LP
27 Feb 15 09:35:05
RT @MarketCurrents: Valero Energy Partners acquire terminals from Valero in $671M deal http://t.co/FwPp6tYIww $VLP $VLO
Large Void Bot
27 Feb 15 09:34:02
12:15:00 $VLP Valero Energy Partners LP Announces Acquisition of Certain Valero Terminaling ...
Large Void Bot
27 Feb 15 09:34:01
$VLP Resumed 12:31:57. News and Resumption Times. (Halted: 12:14:00)
Corporate Algorithm
27 Feb 15 09:33:05
RT @OpenOutcrier: $VLP on highs after this acquisition. Keep an eye on $VLO
Large Void Bot
27 Feb 15 09:33:02
$VLP Halt - News Released. Halt time: 12:14:00.
Corporate Algorithm
27 Feb 15 09:32:51
Valero Energy Partners acquire terminals from Valero in $671M deal http://t.co/SEbQiVCmQo $VLP $VLO
Open Outcrier
27 Feb 15 09:32:30
$VLP on highs after this acquisition. Keep an eye on $VLO
M&A News
27 Feb 15 09:30:26
Valero Energy Partners acquire terminals from Valero in $671M deal http://t.co/L1f3GqsA0t $VLP $VLO
SA Breaking News
27 Feb 15 09:30:25
Valero Energy Partners acquire terminals from Valero in $671M deal http://t.co/FwPp6tYIww $VLP $VLO
Breaking News
27 Feb 15 09:27:07
$VLP: Valero Energy Partners LP Announces Acquisition of Certain Valero ...: http://t.co/TpxoaJeKsl
StockNewsWires
27 Feb 15 09:26:08
$VLP: Valero Energy Partners LP Announces Acquisition of Certain Valero ...: http://t.co/EiLFFUnUdA
CalConfidence
27 Feb 15 09:25:33
UPDATE: Valero Energy Partners LP To Acquire Certain Valero Terminaling Businesses for $671M $VLO $VLP http://t.co/qPWrmaJl31 via @benzinga
FinancialJuice
27 Feb 15 09:22:19
Valero Energey Partners $VLP announce they are to buy some of Valero $VLO terminaling business #stocks
NASDAQ
27 Feb 15 09:22:07
$VLP - Valero Energy Partners LP Announces Acquisition of Certain Valero Terminaling Businesses for $671 http://t.co/moDNWp9BC8
Open Outcrier
27 Feb 15 09:21:26
$VLP announces an acquisigion of terminaling businesses for $671M
DSinden
27 Feb 15 09:19:17
RT @financialjuice: Valero Energy Partners $VLP halted new pending #stocks
Briefing.com
27 Feb 15 09:18:05
$VLP shares halted for news pending (52.90 +0.07)
NightHawk
27 Feb 15 09:18:02
RT @OpenOutcrier: $VLP halted
NightHawk
27 Feb 15 09:18:00
RT @financialjuice: Valero Energy Partners $VLP halted new pending #stocks
BLUESPIDER
27 Feb 15 09:17:35
$VLP shares halted for news pending
Trading Halts
27 Feb 15 09:17:20
$VLP in T1 halt at 12:14:00 -- News Pending
Large Void Bot
27 Feb 15 09:17:02
$VLP Halt - News Pending. Halt time: 12:14:00.
FinancialJuice
27 Feb 15 09:15:49
Valero Energy Partners $VLP halted new pending #stocks
Open Outcrier
27 Feb 15 09:14:23
$VLP halted
TalkMarkets
27 Feb 15 04:04:03
Brazil Stocks Down, Real Tumbles, Petrobras Cut To Junk $PBR $WGP $VTTI $VLP http://t.co/szaLH3y13L
TalkMarkets
26 Feb 15 15:31:48
Brazil Stocks Down, Real Tumbles, Petrobras Cut To Junk $PBR $WGP $VTTI $VLP http://t.co/szaLH3y13L
Paulo Sa Elias
26 Feb 15 13:39:34
RT @ZacksResearch: How will Brazilian stocks be impacted by the Petrobras scandal? $BPR $WGP $VTTI $VLP http://t.co/0OYm6F7GMP
Zacks.com
26 Feb 15 13:35:10
How will Brazilian stocks be impacted by the Petrobras scandal? $BPR $WGP $VTTI $VLP http://t.co/0OYm6F7GMP
InterCooler
26 Feb 15 09:48:17
Valero Energy Partners Receives Consensus Rating of “Buy” from Analysts $VLP http://t.co/nTbh5V73fr
Market Parse
25 Feb 15 22:18:41
@glennskwilliams $VLP Your tweet has been featured on Market Parse, for iPhone. http://t.co/YHInvBCk4m
Glenn Williams
25 Feb 15 15:57:46
Biggest debt issuance since July: "Chevron (CVX) Issues Bonds Worth $6B for Refinancing Debt" http://t.co/LiyLOZAWDQ @YahooFinance $CVX $VLP
Penny Stock Secret
24 Feb 15 12:26:44
This Guy Turned $100 Into Over $10,000 In Just 30 Days!!! http://t.co/NovWYeksZ7 .. $VLO $VLP $VLRS
Ticker Report
23 Feb 15 05:56:38
Valero Energy Partners Receives $54.19 Average PT from Analysts $VLP http://t.co/IoIPq3aK3s
				
				
By  +Follow December 10, 2013 5:05PM
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