IPO Report: World Point Terminals, LP (WPT)

Nine other IPOs were scheduled for the week of August 5. The full IPO calendar can be found at IPOpremium.

World Point Terminals, LP ($WPT) is based in ST. Louis, MO.  WPT scheduled an $176 million IPO with a market capitalization of $660 million at a price range mid-point of $20, for Friday, August 9, 2013.

WPT's S-1 was filed August 1, 2013.  The manager is BofA Merrill.  The co-managers are Credit Suisse; Citigroup; Stifel; BNP PARIBAS; Stephens; Wedbush.

Summary

WPT is a limited partnership sponsored by secretive, privately held Apex Oil, a $5 billion in revenue company also based in St. Louis, MO. WPT provides oil storage facilities.

WPT's growth plan appears to be pretty much limited to other oil storage facilities that can be funneled in by Apex. WPT's post-IPO capacity will be 12.8 million barrels.

Post-IPO Apex will still own six refined product and crude oil storage terminals in the East Coast and Gulf Coast regions, with an aggregate available storage capacity of 7.8 million barrels

Valuation

WPT has a relatively high price-to-book. And public shareholders receive no incentive distributions rights, that's a negative. Most limited partnerships share incentive distribution rights with public shareholders.

Glossary:

Conclusion

Neutral on the WPT IPO, lacks growth potential.

Business

WPT is a fee-based, growth-oriented Delaware limited partnership recently formed to own, operate, develop and acquire terminals and other assets relating to the storage of light refined products, heavy refined products and crude oil.

Storage terminals are strategically located in the East Coast, Gulf Coast and Midwest regions of the United States and, as of May 31, 2013, had a combined available storage capacity of 12.4 million barrels, and at the closing of this offering we will have 12.8 million barrels of available storage capacity.

Since January 1, 2013, WPT completed construction of and placed into service 0.2 million barrels of available storage capacity at existing facilities and have acquired or will acquire prior to the closing of this offering an additional 1.4 million barrels of available storage capacity, increasing storage capacity since December 31, 2012 by approximately 14%.

Most of the terminal facilities are strategically located on major waterways, providing easy ship or barge access for the movement of petroleum products, and have truck racks with efficient loading logistics. Several of our terminal facilities also have rail or pipeline access.

For the years ended December 31, 2011 and 2012, WPT generated 86% of revenue from storage services fees, and for the three months ended March 31, 2012 and 2013, generated 84% of revenue from these fees.

Sponsor generated revenues

For the year ended December 31, 2012 and the three months ended March 31, 2013, 28% and 34%, respectively, of revenues were derived from Apex, the sponsor.

Formed in 1932, Apex is a distribution and marketing company controlled by the controlling shareholders that supplies, distributes and markets refined petroleum products to refiners, wholesalers, distributors, marketers and industrial and commercial end users throughout the United States and international markets.

For the three years ended September 30, 2012, Apex averaged annual revenue in excess of $5.0 billion and sales in excess of 50 million barrels of refined products. WPT's terminals provide critical logistics services that support Apex's distribution and marketing operations.

Apex also owns six refined product and crude oil storage terminals in the East Coast and Gulf Coast regions, with an aggregate available storage capacity of 7.8 million barrels.

Under contract

As of May 31, 2013, 93% of available storage capacity was under contract. During the five years ended December 31, 2012, more than 95% of available storage capacity was under contract.

The top ten customers (including Apex) represented over 84% of revenue for 2012 and for the first three months of 2013, have used WPT's services for an average of approximately ten years.

As of May 31, 2013, 93% of available storage capacity was under contract. The top ten customers include several major oil and natural gas companies, including Phillips 66 Company, Sunoco, Inc. and ExxonMobil.

Sponsor & organization chart

One of WPT's principal attributes is its relationship with Apex, which is controlled by Paul A. Novelly and members of his family. 28% of WPT's revenue for 2012 was derived from Apex.

Aprex is a secretive private company based in St. Louis, MO.
http://www.apexoil.com/

At the closing of this offering, the controlling shareholders will indirectly control the general partner, and the sponsors will own all incentive distribution rights.

Organization chart
http://gaskinsco.com/wpt-org.png

Incentive distribution rights

None to public shareholders (this is a negative)

Minimum distribution

WPT expects to make a minimum distribution of $1.20 per year, which is 6% at the price range mid-point of $20.

Use of proceeds

WPT expects to receive $70 million from its IPO from the sale of 3.9 million shares. Shareholders expects to sell 4.9 million shares, or 56% of the IPO.

• pay transaction expenses related to the new revolving credit facility in the amount of $1.6 million;

• distribute to the selling unitholder $29.9 million, the majority of which is to reimburse the selling unitholder for costs related to the acquisition or improvement of assets that the selling unitholder will contribute to WPT;

• repay indebtedness owed to a commercial bank under a term loan of $8.1 million;

• repay indebtedness owed to a related party of $14.1 million;

•repay existing payables of $4.3 million; and

• provide working capital of $12.0 million.