PBF Logistics has announced the acquisition of remaining 50% interest in Torrance Valley Pipeline Company (TVPC) from an affiliate of PBF Energy for total consideration of approximately $200m in cash.
The 304km San Joaquin Valley Pipeline system owned by the TVPC has a throughput capacity of approximately 110,000 barrels per day.
The pipeline system includes the M55, M1 and M70 pipelines which are the primary crude gathering and transportation lines that supply PBF Energy’s Torrance refinery, along with 11 pipeline stations with approximately one million barrels of combined storage capacity and truck unloading capability at two of the stations.
PBF Logistics and PBF Energy anticipate the closing of transaction to occur in the second quarter, subject to customary closing conditions.
The acquisition is financed through a combination of $135m of gross proceeds from PBFX’s over-subscribed registered direct offering of common units to certain institutional investors and a $65m draw-down from PBF Logistics‘ senior secured revolving credit facility.
PBF Logistics’ present acquisition of TVPC is expected to immediately double its position in one of its core assets.
PBFX and PBF Energy Chief Executive Officer Thomas Nimbley said: “The acquisition of the remaining 50 percent interest in TVPC reflects PBFX’s ongoing commitment to deliver sustained growth to our unitholders by adding high-quality assets to our earnings base.
“The equity issuance and drop-down transaction were executed in response to high investor demand for investable opportunities in PBF Logistics. With this transaction, in combination with our organic growth efforts, we exceed our near-term distribution growth funding requirements and achieve the flexibility to execute our strategic plan without accessing public equity to fund growth capital through 2020.”
After the completion of the transaction, PBF Logistics is expected to consolidate the existing ten-year term transportation services agreements with subsidiaries of PBF Energy.
The service agreements include minimum volume throughput commitments (MVCs) of approximately 50,000 barrels per day for the M1 and M55 pipelines.
In August 2016, PBF Logistics had signed a letter of intent (LOI) to acquire the initial 50% stake in Torrance Valley Pipeline Company from an affiliate of PBF Energy for about $175m.