PBF Logistics LP (NYSE: PBFX) announced today that it acquired a 50 percent interest in Torrance Valley Pipeline Company LLC from an affiliate of PBF Energy Inc. (NYSE: PBF) for a total consideration of approximately $175.0 million in cash. The acquisition was financed with cash on hand, borrowings under its revolving credit facility and proceeds from a successful public offering of common units completed in August.
Based on anticipated ownership percentage, current cost structure, increased fees payable by PBF under the transportation services agreement and the expected minimum throughput rates, the acquired interests of TVPC would be expected to generate estimated annual net income to the Partnership of approximately $9.4 million from revenues of approximately $38.5 million and operating income of $11.0 million and estimated earnings before interest, taxes, depreciation and amortization of approximately $20.0 million. Annual maintenance capital expenditures for the Partnership's acquired interest would be expected to average approximately $1.5 million.
PBFX and PBF Energy Chief Executive Officer Thomas Nimbley said, "The acquisition of the Torrance Valley Pipeline interests demonstrates PBFX's ongoing commitment to deliver sustained growth and diversify our earnings base with high-quality assets." Mr. Nimbley continued, "PBF Energy shareholders also benefit from this transaction as PBF Energy has received additional cash, representing approximately one third of PBF Energy's acquisition price for the Torrance refinery and its logistics assets, to strengthen its balance sheet in anticipation of future opportunities."
TVPC owns the 189-mile San Joaquin Valley Pipeline system with a throughput capacity of approximately 110,000 barrels per day. The system, segregated into two parts, Northern and Southern portions, is comprised of the M55, M1 and M70 pipelines which are the primary crude gathering and transportation lines that supply PBF Energy's Torrance refinery. The assets also include 11 pipeline stations with approximately one million barrels of combined tankage and truck unloading capability at two of the stations. The Partnership has entered into a ten-year term transportation services agreement with a subsidiary of PBF Energy containing minimum volume throughput commitments ("MVCs") of approximately 50,000 barrels per day for the Northern logistics system and MVCs of approximately 70,000 barrels per day for the Southern logistics system and the usage of certain tanks.
The terms of the transaction were approved by the Conflicts Committee of the Board of Directors of the general partner of PBF Logistics. The Conflicts Committee is composed of independent directors and was advised by Piper, Jaffray & Co., its financial advisor, and Vinson & Elkins LLP, its legal counsel.
About PBF Logistics
LP PBF Logistics LP (NYSE: PBFX), headquartered in Parsippany, New Jersey, is a fee-based, growth-oriented master limited partnership formed by PBF Energy Inc. to own or lease, operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets.
