Attached files
| file | filename |
|---|---|
| EX-10.05 - EXHIBIT 10.05 - VALERO ENERGY PARTNERS LP | ex1005vlpexhibitstoservice.htm |
| EX-10.09 - EXHIBIT 10.09 - VALERO ENERGY PARTNERS LP | ex1009vlpcorpuswestleasean.htm |
| EX-10.03 - EXHIBIT 10.03 - VALERO ENERGY PARTNERS LP | ex1003vlpschedulestoomnibu.htm |
| EX-10.10 - EXHIBIT 10.10 - VALERO ENERGY PARTNERS LP | ex1010vlp395mmsubordinated.htm |
| EX-10.07 - EXHIBIT 10.07 - VALERO ENERGY PARTNERS LP | ex1007vlpterminalservicesc.htm |
| EX-10.01 - EXHIBIT 10.01 - VALERO ENERGY PARTNERS LP | ex1001vlptransactionagreem.htm |
| EX-10.08 - EXHIBIT 10.08 - VALERO ENERGY PARTNERS LP | ex1008vlpcorpuseastleasean.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 1, 2015
VALERO ENERGY PARTNERS LP
(Exact name of registrant as specified in its charter)
Delaware | 1-36232 | 90-1006559 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
One Valero Way San Antonio, Texas | 78249 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (210) 345-2000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 1.01 Entry into a Material Definitive Agreement.
Effective October 1, 2015, Valero Energy Partners LP (the Partnership) entered into a transaction agreement (the Transaction Agreement) pursuant to which Valero Energy Corporation, through its wholly owned subsidiaries, Valero Terminaling and Distribution Company (VTDC) and Valero Energy Partners GP LLC (the General Partner) contributed to the Partnership (the Contribution) all of the outstanding membership interests of Valero Partners CCTS, LLC (Valero CCTS), in exchange for (i) a cash distribution of $395 million to VTDC, (ii) the issuance of 1,570,513 common units representing limited partner interests in the Partnership (Common Units) to VTDC and (iii) the issuance of 32,051 general partner units representing general partner interests in the Partnership (General Partner Units) to the General Partner. The cash distribution was funded with $395 million of proceeds from a subordinated loan agreement (described below in this Item 1.01).
The term “Valero,” when used in this report, may refer to Valero Energy Corporation, to one or more of its subsidiaries, or all of them taken as a whole (other than the Partnership or its subsidiaries or the General Partner) as the context requires.
Valero CCTS owns all of the outstanding membership interests of Valero Partners Corpus East, LLC (Valero Corpus East) and Valero Partners Corpus West, LLC (Valero Corpus West). Valero Corpus East and Valero Corpus West are engaged in the business of terminaling crude oil, intermediates, and refined petroleum products at terminals in Corpus Christi, Texas (collectively, the Corpus Terminals), as more fully described below:
• | Valero Corpus East. Valero Corpus East operates a crude oil, intermediates, and refined petroleum products terminal that supports Valero’s Corpus Christi East Refinery (the Corpus East Terminal). The Corpus East Terminal is located on the Corpus Christi ship channel and has storage tanks with 6.3 million barrels of storage capacity. |
• | Valero Corpus West. Valero Corpus West operates a crude oil, intermediates, and refined petroleum products terminal that supports Valero’s Corpus Christi West Refinery (the Corpus West Terminal). The Corpus West Terminal is located on the Corpus Christi ship channel and has storage tanks with 3.8 million barrels of storage capacity. |
Valero owns (i) the 2% general partner interest in the Partnership, (ii) all incentive distribution rights in the Partnership, and (iii) a 70.3% limited partner interest in the Partnership. Certain officers of Valero (including Joseph W. Gorder who is Valero’s Chairman of the Board, President and Chief Executive Officer) also serve as officers and/or directors of the Partnership and its subsidiaries. Additionally, the Partnership and Valero have certain commercial relationships as further described in the Partnership’s Annual Report on Form 10‑K for the year ended December 31, 2014, which descriptions are incorporated herein by reference.
The terms of the Contribution were determined pursuant to negotiations between the Partnership and the conflicts committee of the board of directors of the General Partner, which is composed solely of independent directors. The conflicts committee retained independent legal and financial advisors to assist in evaluating and negotiating the Contribution. The conflicts committee approved the Contribution and recommended approval of the Contribution to the General Partner’s board of directors, which then approved the Contribution.
Effective October 1, 2015, the following documents were executed in connection with the Contribution.
Transaction Agreement
The Partnership entered into the Transaction Agreement with VTDC, which provides for, among other things, the contribution by VTDC and the General Partner of their interests in Valero CCTS, in exchange for (i) a
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cash distribution of $395 million to VTDC, (ii) the issuance of 1,570,513 Common Units to VTDC and (iii) the issuance of 32,051 General Partner Units to the General Partner. The Transaction Agreement contains customary representations, warranties, covenants, and indemnities.
The foregoing description of the Transaction Agreement is not complete and is qualified in its entirety by reference to the full text of the Transaction Agreement, which is attached as Exhibit 10.01 to this Current Report on Form 8-K and incorporated herein by reference.
Amended and Restated Schedules to Omnibus Agreement
The Partnership entered into amended and restated schedules (the Amended Omnibus Schedules) to the Amended and Restated Omnibus Agreement, dated as of July 1, 2014 (the Omnibus Agreement), among Valero, the General Partner, the Partnership, and certain of their respective subsidiaries. The Amended Omnibus Schedules join Valero CCTS, Valero Corpus East and Valero Corpus West as parties to the Omnibus Agreement and include the following modifications, among others:
• | the indemnification obligations of Valero and the Partnership under the Omnibus Agreement were extended to apply to the Corpus Terminals in substantially the same manner as the assets acquired by the Partnership in its initial public offering; |
• | the annual administrative fee payable by the Partnership was increased from $10.4 million per year to $11.2 million per year. The increase in the fee of $0.8 million will be prorated for the remainder of 2015 based on the number of days from October 1, 2015 to December 31, 2015; and |
• | the grant to Valero of a right of first refusal with respect to the Corpus Terminals. |
The Amended Omnibus Schedules are governed by the terms of the Omnibus Agreement, which is incorporated by reference to this Current Report on Form 8-K as Exhibit 10.02. The foregoing description of the Amended Omnibus Schedules is not complete and is qualified in its entirety by reference to the Amended Omnibus Schedules, which are filed as Exhibit 10.03 to this Current Report on Form 8-K and incorporated herein by reference.
Amended and Restated Exhibits to Services and Secondment Agreement
The General Partner entered into amended and restated exhibits (the Amended Services Exhibits) to the Amended and Restated Services and Secondment Agreement (the Amended Services Agreement), dated as of March 1, 2015, with Valero. The Amended Services Exhibits provide for the additional secondment of employees to the General Partner for the provision of services with respect to the Corpus Terminals.
The forgoing description of the Amended Services Exhibits is not complete and is qualified in its entirety by reference to the Amended Services Exhibits which are filed as Exhibit 10.05 to this Current Report on Form 8-K and incorporated herein by reference.
Terminal Services Schedules
The Partnership and Valero entered into a commercial agreement with respect to the Corpus Terminals in the form of an additional schedule (the Schedule) to the Master Terminal Services Agreement (together with the schedules thereto, the Terminal Services Agreement) entered into on December 16, 2013 in connection with the Partnership’s initial public offering. The Schedule provides for inflation escalators, has an initial term of 10 years, and provides Valero an option to renew for one additional five‑year term. The Schedule is governed by the terms of the Terminal Services Agreement, which is incorporated by reference to this Current Report on Form 8-K as Exhibit 10.06. The description of the Terminal Services Agreement in the Partnership’s Current Report on Form 8-K filed on December 16, 2013 is incorporated herein by reference.
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Pursuant to the Schedule, the Partnership will charge Valero for terminaling services at the Corpus Terminals. Valero will pay a fee of $0.509 per barrel for throughput volumes up to 390,000 barrels per day and $0.05 per barrel for throughput volumes in excess of 390,000 barrels per day. Valero will be obligated to deliver for throughput a quarterly average of at least 354,000 barrels per day at the Corpus Terminals.
The foregoing description of the Schedule is not complete and is qualified in its entirety by reference to the Schedule which is filed as Exhibit 10.07 to this Current Report on Form 8-K and incorporated herein by reference.
Lease and Access Agreements
Valero Corpus East and Valero Corpus West each entered into Lease and Access Agreements with Valero (the Lease and Access Agreements), pursuant to which Valero Corpus East and Valero Corpus West will lease the land on which the Corpus Terminals are located. The term of each Lease and Access Agreement is for 10 years with four automatic successive renewal periods of five years each. Each party may terminate by providing written notice within 180 days of such period. Initially, Valero Corpus East and Valero Corpus West will pay an aggregate $1.7 million per year as base rent, subject to an annual inflation escalator. Valero Corpus East and Valero Corpus West will also pay customary expense reimbursement for taxes, utilities, and similar costs incurred by Valero related to the leased premises.
Each Lease and Access Agreement contains customary terms regarding the rights and obligations of the parties with respect to maintenance of the leased premises, alterations to the leased premises, and maintenance of certain types of insurance, as well as customary default, remedy, and indemnity provisions.
The foregoing descriptions of the Lease and Access Agreements are not complete and are qualified in their entirety by reference to the Lease and Access Agreements which are filed as Exhibits 10.08 and 10.09 to this Current Report on Form 8-K and incorporated herein by reference.
Subordinated Credit Agreement (Term Loan)
The Partnership (as borrower) and Valero (as lender) entered into a Subordinated Credit Agreement (Loan Agreement) under which the Partnership borrowed cash in the amount of $395 million (the Loan). The Partnership used the cash proceeds from the Loan as payment of the cash distribution made under the Transaction Agreement. The Loan has a maturity date of October 1, 2020, at which time the borrower promises to pay to the lender the then unpaid principal amount of the Loan. The Loan may be prepaid at any time without penalty; amounts repaid or prepaid may not be reborrowed. The Loan will bear interest, at the Partnership’s option, at either: (a) the LIBO Rate (as defined in the Loan Agreement) plus the applicable margin, or (b) the Prime Rate (as defined in the Loan Agreement) plus the applicable margin. Accrued interest on the outstanding Loan balance is payable in arrears on each Interest Payment Date (as defined in the Loan Agreement) and the maturity date.
The payment of amounts owing under the Loan Agreement are subordinated to the obligations of the Partnership under its revolving credit agreement with third-party lenders. The Loan Agreement contains customary terms regarding covenants, representations, default, and remedies, including covenants that limit the creation of liens, the incurrence of debt by the Partnership or its subsidiaries, the payment of distributions, and the entry into securitization transactions, sale/leaseback transactions, certain restrictive agreements, consolidations, mergers, and the sale of all or substantially all assets. The Loan Agreement also includes a covenant that requires, as of the last day of each fiscal quarter, the Partnership’s ratio of Consolidated Total Debt (as defined in the Loan Agreement) as of such day to Consolidated EBITDA (as defined in the Loan Agreement) for the four-quarter period ending on such day not to exceed 5.0 to 1.0 (or 5.5 to 1.0 during a specified acquisition period). The Loan is subject to acceleration upon the occurrence of an event of default.
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The foregoing description of the Loan Agreement is not complete and is qualified in its entirety by reference to the Loan Agreement which is filed as Exhibit 10.10 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 1, 2015, the Partnership completed the Contribution pursuant to the terms of the Transaction Agreement. The Partnership, the General Partner, and Valero have various relationships with one another. The information set forth in Item 1.01 regarding the Transaction Agreement and the relationships among the Partnership, the General Partner, and Valero is incorporated by reference into this Item 2.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 regarding the Loan Agreement entered into between the Partnership and Valero in connection with the Contribution is incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 regarding the issuance of Common Units to VTDC and the issuance of General Partner Units to the General Partner in connection with the Contribution is incorporated into this Item 3.02 by reference. The issuance of the Common Units and General Partner Units was completed in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended under Section 4(a)(2), as a transaction by an issuer not involving a public offering.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | |
10.01 | Transaction Agreement, dated October 1, 2015, by and among Valero Terminaling and Distribution Company and Valero Energy Partners LP. | |
10.02 | Amended and Restated Omnibus Agreement, dated July 1, 2014, by and among Valero Energy Corporation, Valero Marketing and Supply Company, Valero Terminaling and Distribution Company, The Premcor Refining Group Inc., The Premcor Pipeline Co., Valero Energy Partners LP, Valero Energy Partners GP LLC, Valero Partners Operating Co. LLC, Valero Partners EP, LLC, Valero Partners Lucas, LLC, Valero Partners Memphis, LLC, Valero Partners North Texas, LLC, Valero Partners South Texas, LLC and Valero Partners Wynnewood, LLC - incorporated by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8-K dated July 1, 2014, and filed July 1, 2014 (SEC File No. 1-36232). | |
10.03 | Amendment and Restatement of Schedules to Amended and Restated Omnibus Agreement, dated October 1, 2015, by and among Valero Energy Corporation, Valero Marketing and Supply Company, Valero Partners Memphis, LLC, Valero Terminaling and Distribution Company, The Premcor Refining Group Inc., The Premcor Pipeline Co., Valero Energy Partners LP, Valero Energy Partners GP LLC, Valero Partners Operating Co. LLC, Valero Partners EP, LLC, Valero Partners Lucas, LLC, Valero Partners North Texas, LLC, Valero Partners South Texas, LLC, Valero Partners Wynnewood, LLC, Valero Partners Houston, LLC, Valero Partners Louisiana, LLC, Valero Partners CCTS, LLC, Valero Partners Corpus East, LLC and Valero Partners Corpus West, LLC. | |
10.04 | Amended and Restated Services and Secondment Agreement, dated March 1, 2015, by and among Valero Services, Inc., Valero Refining Company-Tennessee, L.L.C., Valero Refining-Texas, L.P., and Valero Energy Partners GP LLC - incorporated by reference to Exhibit 10.04 to the Partnership’s Current Report on Form 8-K dated March 1, 2015, and filed March 5, 2015 (SEC File No. 1-36232). | |
10.05 | Amendment and Restatement of Exhibits to Amended and Restated Services and Secondment Agreement, dated October 1, 2015, by and among Valero Services, Inc., Valero Refining Company-Tennessee, L.L.C., Valero Refining-Texas, L.P., and Valero Energy Partners GP LLC. | |
10.06 | Master Terminal Services Agreement, dated December 16, 2013, by and between Valero Partners Operating Co. LLC and Valero Marketing and Supply Company - incorporated by reference to Exhibit 10.7 to the Partnership’s Current Report on Form 8-K dated December 16, 2013, and filed December 20, 2013 (SEC File No. 1-36232). | |
10.07 | Terminal Services Schedule (Corpus East and West Terminals), dated October 1, 2015, by and between Valero Partners Operating Co. LLC and Valero Marketing and Supply Company. | |
10.08 | Lease and Access Agreement, dated October 1, 2015, between Valero Refining-Texas, L.P. and Valero Partners Corpus East, LLC. | |
10.09 | Lease and Access Agreement, dated October 1, 2015, between Valero Refining-Texas, L.P. and Valero Partners Corpus West, LLC. | |
10.10 | Subordinated Credit Agreement, dated October 1, 2015, by and between Valero Energy Partners LP and Valero Energy Corporation and the parties named therein. | |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
VALERO ENERGY PARTNERS LP | |||
(Registrant) | |||
By: | Valero Energy Partners GP LLC, | ||
its general partner | |||
Date: | October 1, 2015 | By: | /s/ Donna M. Titzman |
Donna M. Titzman | |||
Senior Vice President, Chief Financial Officer, | |||
and Treasurer | |||
(Principal Financial and Accounting Officer) | |||
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