July 23, 2018 [PR Newswire] - PBF Logistics LP today announced that it has entered into an agreement with Crown Point International, LLC, formerly known as Axeon Specialty Products LLC (collectively "Crown Point"), to purchase its wholly-owned subsidiary, CPI Operations LLC, whose assets include a storage facility and other idled assets located on the Delaware River near Paulsboro, New Jersey (the "East Coast Storage Assets").
The East Coast Storage Assets include a storage facility with approximately four million barrels of multi-use storage capacity (of which over 50 percent is heated storage), an Aframax-capable marine facility, a rail facility, a truck terminal, equipment, contracts and other assets.
With close proximity to the Paulsboro refinery, the assets are expected to provide synergy opportunities with the Partnership’s sponsor, PBF Energy. The total consideration for the assets is $107.0 million, which is comprised of an initial payment at closing of $75.0 million with the balance being payable one year after closing.
Following closing, the Partnership expects to invest approximately $8.5 million over the next two years in projects to enhance facility capabilities and expects to achieve run-rate earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $15.5 million at the end of 2020. The transaction is expected to close in the fourth quarter subject to customary regulatory and other approvals.
Commenting on the acquisition, Matt Lucey, PBF Logistics Executive Vice President, said, “The acquisition of the East Coast Storage Assets will be immediately accretive and will strategically position the Partnership for the upcoming International Maritime Organization’s low-sulfur fuel specification change in 2020 by adding significant marine-accessible storage assets to our portfolio that are capable of handling a range of material from finished petroleum products and residual fuel oils to heavy, high-sulfur refinery feedstocks.” Mr. Lucey continued,
“We look forward to adding the Crown Point employees to the PBF Logistics’ family and driving further accretive growth for the Partnership.”
The acquisition of the East Coast Storage Assets, combined together with the transactions announced on April 16, 2018, and expected to close on July 31, 2018, the Partnership expects to achieve annualized run-rate EBITDA of approximately $34 million for a total investment of approximately $243 million.
The transactions are expected to be funded through a mix of borrowings from the Partnership’s existing revolving credit facility, cash on hand and new common unit issuances, including a concurrent direct placement for approximately $35 million in gross proceeds and an additional $32 million of common units to be issued to PBF Energy.
Pro forma leverage is expected to remain within our long-term net-debt-to-EBITDA target of three-to-four times. The Partnership does not anticipate the requirement to issue additional equity to support these accretive growth transactions and projects.
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