Delek Logistics Partners, LP (NYSE:DKL) ("Delek Logistics") and
Green Plains Partners LP (NASDAQ:GPP) today announced the companies
have formed DKGP Energy Terminals LLC, (“DKGP”) a 50/50 joint
venture engaging in the light products terminalling business.
DKGP signed a membership interest purchase
agreement to acquire two light products terminals from an affiliate
of American Midstream Partners, L.P. These light products terminals
are located in Caddo Mills, Texas and North Little Rock, Arkansas.
The total purchase price for these assets is $138.5 million in
cash. Subject to customary closing conditions and regulatory
approvals, this transaction is expected to close in the first half
of 2018.
DKGP will consist of the assets purchased from
an affiliate of American Midstream and assets contributed by Delek
Logistics, with a total value of approximately $162.5 million.
Taking into consideration the combination of the assets, synergies
and future growth, the joint venture is expected to generate an
annualized earnings before interest, taxes, depreciation and
amortization (“EBITDA”) of approximately $19.2 million in
2019. Immediately prior to the closing of the acquisition by
the joint venture of the two terminals from American Midstream,
Delek Logistics will contribute to the joint venture its North
Little Rock, Arkansas terminal with throughput capacity of 17,100
barrels per day and its Greenville tank farm located in Caddo
Mills, Texas with approximately 330,000 barrels of aggregate shell
capacity, which will be valued at approximately $24.0 million,
along with approximately $57.25 million in cash. Green Plains
Partners will contribute approximately $81.25 million in cash to
DKGP. The DKGP board will oversee the newly formed joint venture
and will appoint an affiliate of Delek Logistics as the operator
with day-to-day operational responsibilities for the four
terminals.
Uzi Yemin, Chairman and Chief Executive Officer
of Delek Logistics' general partner, remarked: “We are excited to
partner with Green Plains Partners for its potential ethanol
volumes, logistics expertise and industry knowledge as the domestic
markets expand blending, and look forward to the future of this
joint venture. This is a great opportunity as it fits our strategy
to grow through assets in markets that we are very familiar with,
and by contributing our complementary existing logistics assets in
east Texas and Little Rock, Arkansas, we expect to create
additional synergies within the joint venture. In addition to
serving third party customers, it should be well positioned to
provide additional logistics support to Delek US’ Tyler, Texas and
El Dorado, Arkansas refineries. Our financial flexibility should
give us the ability to finance this investment under our revolving
credit facility, while we continue to look for opportunities for
future growth.”
“This transaction helps us start achieving our
goal of diversifying Green Plains Partners revenue and income
streams,” said Todd Becker, President and Chief Executive Officer
at Green Plains Partners. “We believe this joint venture with Delek
Logistics creates significant value for both our partnership
unitholders and Green Plains Inc. shareholders. We anticipate that
this new joint venture will be immediately accretive to earnings
and we look forward to building on our relationship with Delek
Logistics.”
In February 2017, Green Plains Partners and
Delek Renewables LLC formed NLR Energy Logistics LLC, a 50/50 joint
venture to build an ethanol unit train terminal in the Little Rock,
Arkansas area with capacity to unload 110-car unit trains and
provide approximately 100,000 barrels of storage. NLR Energy
Logistics expects to begin operating the terminal before the end of
the first quarter of 2018. NLR Energy Logistics LLC will remain a
separate entity from DKGP as described above.
Acquired Asset SummaryThe Caddo
Mills, Texas terminal can be supplied by a connection with the
Explorer Pipeline and by truck and consists of approximately
770,000 barrels of light product storage capacity, five truck
loading lanes and ethanol blending capability. Total throughput
capacity is approximately 28,000 barrels per day. This terminal is
located adjacent to Delek Logistics’ Greenville tank farm.
The North Little Rock, Arkansas terminal is
supplied by both the Enterprise and Magellan pipelines, rail and
truck. It consists of approximately 550,000 barrels of storage
capacity, eight truck loading lanes and ethanol blending
capabilities. Total throughput capacity is approximately 45,000
barrels per day. Logistics capabilities at this location also
include the capability to unload ethanol unit trains. This terminal
is located adjacent to Delek Logistics’ existing North Little Rock
terminal.
Reconciliation of Forecasted 2019 EBITDA to Forecasted
Net Income(unaudited, in millions) |
|
|
DKGP Joint Venture |
Forecasted Net Income: |
$ 11.0 |
Add:
Depreciation and amortization expenses |
8.2 |
Add:
Interest and financing costs, net |
0.0 |
Forecasted EBITDA (1) |
$19.2 |
- EBITDA is defined as net income (loss) before net
interest expense, income tax expense, depreciation and amortization
expense. EBITDA is a non-U.S. GAAP supplemental financial measure
that management and external users of our combined financial
statements, such as industry analysts, investors, lenders and
rating agencies, may use to assess performance of a business. This
amount is based on projected results. Actual results can and will
vary based on market conditions and operations.
About Delek Logistics Partners,
LP
Delek Logistics Partners, LP, headquartered in
Brentwood, Tennessee, is a growth-oriented master limited
partnership formed by Delek US Holdings, Inc. (NYSE:DK) to own,
operate, acquire and construct crude oil and refined products
logistics and marketing assets.
About Green Plains Partners
LP
Green Plains Partners LP (NASDAQ:GPP) is a
fee-based Delaware limited partnership formed by Green Plains Inc.
(NASDAQ:GPRE) to provide fuel storage and transportation services
by owning, operating, developing and acquiring ethanol and fuel
storage tanks, terminals, transportation assets and other related
assets and businesses.
About Green Plains, Inc.
Green Plains Inc. (NASDAQ:GPRE) is a diversified
commodity-processing business with operations related to ethanol
production, grain handling and storage, cattle feedlots, food
ingredients, and commodity marketing and logistics services. The
company is the second largest consolidated owner of ethanol
production facilities in the world with 17 dry mill plants,
producing nearly 1.5 billion gallons of ethanol at full capacity.
Green Plains owns a 62.5% limited partner interest and a 2.0%
general partner interest in Green Plains Partners.
Safe Harbor Provisions Regarding
Forward-Looking Statements This press release may include
forward-looking. Statements that do not relate strictly to
historical or current facts are forward-looking, including, but not
limited to, statements as to the expected timing, completion, value
and effects of the proposed transactions between Delek Logistics,
Green Plains Partners, and between DKGP and American Midstream and
statements about the benefit of the proposed transaction, including
future financial and operating results, synergies and each
company’s plans, objectives, expectations and intentions; Delek
Logistics’ growth and financial flexibility; support of Delek US’
refineries; operation of the NLR terminal; the assets being
purchased and/or contributed including capacities, connections and
financial performance thereof; and other factors. Such statements
contain words such as “anticipates,” “believes,” “estimates,”
“intends,” “plans,” “possible,” “if,” “will,” “expects” and other
words of similar meaning that are predictions of or indicate future
events, trends or prospects, and can be impacted by numerous
factors.
These forward-looking statements involve risks
and uncertainties that may cause the actual results, performance or
achievements of DKGP, Delek Logistics and/or Green Plains Partners
to differ materially from future results, performance or
achievements expressed or implied by such forward-looking
statements, many of which involve factors or circumstances that are
beyond DKGP’s control. The risks and uncertainties include, but are
not limited to changes in the business plans of DKGP as
circumstances warrant, uncertainties regarding the timing of the
proposed transaction between Delek Logistics and Green Plains
Partners and between DKGP and American Midstream, the parties’
ability to satisfy closing conditions (including receipt of
regulatory approvals) and consummate the transaction, failure of
either company to realize the anticipated benefits from the
proposed transaction, DKGP’s ability to integrate the
facilities into its operations with no substantial adverse effect
on its existing operations or financial performance, as well as
industry and economic conditions, competitive, legal and
governmental factors. When considering these forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements contained in Delek Logistics and Green Plains
Partners’ filings with the SEC. Neither Delek Logistics, Green
Plains Partners nor DKGP undertake any obligation or intend to
update these forward-looking statements, whether as a result of new
information, future events or otherwise. You are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date of this press release.
Delek Logistics Partners Investor / Media Relations
ContactKeith JohnsonVice President of Investor
Relations
615-435-1366
Green Plains Partners Investor / Media
ContactJim StarkVP, Investor & Media
Relations402.884.8700jim.stark@gpreinc.com
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