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Terminal News

Buckeye to sell pipeline & terminal assets for $450 million

Buckeye to sell pipeline & terminal assets for $450 million
Buckeye will sell a package of non-integrated domestic pipeline & terminal assets in locations across the US for $450 million.

This is in addition to the company selling its entire equity stake in VTTI for case proceeds of $975 million to Vitol Investment Partnership and IFM Investors.

These actions are the result of a strategic review that the company says will maintain its investment grade credit rating by reducing leverage, provide increased financial flexibility and reallocate capital to higher return growth opportunities across its remaining assets.

The assets include: a jet fuel pipeline from Port Everglades, Florida to the Ft. Lauderdale and Miami, Florida airports, pipelines and terminal facilities serving the Reno, Nevada; San Diego, California and Memphis, Tennessee airports, and refined petroleum products terminals in Sacramento and Stockton, California.

Clark C. Smith, chairman, president and CEO says: 'I am confident that the actions taken as a result of our strategic review will not only strength our balance sheet and solidify our investment grade rating but also meaningfully improve distribution coverage.

'We are now well positioned to fund our annual growth capital spend without accessing the public equity markets. In addition, the sales of our interest in VTTI and the domestic asset package allow us to reallocate available growth capital to higher return initiatives across our domestic assets, particularly the opportunities we are actively pursuing along the US Gulf Coast.

'Our improved financial flexibility along with our remaining portfolio of pipeline and terminal assets and attractive growth opportunities are expected to provide solid long-term returns for our unitholders through all business cycles.'

In its third quarter financials reported a net loss of $745.8 million compared to the net income attributable for Buckeye's unitholders for the same period in 2017 of $116.2 million.

The third quarter was negatively impacted by a $537.0 million non-cash goodwill impairment charge, related primarily to its Caribbean assets, following an interim assessment of the recoverability of goodwill that was initiated in conjunction with the completion of the strategic review.

Smith adds: 'Buckeye's third quarter results fell short of prior year largely as a result of continued weakness in segregated storage, particularly in the Caribbean.

'Our domestic pipelines and terminals segment saw strong demand across the markets in which we operate, which drove increased pipeline and terminalling throughput volumes and increased revenues.'

The company's global marine terminals segment continued to benefit from strong operating performance from Buckeye Texas Partners, partially offsetting the continued impact of challenging market conditions in the segregated storage market, which drove lower utilisation and rates in this segment.