Sunoco Logistics Partners LP has reached an agreement with Sunoco Inc to purchase the Eagle Point tank farm and related assets in Westville NJ for approximately $100 million in deferred distribution units. Sunoco Logistics anticipates additional capital spending of about $90 million to provide for operational flexibility and to meet regulatory requirements.
In a separate transaction, Sunoco Logistics has signed a definitive agreement to purchase a refined products terminal in East Boston MA from ConocoPhillips for $56 million plus the fair market value of inventory. This transaction is expected to be financed with borrowings under Sunoco Logistics’ revolving credit facilities pending more permanent financing.
Both transactions are subject to customary closing conditions and are expected to be completed in the third quarter of 2011.
The Eagle Point tank farm consists of around five million barrels of active storage for clean products and dark oils, with the potential to expand storage capacity in the future.
Deferred distribution units used to finance this transaction represent a new class of units on which no distributions are paid. This new class of units converts to SXL common LP units on the one-year anniversary of their issuance. Financing the transaction with deferred distribution units makes the acquisition immediately accretive to SXL unit holders and provides additional balance sheet flexibility to Sunoco Logistics.
Sale of the Eagle Point tank farm and related assets excludes the idled refinery processing units and still-operational 225-megawatt cogeneration facility. Sunoco Inc is pursuing the sale of both the processing units and co-generation facility.
The East Boston terminal, with storage capacity of approximately 1.2 million barrels, is the sole service provider of Logan International Airport under a long-term contract. The terminal’s truck rack services local markets.