Albert Chao, president and chief executive officer, Westlake Partners.
HOUSTON, US: Westlake Chemical Partners LP said it has acquired approximately 2.7 per cent of additional limited partner interest in Westlake Chemical OpCo LP for approximately $135 million.
Additionally, Westlake Partners has established a $300 million revolving credit facility with a wholly owned subsidiary of Westlake Chemical Corp to fund acquisitions and for general corporate purposes.
With this transaction Westlake Partners has increased its interest in OpCo from about 10.6 per cent to about 13.3 per cent. Also the transaction, which closed today, is expected to be immediately accretive to Westlake Partners’ distributable cash flow.
OpCo’s assets are comprised of three ethylene production facilities and OpCo sells approximately 95 per cent of its ethylene production to Westlake under a long-term supply agreement, which provides for a stable $0.10 margin per pound.
“OpCo is unique given the long-term and stable nature of its key contracts and the structure of its business. Moreover, Westlake Partners can pursue organic growth opportunities such as capacity expansions in OpCo’s ethylene production facilities and acquisitions of other qualified assets from third parties,” said Albert Chao, president and chief executive, Westlake Partners.
The company is currently executing its previously announced capacity expansion project at one of OpCo’s ethylene crackers in Lake Charles, Louisiana. “This expansion is expected to increase OpCo’s ethylene production capacity by about 250 million pounds once completed during the first half of 2016 and thereafter, will enhance Westlake Partner’s revenue and cash available for distribution,” added Chao.
The terms of the acquisition were approved by a conflicts committee, which is comprised entirely of independent directors of the board of directors of Westlake Chemical Partners GP LLC, the general partner of Westlake Partners. This committee was advised by Tudor, Pickering, Holt & Co as to financial matters and Akin Gump Strauss Hauer & Feld LLP as to legal matters. Westlake Chemical Corporation was advised by UBS Investment Bank and legal counsel was provided by Vinson & Elkins LLP.
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