Publicly traded energy master limited partnership
NuStar Energy L.P.
) has closed the previously announced sale of 50% interest in its
asphalt operations to privately held investment firm Lindsay
Goldberg LLC. The transaction - an attempt by NuStar to raise funds
to pay down debt - was declared in July.
NUSTAR ENERGY (NS): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis Report
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Per the terms, a subsidiary of Lindsay Goldberg paid $175 million
to NuStar for the stakes of the asphalt refining assets. As part of
the sale, the companies have formed a joint venture - with 50%
voting interest for each - to conduct the operations of the asphalt
The sold properties includes NuStar's two asphalt refineries - one
in Paulsboro, New Jersey and the other in Savannah, Georgia - with
a combined daily capacity of 104,000 barrels plus the associated
Inclusive of the $175 million paid by Lindsay Goldberg, San
Antonio-based NuStar received initial cash payment of approximately
$270 million. The owner/operator of crude oil and refined products
pipelines and storage facilities expects to lower its debt balance
by $400-$500 million eventually through this transaction, the final
figure depending upon the joint venture's working capital
NuStar intends to use the proceeds from this divestment to pay back
the outstanding debt under its revolving credit facility, to
finance potential future acquisitions, and for general partnership
We view the Lindsay Goldberg deal as a positive for NuStar, as it
will help the firm to monetize a portion of the volatile asphalt
operations, while still allowing the partnership to retain 50%
voting rights in a business that can yield substantial cash flows
in an improving domestic economy.
NuStar - which was spun off from the U.S. refiner
Valero Energy Corp.
) in 2006 - currently retains a Zacks #3 Rank (short-term Hold
rating). We are also maintaining our long-term Neutral
recommendation on the unit.