UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 18, 2003
VALERO L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 1-16417 74-2956831
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
ONE VALERO PLACE 78212
SAN ANTONIO, TEXAS (Zip Code)
(Address of principal executive offices)
(210) 370-2000
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 18, 2003, Valero Energy Corporation contributed to Valero
Logistics Operations, L.P., a 100%-owned operating subsidiary of Valero L.P.,
(i) 58 crude oil and intermediate feedstock storage tanks and related assets
with an aggregate storage capacity of approximately 11.0 million barrels (the
"Tank Assets") for $200 million in cash and (ii) Valero Energy's South Texas
pipeline system and related terminals (the "South Texas Pipeline System") for
$150 million in cash.
The Tank Assets consist of all of the tank shells, foundations, tank
valves, tank gauges, pressure equipment, temperature equipment, corrosion
protection, leak detection, tank lighting and related equipment and
appurtenances associated with the specified crude oil storage tanks and
intermediate feedstock storage tanks located at Valero Energy's West plant of
the Corpus Christi refinery in Corpus Christi, Texas, Texas City refinery in
Texas City, Texas, and Benicia refinery in Benicia, California.
The South Texas Pipeline System includes three intrastate pipeline
systems -- the Houston pipeline system with 105,000 barrels per day of capacity,
the Valley pipeline system with 27,100 barrels per day of capacity and the San
Antonio pipeline system with 24,000 barrels per day of capacity in its north
segment and 15,000 barrels per day in its south segment. These common carrier
refined product pipelines connect Valero Energy's Corpus Christi and Three
Rivers refineries to the Houston, San Antonio and Rio Grande Valley, Texas
markets. There are also five refined product terminals along these pipeline
systems and one asphalt terminal.
Valero L.P. intends to use the Tank Assets and the South Texas Pipeline
System for the same purposes they were used prior to their acquisition.
Valero Energy, through its wholly owned subsidiaries, currently owns an
aggregate 47.5% limited partner interest in Valero L.P. In addition, Valero
Energy owns and controls Valero L.P.'s general partner, Riverwalk Logistics,
L.P., which owns the 2% general partner interest in Valero L.P. and has
incentive distribution rights giving it higher percentages of Valero L.P.'s
quarterly cash distributions as various target distribution levels are met. Four
of the seven members of the board of directors of Valero GP, LLC, the general
partner of Riverwalk Logistics, L.P., are also officers and/or directors of
Valero Energy. The executive officers of Valero GP, LLC are also officers and/or
employees of Valero Energy. Valero Energy is also Valero L.P.'s primary customer
for its pipelines and its terminalling operations and accounted for 99% of
Valero L.P.'s revenues for the year ended December 31, 2002.
The terms of the Tank Assets and South Texas Pipeline System
contributions were determined through negotiations between representatives of
Valero Energy, acting on its own behalf, and the independent conflicts committee
of the board of directors of Valero GP, LLC, the general partner of Valero
L.P.'s general partner, acting on behalf of Valero L.P. The independent
conflicts committee, which was represented by its own independent legal and
financial advisors, approved the Tank Assets and South Texas Pipeline System
contributions based in part on an opinion from its financial advisor that the
consideration to be paid by Valero L.P. pursuant to the transaction agreements
related to each of the contributions was fair, from a financial point of view,
to Valero L.P. and its public unitholders.
Valero L.P. financed the contributions with the proceeds from a public
offering of 5,750,000 common units (the "Common Unit Offering"), which resulted
in net proceeds to Valero L.P. of approximately $202.3 million, and a portion of
the proceeds from a private placement of $250 million aggregate principal amount
of Valero Logistics' 6.05% senior notes due 2013, as well as $7.3 million of
cash on hand and $25.0 million of borrowings under Valero Logistics' revolving
credit facility. With the remainder of the proceeds, and immediately prior to
the consummation of the contributions, Valero L.P. redeemed 3,809,750 of its
common units representing limited partner interests from a wholly owned
subsidiary of Valero Energy for approximately $134.1 million, or $35.19 per
common unit, which was equal to the net proceeds per common unit Valero L.P.
received in the Common Unit Offering, before expenses.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of the business acquired.
Audited financial statements for the Valero South Texas Pipeline and
Terminal Business as of December 31, 2002 and for the year ended
December 31, 2002, are filed herewith as Exhibit 99.1 and incorporated
herein by reference.
(b) Pro forma financial information.
Pro Forma combined financial statements for Valero L.P. and
subsidiaries as of December 31, 2002 and for the year ended December
31, 2002 is filed herewith as Exhibit 99.2 and incorporated herein by
reference.
(c) Exhibits.
Exhibit No. Description
----------- -----------
2.1 Contribution Agreement, dated as of March 6, 2003,
among Valero Refining Company - California, UDS
Logistics, LLC, Valero L.P., Valero GP, Inc. and
Valero Logistics Operations, L.P. (Incorporated by
reference from Exhibit 10.13 of Valero L.P.'s Annual
Report on Form 10-K for the Year ended December 31,
2002 (File No. 001-16417) filed on March 10, 2003).
2.2 First Amendment to Contribution Agreement, dated as
of March 14, 2003, among Valero Refining Company -
California, UDS Logistics, LLC, Valero L.P., Valero
GP, Inc. and Valero Logistics Operations, L.P. (filed
herewith).
2.3 Contribution Agreement, dated as of March 6, 2003,
among Valero Refining - Texas, L.P., UDS Logistics,
LLC, Valero L.P., Valero GP, Inc. and Valero
Logistics Operations, L.P. (Incorporated by reference
from Exhibit 10.14 of Valero L.P.'s Annual Report on
Form 10-K for the Year ended December 31, 2002 (File
No. 001-16417) filed on March 10, 2003).
2.4 First Amendment to Contribution Agreement, dated as
of March 14, 2003, among Valero Refining - Texas,
L.P., UDS Logistics, LLC, Valero L.P., Valero GP,
Inc. and Valero Logistics Operations, L.P. (filed
herewith).
2.5 Contribution Agreement, dated as of March 6, 2003,
among Valero Pipeline Company, UDS Logistics, LLC,
Valero L.P., Valero GP, Inc. and Valero Logistics
Operations, L.P. (Incorporated by reference from
Exhibit 10.15 of Valero L.P.'s Annual Report on Form
10-K for the Year ended December 31, 2002 (File No.
001-16417) filed on March 10, 2003).
23.1 Consent of Ernst & Young LLP. (filed herewith).
99.1 Financial Statements of Valero South Texas Pipeline
and Terminal Business as of and for the year ended
December 31, 2002. (filed herewith).
99.2 Pro Forma Combined Financial Statements as of and for
the year ended December 31, 2002. (filed herewith).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Valero L.P.
By: Riverwalk Logistics, L.P.
its general partner
By: Valero GP, LLC
its general partner
Dated: April 2, 2003 By: /s/ Bradley C. Barron
---------------------------
Name: Bradley C. Barron
Title: Corporate Secretary
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
2.1 Contribution Agreement, dated as of March 6, 2003,
among Valero Refining Company - California, UDS
Logistics, LLC, Valero L.P., Valero GP, Inc. and
Valero Logistics Operations, L.P. (Incorporated by
reference from Exhibit 10.13 of Valero L.P.'s Annual
Report on Form 10-K for the Year ended December 31,
2002 (File No. 001-16417) filed on March 10, 2003).
2.2 First Amendment to Contribution Agreement, dated as
of March 14, 2003, among Valero Refining Company -
California, UDS Logistics, LLC, Valero L.P., Valero
GP, Inc. and Valero Logistics Operations, L.P. (filed
herewith).
2.3 Contribution Agreement, dated as of March 6, 2003,
among Valero Refining - Texas, L.P., UDS Logistics,
LLC, Valero L.P., Valero GP, Inc. and Valero
Logistics Operations, L.P. (Incorporated by reference
from Exhibit 10.14 of Valero L.P.'s Annual Report on
Form 10-K for the Year ended December 31, 2002 (File
No. 001-16417) filed on March 10, 2003).
2.4 First Amendment to Contribution Agreement, dated as
of March 14, 2003, among Valero Refining - Texas,
L.P., UDS Logistics, LLC, Valero L.P., Valero GP,
Inc. and Valero Logistics Operations, L.P. (filed
herewith).
2.5 Contribution Agreement, dated as of March 6, 2003,
among Valero Pipeline Company, UDS Logistics, LLC,
Valero L.P., Valero GP, Inc. and Valero Logistics
Operations, L.P. (Incorporated by reference from
Exhibit 10.15 of Valero L.P.'s Annual Report on Form
10-K for the Year ended December 31, 2002 (File No.
001-16417) filed on March 10, 2003).
23.1 Consent of Ernst & Young LLP. (filed herewith).
99.1 Financial Statements of Valero South Texas Pipeline
and Terminal Business as of and for the year ended
December 31, 2002. (filed herewith).
99.2 Pro Forma Combined Financial Statements as of and for
the year ended December 31, 2002. (filed herewith).