SOURCE: Buckeye Partners, L.P.

Buckeye Partners, L.P.

January 18, 2011 17:43 ET

Buckeye Partners, L.P. Completes Acquisition of 80% Interest in Bahamas Oil Refining Company International

HOUSTON, TX--(Marketwire - January 18, 2011) - Buckeye Partners, L.P. ("Buckeye") (NYSE: BPL) announced today that it has completed the purchase of an 80 percent interest in FR Borco Coop Holdings, L.P. ("FRBCH"), the indirect owner of Bahamas Oil Refining Company International Limited ("BORCO"), from affiliates of FRC Founders Corporation ("First Reserve") for $1.36 billion. As previously announced, Vopak Bahamas B.V. ("Vopak"), which owns the remaining 20 percent of FRBCH, has elected to exercise its right to sell its interest to Buckeye at the same proportionate price and on the same terms and conditions as those in Buckeye's agreement with First Reserve. Buckeye expects the acquisition of Vopak's interest to close as promptly as definitive documentation can be executed and the closing conditions can be satisfied. In the aggregate, Buckeye will pay $1.7 billion in a combination of cash and equity to acquire 100 percent of BORCO.

"BORCO's oil and petroleum products storage terminal is a premier international logistics hub with highly-attractive identified expansion projects," said Forrest E. Wylie, Chairman and CEO of Buckeye. "With 21.6 million barrels of existing storage capacity, this facility is the fourth largest marine terminal in the world and the largest facility of its kind in the Caribbean. The acquisition of BORCO represents an important step in our ongoing efforts to expand and diversify our operations by again reaching beyond the continental United States to acquire a world-class facility that complements our existing portfolio of assets. The transaction is expected to be immediately accretive to distributable cash flow per unit, and should more than offset the amount of dilution that we expected as a result of the recent acquisition of our general partner. By eliminating the incentive distribution rights that we historically paid to our general partner, and thereby reducing our cost of equity capital, we substantially enhanced our ability to compete for the BORCO acquisition. As such, this transaction demonstrates the benefits of the recent general partner acquisition and our commitment to diversify our portfolio of assets while generating steady and growing distributions to our unitholders."

"We will work closely with Vopak to safely transfer operations of BORCO to Buckeye," said Clark C. Smith, President and Chief Operating Officer of Buckeye. "We are excited by the opportunity to apply Buckeye's best practices and entrepreneurial approach to BORCO's international operations, and are committed to build upon BORCO's strengths in customer service, to optimize its assets, and to expand its service offerings. Additionally, as the integration of BORCO into Buckeye's business progresses over time, we expect to realize synergies with our recently acquired marine terminal in Yabucoa, Puerto Rico and our strategic distribution assets on the U.S. mainland."

As partial consideration for First Reserve's interest in FRBCH, Buckeye issued 4.38 million of its Class B units and 2.48 million of its LP units to First Reserve. In connection with the acquisition from First Reserve, Buckeye also closed today the previously announced private placement of 5.79 million of its LP units and 1.31 million of its Class B units to institutional investors. After the January 13, 2011 closing of the previously announced public offering of $650 million of Buckeye's 4.875% senior unsecured notes due 2021, Buckeye terminated its senior unsecured bridge facility commitment.

Buckeye is a publicly traded partnership that owns and operates one of the largest independent refined petroleum products pipeline systems in the United States in terms of volumes delivered, with approximately 5,400 miles of pipeline. Buckeye also owns 69 refined petroleum products terminals, operates and maintains approximately 2,400 miles of pipeline under agreements with major oil and chemical companies, owns a major natural gas storage facility in northern California, and markets refined petroleum products in certain of the geographic areas served by its pipeline and terminal operations. More information concerning Buckeye is available at www.buckeye.com.

This press release includes forward-looking statements that we believe to be reasonable as of today's date. Such statements are identified by use of the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "should," and similar expressions. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and that may be beyond our control. Among these risks and uncertainties are (1) changes in laws or regulations to which we are subject, including those that permit the treatment of us as a partnership for federal income tax purposes, (2) terrorism, adverse weather conditions, environmental releases, and natural disasters, (3) changes in the marketplace for our products or services, such as increased competition, better energy efficiency, or general reductions in demand, (4) adverse regional or national economic conditions or adverse capital market conditions, (5) shutdowns or interruptions at the source points for the products we transport, store, or sell, (6) unanticipated capital expenditures in connection with the construction, repair, or replacement of our assets, (7) volatility in the price of refined petroleum products and the value of natural gas storage services, (8) nonpayment or nonperformance by our customers, (9) our ability to realize efficiencies expected to result from our previously announced reorganization, and (10) our ability to integrate acquired assets with our existing assets and to realize anticipated cost savings and other efficiencies. You should read our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2009 and our subsequently filed Quarterly Reports on Form 10-Q, for a more extensive list of factors that could affect results. In addition, there are significant risks and uncertainties relating to our acquisition and ownership of BORCO, including (a) the acquisition of Vopak's 20 percent interest may not be consummated, (b) the representations, warranties, and indemnifications by First Reserve are limited in the acquisition agreement, and those of Vopak will be similarly limited, and our diligence into the business has been limited; as a result, the assumptions on which our estimates of future results of the business have been based may prove to be incorrect in a number of material ways, resulting in our not realizing the expected benefits of the acquisition and our having limited recourse against First Reserve or Vopak, (c) financing the acquisition has substantially increased our leverage, (d) the acquisition could expose us to additional unknown and contingent liabilities, (e) BORCO depends on a limited number of customers for substantially all of its revenue and the loss of any of them could adversely affect our results of operations and cash flow, (f) BORCO may be adversely affected by economic, political, and regulatory developments in The Bahamas and the region in general, (g) a substantial amount of the petroleum products handled by BORCO are exported from Venezuela, which exposes us to political risks, (h) hurricanes could disrupt BORCO's operations or the operations of its customers or could result in significant damage to its facilities, having a material adverse effect on our business, financial results, and cash flow, (i) if BORCO's tax status in The Bahamas changes such that BORCO has more tax liability than we anticipate, our cash flow could be materially adversely affected, and (j) the acquisition could expose us to challenges as a result of operating in a new and foreign jurisdiction, including compliance with additional domestic and foreign laws and regulations. We undertake no obligation to revise our forward-looking statements to reflect events or circumstances occurring after today's date.

This press release does not constitute an offer of any securities for sale. The equity to be issued to Vopak has not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.