Valero nails down cash for big acquisition
Vicki Vaughan
Express-News Business Writer
Valero Energy Corp. is taking steps to complete its purchase of Premcor Inc. —
a move that will make it North America's biggest refiner — by securing $4.5 billion in loans, a company spokesman said Friday.
San Antonio-based Valero announced April 24 that it planned to purchase Connecticut-based Premcor for $8 billion, including assumption of debt. With the new loans, Valero is prepared to close its purchase of Premcor as soon as Sept. 1, subject to approval by the Federal Trade Commission, Valero spokesman Greg Matula said.
Bloomberg News, quoting unnamed sources, said Bank of America Corp. and BNP Paribas SA arranged a $2 billion term loan for Valero, while JPMorgan Chase & Co. and Royal Bank of Canada arranged a $2.5 billion revolving line of credit.
Matula confirmed the loan amounts, saying the revolving credit line represents $750 million increases in two existing lines of credit, money that will be used to pay for expenses after the acquisition.
The $2 billion loan is a term loan to be used to purchase Premcor.
Now Valero is poised to become North America's largest refiner as it waits for a deadline with regulators to expire. If the FTC files no objection to its merger plans by Aug. 31 and seeks no more information from it or Premcor, the merger can go forward, Matula said.
The boards of both companies already have approved the merger.
The deal between Valero and Premcor, based in Old Greenwich, Conn., would boost Valero's crude-oil refining capacity almost 800,000 barrels a day to about 3.3 million barrels a day, vaulting it past the two biggest refiners now: Exxon Mobil Corp., with more than 2.5 million barrels a day, and ConocoPhillips, 2.2 million barrels a day.
Premcor would add four refineries to Valero's 14, including large plants in Port Arthur and Delaware City, Del.
Valero has been expanding for years. Since 1998, it has spent about $8 billion buying 14 refineries.
When the Premcor acquisition is completed, the company's annual revenue will be about $70 billion, ranking it 15th on the Fortune 500.
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