- Mergers & Acquisitions
Vertex sells Heartland UMO collection and recycling business
Vertex Energy, Inc., based in Houston, Texas, U.S.A., announced the sale of its Heartland used motor oil (UMO) collection and recycling business to a wholly owned subsidiary of GFL Environmental, Inc. for a total cash consideration of USD90 million.
The transaction was completed pursuant to the entry into a sale and purchase agreement which closed at the time of signing, on February 1, 2023.
Under the terms of the transaction, GFL acquired Vertex’s 20 million gallon per year Heartland used motor oil refinery in Ohio and the associated Heartland UMO collections business.
The net proceeds of USD85 million provide substantial liquidity to improve Vertex Energy’s balance sheet, as well as allow the company to pursue incremental organic investment opportunities. The company said it may use some of the transaction proceeds to reduce its outstanding debt.
Houlihan Lokey served as financial advisor to Vertex Energy, and Stroock & Stroock & Lavan LLP served as legal counsel for the transaction.
This transaction positions Vertex to redeploy capital into energy transition assets of scale. Vertex continues to examine potential investment opportunities across the sustainable fuels sector, including further development of its renewable diesel production business, as well as potential new opportunities in the rapidly growing sustainable aviation fuel (SAF) market.
The management believes the transition to the production of lower-carbon, sustainable fuels and products represents an attractive investment opportunity that positions the company to achieve meaningful growth.
“We believe that the divestiture of our used motor oil business at Heartland, while a significant element of our company’s history and roots, will reflect another step forward in the greater transformation of our business into an energy transition story of scale,” said Benjamin P. Cowart, president and CEO of Vertex Energy.
Vertex Energy is one of the largest processors of used motor oil in the United States, with operations located in Houston and Port Arthur, Texas,, Marrero, Louisiana, and Columbus, Ohio. Vertex also owns a facility, Myrtle Grove, located on a 41-acre industrial complex along the Gulf Coast in Belle Chasse, Louisiana, with existing hydroprocessing and plant infrastructure assets that include nine million gallons of storage.
Vertex said it is continuing to advance construction activities on its renewable diesel conversion project, which is designed to convert the Mobile, Alabama refinery’s existing hydrocracking unit to produce renewable diesel fuel on a standalone basis. Upon completion of the project, the refinery is expected to commence production of renewable diesel in the second quarter of 2023. Initial volumes are planned to ramp to approximately 8,000-10,000 barrels per day (bpd), with production volumes anticipated to subsequently ramp up to approximately 14,000 bpd upon installation of additional required infrastructure. Total capital expenditures spent to date on the renewable diesel project are USD72 million, or approximately 76% of the total projected budget for the project of USD90-100 million.