Vertex Energy, a specialty refiner and marketer of high-quality refined products, has sold its Heartland used motor oil collection and recycling business to a wholly owned subsidiary of GFL Environmental for total cash consideration of $90m.
Under the terms of the transaction, GFL acquired Vertex’s 20 million gallon per year Heartland used motor oil (UMO) refinery in Ohio and the associated Heartland UMO collections business, according to a news release.
After fees, total net cash proceeds from the transaction are approximately $85m. The company may use some of the transaction proceeds to reduce outstanding debt on its balance sheet.
Houlihan Lokey served as financial advisor to Vertex, and Stroock & Stroock & Lavan LLP served as legal counsel to Vertex for the transaction.
The 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. 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 in Adjusted EBITDA and free cash flow long-term.
Vertex believes the resulting streamlined asset footprint will enable further operational focus and enhanced efficiencies throughout the company, according to the press release. The improved operational focus on the Mobile refining facility comes almost concurrently with anticipated mechanical completion and subsequent start-up of initial renewable diesel production which is currently expected to be completed in the second quarter 2023.
“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. We expect that this transaction will serve us well by enabling the improvement of our balance sheet health, while adding strategic value through the streamlining of our operations. We remain highly focused on the execution of our conventional fuels refining strategy and the development of a large-scale, sustainable fuels production business longer-term. Make no mistake, we are committed to our remaining legacy business, coupled with our new investments in the Mobile refinery and the Gulf Coast, a key pathway to our greater energy transition strategy,” stated Benjamin P. Cowart, president and CEO of Vertex.
