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Valero Energy Corporation Message Board

  • vlono.1fan vlono.1fan Apr 7, 2013 6:37 PM Flag

    Facts and Benefits of CST Spin-off

    Folks, so there is a lot of chatter about the retail spin-off out there. Some correct facts and some "spin". Well, I thought I would post my thoughts and facts of this retail spin:

    1)Valero is splitting off in a tax free spin to share holders 80% of the retail company operations in a separate retail company with symbol of CST and shareholders of record April 19 get 1 share of CST for every 9 Valero shares.
    2)Valero intends to sell off in 6-18 months the 20% equity ownership stake in CST.
    3)Valero shareholders get the new shares of CST May 1. Official trading of CST starts May 2.
    4)Valero gets $1.1 Billion for the spin-off. It will have to pay $260 million in taxes for its Canadian operations.
    5)The estimated (my calculations) share price initially will about $36/share
    6)There will be 76 million shares with a market cap (my calulations) of about $2.7 Billion
    7)Owners of CST will own 1900 retail convenience stores in US and Canada. 1032 will be in US and 848 will be in Canada. CST will own 81% of its sites in the US, 19% leased. In Canada CST will own 38% of its sites and 62% leased.
    8)Note: on the retailed owned sites, CST could do a sale-leaseback and pull a bunch of cash out instead of tying capital up in owning sites.
    9)61% of all retail sites are in the state of Texas where the economy is doing very well.
    10)The retail spin should unlock $2 Billion in shareholder value according to Valero.
    11)This is a good thing for Valero shareholders because: 1)a small part of Valero's operations at about 10% of earnings... allows Valero to concentrate on its main business of operating refineries 2)the retail portion of Valero is currently only being assigned a low PE value of a refinery 3)retail is a very competitive business 4)Valero unloads 12,000 of 22,000 of its employess and 5)the retail company will operate more competively, efficiently, and autonomously on its own.
    12)There is no share "dilution" and you can sell your shares starting May 2.
    Ran out of space

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