Vertex Energy to sell used motor oil and recycling assets for $140M

Vertex Energy Inc. has reached a deal selling a number of its legacy assets ahead of a refinery acquisition later in 2021.

Vertex, a specialty refiner that recycles waste products into fuel feedstocks, will turn over its used motor oil collection and recycling assets to a subsidiary of Clean Harbors Inc. in exchange for $140 million in cash, according to a filing with the U.S. Securities and Exchange Commission.

The deal includes used oil refineries in Louisiana and Ohio, a used oil collections business, a recycling facility in East Texas and a marine terminal in Baytown, Texas.

Vertex will use the proceeds of the sale to buy back the 15% interest in its Myrtle Grove facility in Louisiana from Tensile Capital Management LLC and build a new pre-treatment unit at the site. The new unit is expected to cost about $40 million to develop, the company said.

Vertex will also use the proceeds to retire term debt, the company said.

The remaining funding from the deal will be redeployed into assets in the energy transition business, the company said.

“This transaction will achieve several important objectives, the combination of which will advance our strategy of becoming a leading pure-play energy transition company of scale,” said CEO Benjamin Cowart. “We expect this transaction to simplify our business and capital structure, directing our collective focus on assets, products and technologies that support the low-carbon energy transition.”

The deal is expected to close in the third quarter, and the new Myrtle Grove unit is expected online by the end of 2023, the company said.

This new deal comes on the heels of Vertex's late-May announcement that it acquired Royal Dutch Shell PLC’s refinery in Mobil, Alabama, for $75 million. The facility will become Vertex's flagship refining asset, and the company expects to retain all of the approximately 200 employees currently supporting the refinery.

The Shell deal is set to close in the fourth quarter, after which Vertex is planning an $85 million conversion that will allow the refinery to produce renewable diesel from waste products. That conversion is expected to be complete by the end of 2022. Afterward, the refinery will begin producing about 10,000 barrels per day of renewable diesel, increasing to 14,000 bpd by midyear 2023, while continuing to supply conventional fuels.

The company said at the time of the Shell deal that some of the renewable feedstock for the Mobile refinery could come from Myrtle Grove.