Andeavor Logistics LP and Andeavor announced that Andeavor Logistics has completed its acquisition of Western Refining Logistics, LP in a unit-for-unit transaction and assumption of $280 million of net debt for a total enterprise value of approximately $1.7 billion, based on Andeavor Logistics' closing unit price of $45.90 on October 30, 2017. The strategic combination of the two companies further positions Andeavor Logistics as a growth-oriented, full-service and diversified midstream company with greater organic growth opportunities across the combined geographic footprint. As a result of this acquisition, Andeavor Logistics is well positioned to compete and grow organically in the highly attractive Permian Basin, principally in the Delaware basin where Andeavor and Andeavor Logistics have a strong logistics asset base, crude oil marketing capability and meaningful refining offtake.
Western Refining Logistics unitholders will receive the Andeavor Logistics quarterly cash distribution for the third quarter 2017 after they have exchanged their WNRL units for Andeavor Logistics units, but will not receive a separate quarterly cash distribution with respect to WNRL. The third quarter distribution will be paid November 14, 2017 to all Andeavor Logistics unitholders of record as of November 3, 2017. As previously announced on October 18, 2017, the distribution of $0.9852 per unit represents a 1.5% increase over the previous quarterly distribution.
Upon the closing of the merger between Andeavor Logistics and WNRL, Andeavor Logistics also issued 78.0 million of its common units to Andeavor in exchange for the cancellation of Andeavor Logistics' incentive distribution rights and the conversion of its economic general partner interest into a non-economic general partner interest. Andeavor will continue to own the non-economic general partner interest in Andeavor Logistics and hold approximately 127 million Andeavor Logistics common units, representing approximately 59% of the common units outstanding. The 78.0 million Andeavor Logistics common units represent $3.6 billion in value based on Andeavor Logistics' closing unit price of $45.90 on October 30, 2017. This financial repositioning enhances Andeavor Logistics' capital structure, reduces the need for new public equity issuance and substantially reduces the cost of capital to support sustainable, long-term growth.
"We are excited about the completion of Andeavor Logistics' acquisition of Western Refining Logistics and the IDR buy-in. These transactions reduce our cost of capital, improve our financial strength and position the business for continued strong growth," said Greg Goff, Chairman and Chief Executive Officer of Andeavor, and Chief Executive Officer of Andeavor Logistics' general partner. "These transactions also strengthen the credit profile of Andeavor Logistics and position it for an investment grade credit rating as well as create significant value for Andeavor shareholders and Andeavor Logistics unitholders."
Andeavor Logistics continues to expect at least $1 billion of annual growth investments over the next several years consisting of at least $500 to $600 million in organic growth and acquisitions and the potential for $400 to $500 million in drop downs from Andeavor. The Company remains committed to achieving its targeted annual distribution growth of 6% or greater, distribution coverage ratio of approximately 1.1 times and debt-to-EBITDA at or below 4.0 times. As previously announced, Greg Goff will continue to serve as Chairman and Chief Executive Officer, and Steven Sterin will continue to serve as President and Chief Financial Officer of the general partner of Andeavor Logistics.
Andeavor Logistics also announced a transition in the board of directors of its general partner. Tom O'Connor gave notice that he will retire from the board of the general partner effective as of January 1, 2018. To succeed Mr. O'Connor, and to structure the board to lead the combined companies, Andeavor Logistics announced that Sigmund L. Cornelius and Ruth I. Dreessen will join the board effective as of January 1, 2018. This transition will bring the total number of directors on the board to eight.
"Tom O'Connor has been a strong leader and partner in our growth at Andeavor Logistics, and we are grateful for his leadership and valuable service," said Goff. "We welcome Mr. Cornelius and Ms. Dreessen. Each has substantial skill and experience that strengthen our board and position it to successfully guide the combined companies going forward."
Mr. Cornelius is President and Chief Operating Officer of Freeport LNG, L.P., a Texas-based owner and operator of a liquefied natural gas receiving and regasification terminal. Mr. Cornelius retired from ConocoPhillips in December 2010 after 30 years with the company, having served in many senior executive positions including most recently as Senior Vice President, Finance and Chief Financial Officer; Senior Vice President, Planning, Strategy and Corporate Affairs; President, Exploration and Production - Lower 48; President, Global Gas; and President, Lower 48, Latin America and Midstream. Mr. Cornelius currently serves on the boards of directors of Freeport LNG and CARBO Ceramics Inc. (NYSE: CRR), and previously served on the boards of Western Refining, Inc., DCP Midstream GP, LLC, USEC Inc., NiSource Inc., Columbia Pipeline Group, Inc. and Parallel Energy Trust.
Ms. Dreessen is Managing Director of Lion Chemical Partners, LLC, a private equity firm focused on the chemical and related industries. She previously served as Executive Vice President and Chief Financial Officer of TPC Group Inc., and as Senior Vice President, Chief Financial Officer and Director of Westlake Chemical Corporation. She spent 21 years at J.P. Morgan Securities and predecessor companies, ultimately as Managing Director of chemicals investment banking. Ms. Dreessen currently serves on the board of directors of Gevo, Inc. (NASDAQ: GEVO), as Chairperson, and previously served on the boards of Targa Resources, L.P., Versar, Inc., Georgia Gulf Corporation, Westlake Chemical Corporation and the Better Minerals & Aggregates Corporation (U.S. Silica Holding).