DALLAS -- (Business Wire)
HollyFrontier Corporation (NYSE: HFC) ("HollyFrontier") and Holly Energy
Partners, L.P. (NYSE: HEP) ("Holly Energy") today announced an agreement
in principle for the acquisition by Holly Energy of a HollyFrontier
subsidiary, which owns certain Woods Cross Refinery units constructed as
part of the Woods Cross expansion for a total cash consideration of
approximately $275.0 million, subject to the execution of definitive
agreements and other customary closing conditions. The total transaction
consideration represents an implied multiple of 8.5 times the 2017
expected EBITDA contribution. Holly Energy expects that the transaction
will be immediately accretive to unitholders and contribute towards the
achievement of HEP’s 8% distribution growth target. The transaction is
expected to close on or about October 1, 2016.
The assets to be acquired by Holly Energy include the newly constructed
crude, fluid catalytic cracking and polymerization units at
HollyFrontier's Woods Cross refinery. In connection with the closing of
the proposed transaction, HollyFrontier and Holly Energy expect to enter
into 15-year tolling agreements for each respective unit containing
minimum quarterly throughput commitments from HollyFrontier.
In conjunction with the closing of the proposed transaction, Holly
Energy has agreed to a private placement with certain clients of
Tortoise Capital Advisors, L.L.C. for approximately $100 million of
common equity. Holly Energy Partners does not anticipate any further
equity financing needs for the remainder of 2016. The balance of the
purchase price will be financed by borrowings under Holly Energy
Partner’s existing revolving credit agreement.
About HollyFrontier Corporation:
HollyFrontier Corporation, headquartered in Dallas, Texas, is an
independent petroleum refiner and marketer that produces high value
light products such as gasoline, diesel fuel, jet fuel and other
specialty products. HollyFrontier operates through its subsidiaries a
135,000 barrels per stream day ("bpsd") refinery located in El Dorado,
Kansas, a 125,000 bpsd refinery in Tulsa, Oklahoma, a 100,000 bpsd
refinery located in Artesia, New Mexico, a 52,000 bpsd refinery located
in Cheyenne, Wyoming and a 45,000 bpsd refinery in Woods Cross, Utah.
HollyFrontier markets its refined products principally in the Southwest
U.S., the Rocky Mountains extending into the Pacific Northwest and in
other neighboring Plains states. HollyFrontier and certain of its
subsidiaries also currently own a 39% interest (including a 2% general
partner interest) in Holly Energy Partners, L.P.
About Holly Energy Partners, L.P.:
Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides
petroleum product and crude oil transportation, terminalling, storage
and throughput services to the petroleum industry, including
HollyFrontier Corporation subsidiaries. The Partnership, through its
subsidiaries and joint ventures, owns and/or operates petroleum product
and crude gathering pipelines, tankage and terminals in Texas, New
Mexico, Arizona, Washington, Idaho, Oklahoma, Utah, Nevada, Wyoming and
Kansas as well as refinery processing units in Kansas and Utah.
HFC & HEP Forward Looking Statement:
The statements contained herein relating to matters that are not
historical facts are "forward-looking statements" within the meaning of
the federal securities laws. These statements are based on
HollyFrontier’s and Holly Energy’s beliefs and assumptions, including
those of Holly Energy’s general partner, using currently available
information and expectations as of the date hereof, are not guarantees
of future performance and involve certain risks and uncertainties.
Although HollyFrontier, Holly Energy and Holly Energy’s general partner
believe that such expectations reflected in such forward-looking
statements are reasonable, neither HollyFrontier, Holly Energy nor Holly
Energy’s general partner can give assurance that such expectations will
prove to be correct. Therefore, actual outcomes and results could
materially differ from what is expressed, implied or forecast in these
statements. Any differences could be caused by a number of factors
including, but not limited to:
-
risks and uncertainties with respect to the actual quantities of
petroleum products and crude oil shipped on Holly Energy's pipelines
and/or terminalled in Holly Energy's terminals;
-
the economic viability of HollyFrontier Corporation, Alon USA, Inc.
and Holly Energy's other customers;
-
the demand for refined petroleum products in markets HollyFrontier and
Holly Energy serve;
-
HollyFrontier's and Holly Energy's ability to successfully purchase
and integrate additional operations in the future;
-
HollyFrontier's and Holly Energy's ability to complete previously
announced or contemplated acquisitions;
-
the availability and cost of additional debt and equity financing;
-
the possibility of reductions in production or shutdowns at
HollyFrontier refineries, including refineries utilizing Holly
Energy's pipeline and terminal facilities;
-
the effects of current and future government regulations and policies;
-
HollyFrontier's and Holly Energy's operational efficiency in carrying
out routine operations and capital construction projects;
-
the possibility of terrorist attacks and the consequences of any such
attacks;
-
general economic conditions; and
-
other financial, operations and legal risks and uncertainties detailed
from time to time in HollyFrontier's and Holly Energy's Securities and
Exchange Commission filings.
The forward-looking statements speak only as of the date made and, other
than as required by law, we undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Use of Non-GAAP Financial Information
This news release includes the term forecasted EBITDA. This is a
non-GAAP financial measure. Forecasted EBITDA is based on Holly Energy’s
projections for the newly constructed crude unit, fluid catalytic
cracking unit and polymerization unit at HollyFrontier's Woods Cross
refinery. Forecasted EBITDA is included to help facilitate comparisons
of operating performance of Holly Energy with other companies in our
industry, as well as help facilitate an assessment of the assets’
projected ability to generate sufficient cash flow to make distributions
to our partners. Forecasted EBITDA is not presented as an alternative to
the nearest GAAP financial measure, net income, and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with GAAP. We are unable to present a
reconciliation of forecasted EBITDA because certain elements of net
income, including interest, depreciation and taxes, are not available.
Together, these items generally result in EBITDA being significantly
greater than net income.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160919005379/en/
Contacts:
HollyFrontier Corporation
Julia Heidenreich, 214-954-6510
Vice
President, Investor Relations
or
Craig Biery, 214-954-6510
Manager,
Investor Relations
Source: Holly Energy Partners and HollyFrontier Corporation
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