HollyFrontier Corporation and Holly Energy Partners, L.P. have 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 US$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 unit holders and contribute towards the achievement of HEP’s 8% distribution growth target. The transaction is expected to close on or about 1 October 2016.
The assets to be acquired by Holly Energy include the newly constructed crude, fluid catalytic cracking and polymerisation 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 US$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.
Adapted from press release by Rosalie Starling
Read the article online at: https://www.hydrocarbonengineering.com/refining/20092016/holly-energy-and-hollyfrontier-announce-dropdown-of-woods-cross-refinery-units-4111/