Holly Energy Partners to Acquire Remaining Interests in Frontier and SLC Pipelines
August 10 2017 - 04:15PM
Business Wire
Holly Energy Partners, L.P. (NYSE:HEP) (“Holly Energy”) today
announced it has entered into definitive agreements to acquire a
50% interest in Frontier Aspen LLC (“Frontier”), the owner of the
Frontier Aspen Pipeline, and a 75% interest in the SLC Pipeline LLC
(“SLC”), the owner of the Salt Lake City Pipeline, from affiliates
of Plains All American Pipeline, L.P. (NYSE:PAA) (“Plains”) for an
aggregate purchase price of $250 million in cash. Holly Energy
currently owns 50% of Frontier and 25% of SLC. As a result,
following the transactions, SLC and Frontier will be wholly-owned
subsidiaries of Holly Energy. The Frontier Aspen Pipeline is a
289-mile crude pipeline from Casper, Wyoming to Frontier Station,
Utah that supplies Canadian and Rocky Mountain crudes to Salt Lake
City area refiners through a connection to the SLC Pipeline. The
Salt Lake City Pipeline is a 95-mile crude pipeline that transports
crude oil into the Salt Lake City area from the Utah terminal of
the Frontier Pipeline and from Wahsatch station. The acquired
interest in both pipelines is expected to generate approximately
$23 million in annual forecasted EBITDA.
The transactions are subject to customary closing conditions,
including expiration of the Hart-Scott Rodino antitrust waiting
period for the acquisition of the 75% interest in SLC.
Additionally, the closing of each transaction is conditioned on the
closing of the other transaction. Holly Energy expects to finance
the transaction with a combination of debt and equity, subject to
market conditions and other factors. In addition, the general
partner of Holly Energy has agreed to waive its incentive
distribution rights for a period of three years following the
closing of the acquisitions on any new units issued in connection
with the financing of the acquisitions. Holly Energy anticipates
the acquisitions will be immediately accretive to its
unitholders.
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.
Holly Energy Forward-Looking Statement:
The statements in this press release 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 our beliefs and assumptions and those of our 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 we and our
general partner believe that such expectations reflected in such
forward-looking statements are reasonable, neither we nor our
general partner can give assurance that our 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:
- our failure to successfully close the
transactions with Plains, or, once closed, integrate the operation
of the SLC Pipeline and/or Frontier Pipeline with our existing
operations;
- failure to receive required
governmental approvals to close the transactions with Plains;
- risks and uncertainties with respect to
the actual quantities of petroleum products and crude oil shipped
on our pipelines and/or terminalled, stored and throughput in our
terminals;
- the economic viability of HollyFrontier
Corporation, Alon USA, Inc. and our other customers;
- the demand for refined petroleum
products in markets we serve;
- our ability to purchase and integrate
future acquired operations;
- our ability to complete previously
announced or contemplated acquisitions;
- the availability and cost of additional
debt and equity financing, including to finance the transactions
with Plains;
- the possibility of reductions in
production or shutdowns at refineries utilizing our pipeline and
terminal facilities;
- the effects of current and future
government regulations and policies;
- our 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 our
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 acquired interests in SLC and
Frontier. Forecasted EBITDA is included to help facilitate
comparisons of operating performance of Holly Energy with other
companies in its industry, as well as help facilitate an assessment
of the projected ability of the acquired interests in SLC and
Frontier to generate sufficient cash flow to make distributions to
Holly Energy’s 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. Holly
Energy is unable to present a reconciliation of forecasted EBITDA
to net income because certain elements of net income for future
periods, including interest, depreciation and taxes, are not
available without unreasonable efforts. Together, these items
generally would result in EBITDA being significantly greater than
net income.
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version on businesswire.com: http://www.businesswire.com/news/home/20170810006075/en/
Holly Energy Partners, L.P.Craig Biery, 214-954-6511Director,
Investor RelationsorJared Harding, 214-954-6511Investor
Relations
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