Item 1.01.
|
Entry into a Material Definitive Agreement.
|
Membership Interest Purchase Agreement (Frontier
Aspen LLC and SLC Pipeline LLC)
On August 7, 2017, (i) HEP Casper SLC LLC, a Delaware limited liability company (HEP
Casper), a subsidiary of Holly Energy Partners, L.P., a Delaware limited partnership (the Partnership), entered into a Membership Interest Purchase Agreement (the Frontier Purchase Agreement) with Plains Pipeline, L.P.,
a Texas limited partnership (Plains Pipeline), a subsidiary of Plains All American Pipeline, L.P., a Delaware limited partnership (Plains), and (ii) HEP SLC, LLC, a Delaware limited liability company (HEP
SLC), a subsidiary of the Partnership, entered into a Membership Interest Purchase Agreement (the SLC Purchase Agreement and, together with the Frontier Purchase Agreement, the Purchase Agreements) with Rocky Mountain
Pipeline System LLC, a Texas limited liability company (Rocky Mountain), a subsidiary of Plains. Subject to the terms and conditions of the Frontier Purchase Agreement, HEP Casper will purchase the 50% limited liability company interest
in Frontier Aspen LLC, a Delaware limited liability company (Frontier Aspen), that it does not already own from Plains Pipeline. Subject to the terms and conditions of the SLC Purchase Agreement, HEP SLC will purchase the 75% limited
liability company interest in SLC Pipeline LLC, a Delaware limited liability company (SLC Pipeline), that it does not already own from Rocky Mountain. Following the consummation of the transactions contemplated by the Purchase
Agreements, the Partnership will indirectly own all of the outstanding limited liability company interests in Frontier Aspen and SLC Pipeline. The aggregate purchase price for the foregoing acquisition of Frontier Aspen and SLC Pipeline is
$250,000,000 in cash, subject to certain adjustments.
The Purchase Agreements include customary representations and warranties,
covenants, and indemnities. The Purchase Agreements are also subject to customary closing conditions. Additionally, each Purchase Agreement is conditioned on the contemporaneous closing of the transaction contemplated by the other Purchase
Agreement. The SLC Purchase Agreement is further conditioned on the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The Purchase Agreements contain customary termination
rights for the parties.
The description of the Frontier Purchase Agreement and the SLC Purchase Agreement herein is qualified by
reference to the copy of the Frontier Purchase Agreement and the SLC Purchase Agreement, respectively, filed as Exhibit 2.1 and Exhibit 2.2, respectively, to this report, each of which is incorporated by reference into this report.
Limited Partial Waiver of Incentive Distribution Rights
On August 7, 2017, in connection with the entry by subsidiaries of the Partnership into the Purchase Agreements, the Partnerships
general partner executed a Limited Partial Waiver of Incentive Distribution Rights under the First Amended and Restated Agreement of Limited Partnership, as amended, of Holly Energy Partners, L.P. (the Waiver). Pursuant to the Waiver,
the Partnerships general partner agreed to forego its right to incentive distributions from the Partnership that the general partner would otherwise be entitled to receive in respect of Partnership common units, if any, issued by the
Partnership in a public offering for cash following the date of the Purchase Agreements, the use of proceeds of which contemplates payment of a portion of the purchase price for the transactions contemplated by the Purchase Agreements (the
Equity Financing). The Waiver applies for the 12 consecutive quarters following closing of the Equity Financing, commencing with the first quarter during which a distribution is paid on the Partnership common units issued in the Equity
Financing, unless earlier automatically terminated in connection with termination of the Purchase Agreements.
The description of the
Waiver herein is qualified by reference to the Waiver, filed as Exhibit 3.1 to this report, which is incorporated by reference into this report.