Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - HollyFrontier Corp | pressrelease-idrtransactio.htm |
| EX-2.1 - EXHIBIT 2.1 - HollyFrontier Corp | exhibit21-equityrestructur.htm |
| 8-K - 8-K - HollyFrontier Corp | hfc_-xformx8xkxidrxelimina.htm |
IDR Simplification
October 19, 2017
Management Call: 8:30am EST
Title Blue:
23,55,94
Orange:
230,175,109
Grey:
127,127,127
Light Blue:
114,164,183
Brown:
148,126,103
https://event.webcasts.com/starthere.jsp?ei=1166751&tp_key=6c5a60ca42
The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: The
statements made during the course of this presentation relating to matters that are not historical facts are
“forward-looking statements” based on management’s beliefs and assumptions using currently available
information and expectations as of the date hereof, are not guarantees of future performance and involve
certain risks and uncertainties, including those contained in our filings with the Securities and Exchange
Commission. Although we believe that the expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and
results could materially differ from what is expressed, implied or forecast in such statements. Any
differences could be caused by a number of factors, including, but not limited to, failure of Holly Energy
Partners and HEP Logistics Holdings, L.P. to successfully close the transaction, failure to receive required
governmental approvals to close the transaction, the possibility of inefficiencies, curtailments or shutdowns
in refinery operations or pipelines, effects of governmental and environmental regulations and policies, the
availability and cost of financing to HollyFrontier and Holly Energy Partners, HollyFrontier’s and Holly Energy
Partners’ 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, operational and legal risks and uncertainties detailed from time to time in HollyFrontier’s and
Holly Energy Partners’ 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.
HOLLYFRONTIER DISCLOSURE STATEMENT
2
3
IDR restructuring is expected to improve the long-term cost of capital, simplify HEP’s corporate
structure, and provide stronger alignment of the GP and LP interests
• Eliminates IDR “drag,” which lowers the cost of equity
• Decreases HEP cost of equity from 11% to 7.5% pro forma 1
• Enhances ability to pursue both organic projects and potential acquisitions
• Allows for accelerated growth and improved valuation levels over time
• Provides more transparent valuation of HFC’s ownership in HEP
• Eliminates ambiguity in calculating the value of the IDRs
• Provides stronger alignment of GP and LP Interests
Strategic Rationale
1) Assumes cost of equity is equal to current annualized distribution yield based on latest annualized quarterly distribution. Unit
price and distribution information as of 10/18/17.
4
IDR RESTRUCTURING
• At closing, HEP will issue 37,250,000 HEP common units to its general partner, a wholly-
owned subsidiary of HFC in exchange for the elimination of HEP’s IDRs held by the general
partner and conversion of the 2% GP interest in HEP into a non-economic interest
• Pro forma HFC will own approximately 59% of HEP’s outstanding common units
DISTRIBUTION WAIVER
• The general partner will waive $2.5 million a quarter in LP distributions for a period of 12
consecutive quarters
VALUATION
• Total equity value of approximately $1.25 billion, representing 14.0x expected 2018 GP
Cash flow based on closing price on October 18, 2017
CLOSING
• The transaction has been approved by the Audit Committee and Board of Directors of HFC
and the Conflicts Committee and the Board of Directors of Holly Logistic Services, L.L.C., the
ultimate general partner of HEP.
• We expect to close the transaction in the fourth quarter of 2017, subject to customary
closing conditions
Transaction Details
5
Pro Forma Ownership Structure
HOLLY ENERGY PARTNERS, L.P. (HEP)
PUBLIC
GENERAL PARTNER (GP)
HEP LOGISTIC SERVICES, L.P.
HOLLYFRONTIER CORPORATION (HFC)
100% Interest
100% Non-
Economic
GP Interest
41.9mm HEP units,
41% LP Interest
59.6mm HEP units,
59% LP Interest
HollyFrontier Corporation
(NYSE: HFC)
Holly Energy Partners, L.P.
(NYSE: HEP)
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
www.hollyfrontier.com
www.hollyenergy.com
Craig Biery | Director, Investor Relations
investors@hollyfrontier.com
214-954-6510
Jared Harding | Investor Relations
investors@hollyfrontier.com
214-954-6510