UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
October 20, 2009 (October 19, 2009)
HOLLY CORPORATION
(Exact name of registrant as specified in its charter)
| |
|
|
|
|
| Delaware
|
|
001-03876
|
|
75-1056913 |
| (State of Incorporation)
|
|
(Commission File Number)
|
|
(I.R.S. Employer |
|
|
|
|
|
Identification Number) |
100 Crescent Court, Suite 1600, Dallas, Texas 75201-6915
(Address of Principal Executive Offices)
(214) 871-3555
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
| o |
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
| o |
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
| o |
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
| |
| o |
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
Asset Sale and Purchase Agreement
On
October 19, 2009, Holly Refining & Marketing-Tulsa LLC (“Holly Tulsa”), a
wholly-owned subsidiary of Holly Corporation (“Holly”), entered into an Asset Sale and Purchase
Agreement (the “Purchase Agreement”) with Sinclair Tulsa Refining Company (“Sinclair”) pursuant to
which Holly Tulsa agreed to purchase refining assets at Sinclair’s refining facility in Tulsa,
Oklahoma (the “Refinery”), for an aggregate consideration of $128.5 million, consisting of
2,789,155 shares of Holly common stock (the “Holly Stock”) to be issued by Holly to Sinclair (which
under the Purchase Agreement are valued at $74 million based on the average price of Holly’s common
stock during the 15 trading day trading period prior to the date of the Purchase Agreement) and
$54.5 million in cash from Holly Tulsa. In addition, Holly Tulsa will purchase the related
inventory at the Refinery for cash based upon the market value of the inventory at closing and will
also be obligated to reimburse Sinclair for up to $17 million of capital expenditures Sinclair
incurs to comply with an environmental consent decree applicable to the Refinery. Pursuant to the
same Purchase Agreement, HEP Tulsa LLC (“HEP Tulsa” and, together with Holly Tulsa, the “Buyers”),
a wholly-owned subsidiary of Holly Energy Partners, L.P. (“HEP”), an affiliate of Holly, agreed to
purchase tankage, loading rack and pipeline assets at the Refinery for an aggregate consideration
of $75 million, consisting of $53.5 million of HEP common units to be issued by HEP to Sinclair and
$21.5 million in cash from HEP Tulsa. The transactions contemplated by this Purchase Agreement are
referred to as the “Acquisitions.”
The consummation of the Acquisitions is subject to customary closing conditions, including,
but not limited to, obtaining certain governmental and third party consents and the absence of a
material adverse effect on Sinclair’s business at the Refinery, or on either Holly or HEP. In
addition, Buyers’ obligation to close the Acquisitions is conditioned upon Sinclair obtaining an
amendment to a certain environmental consent decree and a recommendation by EPA counsel of the
removal of the Refinery from the EPA debarment list. The Purchase Agreement may be terminated by
either Buyers or Sinclair if the closing of the Acquisition is not consummated by December 1, 2009, with each party
having the right in certain circumstances to extend the closing to December 31, 2009.
Holly has agreed to guaranty the obligations of Holly Tulsa under the Purchase Agreement.
Holly Energy Partners — Operating, L.P., a subsidiary of HEP, has agreed to guaranty the
obligations of HEP Tulsa under the Purchase Agreement.
The Sinclair Companies, Sinclair’s ultimate parent company,
has agreed to guaranty the obligations of Sinclair under the Purchase Agreement.
The description of the Purchase Agreement herein is qualified by reference to the copy of the
Purchase Agreement, including exhibits, filed as Exhibit 2.1 to this report, which is incorporated
by reference into this report in its entirety.
Registration Rights and Transfer Restriction Agreement
Contemporaneously with the execution of the Purchase Agreement, Holly entered into a
Registration Rights and Transfer Restriction Agreement (the “Registration Rights Agreement”) with
Sinclair pursuant to which Holly agreed to file a resale registration statement (the “Registration
Statement”) with regard to Sinclair’s resale of the Holly Stock following the closing of the
Acquisitions. Under the Registration Rights Agreement, Holly has the right to prevent Sinclair
from selling under the prospectus filed under the Registration Statement during certain blackout
periods. The Registration Rights Agreement also provides that Sinclair is restricted from trading
more than 58,000 shares of Holly Stock in any trading day, though it may exceed that limit in
certain circumstances.
The description of the Registration Rights Agreement herein is qualified by reference to the
copy of the Registration Rights Agreement, including exhibits, filed as Exhibit 4.1 to this report,
which is incorporated by reference into this report in its entirety.
2
Anticipated Additional Agreements to be Entered into at Closing
In connection with the closing of the Acquisitions, we anticipate that Holly Tulsa will enter
into a 15 year Pipelines, Tankage and Loading Rack Throughput Agreement (the “Throughput
Agreement”) with HEP Tulsa, to pay HEP Tulsa, subject to various adjustments:
| |
• |
|
a pipeline tariff of $.10 for each barrel of refined products moved on the
pipelines acquired by HEP Tulsa in the Acquisitions, with a guaranteed minimum
throughput of 60,000 bpd of refined products moved; |
| |
| |
• |
|
a tankage base tariff of $.30 for each barrel of refined products stored using
tankage acquired by HEP Tulsa in the Acquisitions, with a guaranteed minimum throughput
of 80,000 bpd of refined products, $.10 per barrel for volumes in excess of 80,000 bpd
but less than 120,000 bpd, and $.22 per barrel for volumes in excess of 120,000 bpd;
and |
| |
| |
• |
|
a loading racks tariff of $.30 for each barrel of refined products, LPG, and
heavy products loaded over the loading racks acquired by HEP Tulsa in the Acquisitions,
with a guaranteed minimum throughput of 26,000 bpd. |
We also anticipate that, in connection with the closing of the Acquisitions:
| |
• |
|
Holly, HEP and certain of their respective subsidiaries, including Holly Tulsa
and HEP Tulsa, will enter into an amendment to the Second Amended and Restated Omnibus
Agreement dated August 1, 2009 by and among those entities to extend Holly’s right of
first refusal to purchase certain of HEP’s assets that serve Holly’s refineries to
include the assets acquired by HEP Tulsa in the Acquisitions; and |
| |
| |
• |
|
Holly Tulsa and Sinclair Oil Corporation (“Sinclair Oil”), an affiliate of
Sinclair, will enter into a Refined Products Purchase Agreement with a 5 year
term (subject to a 5 year extension at Sinclair Oil’s option) under which Holly Tulsa
will agree to sell Sinclair Oil between 29,000 and 32,000 barrels per day of unleaded
gasoline at market prices and between 16,000 and 18,000 barrels per day of ultra low sulfur diesel
(subject to certain adjustments)
at market prices. |
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 above is incorporated herein by reference. The
private placement of the Holly Stock to be issued pursuant to the Purchase Agreement is being made
in reliance upon an exemption from the registration requirements of the Securities Act of 1933
pursuant to Section 4(2) thereof, as well as Rule 506 of Regulation D thereunder.
3