HF Sinclair Corporation and Holly Energy Partners, L.P. announced the commencement of private offers by HF Sinclair to all Eligible Holders (as defined herein) to exchange (each an “Exchange Offer” and, collectively, the “Exchange Offers”) notes previously issued by HEP and Holly Energy Finance Corp. (“Finance Corp.” and together with HEP, the “HEP Issuers”) listed in the table below (the “HEP Notes”), pursuant to the terms and subject to the conditions set forth in a confidential exchange offer memorandum and consent solicitation statement, dated as of October 30, 2023 (the “Exchange Offer Memorandum”). The interest rate, interest payment dates, maturity date and redemption terms of each series of new notes to be issued by HF Sinclair in the Exchange Offers (the “New Notes”) will be substantially identical as those of the corresponding series of HEP Notes to be exchanged.
Concurrently with the Exchange Offers, HF Sinclair, on behalf of the HEP Issuers, is soliciting the consents (collectively, the “Consent Solicitations”) from the Eligible Holders to adopt certain proposed amendments to the indentures governing the HEP Notes (the “HEP Indentures” and each an “HEP Indenture”) to, among other things, eliminate from each HEP Indenture, as it relates to each series of HEP Notes (i) substantially all of the restrictive covenants, (ii) certain of the events which may lead to an “Event of Default”, (iii) the U.S. Securities and Exchange Commission (“SEC”) reporting covenant and (iv) the requirement of HEP to offer to purchase the HEP Notes upon a change of control (collectively, the “Proposed Amendments”). The Proposed Amendments will become effective with respect to a particular HEP Indenture to the extent (i) participation in the Exchange Offer by the relevant series of HEP Notes exceeds 50% of the outstanding principal amount of such series and (ii) all tendered HEP Notes of such series are accepted for exchange in the related Exchange Offer. Eligible Holders of HEP Notes that tender such HEP Notes will be deemed to have given consent to the Proposed Amendments (in respect of the applicable series of HEP Notes tendered). Eligible Holders will not be permitted to tender their HEP Notes without delivering consents or to deliver consents without tendering their HEP Notes. Tenders of HEP Notes may not be withdrawn after the earlier of (i) the Early Participation Date, and (ii) the date on which the applicable supplemental indenture to the corresponding HEP Indenture implementing the applicable Proposed Amendments is executed, unless extended (such date and time, as the same may be extended, the “Withdrawal Deadline”), except in the limited circumstances where additional withdrawal rights are required by law. A valid withdrawal of tendered HEP Notes will also constitute the revocation of the related consent with respect to the applicable HEP Indenture. As used herein, a “valid withdrawal” means valid withdrawal prior to the Withdrawal Deadline.
The Exchange Offers and Consent Solicitations are being made pursuant to the terms and subject to the conditions set forth in the Exchange Offer Memorandum, copies of which will be made available to holders of the HEP Notes eligible to participate in the Exchange Offers. Each Exchange Offer and Consent Solicitation will expire at 5:00 p.m., New York City time, on November 29, 2023, unless such date is extended or earlier terminated (such date and time, as they may be extended, the “Expiration Date”). However, Eligible Holders who validly tender and do not validly withdraw their HEP Notes at or prior to 5:00 p.m., New York City time, on November 13, 2023, unless extended or terminated (as the same may be extended, the “Early Participation Date”), will be eligible to receive greater consideration for their HEP Notes than will be available for tenders made after the Early Participation Date but at or prior to the Expiration Date. HF Sinclair reserves the right to terminate, withdraw, amend or extend one or more of the Exchange Offers and Consent Solicitations in its discretion, subject to applicable law and the terms and conditions set forth in the Exchange Offer Memorandum.
Subject to the terms and conditions set forth in the Exchange Offer Memorandum, for each $1,000 principal amount of HEP Notes validly tendered and not validly withdrawn at or prior to the Early Participation Date, Eligible Holders of such HEP Notes will be eligible to receive the applicable consideration set forth in the table above under the heading “Early Participation Exchange Consideration” (the “Early Participation Exchange Consideration”), which includes a payment of $1.00 in cash (the “Cash Payment”) and an early participation premium, payable in principal amount of New Notes, of $50.00 (the “Early Participation Premium”). To be eligible to receive the Early Participation Exchange Consideration, Eligible Holders must have validly tendered at or prior to the Early Participation Date, not have withdrawn the tender of their HEP Notes of the applicable series at or prior to the Early Participation Date and beneficially own such HEP Notes at the Expiration Date.
For each $1,000 principal amount of HEP Notes validly tendered and not validly withdrawn after the Early Participation Date and at or prior to the Expiration Date, Eligible Holders of such HEP Notes will be eligible to receive the applicable consideration set forth in the table above under the heading “Expiration Date Exchange Consideration” (the “Expiration Date Exchange Consideration”), which includes the Cash Payment, but does not include the Early Participation Premium. To be eligible to receive the Expiration Date Exchange Consideration, Eligible Holders must validly tender (and not validly withdraw) their HEP Notes after the Early Participation Date and at or prior to the Expiration Date.
Settlement of the Exchange Offers is expected to be on or about the third business day following the Expiration Date (the “Settlement Date”), unless HF Sinclair extends the Expiration Date or terminates the Exchange Offers.
The minimum denominations of the HEP Notes are $2,000 and any greater integral multiple of $1,000 in excess thereof. HF Sinclair will not accept any tender that would result in the issuance of less than $2,000 principal amount of either series of New Notes. The aggregate principal amount of each series of New Notes issued to each participating holder for each series of HEP Notes validly tendered (and not validly withdrawn) and accepted by HF Sinclair will be rounded down, if necessary, to the nearest whole multiple of $1,000 in excess thereof. This rounded amount will be the principal amount of New Notes such participating holder will receive, and HF Sinclair will pay a cash amount equal to the difference between the principal amount of the New Notes such holder would otherwise be entitled and the principal amount of the New Notes actually issued, plus any accrued and unpaid interest on such principal amount up to the Settlement Date.
Each series of New Notes will have substantially identical interest rate, interest payment dates, maturity date and redemption terms as the corresponding series of HEP Notes. The first interest payment on any New Notes will include the accrued and unpaid interest on the HEP Notes tendered in exchange therefor so that a tendering Eligible Holder will receive the same interest payment it would have received had its HEP Notes not been tendered in the Exchange Offers and Consent Solicitations; provided that the amount of accrued and unpaid interest shall only be equal to the accrued and unpaid interest on the principal amount of HEP Notes equal to the aggregate principal amount of New Notes an Eligible Holder receives, which may be less than the principal amount of corresponding HEP Notes tendered for exchange if such holder tenders (and does not subsequently withdraw) its HEP Notes after the Early Participation Date.
HF Sinclair, in its sole discretion, subject to applicable law, may extend the Early Participation Date, the Withdrawal Deadline and the Expiration Date with respect to any or all of the Consent Solicitations and Exchange Offers. Any extension of the Early Participation Date, the Withdrawal Deadline or the Expiration Date with respect to either or both of the Consent Solicitations or Exchange Offers by HF Sinclair will automatically extend the Early Participation Date, the Withdrawal Deadline or the Expiration Date, as applicable, with respect to the corresponding Consent Solicitation or Exchange Offer. In addition, each Exchange Offer and Consent Solicitation is subject to certain conditions such as, among other things, completion of the Proposed Merger (as defined below), which condition may not be waived by HF Sinclair, and the receipt of the requisite consents necessary to effect the Proposed Amendments to each of the HEP Indentures. HF Sinclair may generally waive any such conditions at any time, and any waiver of a condition by HF Sinclair with respect to an Exchange Offer will automatically waive such condition with respect to the corresponding Consent Solicitation, as applicable. In addition, HF Sinclair may amend the terms of any Exchange Offer without amending the terms of any other Exchange Offer.
