Tesoro’s $2.15 billion bridge facility with Goldman detailed

By Wendy Van Sickle

Columbus, Ohio, Nov. 18 – Tesoro Corp. entered into a financing commitment letter with Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC for a 364-day senior unsecured bridge facility of up to $2.15 billion, according to an 8-K filing with the Securities and Exchange Commission.

The commitment is in connection with Tesoro’s planned $4.1 billion stock acquisition of Western Refining, Inc., an El Paso, Texas-based independent refining and marketing company.

The company said it expects to replace some or all of the bridge facility prior to closing the merger with permanent financing, comprising debt including a term loan facility.

Interest varies according to a ratings-based grid and increases over time. Initially, interest is Libor plus a margin ranging from 250 basis points to 325 bps, and the margin steps up by 25 bps every 90 days.

The commitment letter contemplates some amendments to Tesoro’s existing credit agreement in connection with the merger and if the amendments are not obtained, a senior secured backstop credit facility of up to $2 billion to refinance the existing credit agreement. Among the proposed amendments to the existing credit agreement are permitting incurrence of additional debt and adding up to $750 million in incremental revolving commitments and $750 million in term loans.

As previously reported, Tesoro will acquire Western Refining at an implied current price of $37.30 per Western Refining share in a stock transaction, representing an equity value of $4.1 billion based on Tesoro’s closing stock price on Wednesday of $85.74.

The acquisition is expected to close in the first half of 2017.

Tesoro is a San Antonio-based owner, operator, developer and acquirer of crude oil and refined products logistics assets.

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