Western Refining $2 billion credit facility to launch next week

By Sara Rosenberg

New York, Sept. 20 - Western Refining Inc. plans to hold a bank meeting sometime during the week of Sept. 25 to launch its proposed $2 billion senior secured credit facility, according to a market source.

Bank of America is the lead bank on the deal.

The facility consists of an up to $1.5 billion term loan with limited amortization and a $500 million revolver.

Proceeds will be used to help fund the acquisition of Giant Industries Inc. for $83.00 per share in cash. The transaction is valued at $1.5 billion, including about $275 million of Giant's outstanding debt.

Based on June 30 figures, initial pro forma debt to trailing 12 months adjusted EBITDA will be 2.4 times with an adjusted EBITDA to interest expense of 5.2 times.

In addition to the new credit facility, Western plans to use about $250 million in cash on hand for acquisition financing.

The transaction, which is expected to close in the fourth quarter, is subject to approval by Giant shareholders and the satisfaction of customary closing conditions and regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. It is not subject to any financing conditions.

Western is an El Paso, Texas, independent refiner and marketer. Giant is a Scottsdale, Ariz., refiner and seller of petroleum products.

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