Western Refining to use bank or capital markets debt for acquisition

By Sara Rosenberg

New York, Dec. 22 – Western Refining Inc. plans on using bank or capital markets debt to help fund its acquisition of all of the outstanding common units of Northern Tier Energy LP that it does not already own, according to a company presentation.

Elsewhere in the presentation, it was said that the company expects to have $380 million of acquisition debt in its pro forma capital structure.

Under the agreement, Northern Tier is being bought for $15.00 in cash and 0.2986 of a share of Western Refining common stock per common unit.

As an alternative to the cash and stock consideration, each Northern Tier unitholder may elect to receive either $26.06 in cash or 0.7036 of a share of Western Refining per unit. The election will be subject to proration to ensure that the aggregate cash paid and common stock issued will equal what would have been paid if all Northern Tier unitholders received $15.00 in cash and 0.2986 of a share of Western Refining common stock per common unit.

Along with the new debt financing, the $858 million cash portion of the acquisition will be funded with cash on hand.

Northern Tier’s $500 million revolver and $350 million of 7.125% senior secured notes due 2020 are expected to remain in place following closing of the transaction.

Pro forma total debt to last-12-months adjusted EBITDA of the combined company will be 1.5 times and net debt to LTM adjusted EBITDA will be 1.2 times, the presentation added.

Closing is expected in the first half of 2016, subject to customary conditions, including the expiration or termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act and approval by Northern Tier unitholders.

Goldman Sachs & Co. acted as financial adviser to Western Refining, and Evercore acted as financial advisor to the Northern Tier conflicts committee.

Western Refining is an El Paso, Texas-based independent refining and marketing company. Northern Tier is a Tempe, Ariz.-based independent downstream energy company.

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