Holly Energy Partners aims to get leverage down between 3x and 3.5x

By Devika Patel

Knoxville, Tenn., May 9 – Holly Energy Partners LP and HF Sinclair Corp. aspire to get Holly Energy Partners’ leverage ratio within management’s targeted range of 3x to 3.5x.

Holly Energy Partners issued some notes last quarter and used the funds to pay down its revolver. Management also increased the company’s credit facility to $1.65 billion.

“In April, we upsized our revolving credit facility due in 2026 to $1.65 billion from the previous $1.35 billion in order to provide additional liquidity for increased operational scale,” president of Holly Energy Partners and executive vice president and chief financial officer of HF Sinclair Richard L. Voliva III said on the company’s first quarter ended March 31 earnings conference call on Monday.

“In April, we issued $400 million of senior notes due in 2027 and applied the full proceeds to partially repay outstanding borrowings under our credit facility.

“We remain committed to our capital-allocation strategy of funding all capital expenditures and distributions within operating cash flow and maintaining distributable cash flow coverage of 1.3x or greater, with the goal of reducing leverage to 3x to 3.5x,” he said.

Cash and cash equivalents at Holly Energy Partners were $15,016,000 as of March 31, 2022, compared to $14,381,000 as of Dec. 31, 2021.

Long-term debt at Holly Energy Partners was $1,634,367,000 as of March 31, 2022, compared to $1,333,049,000 as of Dec. 31, 2021.

Cash and cash equivalents at HF Sinclair were $592,278,000 as of March 31, 2022, compared to $234,444,000 as of Dec. 31, 2021.

Long-term debt at HF Sinclair was $3,374,701,000 as of March 31, 2022, compared to $3,072,737,000 as of Dec. 31, 2021.

On April 6, Holly Energy Partners and Holly Energy Finance Corp. priced a $400 million issue of five-year senior notes (Ba3/BB+/BB+) at par to yield 6 3/8% in a drive-by.

The yield printed at the tight end of the 6 3/8% to 6˝% yield talk, and tight to initial guidance in the mid-6% area.

Wells Fargo Securities LLC was the left bookrunner. MUFG, Scotia Capital (USA) Inc., SMBC Nikko Securities America Inc., TD Securities (USA) LLC and Truist Securities, Inc. are joint bookrunners.

Proceeds were earmarked to pay down Holly Energy Partners’ revolver.

The companies are Dallas-based petroleum refiners.

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