Holly Energy Partners, L.P. has entered into definitive agreements to acquire a 50% interest in Frontier Aspen LLC, the owner of the Frontier Aspen Pipeline, and a 75% interest in the SLC Pipeline LLC, the owner of the Salt Lake City Pipeline, from affiliates of Plains All American Pipeline, L.P for an aggregate purchase price of USD250 million in cash.
Holly Energy currently owns 50% of Frontier and 25% of SLC. As a result, following the transactions, SLC and Frontier will be wholly-owned subsidiaries of Holly Energy.
The Frontier Aspen Pipeline is a 289-mile crude pipeline from Casper, Wyo., to Frontier Station, Utah that supplies Canadian and Rocky Mountain crudes to Salt Lake City area refiners through a connection to the SLC Pipeline.
The Salt Lake City Pipeline is a 95-mile crude pipeline that transports crude oil into the Salt Lake City area from the Utah terminal of the Frontier Pipeline and from Wahsatch station.
The acquired interest in both pipelines is expected to generate approximately USD23 million in annual forecasted EBITDA (earnings before interest, taxes, depreciation and amortization).
The transactions are subject to customary closing conditions, including expiration of the Hart-Scott Rodino anti-trust waiting period for the acquisition of the 75% interest in SLC. Additionally, the closing of each transaction is conditioned on the closing of the other transaction.
Holly Energy expects to finance the transaction with a combination of debt and equity, subject to market conditions and other factors. In addition, the general partner of Holly Energy has agreed to waive its incentive distribution rights for a period of three years following the closing of the acquisitions on any new units issued in connection with the financing of the acquisitions.
Holly Energy anticipates the acquisitions will be immediately accretive to its unit holders.
Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides petroleum product and crude oil transportation, terminal, storage and throughput services to the petroleum industry, including Holly Frontier Corporation subsidiaries. The partnership, through its subsidiaries and joint ventures, owns and/or operates petroleum product and crude gathering pipelines, tankage and terminals in Texas, New Mexico, Arizona, Washington, Idaho, Oklahoma, Utah, Nevada, Wyoming and Kansas, as well as refinery processing units in Kansas and Utah.