Source: Holly Energy Partners
Holly Energy Partners, L.P. (HEP) and Holly Corporation (HOC) have completed their previously announced transaction for the sale by Holly to Holly Energy of petroleum storage tanks with approximately 2 million barrels of capacity and certain rail loading rack facilities at Holly's Tulsa refinery site as well as an asphalt truck loading rack at Holly's Lovington, New Mexico facility.
Holly Energy has paid Holly $93 million in cash for these assets. Holly and Holly Energy have entered into 15-year agreements whereby Holly Energy will provide storage and loading services to Holly utilizing these assets. These agreements provide for minimum annual revenues to Holly Energy of $13.9 million.
This transaction has been approved by the Boards of Directors for both Holly Energy and Holly after approvals by the Conflicts Committee for Holly Energy, which is comprised solely of independent outside directors for Holly Energy, and the Holly Audit Committee, which is composed solely of outside directors of Holly. The Boards of Directors for both companies have obtained fairness opinions from financial advisory firms in connection with this proposed transaction.
Holly acquired the Tulsa storage and rail loading facilities as part of its refinery purchase from Sinclair Tulsa Refinery Company ("Sinclair") on December 1, 2009 as part of the same transaction in which Holly Energy acquired approximately 1.4 million barrels of storage capacity as well as certain loading racks and pipeline receiving and delivery facilities directly from Sinclair. With the completion of today's announced transaction, Holly Energy, through its subsidiaries, now owns a substantial portion of the in-service storage and logistic assets at Holly's integrated Tulsa refinery location and will provide storage, receiving, delivery and loading requirements of the facility to Holly in support of Holly's refining operations.