The purchase price consists of approximately $171 million cash and Holly Energy common units valued at approximately $9 million. It is anticipated that this transaction will close on February 29, 2008, and will become effective March 1, 2008.
In connection with the closing of the proposed transaction, Holly and Holly Energy will enter into a 15-year pipelines and tankage agreement containing minimum annual revenue commitments from Holly. The initial minimum annual revenue guarantee is set at $25.3 million, and will increase annually based on a formula using the Producer Price Index.
The assets being acquired include the Navajo refinery crude oil delivery system; Western Permian Basin crude gathering lines plus lease connection lines; refinery on-site crude tankage located within the Navajo and Woods Cross refinery complexes; Artesia to Roswell, New Mexico, jet fuel products pipeline and terminal; and the Woods Cross refinery pipelines.
Matt Clifton, chairman and CEO of Holly and Holly Energy Partners, said: These assets, coupled with Holly Energy’s current set of organic projects, should allow Holly Energy to continue with its strong track record of providing growth to its limited partners.
