In the United States (US), HollyFrontier Corporation (HollyFrontier) and Holly Energy Partners, L.P. (HEP), have announced the establishment of HF Sinclair Corporation (HF Sinclair) as the new parent holding company of HollyFrontier and HEP and the completion of their respective acquisitions of Sinclair Oil Corporation and Sinclair Transportation Company from The Sinclair Companies. Commencing at market open on March 15, 2022, HF Sinclair replaces HollyFrontier as the public company trading on the New York Stock Exchange.
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Headquartered in Dallas, Texas (TX), HF Sinclair will be the parent company of a leading independent integrated downstream petroleum and renewable fuels company with an enhanced scale and a strong marketing presence.
The completion of our transactions and the launch of HF Sinclair marks the start of the next phase of our Company’s history, said Mike Jennings, CEO of HF Sinclair and HEP.
In addition, subsidiaries of HF Sinclair produce and market base oils and other specialized lubricants in the United States, Canada, and the Netherlands, and export products to more than 80 countries.
Through its subsidiaries, HF Sinclair produces renewable diesel at two of its facilities in Wyoming. HF Sinclair also owns a 47 percent limited partner interest and a non-economic general partner interest in HEP, a master limited partnership that provides petroleum product and crude oil transportation, terminals, storage, and throughput services to the petroleum industry, including HF Sinclair subsidiaries.
HF Sinclair features:
- An expanded refining business that includes seven complex refineries across the Mid Continent Southwest, Rocky Mountains, and Pacific Northwest that convert discounted, heavy, and sour crudes into a high percentage of gasoline, diesel, and other high-value refined products.
- A growing renewables business with three production facilities that are expected to produce approximately 380 million (US) gallons (≈ 1.44 billion litres) of renewable diesel annually.
- A multi-national lubricants business that produces specialty products and base oils, marketed under the Petro-Canada Lubricants, Sonneborn, Red Giant Oil, and HollyFrontier Specialty Products brands.
- A leading marketing business, featuring the Sinclair brand and comprising 300-plus distributors and more than 1 300 independent wholesale branded sites located across 30 states.
- An expansive logistics business under HEP with an integrated logistics network connecting key crude and product regions and interests in strategic joint ventures that provide access to finished product pipelines and storage.
Increase renewables share
Across its businesses, HF Sinclair will build on its legacy companies’ ongoing ESG efforts with increased renewables scale, a shared commitment to health and safety practices that best serve employees and communities, and a focus on risk management.
With the addition of Sinclair’s integrated crude and refined products midstream business, HEP significantly extends the reach of its network of pipelines and storage facilities, enhancing its earning power to capture new organic growth opportunities and expects to increase cash returns to unitholders.
We are moving forward as a more diverse, downward-integrated business with a scale that is positioned to drive growth and capital returns to our shareholders. We are also optimistic about the significantly expanded scale of HEP, which will benefit from long-term commitments from HF Sinclair. I am honored to welcome the talented Sinclair team to our organizations and I look forward to working closely with them to capture the significant growth and value-creation opportunities ahead at both HF Sinclair and HEP, said Mike Jennings.
Integration and business details
HollyFrontier’s senior management team will continue to operate HF Sinclair with combined business offices in Salt Lake City, Utah (UT). HEP’s senior management team will continue to operate HEP under the name Holly Energy Partners, L.P.
Pursuant to an agreement between HollyFrontier and Sinclair, Ross Matthews and Norman Szydlowski will be appointed to the HF Sinclair Board of Directors effective March 15, 2022.
Collectively, the appointees have over 60 years of energy industry experience. Ross Matthews served as Chairman and CEO of Sinclair Oil Corporation from October 2009 until the closing of the transaction.
Norman Szydlowski previously served as CEO of SemGroup Corporation, Rose Rock Midstream, and Colonial Pipeline Company and as Director of Sinclair Oil Corporation.
Additionally, pursuant to an agreement between HEP and Sinclair, Mark Peterson will be appointed to the Holly Logistics Services, L.L.C. Board of Directors. He has over 30 years of experience in the midstream sector and served as VP of Transportation for Sinclair Oil Corporation from January 2010 until the closing of the transaction and as Director and President of Sinclair Transportation Company from August 2009 until the closing of the transaction.
In connection with the close of the transaction, all existing shares of HollyFrontier have automatically converted on a one-for-one basis into shares of common stock of HF Sinclair, and HF Sinclair has issued approximately 60.2 million shares of common stock to Sinclair, representing 27 percent of the pro forma equity of HF Sinclair with a value of approximately US$2.1 billion based on HollyFrontier’s fully diluted shares of common stock outstanding and closing stock price on March 11, 2022.
HEP has also issued 21 million common units to Sinclair, representing 17 percent of the outstanding common units, and having a value of approximately US$349 million based on HEP’s fully diluted common units outstanding and closing unit price on March 11, 2022.
Citi served as financial advisor to HollyFrontier, and Morgan, Lewis & Bockius served as HollyFrontier’s legal counsel.
Bank of America Merrill Lynch served as financial advisor to the HEP Conflicts Committee, Bracewell served as HEP’s legal counsel and Morris, Nichols, Arsht & Tunnell LLP served as the HEP Conflicts Committee’s legal counsel.
Wachtell, Lipton, Rosen & Katz served as legal counsel to both HollyFrontier and HEP.