UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 8.01 | Other Events |
Exchange Offers and Consent Solicitations
On October 30, 2023, HF Sinclair Corporation (“HF Sinclair”) commenced private offers to all Eligible Holders (as defined in the press release) to exchange (the “Exchange Offers”) any and all outstanding 6.375% Senior Notes due 2027 (the “HEP 2027 Notes”) and 5.000% Senior Notes due 2028 (the “HEP 2028 Notes” and together with the HEP 2027 Notes, the “HEP Notes”) issued by Holly Energy Partners, L.P. (“HEP”) and Holly Energy Finance Corp. (“Finance Corp.” and together with HEP, the “HEP Issuers”), for new notes to be issued by HF Sinclair, with registration rights, and cash, pursuant to the terms and subject to the conditions set forth in a confidential exchange offer memorandum and consent solicitation statement, dated October 30, 2023 (the “Exchange Offer Memorandum”).
Concurrently with the Exchange Offers, HF Sinclair is soliciting the consents (collectively, the “Consent Solicitations”) from the Eligible Holders to adopt certain proposed amendments to the indentures governing the HEP Notes (the “HEP Indentures” and each, an “HEP Indenture”) to, among other things, eliminate from each HEP Indenture, as it relates to each series of HEP Notes (i) substantially all of the restrictive covenants, (ii) certain of the events which may lead to an “Event of Default”, (iii) the U.S. Securities and Exchange Commission (“SEC”) reporting covenant and (iv) the requirement of HEP to offer to purchase the HEP Notes upon a change of control (collectively, the “Proposed Amendments”). The Proposed Amendments will become effective with respect to a particular series of HEP Notes to the extent (i) participation in the Exchange Offer by the relevant series of HEP Notes exceeds 50% of the outstanding principal amount of such series and (ii) all tendered HEP Notes of such series are accepted for exchange in the related Exchange Offer. Eligible Holders of HEP Notes that tender such HEP Notes will be deemed to have given consent to the Proposed Amendments (in respect of the applicable series of HEP Notes tendered).
Eligible Holders will not be permitted to tender their HEP Notes without delivering consents or to deliver consents without tendering their HEP Notes. Tenders of HEP Notes may not be withdrawn after the earlier of (i) the Early Participation Date (as defined below), and (ii) the date on which the applicable supplemental indenture to the corresponding HEP Indenture implementing the applicable Proposed Amendments is executed, unless extended (such date and time, as the same may be extended, the “Withdrawal Deadline”), except in the limited circumstances where additional withdrawal rights are required by law. A valid withdrawal of tendered HEP Notes will also constitute the revocation of the related consent with respect to the applicable HEP Indenture. As used herein, a “valid withdrawal” means valid withdrawal prior to the Withdrawal Deadline.
The Exchange Offers and the Consent Solicitations will expire at 5:00 p.m., New York City time, on November 29, 2023, unless extended or terminated (such time and date, as the same may be extended, the “Expiration Date”). However, Eligible Holders who validly tender and do not validly withdraw their HEP Notes at or prior to 5:00 p.m., New York City time, on November 13, 2023, unless extended or terminated (as the same may be extended, the “Early Participation Date”), will be eligible to receive greater consideration for their HEP Notes than will be available for tenders made after the Early Participation Date but at or prior to the Expiration Date, all as more fully described in the attached press release and in the Exchange Offer Memorandum.
HF Sinclair will return to the HEP Issuers all HEP Notes which are validly tendered and accepted pursuant to the Exchange Offers (the “Returned Notes”), and such Returned Notes will be cancelled.
The Exchange Offers and Consent Solicitations are being made solely pursuant to the conditions set forth in the Exchange Offer Memorandum in a private offering exempt from, or not subject to, registration under the Securities Act of 1933, as amended, and are subject to certain conditions set forth in the Exchange Offer Memorandum, although HF Sinclair may generally waive any such conditions at any time. Notwithstanding the foregoing, HF Sinclair may not waive or modify the condition that the merger of a wholly-owned subsidiary of HF Sinclair with and into HEP, with HEP surviving as an indirect, wholly-owned subsidiary of HF Sinclair (the “Proposed Merger”) shall have been consummated.
HF Sinclair and HEP are in discussions with the current lending group under HEP’s Third Amended and Restated Credit Agreement, dated July 27, 2017, by and among HEP, as borrower, and Wells Fargo Bank, National Association, in its capacity as administrative agent, and the lenders party thereto (as amended, restated,
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supplemented or otherwise modified from time to time, the “HEP Credit Agreement”), to obtain an amendment to the HEP Credit Agreement to, among other things, (a) provide a guaranty from HF Sinclair and terminate all guaranties of subsidiaries of HEP, (b) amend the definition of “Investment Grade Rating” in the HEP Credit Agreement to reference the credit rating of HF Sinclair’s senior unsecured indebtedness, (c) eliminate the requirement to deliver separate audited and unaudited financial statements for HEP and its subsidiaries and only provide certain segment-level reporting for HEP with any compliance certificate delivered in accordance with the HEP Credit Agreement and (d) amend certain covenants to eliminate certain restrictions on (i) amendments to intercompany contracts, (ii) transactions with HF Sinclair and its subsidiaries and (iii) investments in and contributions, dividends, transfers and distributions to HF Sinclair and its subsidiaries. There can be no assurance that the administrative agents and lenders party thereto will agree to amend the HEP Credit Agreement in a timely manner, or on acceptable terms, if at all.
Please carefully review the attached press release for further details regarding the Exchange Offers and Consent Solicitations. A copy of HEP’s and HF Sinclair’s joint press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
This announcement does not constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders or consents with respect to, any security. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such an offer, solicitation, or sale would be unlawful. The Exchange Offers and Consent Solicitations are being made solely pursuant to the Exchange Offer Memorandum and only to such persons and in such jurisdictions as is permitted under applicable law.
Supplement to the Joint Proxy Statement/Prospectus
As previously announced, on August 15, 2023, HEP entered into an Agreement and Plan of Merger with HF Sinclair, Navajo Pipeline Co., L.P., a Delaware limited partnership and an indirect wholly-owned subsidiary of HF Sinclair (“HoldCo”), Holly Apple Holdings LLC, a Delaware limited liability company and a wholly-owned subsidiary of HoldCo (“Merger Sub”), HEP Logistics Holdings, L.P., a Delaware limited partnership and the general partner of HEP (“HLH”), and Holly Logistic Services, L.L.C., a Delaware limited liability company and the general partner of HLH (the “General Partner”), pursuant to which Merger Sub will merge with and into HEP, with HEP surviving as an indirect, wholly-owned subsidiary of HF Sinclair.
This Current Report on Form 8-K (this “Form 8-K”) is being filed, in part, to update and supplement the joint proxy statement/prospectus (the “joint proxy statement/prospectus”) (i) included in Amendment No. 1 to the Registration Statement on Form S-4, File No. 333-274655 (the “Registration Statement”), filed by HF Sinclair with the SEC on October 16, 2023 and declared effective by the SEC on October 24, 2023, (ii) filed by HF Sinclair with the SEC as a prospectus on October 26, 2023, (iii) filed by HEP with the SEC as a definitive proxy statement on Schedule DEFM14A on October 26, 2023, and (iv) first mailed to HF Sinclair’s stockholders and HEP’s unitholders on or about October 26, 2023. The information contained in this Form 8-K is incorporated by reference into the joint proxy statement/prospectus.
If you have not already submitted a proxy for use at the virtual special meetings of HF Sinclair and HEP, you are urged to do so promptly. This Form 8-K does not affect the validity of any proxy card or voting instructions that HF Sinclair stockholders or HEP unitholders may have previously received or delivered. No action is required by any HF Sinclair stockholder or HEP unitholder who has previously delivered a proxy or voting instructions and who does not wish to revoke or change that proxy or voting instructions.
All page references are to pages in the joint proxy statement/prospectus, and terms used below, unless otherwise defined, have the meanings set forth in the joint proxy statement/prospectus. The directors and executive officers of the General Partner hold the following HEP awards as of October 26, 2023:
The disclosure in the first paragraph and table of page 92 within the “HEP Awards Held by Directors and Executive Officers” section of the joint proxy statement/prospectus is hereby amended and restated as follows:
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HEP Awards Held by Directors and Executive Officers
The unvested Partnership LTIP Service Awards, Director LTIP Awards, Partnership Performance LTIP Awards and Partnership Cash Awards outstanding and held by each of the General Partner’s executive officers and directors as of October 26, 2023 is set forth in the table below.
| Name (1) |
Partnership Service LTIP Award (#) |
2020 Partnership Performance LTIP Award (#) (2) |
2021, 2022 or 2023 Partnership Performance LTIP Award (#) (2) |
Value of Partnership Cash Award to he Converted to Parent Cash Award ($) |
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| Executive Officers |
||||||||||||||||
| Michael C. Jennings(3) |
— | — | — | — | ||||||||||||
| John Harrison |
— | — | — | — | ||||||||||||
| Robert I. Jamieson |
28,147 | 10,488 | 11,412 | $ | 181,123 | |||||||||||
| Vaishali S. Bhatia |
— | — | — | — | ||||||||||||
| Non-Employee Directors |
||||||||||||||||
| Larry R. Baldwin |
11,627 | — | — | — | ||||||||||||
| Christine B. LaFollette |
11,627 | — | — | — | ||||||||||||
| James H. Lee |
11,627 | — | — | — | ||||||||||||
| Eric L. Mattson |
11,627 | — | — | — | ||||||||||||
| Mark A. Petersen |
11,627 | — | — | — | ||||||||||||
| (1) | Additional individuals may have been identified as “executive officers” or “Named Executive Officers” in the most recent HEP Annual Report on Form 10-K, but the following individuals are no longer providing services to HEP as of the date of this joint proxy statement and therefore will receive no compensation in connection with the Merger: Mr. Mark T. Cunningham (former Senior Vice President, Operations and Engineering) and Mr. Richard L. Voliva (former President). |
| (2) | All Partnership Performance LTIP Awards are reflected at target values. With respect to the 2020 Partnership Performance LTIP Awards, the awards will be settled using actual performance achievement at the end of the performance period, which may be higher or lower than the target values shown here. |
| (3) | Mr. Jennings is also the Chairperson of the GP Board. |
Additional Information and Where You Can Find It
This report does not constitute a solicitation of any vote or approval with respect to the Proposed Merger. In connection with the Proposed Merger, HF Sinclair has filed with the SEC the Registration Statement, which includes a joint proxy statement of HF Sinclair and HEP and also constitutes a prospectus of HF Sinclair, which was declared effective on October 24, 2023. HF Sinclair and HEP may also file other materials with the SEC regarding the Proposed Merger. Mailing of the definitive joint proxy statement/prospectus to the securityholders of HF Sinclair and HEP commenced on October 26, 2023. INVESTORS AND SECURITYHOLDERS OF HF SINCLAIR AND HEP ARE ADVISED TO CAREFULLY READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS THAT HAVE BEEN FILED OR MAY BE FILED WITH THE SEC (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER, THE PARTIES TO THE PROPOSED MERGER AND THE RISKS ASSOCIATED WITH THE PROPOSED MERGER. Investors and securityholders may obtain a free copy of such documents and other relevant documents (if and when available) filed by HF Sinclair or HEP with the SEC from the SEC’s website at www.sec.gov. Securityholders and other interested parties will also be able to obtain, without charge, a copy of such documents and other relevant documents (if and when available) from HF Sinclair’s website at www.hfsinclair.com under the Investor Relations page or from HEP’s website at www.hollyenergy.com on the Investors page.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer,
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solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.
Participants in the Solicitation of Proxies
HF Sinclair, HEP and their respective directors, executive officers and certain other members of management may be deemed to be participants in the solicitation of proxies in respect of the Proposed Merger. Information about these persons is set forth in the Registration Statement, which includes a joint proxy statement of HF Sinclair and HEP and also constitutes a prospectus of HF Sinclair, which was filed by HF Sinclair with the SEC on October 16, 2023 and declared effective by the SEC on October 24, 2023; HF Sinclair’s proxy statement relating to its 2023 Annual Meeting of Stockholders, which was filed with the SEC on April 6, 2023; HF Sinclair’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 28, 2023; HEP’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 28, 2023, and subsequent statements of changes in beneficial ownership on file with the SEC. Securityholders and investors may obtain additional information regarding the interests of such persons, which may be different than those of the respective companies’ securityholders generally, by reading the Registration Statement, including the joint proxy statement/prospectus, and other relevant documents regarding the Proposed Merger (if and when available), which will be filed with the SEC.
Cautionary Statement Regarding Forward-Looking Statements
The statements in this Current Report on Form 8-K relating to matters that are not historical facts are “forward-looking statements” based on management’s beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in HF Sinclair’s and HEP’s filings with the SEC. Forward-looking statements use words such as “anticipate,” “project,” “will,” “expect,” “plan,” “goal,” “forecast,” “strategy,” “intend,” “should,” “would,” “could,” “believe,” “may,” and similar expressions and statements regarding HF Sinclair’s and HEP’s plans and objectives for future operations or the Proposed Merger. Although HEP believes that the expectations reflected in these forward-looking statements are reasonable, HEP cannot assure you that HF Sinclair’s and HEP’s expectations will prove to be correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Any differences could be caused by a number of factors, including, but not limited to, the ability of HF Sinclair or HEP to consummate the Proposed Merger; the risk that the Proposed Merger does not occur; negative effects from the pendency of the Proposed Merger; the time required to consummate the Proposed Merger; the risk that cost savings, tax benefits and any other synergies from the Proposed Merger may not be fully realized or may take longer to realize than expected; disruption from the Proposed Merger may make it more difficult to maintain relationships with customers, employees or suppliers; the possibility that the market price of HF Sinclair’s common stock will fluctuate prior to the completion of the Proposed Merger causing the value of the merger consideration of the Proposed Merger to change; the risk that certain officers and directors of HF Sinclair and HEP have interests in the Proposed Merger that are different from, or in addition, to the interests they may have as a HF Sinclair stockholder or a HEP unitholder, respectively; the possibility that financial projections by HF Sinclair may not prove to be reflective of actual future results; failure to obtain the required approvals for the Proposed Merger; the focus of management time and attention on the Proposed Merger and other disruptions arising from the Proposed Merger; legal proceedings that may be instituted against HF Sinclair or HEP in connection with the Proposed Merger; HF Sinclair’s and HEP’s ability to successfully integrate the Sinclair Oil Corporation (now known as Sinclair Oil LLC) and Sinclair Transportation Company LLC businesses acquired from The Sinclair Companies (now known as REH Company) (collectively, the “Sinclair Transactions”) with their existing operations and fully realize the expected synergies of the Sinclair Transactions or on the expected timeline; the demand for and supply of crude oil and refined products, including uncertainty regarding the increasing societal expectations that companies address climate change; risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on HEP’s pipelines and/or terminalled, stored or throughput in HEP’s terminals and refinery processing units; the economic viability of HF Sinclair, HEP’s other customers and HEP’s joint ventures’ other customers, including any refusal or inability of HEP’s or HEP’s joint ventures’ customers or counterparties to perform their obligations under their contracts; the demand for refined
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petroleum products in the markets we serve; HEP’s ability to purchase operations and integrate the operations we have acquired or may acquire, including the acquired Sinclair Transportation Company LLC business; HEP’s ability to complete previously announced or contemplated acquisitions; the availability and cost of additional debt and equity financing; the possibility of temporary or permanent reductions in production or shutdowns at refineries utilizing HEP’s pipelines, terminal facilities and refinery processing units, due to reductions in demand, accidents, unexpected leaks or spills, unscheduled shutdowns, infection in the workforce, weather events, global health events, civil unrest, expropriation of assets, and other economic, diplomatic, legislative, or political events or developments, terrorism, cyberattacks, or other catastrophes or disruptions affecting HEP’s operations, terminal facilities, machinery, pipelines and other logistics assets, equipment, or information systems, or any of the foregoing of HEP’s suppliers, customers, or third-party providers or lower gross margins due to the economic impact of inflation and labor costs, and any potential asset impairments resulting from, or the failure to have adequate insurance coverage for or receive insurance recoveries from, such actions; the spread between market prices for refined products and market prices for crude oil; the possibility of constraints on the transportation of refined products or lubricant and specialty products; the effects of current and/or future governmental and environmental regulations and policies, including increases in interest rates; delay by government authorities in issuing permits necessary for HEP’s business or HEP’s capital projects; HEP’s and HEP’s joint venture partners’ ability to complete and maintain operational; HF Sinclair’s and HEP’s efficiency in carrying out and consummating construction projects, including HF Sinclair’s ability to complete announced capital projects on time and within capital guidance; HF Sinclair’s and HEP’s ability to timely obtain or maintain permits, including those necessary for operations or capital projects; the possibility of terrorist or cyberattacks and the consequences of any such attacks; uncertainty regarding the effects and duration of global hostilities, including the Israel-Gaza conflict, the Russia-Ukraine war, and any associated military campaigns which may disrupt crude oil supplies and markets for HF Sinclair’s refined products and create instability in the financial markets that could restrict HF Sinclair’s ability to raise capital; general economic conditions, including economic slowdowns caused by a local or national recession or other adverse economic condition, such as periods of increased or prolonged inflation; the impact of recent or proposed changes in the tax laws and regulations that affect master limited partnerships; the outcome of the Exchange Offers and Consent Solicitations; and other business, financial, operational and legal risks and uncertainties detailed from time to time in HF Sinclair’s and HEP’s SEC filings, whether or not related to the Exchange Offers and Consent Solicitations. The forward-looking statements speak only as of the date made and, other than as required by law, HEP undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
Description | |
| 99.1 | Joint Press Release of HF Sinclair Corporation and Holly Energy Partners, L.P., dated October 30, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HOLLY ENERGY PARTNERS, L.P. | ||||||
| By: HEP LOGISTICS HOLDINGS, L.P. its General Partner | ||||||
| By: HOLLY LOGISTIC SERVICES, L.L.C. its General Partner | ||||||
| Date: October 30, 2023 | /s/ John Harrison | |||||
| John Harrison | ||||||
| Senior Vice President, Chief Financial Officer and Treasurer | ||||||
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