Debt

HollyFrontier Credit Agreement

We have a $1 billion senior secured credit agreement that matures in July 2016 (the “HollyFrontier Credit Agreement”) and may be used to fund working capital requirements, capital expenditures, acquisitions and general corporate purposes. Obligations under the HollyFrontier Credit Agreement are collateralized by our inventory, accounts receivable and certain deposit accounts and guaranteed by our material, wholly-owned subsidiaries. At December 31, 2013, we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $5.2 million under the HollyFrontier Credit Agreement.

HEP Credit Agreement

In November 2013, HEP amended its senior secured credit agreement increasing the size of the credit facility from $550 million to $650 million (the “HEP Credit Agreement”). The HEP Credit Agreement matures in November 2018 and is available to fund capital expenditures, investments, acquisitions, distribution payments and working capital and for general partnership purposes. It is also available to fund letters of credit up to a $50 million sub-limit. At December 31, 2013, HEP was in compliance with all its covenants, had outstanding borrowings of $363.0 million and no outstanding letters of credit under the HEP Credit Agreement.

Indebtedness under the HEP Credit Agreement bears interest, at their option, at either a reference rate announced by the administrative agent plus an applicable margin or at a rate equal to LIBOR plus an applicable margin. In each case, the applicable margin is based upon the ratio of HEP’s funded debt to earnings before interest, taxes, depreciation and amortization (as defined in the HEP Credit Agreement). The interest rates in effect on HEP’s Credit Agreement borrowings were 2.163% and 2.456% at December 31, 2013 and 2012, respectively.

HEP’s obligations under the HEP Credit Agreement are collateralized by substantially all of HEP’s assets (presented parenthetically in our consolidated balance sheets). Indebtedness under the HEP Credit Agreement involves recourse to HEP Logistics Holdings, L.P., its general partner, and is guaranteed by HEP’s wholly-owned subsidiaries. Any recourse to the general partner would be limited to the extent of HEP Logistics Holdings, L.P.’s assets, which other than its investment in HEP, are not significant. HEP’s creditors have no recourse to our other assets. Furthermore, our creditors have no recourse to the assets of HEP and its consolidated subsidiaries.

HollyFrontier Senior Notes

Our 6.875% senior notes ($150.0 million principal amount maturing November 2018) (the “HollyFrontier Senior Notes”) are unsecured and impose certain restrictive covenants, including limitations on our ability to incur additional debt, incur liens, enter into sale-and-leaseback transactions, pay dividends, enter into mergers, sell assets and enter into certain transactions with affiliates. Additionally, we have certain redemption rights under the HollyFrontier Senior Notes.

At any time, following notice to the trustee, that the HollyFrontier Senior Notes are rated investment grade by both Moody's and Standard & Poor's and no default or event of default exists, we are not subject to many of the foregoing covenants (a "Covenant Suspension"). As of December 31, 2013, the HollyFrontier Senior Notes were rated investment grade (BBB-) by Standard & Poor's and also investment grade (Baa3) by Moody's. As a result, we are under the Covenant Suspension pursuant to the terms of the indenture governing the HollyFrontier Senior Notes.

In June 2013, we redeemed our $286.8 million aggregate principal amount of 9.875% senior notes maturing June 2017 at a redemption cost of $301.0 million, at which time we recognized a $22.1 million early extinguishment loss consisting of a $14.2 million debt redemption premium and an unamortized discount of $7.9 million.

In September 2012, we redeemed our $200 million aggregate principal amount of 8.5% senior notes maturing September 2016 at a redemption price of $208.5 million.

HollyFrontier Financing Obligation

We have a financing obligation that relates to a sale and lease-back of certain crude oil tankage that we sold to an affiliate of Plains All American Pipeline, L.P. (“Plains”) in October 2009 for $40.0 million. Monthly lease payments are recorded as a reduction in principal over the 15-year lease term ending in 2024.

HEP Senior Notes

HEP’s senior notes consist of the following:


•	8.25% HEP senior notes ($150 million principal amount maturing March 2018)


•	6.5% HEP senior notes ($300 million principal amount maturing March 2020)

In March 2012, HEP issued $300 million in an aggregate principal amount of 6.5% HEP senior notes maturing March 2020. The $294.8 million in net proceeds were used to repay $157.8 million aggregate principal amount of 6.25% HEP senior notes, $72.9 million in promissory notes due to HollyFrontier, related fees, expenses and accrued interest in connection with these transactions and to repay borrowings under the HEP Credit Agreement. In April 2012, HEP called for redemption the remaining $27.2 million aggregate principal amount outstanding of 6.25% HEP senior notes.

The 8.25% and 6.5% HEP senior notes (collectively, the “HEP Senior Notes”) are unsecured and impose certain restrictive covenants, including limitations on HEP’s ability to incur additional indebtedness, make investments, sell assets, incur certain liens, pay distributions, enter into transactions with affiliates, and enter into mergers. At any time when the HEP Senior Notes are rated investment grade by both Moody’s and Standard & Poor’s and no default or event of default exists, HEP will not be subject to many of the foregoing covenants. Additionally, HEP has certain redemption rights under the HEP Senior Notes. On February 12, 2014, HEP announced that it will redeem all of its outstanding 8.25% senior notes. The redemption price will be equal to 104.125% of the principal amount for a total payment to the holders of the notes of approximately $156.2 million plus accrued interest. The redemption of the 8.25% senior notes is scheduled to occur on March 15, 2014. HEP plans to fund the redemption with borrowings under the HEP Credit Agreement.

Indebtedness under the HEP Senior Notes involves recourse to HEP Logistics Holdings, L.P., its general partner, and is guaranteed by HEP’s wholly-owned subsidiaries. However, any recourse to the general partner would be limited to the extent of HEP Logistics Holdings, L.P.’s assets, which other than its investment in HEP, are not significant. HEP’s creditors have no other recourse to our assets. Furthermore, our creditors have no recourse to the assets of HEP and its consolidated subsidiaries.

The carrying amounts of long-term debt are as follows:



	December 31,
	2013		2012
	(In thousands)
9.875% Senior Notes
Principal	$	—	$	286,812
Unamortized discount	—		(7,468		)
	—		279,344
6.875% Senior Notes
Principal	150,000		150,000
Unamortized premium	5,054		5,910
	155,054		155,910
Financing Obligation	34,835		36,311

Total HollyFrontier long-term debt	189,889		471,565



	December 31,
	2013			2012
	(In thousands)

HEP Credit Agreement	363,000			421,000

HEP 8.25% Senior Notes
Principal	150,000			150,000
Unamortized discount	(1,297		)	(1,602		)
	148,703			148,398
HEP 6.5% Senior Notes
Principal	300,000			300,000
Unamortized discount	(4,073		)	(4,725		)
	295,927			295,275

Total HEP long-term debt	807,630			864,673

Total long-term debt	$	997,519		$	1,336,238

Principal maturities of long-term debt are as follows:



Years Ending December 31,	(In thousands)
2014	$	1,666
2015	1,880
2016	2,121
2017	2,393
2018	665,700
Thereafter	324,075
Total	$	997,835