B of A Leads $1.5 Bln Energy Merger

Western Refining has tapped Bank of America for a $2 billion credit facility to finance the acquisition of Giant Industries.

  • 01 Sep 2006
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Western Refining has tapped Bank of America for a $2 billion credit facility to finance the acquisition of Giant Industries. The deal consists of a $500 million senior secured revolver and a $1.5 billion senior secured term loan "B," according to a Western spokesman. Pricing has yet to be determined and the deal is expected to close in the fourth quarter.

The merger is valued at approximately $1.5 billion, including the assumption of about $275 million in Giant's outstanding debt. Western will acquire all outstanding shares of Giant's stock for $83 per share. Western will also use about $250 million of cash on hand to finance the acquisition. The new facility will also be used to refinance Western's existing $150 million revolving credit facility, according to a spokesman. Pricing on the revolver was LIBOR plus 1 3/8% at launch. B of A is also a lead on this deal.

Standard & Poor's placed Giant Industries' B+ rating on CreditWatch with positive implications with the expectation the company will commence a tender offer of its 8% senior subordinated notes due 2014 and its 11% senior subordinated notes due 2012. Moody's Investors Service affirmed Giant's B1 corporate family rating.

Western tapped the market back in August 2003 for a $125 million amortizing term loan "B" for the acquisition of Chevron USA's El Paso, Texas refinery (LMW, 8/31/2003). It last tapped the market in 2005 for the revolver, along with a delayed-draw term loan. El Paso, Texas-based Western Refining is an independent crude oil refiner and marketer of refined products. Giant Industries, headquartered in Scottsdale, Ariz., is a refiner and marketer of petroleum products. Calls to a Giant spokesman were not returned.

  • 01 Sep 2006

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4 Citi 467 1 10.94
5 Morgan Stanley 455 1 10.66

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