Western Refining is back in the market with Bank of America for a seven-year, $1.4 billion term loan backing its acquisition of Giant Industries. Pricing on the credit could not be determined. The debt has the ability to be expanded to $100 million and the facility will also be used to refinance Western's existing $150 million revolver, according to a company spokesman (CIN, 9/1). Pricing on the revolver was LIBOR plus 1 3/8% at launch. B of A is also a lead on that deal.
The acquisition was announced in August as a $1.5 billion credit, paying out shareholders at $83 per share (9/1). Two fires at separate Giant refineries resulted in increased costs and modified terms associated with its insurance coverage. As a result, shareholders will now receive $77 per share. The reworked transaction values the company at approximately $1.4 billion, including the assumption of about $280 million in outstanding senior notes.
Moody's Investors Service assigned Western Refining a B1 corporate family rating, as well as a B1 rating on the proposed term loan. The ratings are restrained by high post-acquisition leverage, heavy capital spending and interest burdens that restrict the amount of early debt reduction. Standard & Poor's rated the new term loan BB- with a recovery rating of 2.
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.