Lehman Brothers has been selected to fully underwrite a debt package backing Tesoro Petroleum's acquisition of two U.S. refineries from BP for $677 million. A spokeswoman for the San Antonio-based refining and marketing company, said the package will refinance existing corporate working capital, working capital for the refineries, as well as the total acquisition amount. At this stage, all financing options revolve around debt, however, it is too early to say what form it will take, she added. Lehman acted as the financial adviser to Tesoro.
The spokeswoman noted that structures would be determined and known in advance of the closing of the acquisition, at the start of the fourth quarter. Calls to officials at Lehman were not returned by press time. According to Capital Data Loanware, Tesoro has a $250 million credit with BANK ONE, ABN AMRO and Bank of Nova Scotia. The purchase will nearly quadruple Tesoro's debt to $1.2 billion and debt-capitalization ratio will leap to 64% from 32%.