DALLAS -- Alon USA Energy Inc. said that it has prepaid its $100 million term loan, due Jan. 14, 2009, reducing the company's total debt outstanding to approximately $33 million.
According to the terms of the loan, Alon did not have the right to prepay the loan before January 2006.
"Due to the strength of Alon's balance sheet we have decided to use approximately one third of the company's cash to reduce debt. After this debt repayment we will have approximately $200 million of cash and cash equivalents," said Jeff Morris, Dallas-based [image-nocss] Alon's president and CEO. "As we outlined in the company's initial public offering [IPO] prospectus, we intended to repay all outstanding amounts under the term loan in the first quarter of 2006, and we are proud that we were able to accomplish this goal."
The loan had a current interest rate of 10.6%, thus the company anticipates the repayment will have an annual incremental interest savings of approximately $6 million starting in 2007. Alon said it anticipates the repayment of the loan will only have a small incremental impact on interest expense for 2006 since the company will fully expense its deferred debt issuance costs of $3.9 million and will pay a loan prepayment premium of $3 million in first-quarter 2006.
Alon USA Energy is an independent refiner and marketer of petroleum products operating primarily in the southwestern and south central regions of the United States. It owns and operates a sour crude oil refinery in Big Spring, Texas, which has a crude oil throughput capacity of 70,000 barrels per day. And it markets gasoline and diesel products under the FINA brand. The company also operates convenience stores in West Texas and New Mexico under the 7-Eleven and FINA brand and supplies motor fuels to these stores from its Big Spring refinery.
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