DALLAS -- Alon USA Energy Inc. and Alon USA Partners LP have announced that Alon Partners has entered into an agreement to acquire Alon Energy's Krotz Springs refinery for total consideration of $437.5 million, which will be payable to Alon Energy in a combination of $100 million cash and $337.5 million in common units representing limited partner interests in Alon Partners.
As part of the transaction, Alon Energy has agreed to reimburse the anticipated capital expenditures relating to the scheduled major maintenance turnaround of the Krotz Springs refinery in 2015. The transaction is expected to close on or about Nov. 28, 2014.
Alon Energy and Alon Partners believe that the Krotz Springs refinery acquisition will provide Alon Partners diversification through crude slates, end products, customers and geographic locations, reduce Alon Partners' dependence on a single asset and simplify Alon Energy's corporate and capital structure.
Alon Partners and Alon Energy president and CEO Paul Eisman said, "We are committed to identifying transactions that are accretive to Alon Partners' unitholders and this acquisition is a significant step in fulfilling that commitment. The Krotz Springs refinery dropdown should provide a significant increase in adjusted EBITDA for Alon Partners. Alon Energy's Krotz Springs refinery is well positioned to generate significant free cash flow, and this transaction unlocks the value of that business. This is a very positive step for the continued success of both Alon Partners and Alon Energy."
The terms of the transaction were approved by Alon Energy's board of directors and the conflicts committee of the board of directors of the general partner of Alon Partners, which is composed of independent directors.
Alon USA Energy, Dallas, is an independent refiner and marketer of petroleum products, operating primarily in the south central, southwestern and western regions of the United States. Alon owns 100% of the general partner and approximately 82% of the limited partner interests in Alon USA Partners, which owns a crude oil refinery in Texas with an aggregate crude oil throughput capacity of approximately 73,000 barrels per day. In addition, Alon directly owns crude oil refineries in Louisiana and California, with an aggregate crude oil throughput capacity of approximately 144,000 bpd per day. Alon is the largest 7-Eleven licensee in the United States and operates approximately 300 convenience stores in Texas and New Mexico.
Alon USA Partners, also based in Dallas, is a Delaware limited partnership formed in August 2012 by Alon Energy. Alon Partners owns and operates a crude oil refinery in Big Spring, Texas, with an aggregate crude oil throughput capacity of approximately 73,000 bpd. Alon Partners refines crude oil into finished products, which are marketed primarily in west Texas, central Texas, Oklahoma, New Mexico and Arizona through its wholesale distribution network to both Alon Energy's retail convenience stores and other third-party distributors.
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