EL PASO, Texas -- A date has been set for unitholders of Northern Tier Energy LP (NTI) to vote on the proposed merger agreement with Western Refining Inc. (WNR). The companies entered into a merger agreement in December 2015 for Western Refining to acquire all of Northern Tiers’ outstanding common units that it did not already own.
Northern Tier established a record date of May 19, 2016, and a meeting date of June 23, 2016, for a special meeting of its common unitholders in Tempe, Ariz.
Assuming completion of the proposed transaction, Northern Tier will become a wholly owned subsidiary of Western Refining, and Northern Tier common units will cease to be publicly traded.
Addressing the transaction, Western Refining treasurer and investor relations director Jeff Beyersdorfer said during the company’s May 3 first-quarter 2016 earnings call, “On April 19, we filed a second amendment to our S-4 registration statement with the SEC that is currently undergoing the customary SEC review. In connection with this amendment, Northern Tier has established a special unitholder meeting date of June 23 for unitholders of record as of May 19 to vote on the proposed merger and other related matters, and we anticipate closing shortly thereafter.”
Jeff Stevens, president and CEO, said on the call, “We look forward to completing the Northern Tier transaction later this quarter and operating our combined assets as one team.”
Western Refining is an independent refining and marketing company based in El Paso, Texas. The refining segment operates refineries in El Paso, and Gallup, N.M. The retail segment includes gas stations, convenience stores and unmanned fleet fueling locations in Arizona, Colorado, New Mexico and Texas.
Western Refining owns the general partner and approximately 66% of the limited partnership interest of Western Refining Logistics LP and the general partner and approximately 38% of the limited partnership interest in Northern Tier Energy LP.
Northern Tier owns and operates refining and transportation assets and operates approximately 169 convenience stores and supports approximately 114 franchised convenience stores, primarily in Minnesota and Wisconsin, under the SuperAmerica trademark, and owns a bakery and commissary under the SuperMom’s brand. Northern Tier is based in Tempe, Ariz.
In late 2013, in a deal mainly intended to expand its refinery presence, but which included the downstream network, WNR acquired ACON Investments' and TPG Capital's ownership interests in Northern Tier for $775 million.
Executives cited an expanded asset base, enhanced scale and diversification, simplified corporate structure and increased operational and financial flexibility as the reasons for the deal.
Western and Northern Financials
Western Refining reported net income for its first quarter ended March 31, 2016, of $11.6 million. This compares to first-quarter 2015 net income of $113.3 million.
“The first quarter was good operationally for Western,” Jeff Stevens, president and CEO, said. “We saw lower than normal gasoline margins as high levels of winter-grade gasoline worked its way through the system during the transition to summer-grade gasoline. Gasoline margins began to improve late in the first quarter. Narrow crude oil differentials and weak distillate margins also hampered our financial results.”
He continued, “In our retail business, we saw an increase in same-store fuel volumes and merchandise sales compared to Q1 2015.”
Northern Tier Energy LP reported first-quarter 2016 net income of $14.7 million, compared to $111.2 million for first-quarter 2015.
“While the refinery ran well, our earnings declined over last year’s first quarter as a result of narrowing light product margins and tightening crude oil differentials,” Dave Lamp, Northern Tier’s CEO, said. “Mid-continent product inventory builds over the winter compressed margins during the quarter. As a result of the weak margin environment, our results did not generate cash available for distribution to our unitholders.”
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