Akin Gump Advises Holly Energy Partners' Conflicts Committee in Incentive Distribution Rights Simplification Agreement
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(Houston) – HollyFrontier Corporation and Holly Energy Partners, L.P. announced today that Holly Energy and HEP Logistics Holdings, L.P. (“HEP GP”), a wholly-owned subsidiary of HollyFrontier and the general partner of HEP, have entered into a definitive agreement to eliminate the incentive distribution rights held by HEP GP. The deal calls for the conversation of HEP GP’s 2 percent general partner interest in Holly Energy into a non-economic interest in exchange for the issuance by Holly Energy of 37,250,000 of its common units to HEP GP, representing total equity value of $1.25 billion based on Holly Energy’s previous closing day price of $33.56. Akin Gump advised the conflicts committee of the board of directors of HEP GP LLC, the general partner of Holly Energy Partners.
In addition, HollyFrontier has agreed to waive $2.5 million of limited partner cash distributions for each of 12 consecutive quarters beginning with the first quarter the units issued as consideration are eligible to receive distributions. Upon closing of the transaction, HollyFrontier will hold approximately 59.6 million Holly Energy common units, representing approximately 59 percent of the outstanding common units, with a market value of $2.0 billion based on Holly Energy’s previous closing day price.
John Goodgame, a partner in Akin Gump’s oil and gas practice, led the team working on the matter. He was joined by tax partner Alison Chen and oil and gas associates Chase Armbrust and Allyson Li.
Founded in 1945, Akin Gump Strauss Hauer & Feld LLP is a leading international law firm with more than 900 lawyers in offices throughout the United States, Europe, Asia and the Middle East.
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