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Par Petroleum Corporation (OTCBB:PARR) announced today that it has reached a definitive agreement for the acquisition of Tesoro Hawaii, LLC from Tesoro Corporation. Tesoro Hawaii, LLC is an owner of refining, retail and distribution assets located in Hawaii. Following the closing, the retail stations will remain under the Tesoro brand.
Under the terms of the agreement, Par Petroleum, through a wholly-owned subsidiary, will purchase all outstanding membership interests of Tesoro Hawaii, LLC for $75 million in cash, plus net working capital and the market value of inventory at closing. Also included in the purchase price is an earn-out arrangement of up to $40 million payable over three years contingent on certain performance metrics. The transaction has been unanimously approved by the board of directors of Par Petroleum. The acquisition is subject to certain closing conditions, including the successful restart of the refinery and the receipt of required governmental approvals. The transaction is currently expected to be completed in the third quarter of 2013.
“This is a great fit for Par Petroleum, and we are pleased to make a long-term investment in Hawaii’s economy,” said Will Monteleone, Chairman of the Board of Directors and Chief Executive Officer of Par Petroleum. “We have found in Tesoro Hawaii a great company with outstanding assets and a superb management team and employee base. We aim to serve customers through operational excellence and enhance value for the communities we serve with a focus on safety, environmental stewardship and employee commitment.”
The acquisition is expected to be financed by the issuance of $200 million of common stock; an ABL revolving credit facility of up to $125 million led by Deutsche Bank; a crude supply and inventory intermediation facility provided by Barclays; and a term loan and revolving credit facility secured by certain retail assets led by the Bank of Hawaii. Par has reached agreement with a group of equity investors to purchase all of the common stock to be issued at closing at a share price of $1.39. The equity investor group is led by existing shareholders Zell Credit Opportunities Fund and Whitebox Advisors.