Business Context and Reporting Period
HF Sinclair Corporation filed this Form 8-K on April 27, 2022, reporting the settlement of exchange offers and consent solicitations for HollyFrontier Corporation debt, issuance of new HF Sinclair senior notes, establishment of a new revolving credit facility, and termination of HollyFrontier’s prior credit agreement.
Key Financial and Capital Structure Metrics
| Instrument | Principal Amount | Terms |
|---|---|---|
| New 2023 Senior Notes | $290.348 million | 2.625% interest; maturity October 1, 2023 |
| New 2026 Senior Notes | $797.100 million | 5.875% interest; maturity April 1, 2026 |
| New 2030 Senior Notes | $325.034 million | 4.500% interest; maturity October 1, 2030 |
| Total New Notes | $1.412482 billion | Issued in exchange for accepted HFC Notes |
| New Revolving Credit Agreement | $1.650 billion maximum commitment | Senior unsecured; maturity April 30, 2026 |
The new credit facility bears interest based on applicable base rate, CDOR, adjusted Term SOFR, or Daily Simple RFR benchmarks, plus margins ranging from 0.25% to 2.125%, depending on the borrowing option and the company’s credit ratings. Unused commitments incur fees ranging from 0.150% to 0.350%.
The filing does not provide revenue, net income, cash flow, operating margin, cash balance, drawn revolver balance, or other liquidity measures for a reporting period.
Material Changes Versus the Prior Structure
- HF Sinclair issued $1.412482 billion of new senior notes and canceled the same aggregate principal amount of HFC notes accepted in the exchange offers.
- HFC notes not tendered and accepted totaled $337.518 million: $59.652 million due 2023, $202.900 million due 2026, and $74.966 million due 2030. These notes remain outstanding, as amended.
- The new revolving credit facility increased maximum commitments from $1.350 billion under the terminated HFC facility to $1.650 billion, while retaining an April 30, 2026 maturity date.
- The HFC Third Supplemental Indenture eliminated substantially all restrictive covenants, certain events of default, the SEC reporting covenant, and change-of-control purchase provisions for the HFC 2023 and HFC 2030 notes that remained outstanding.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- The new notes include limitations on liens and sale-leaseback transactions and customary events of default.
- New 2023 and New 2030 noteholders may require repurchase at 101% of principal, plus accrued interest, following a defined change-of-control triggering event, unless HF Sinclair redeems all new notes. The New 2026 Notes do not include this provision.
- The new notes are redeemable at HF Sinclair’s option before maturity under the indenture terms.
- Under the registration rights agreement, HF Sinclair agreed to use commercially reasonable efforts to register an exchange offer for the new notes. Failure to meet specified registration deadlines or maintain an effective registration statement could result in additional interest.
- The target date for completing the registered exchange offer is April 27, 2023, subject to the agreement’s terms.
- All outstanding letters of credit under the terminated HFC credit agreement were deemed reissued under the new facility, and no prepayment penalties were paid.
Important Facts for Investors to Verify
- Confirm the final outstanding balances and maturity schedule of both the new HF Sinclair notes and the amended HFC notes that were not exchanged.
- Review the new indenture for covenant limitations, redemption provisions, events of default, and change-of-control protections.
- Verify availability, outstanding borrowings, letters of credit, and pricing under the $1.650 billion revolving credit facility.
- Monitor completion of the registered exchange offer by April 27, 2023 and any potential additional-interest obligations.
- Review subsequent filings for the accounting impact of the exchange transaction and changes in total debt, interest expense, and liquidity.