Dallas, Texas-headquartered Holly Energy Partners L.P. (HEP) – subsidiary of oil refiner and marketer HollyFrontier Corporation (HFC) – recently announced a public offering of 1,875,000 common units to increase its liquidity. Simultaneously, HollyFrontier Corporation and some of its affiliates will also sell 1,875,000 common units as selling unit holders. The units were priced at $40.80 a piece.
The partnership also offered a 30-day option to the underwriters to purchase 281,250 additional units from them and up to 281,250 additional common units from the selling unit holders.
Holly Energy plans to use the proceeds to clear the debt under its credit facility and for other partnership purposes. The amount repaid may be borrowed again by the partnership to finance capital expenditures related to the expansion of crude oil transportation system in southeastern New Mexico. Total expenditure of the same is expected at $35–$40 million.
The offering is expected to close on Mar 22, 2013. Holly Energy will not get any of the takings from the common units sold by HollyFrontier Corporation.
Holly Energy currently retains a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next 1 to 3 months.
Holly Energy Partners is a master limited partnership (MLP) that operates petroleum product and crude oil pipelines, storage tanks, distribution terminals and loading rack facilities.
As of Dec 31, 2012, company had cash and cash equivalents of $5,237,000 and long-term debt of $864,674,000.
Other pipeline operators that offer value and are worth buying now include Oiltanking Partners L.P. (OILT) and EQT Midstream Partners LP (EQM). Both the stocks carry a Zacks Rank #2 (Buy).
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