Alon USA Energy Inc. (NYSE:ALJ) has completed the acquisition of the Krotz Springs refinery from Valero Energy Corp. (NYSE: VLO), for a total of $473 million. The final price is $40 million higher than the sum Alon USA stated when it began negotiations with Valero, but the addition was not in the form of an extra payment on the refinery itself but for the refinery's working capital, and inventories, which were valued at $140 million instead of the $100 million in the original agreement. The cash portion of the deal amounted to $333 million.
Alon USA executive chairman David Wiessman said, "We anticipate that this transaction should generate strong free cash flow which should enable us to repay its associated debt in as early as three years."
The company said in its announcement that most of the financing for the deal came from a $302 million term loan, including a $50 million sub-facility to support substantial hedging. The loan was arranged by Credit Suisse, who also was Alon's M&A advisor for the transaction. Alon USA also received an $80 million equity investment from its parent, Alon Israel Oil Company Ltd. and a revolving credit facility from the Bank of America.
Alon USA said that the Krotz Springs refinery has a crude refining capacity of approximately 83,100 barrels per day, of which 96% is classed as light products - 44% gasoline, 44% distillates and light cycle oils, and 8% are petrochemicals. The remaining 4% are heavy products such as asphalt.
Published by Globes [online], Israel business news - www.globes-online.com - on July 8, 2008
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