Par Pacific Announces Expected Increase in ABL Commitments to up to $1.4 billion and Replacement of Intermediation Facility

Rhea-AI Summary

Par Pacific Holdings, Inc. (PARR) announces an expected increase in lender commitments under its asset-based revolving credit facility to $1.4 billion. The company plans to refinance existing financing facilities for Hawaii operations, reducing working capital costs by $10 million annually and increasing funding flexibility.

Financial Analyst

The announcement by Par Pacific Holdings regarding the expansion of their asset-based revolving credit facility (ABL) to $1.4 billion, supported by additional collateral assets in Hawaii, signifies a strategic move to optimize their capital structure. The introduction of new collateral, such as refined product inventory and accounts receivable, indicates a solid asset base that could reassure lenders and investors about the company's liquidity and collateral quality. The refinancing of working capital facilities and the establishment of a smaller crude-only intermediation agreement could streamline the company's financial operations, potentially leading to improved cash flow management.

By reducing annual working capital financing costs by an estimated $10 million, Par Pacific could enhance its profitability margins and reinvest savings into core business activities, driving long-term growth. The increased funding flexibility may also allow the company to seize market opportunities more effectively, especially in volatile energy markets. However, stakeholders should be aware of the associated risks, such as potential over-leverage or dependence on certain assets as collateral, which could pose challenges if market conditions deteriorate.

Market Research Analyst

Par Pacific's anticipated refinancing strategy could be seen as a response to evolving market conditions in the energy sector. By securing a larger credit facility and reducing reliance on working capital financing, the company may be positioning itself for competitive advantage. The move to include additional collateral assets suggests a proactive approach to managing their asset utilization, which may be favorably viewed by the market.

Investors should consider the potential impact of this refinancing on the company's stock performance. If the market perceives the strategy as strengthening Par Pacific's financial position, it could lead to increased investor confidence and possibly a positive stock price reaction. Conversely, if the execution of these financial maneuvers is not seamless or if market conditions shift unfavorably, there could be negative implications for the stock value.

Energy Sector Analyst

The energy sector is known for its capital-intensive nature and the importance of liquidity management. Par Pacific's decision to refinance and increase its ABL facility, particularly by leveraging assets in Hawaii, reflects an understanding of the sector's dynamics. The emphasis on flexibility in funding indicates a strategic approach to navigating the unpredictable swings in energy prices and demand.

Moreover, the $10 million annual savings in working capital financing costs could provide Par Pacific with a buffer against price volatility in the energy markets. The ability to pivot quickly with financial resources can be a significant competitive edge in the energy industry. Stakeholders should monitor how these financial changes align with the company's operational strategies and whether they support sustainable growth in the long term.

HOUSTON, March 20, 2024 (GLOBE NEWSWIRE) -- Par Pacific Holdings, Inc. (NYSE: PARR) (“Par Pacific” or the “Company”) today announced an expected increase in lender commitments under its existing asset-based revolving credit facility (“ABL”) to up to $1.4 billion. The increase is expected to be based, in part, on the addition of certain collateral assets in Hawaii, including refined product inventory and accounts receivable. Par Pacific also intends to refinance its existing working capital financing facilities for its Hawaii operations, a supply and offtake agreement and discretionary draw facility, with a combination of funds from the increased ABL facility and a smaller crude-only intermediation agreement. The financing is anticipated to reduce the Company’s working capital financing costs by approximately $10 million per year and increase flexibility of funding.

Each of the expected increase in lender commitments, the addition of collateral assets to the existing ABL and the new intermediation agreement is expected to be effective on or around May 31, 2024, and are subject to the negotiation and execution of definitive documentation, and satisfaction of certain customary closing conditions.   

About Par Pacific

Par Pacific Holdings, Inc. (NYSE: PARR), headquartered in Houston, Texas, is a growing energy company providing both renewable and conventional fuels to the western United States. In the Pacific Northwest and the Rockies, Par Pacific owns and operates 125,000 bpd of combined refining capacity across three locations and an extensive energy infrastructure network, including 7.6 million barrels of storage, and marine, rail, rack, and pipeline assets. In addition, Par Pacific operates the “nomnom” convenience store chain and supplies ExxonMobil-branded fuel retail stations in the region. Par Pacific owns and operates one of the largest energy infrastructure networks in Hawaii with 94,000 bpd of operating refining capacity, a logistics system supplying the major islands of the state and Hele-branded retail locations. Par Pacific also owns 46% of Laramie Energy, LLC, a natural gas production company with operations and assets concentrated in Western Colorado. More information is available at www.parpacific.com.

Forward-Looking Statements

This news release includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements, including statements regarding the expected increase in lender commitments under the ABL, the addition of collateral assets to the ABL, the termination of the existing intermediation agreement and the execution of a new intermediation agreement. We may be unable to negotiate and execute definitive documents related to the increase in lender commitments under the ABL, the addition of collateral assets to the ABL, the termination of the existing intermediation agreement and the execution of a new intermediation agreement on terms that are acceptable to us or at all. Definitive documents, if executed, may be executed later than we currently expect. In addition, these forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties, including (i) the negotiation and execution of definitive documents representing each of the foregoing, (ii) the satisfaction of any conditions precedent to the closing or effectiveness of such documents, (iii) the effects of the continued volatility of commodity prices and the related macroeconomic and political environment, (iv) risks and uncertainties related to the credit markets generally, and (v) other factors, many of which are outside our control, which could cause actual results to differ materially from such statements. We cannot provide assurances that the assumptions upon which these forward-looking statements are based will prove to have been correct. Should one of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied in any forward-looking statements, and investors are cautioned not to place undue reliance on these forward-looking statements, which are current only as of this date. We do not intend to update or revise any forward-looking statements made herein or any other forward-looking statements as a result of new information, future events or otherwise. We further expressly disclaim any written or oral statements made by a third party regarding the subject matter of this news release.

For more information contact:
Ashimi Patel
VP, Investor Relations and Sustainability
(832) 916-3355
apatel@parpacific.com

What is the expected increase in lender commitments announced by Par Pacific Holdings, Inc. (PARR)?

Par Pacific Holdings, Inc. (PARR) announced an expected increase in lender commitments under its asset-based revolving credit facility to up to $1.4 billion.

How does Par Pacific Holdings, Inc. (PARR) plan to reduce working capital financing costs?

Par Pacific Holdings, Inc. (PARR) plans to refinance its existing working capital financing facilities for its Hawaii operations, reducing working capital financing costs by approximately $10 million per year.

When are the expected changes in lender commitments and the new intermediation agreement expected to be effective?

The expected increase in lender commitments, addition of collateral assets, and the new intermediation agreement are expected to be effective on or around May 31, 2024.