Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
On August 2, 2021, HollyFrontier Corporation (“HFC”), Hippo Parent Corporation, a wholly-owned subsidiary of HFC (“New Parent” or, following the consummation of the HFC Transactions (as defined below), HF Sinclair Corporation, or “HF Sinclair”), Hippo Merger Sub, Inc., a wholly-owned subsidiary of New Parent (“Parent Merger Sub”), REH Company (formerly known as The Sinclair Companies, and referred to herein as “REH Company”), and Sinclair Holding LLC (formerly known as Hippo Holding, LLC), a wholly-owned subsidiary of REH Company (the “Target Company”), entered into a business combination agreement (as amended on March 14, 2022, the “BCA”).
On March 14, 2022 (the “HFC Closing Date”), pursuant to the BCA, HF Sinclair completed its acquisition of the Target Company by effecting (a) a holding company merger in accordance with Section 251(g) of the Delaware General Corporation Law whereby HFC merged with and into Parent Merger Sub, with HFC surviving such merger as a direct wholly-owned subsidiary of HF Sinclair (the “HFC Merger”), and (b) immediately following the HFC Merger, a contribution whereby REH Company contributed all of the equity interests of the Target Company to HF Sinclair in exchange for shares of HF Sinclair, resulting in the Target Company becoming a direct wholly-owned subsidiary of HF Sinclair (collectively, the “HFC Transactions”).
In connection with the closing of the HFC Transactions, HF Sinclair issued 60,230,036 shares of HF Sinclair common stock, par value $0.01 per share (“HF Sinclair Common Stock”), to REH Company, with a value of approximately $2,149 million based on HFC’s fully diluted shares of common stock outstanding and its closing stock price on March 11, 2022. On the HFC Closing Date, REH Company made a $77.5 million cash payment to HF Sinclair, inclusive of final working capital adjustments, which reduced the aggregate transaction value to approximately $2,072 million. At the effective time of the HFC Merger, HFC became a wholly-owned subsidiary of HF Sinclair, and all of HFC’s outstanding shares were automatically converted into equivalent corresponding shares of HF Sinclair. Pursuant to the HFC Merger, HF Sinclair became the successor issuer to HFC pursuant to Rule 12g-3(a) under the Securities and Exchange Act of 1934, as amended, and replaced HFC as the public company trading on the New York Stock Exchange under the symbol “DINO.”
Additionally, on March 14, 2022 (the “HEP Closing Date”), Holly Energy Partners, L.P. (“HEP”), REH Company, and Sinclair Transportation Company, a wholly-owned subsidiary of REH Company (“STC”), completed the previously announced transaction whereby HEP acquired all of the outstanding shares of STC in exchange for 21,000,000 newly issued common limited partner units of HEP (“Common Units”) with a value of approximately $349 million based on HEP’s fully diluted Common Units outstanding and HEP’s closing unit price on March 11, 2022, plus cash consideration equal to $329 million, inclusive of final working capital adjustments pursuant to the contribution agreement dated August 2, 2021, for an aggregate transaction value of $678 million (the “HEP Transaction,” and together with the HFC Transactions, the “Sinclair Transactions”). The cash consideration was funded through a draw under HEP’s senior secured revolving credit facility.
The HEP Transaction immediately preceded the HFC Transactions and the transactions were cross-conditioned on each other. For purposes of the unaudited pro forma condensed combined statement of operations and related footnotes (the “Pro Forma Statement of Operations”), the target entities in the HFC Transactions and HEP Transaction, the Target Company and STC, respectively, are referred to collectively as “Hippo Holding, LLC and Sinclair Transportation Company and their Subsidiaries” or “H&T.”
The Pro Forma Statement of Operations has been prepared in accordance with Article 11 of Regulation S-X, Pro Forma Financial Information, which is herein referred to as Article 11. The Pro Forma Statement of Operations presents the combination of the financial information and the pro forma effects with respect to the Sinclair Transactions, further details of which are included within the footnotes to the Pro Forma Statement of Operations.
The Pro Forma Statement of Operations is presented for informational purposes only and is not necessarily indicative of the results of operations that would have occurred had the events been consummated as of the dates indicated, nor is it indicative of any future results. The information presented in the Pro Forma Statement of Operations does not give effect to the potential impact of current financial conditions, or any anticipated revenue enhancements, cost savings or operating synergies that may result from the Sinclair Transactions.
The Sinclair Transactions are accounted for using the acquisition method of accounting with HF Sinclair identified as the accounting acquirer. Under the acquisition method of accounting, HF Sinclair recorded the assets acquired and liabilities assumed at their respective acquisition date fair values.
The Pro Forma Statement of Operations has been prepared from the respective historical consolidated financial statements of HF Sinclair and H&T, adjusted to give effect to the Sinclair Transactions. The unaudited Pro Forma Condensed Combined Statement of Operations for the twelve months ended December 31, 2022 combines the historical consolidated statements of operations of HF Sinclair (which includes the historical results of operations of H&T from the HFC Closing Date through December 31, 2022) and H&T (which includes the historical results of operations from January 1, 2022 through March 13, 2022), giving effect to the Sinclair Transactions as if they had been consummated on January 1, 2021. The Pro Forma Statement of Operations contains certain reclassification adjustments to conform the historical H&T financial statement presentation to HF Sinclair’s financial statement presentation.
