| Item 1.01. | Entry into a Material Definitive Agreement |
On August 29, 2018 (the “Execution Date”), Par Hawaii Refining, LLC (“PHR”), an indirect subsidiary of Par Pacific Holdings, Inc. (the “Company”) wholly-owned by Par Petroleum, LLC, entered into a Topping Unit Purchase Agreement (the “Purchase Agreement”) with IES Downstream, LLC, a Delaware limited liability company (the “Seller”), Eagle Island, LLC, a Delaware limited liability company and wholly owned subsidiary of the Seller (“Eagle”), and, solely for certain purposes specified in the Agreement, the Company. Pursuant to the Purchase Agreement, the Seller, following its announcement to cease its refining operations, agreed to contribute and transfer (the “Transfer”) certain of its refining units (the “Topping Units”) and related assets (the “Transferred Assets”) to Eagle and, following the Transfer, to sell all of the limited liability company interests of Eagle (the “Company Interests”) to PHR (the “Transaction”).
Set forth below are certain material terms of the Purchase Agreement.
Purchase Price. PHR has agreed to purchase the Company Interests for a purchase price equal to $45 million, payable in $30 million in cash at the closing of the Transaction and 860,502 shares (the “Base Shares”) of the Company’s common stock, par value $0.01 (the “Common Stock”). The purchase price will be adjusted by the value of hydrocarbon and certain nonhydrocarbon inventory at the closing, with the adjustment for the nonhydrocarbon inventory to be paid for by the issuance of up to 286,834 shares of Common Stock (the “Nonhydrocarbon Inventory Adjustment Shares” and, together with the Base Shares, the “Shares”), and for certain prorated expenses related to the ownership of the Topping Units and the Transferred Assets.
Closing Conditions. The closing of the Transaction is subject to certain closing conditions, including, among other things, (i) that no material adverse effect has occurred on the Topping Units or Transferred Assets since the Execution Date, and (ii) that the Seller has completed the separation of the refining units that it is retaining from the Topping Units. The closing of the Transaction will take place no later than the second business day following the satisfaction or waiver of the closing conditions contained in the Purchase Agreement, or on such other date to which the Seller and PHR may mutually agree, provided that, either the Seller or PHR may elect to terminate the Purchase Agreement if the closing shall not have occurred on or before February 22, 2019, provided that such terminating party is not then in material breach of the Purchase Agreement or whose breach is the primary cause of the failure to close.
Representations, Warranties and Covenants. The Purchase Agreement contains customary representations, warranties and covenants for a transaction of this type. The Purchase Agreement also contains certain covenants with respect to the period of time between the Execution Date and the closing of the Transaction.
Indemnification.The Seller and PHR have generally agreed to indemnify each other for breaches of the representations, warranties and covenants contained in the Purchase Agreement, subject to certain survival period limitations, deductibles, caps and mini-baskets. In addition, the Seller has agreed to indemnify PHR for certain excluded liabilities and PHR has agreed to indemnify the Seller for certain assumed liabilities.
Ancillary Agreements. In connection with the closing of the Transaction, the Seller and PHR and their respective affiliates will enter into a number of ancillary agreements, including a long-term agreement pursuant to which PHR will utilize the Seller’s retained logistics assets for the storage and throughput of crude oil and related products necessary for the operation of the Topping Units and the Transferred Assets.
| Item 3.02 | Unresgistered Sales of Equity Securities |
The information provided under Item 1.01 in this Current Report on Form8-K regarding the issuance of the Base Shares and the Nonhydrocarbon Inventory Adjustment Shares to Seller pursuant to the terms of the Purchase Agreement is incorporated by reference into this Item 3.02. No finders’ fees or commissions will be paid to any party in connection with the issuance of the Shares. The Shares will be issued by the Company in a private placement transaction in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.
| Item 7.01. | Regulation FD Disclosure. |
On the Execution Date, the Company issued a news release announcing the entry into the Purchase Agreement. The news release is filed as Exhibit 99.1 to this Form8-K, and is incorporated herein by reference.
On the Execution Date, the Company posted a presentation regarding the Transaction on the “Investor Relations” section of its website at www.parpacific.com. Information on the Company’s website or any other website is not incorporated by reference in this Current Report on Form8-K and does not constitute a part of this Current Report on Form8-K. The presentation materials are attached hereto as Exhibit 99.2 and incorporated herein by reference.
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