HollyFrontier 2013 Annual Report Download - page 83

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75
NOTE 12: Debt
HollyFrontier Credit Agreement
We have a $1 billion senior secured credit agreement that matures in July 2016 (the “HollyFrontier Credit Agreement”) and may
be used to fund working capital requirements, capital expenditures, acquisitions and general corporate purposes. Obligations under
the HollyFrontier Credit Agreement are collateralized by our inventory, accounts receivable and certain deposit accounts and
guaranteed by our material, wholly-owned subsidiaries. At December 31, 2013, we were in compliance with all covenants, had
no outstanding borrowings and had outstanding letters of credit totaling $5.2 million under the HollyFrontier Credit Agreement.
HEP Credit Agreement
In November 2013, HEP amended its senior secured credit agreement increasing the size of the credit facility from $550 million
to $650 million (the “HEP Credit Agreement”). The HEP Credit Agreement matures in November 2018 and is available to fund
capital expenditures, investments, acquisitions, distribution payments and working capital and for general partnership purposes.
It is also available to fund letters of credit up to a $50 million sub-limit. At December 31, 2013, HEP was in compliance with all
its covenants, had outstanding borrowings of $363.0 million and no outstanding letters of credit under the HEP Credit Agreement.
Indebtedness under the HEP Credit Agreement bears interest, at their option, at either a reference rate announced by the
administrative agent plus an applicable margin or at a rate equal to LIBOR plus an applicable margin. In each case, the applicable
margin is based upon the ratio of HEP’s funded debt to earnings before interest, taxes, depreciation and amortization (as defined
in the HEP Credit Agreement). The interest rates in effect on HEP’s Credit Agreement borrowings were 2.163% and 2.456% at
December 31, 2013 and 2012, respectively.
HEP’s obligations under the HEP Credit Agreement are collateralized by substantially all of HEP’s assets (presented parenthetically
in our consolidated balance sheets). Indebtedness under the HEP Credit Agreement involves recourse to HEP Logistics Holdings,
L.P., its general partner, and is guaranteed by HEP’s wholly-owned subsidiaries. Any recourse to the general partner would be
limited to the extent of HEP Logistics Holdings, L.P.’s assets, which other than its investment in HEP, are not significant. HEP’s
creditors have no recourse to our other assets. Furthermore, our creditors have no recourse to the assets of HEP and its consolidated
subsidiaries.
HollyFrontier Senior Notes
Our 6.875% senior notes ($150.0 million principal amount maturing November 2018) (the “HollyFrontier Senior Notes”) are
unsecured and impose certain restrictive covenants, including limitations on our ability to incur additional debt, incur liens, enter
into sale-and-leaseback transactions, pay dividends, enter into mergers, sell assets and enter into certain transactions with affiliates.
Additionally, we have certain redemption rights under the HollyFrontier Senior Notes.
At any time, following notice to the trustee, that the HollyFrontier Senior Notes are rated investment grade by both Moody's and
Standard & Poor's and no default or event of default exists, we are not subject to many of the foregoing covenants (a "Covenant
Suspension"). As of December 31, 2013, the HollyFrontier Senior Notes were rated investment grade (BBB-) by Standard & Poor's
and also investment grade (Baa3) by Moody's. As a result, we are under the Covenant Suspension pursuant to the terms of the
indenture governing the HollyFrontier Senior Notes.
In June 2013, we redeemed our $286.8 million aggregate principal amount of 9.875% senior notes maturing June 2017 at a
redemption cost of $301.0 million, at which time we recognized a $22.1 million early extinguishment loss consisting of a $14.2
million debt redemption premium and an unamortized discount of $7.9 million.
In September 2012, we redeemed our $200 million aggregate principal amount of 8.5% senior notes maturing September 2016 at
a redemption price of $208.5 million.
HollyFrontier Financing Obligation
We have a financing obligation that relates to a sale and lease-back of certain crude oil tankage that we sold to an affiliate of Plains
All American Pipeline, L.P. (“Plains”) in October 2009 for $40.0 million. Monthly lease payments are recorded as a reduction in
principal over the 15-year lease term ending in 2024.
Table of Contents HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued