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76
HEP Senior Notes
HEP’s senior notes consist of the following:
• 8.25% HEP senior notes ($150 million principal amount maturing March 2018)
• 6.5% HEP senior notes ($300 million principal amount maturing March 2020)
In March 2012, HEP issued $300 million in an aggregate principal amount of 6.5% HEP senior notes maturing March 2020. The
$294.8 million in net proceeds were used to repay $157.8 million aggregate principal amount of 6.25% HEP senior notes, $72.9
million in promissory notes due to HollyFrontier, related fees, expenses and accrued interest in connection with these transactions
and to repay borrowings under the HEP Credit Agreement. In April 2012, HEP called for redemption the remaining $27.2 million
aggregate principal amount outstanding of 6.25% HEP senior notes.
The 8.25% and 6.5% HEP senior notes (collectively, the “HEP Senior Notes”) are unsecured and impose certain restrictive
covenants, including limitations on HEP’s ability to incur additional indebtedness, make investments, sell assets, incur certain
liens, pay distributions, enter into transactions with affiliates, and enter into mergers. At any time when the HEP Senior Notes are
rated investment grade by both Moody’s and Standard & Poor’s and no default or event of default exists, HEP will not be subject
to many of the foregoing covenants. Additionally, HEP has certain redemption rights under the HEP Senior Notes. On February
12, 2014, HEP announced that it will redeem all of its outstanding 8.25% senior notes. The redemption price will be equal to
104.125% of the principal amount for a total payment to the holders of the notes of approximately $156.2 million plus accrued
interest. The redemption of the 8.25% senior notes is scheduled to occur on March 15, 2014. HEP plans to fund the redemption
with borrowings under the HEP Credit Agreement.
Indebtedness under the HEP Senior Notes involves recourse to HEP Logistics Holdings, L.P., its general partner, and is guaranteed
by HEP’s wholly-owned subsidiaries. However, 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 other recourse to our
assets. Furthermore, our creditors have no recourse to the assets of HEP and its consolidated subsidiaries.
The carrying amounts of long-term debt are as follows:
December 31,
2013 2012
(In thousands)
9.875% Senior Notes
Principal $ — $ 286,812
Unamortized discount — (7,468)
— 279,344
6.875% Senior Notes
Principal 150,000 150,000
Unamortized premium 5,054 5,910
155,054 155,910
Financing Obligation 34,835 36,311
Total HollyFrontier long-term debt 189,889 471,565
Table of Contents HOLLYFRONTIER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Continued