Par Pacific Announces New Intermediation Financing Agreement and Confirms Increase in ABL Commitments to up to $1.4 billion
Par Pacific has announced a new crude-only intermediation financing agreement with Citigroup Energy to supply crude oil to its Hawaii refinery. The company also terminated a previous supply agreement with J. Aron & Company. Additionally, Par Pacific confirmed an increase in lender commitments under its asset-based revolving credit facility to up to $1.4 billion, based on added collateral assets in Hawaii, including refined product inventory and accounts receivable. All changes became effective on May 31, 2024.
- New crude-only intermediation financing agreement with Citigroup Energy ensures a stable crude oil supply for the Kapolei, Hawaii refinery.
- Termination of the previous supply agreement with J. Aron & Company could streamline operations.
- Increase in lender commitments under the ABL to up to $1.4 billion, enhancing liquidity.
- Addition of refined product inventory and accounts receivable as collateral strengthens the borrowing base.
- Potential risks involved with transitioning to a new intermediation agreement with Citi.
- Dependence on added collateral assets in Hawaii for increased ABL commitments could expose the company to regional risks.
Insights
Par Pacific’s announcement of a new intermediation financing agreement with Citigroup Energy Inc. is significant in several ways. Firstly, the termination of the previous agreement with J. Aron & Company LLC suggests that Par Pacific has found more favorable terms or conditions with Citi, which could potentially improve their cash flow situation and reduce financing costs. This would be a positive development for the company’s liquidity and operational efficiency.
The increase in the asset-based revolving credit facility (ABL) to up to
For a retail investor, these moves indicate that Par Pacific is actively managing its financial operations to ensure stability and growth. However, it also means that the company is reliant on external financing to support its operations, which could be seen as a risk factor if market conditions change unfavorably. The net impact of these financial maneuvers would likely depend on how effectively the company utilizes the newly available funds.
The new intermediation agreement and the increase in ABL commitments can also have broader market implications. By securing a crude supply agreement with Citi, Par Pacific ensures a stable supply chain for its refinery operations in Hawaii. This agreement might also offer cost advantages or better credit terms, which could improve the company’s competitive positioning in the refining market.
The market typically views such strategic financing agreements as a sign of proactive management. Par Pacific’s ability to negotiate these terms may be seen as a vote of confidence from financial institutions in the company’s future prospects. However, the company’s dependency on such agreements could be a double-edged sword. If future market conditions were to change, leading to tighter credit markets or increased cost of borrowing, Par Pacific could face challenges in maintaining its operational efficiencies.
Retail investors should consider the potential benefits of improved cash flow and operational stability against the risks of increased financial leverage and market dependency. These factors will likely influence the company's stock performance in both the short and long term, depending on how they navigate these financial arrangements.
HOUSTON, June 05, 2024 (GLOBE NEWSWIRE) -- Par Pacific Holdings, Inc. (NYSE: PARR) (“Par Pacific”) today announced a new, crude-only intermediation financing agreement (the “Intermediation Agreement”) between its subsidiary Par Hawaii Refining, LLC (“Par Hawaii”) and Citigroup Energy Inc. (“Citi”). Pursuant to the Intermediation Agreement, Citi will purchase and deliver crude oil to Par Hawaii for use at its refinery located in Kapolei, Hawaii. Par Pacific also announced the termination of the Second Amended and Restated Supply and Offtake Agreement between J. Aron & Company LLC and Par Hawaii.
Additionally, Par Pacific confirmed the previously announced increase in lender commitments under its existing asset-based revolving credit facility (“ABL”) to up to
The new Intermediation Agreement, the termination of Par Pacific’s previous intermediation financing facility, and the increase in lender commitments and addition of certain collateral assets to the borrowing base of the ABL each became effective on May 31, 2024.
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. Par Pacific owns and operates 219,000 bpd of combined refining capacity across four locations in Hawaii, the Pacific Northwest and the Rockies, and an extensive energy infrastructure network, including 13 million barrels of storage, and marine, rail, rack, and pipeline assets. In addition, Par Pacific operates the Hele retail brand in Hawaii and the “nomnom” convenience store chain in the Pacific Northwest. Par Pacific also owns
For more information contact:
Ashimi Patel
VP, Investor Relations and Sustainability
(832) 916-3355
apatel@parpacific.com
FAQ
What is the new intermediation financing agreement announced by Par Pacific?
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