Holly Energy Partners LP (NYSE: HEP) on Aug. 10 said it had agreed to pay $250 million for interests in two pipelines in the western U.S. that will bolster forecast annual EBITDA by $23 million.
By purchasing a 50% interest in Frontier Aspen LLC, owner of the Frontier Aspen Pipeline; and a 75% interest in the SLC Pipeline LLC, owner of the Salt Lake City Pipeline, from affiliates of Plains All American Pipeline LP (NYSE: PAA), the company will make the units wholly owned subsidiaries following completion of the transactions
Frontier Aspen, a 289-mile crude pipeline that connects Casper, Wyo., to Frontier Station, Utah, supplies Canadian and Rocky Mountain crudes to Salt Lake City area refiners through a connection to the SLC Pipeline. The Salt Lake City Pipeline is a 95-mile line that transports oil into the Salt Lake City area from the Utah terminal of the Frontier Pipeline and from Wahsatch station.
The closing of each transaction is conditioned on the closing of the other transaction. Holly Energy expects to finance the deal with a combination of debt and equity. The general partner of Holly Energy will waive its incentive distribution rights for three years following the closing on any new units issued in connection with the financing of the acquisitions. Holly Energy said it anticipates the acquisitions will be immediately accretive to its unitholders.
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