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| El Paso-owned and proud |
Sep. 5 - Sep. 11
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Western will offer stock to repay debt
By Ryan Poulos El Paso Inc. Austin Bureau |
AUSTIN – El Paso-based Western Refining (NYSE: WNR) announced plans to offer concurrently about $600 million in senior secured notes, due in 2017, and about $100 million of convertible senior notes, due in 2014.
In finance, senior debt – frequently issued in the form of a senior note – is a debt that takes priority over other unsecured debt owed by the issuer.
The El Paso refinery also said it will offer 14-million common shares and that it will use net proceeds from the offerings to repay debt under its term loan credit agreement.
In a federal filing Monday, Western also estimated that its second-quarter operating income will range from $5 million to $25 million.
For the second quarter of 2008, Western reported a net income of $8.2 million, a 94-percent decrease compared with the same period in 2007.
Officials with Western Refining said they couldn’t make any comment due to strict Securities and Exchange Commission rules.
But according to Ann Kohler, a Caris & Co. analyst recently quoted in the Wall Street Journal, Western was forced to offer the debt and equity because it has been unable to sell its Yorktown, Va., refinery.
“They really need to escape the clutches of those covenants,” she said. “Their inability to sell their assets really forced them into this mode.”
Western put the 63,000-barrel-a-day refinery on sale last year, but has been unable to find a buyer during the economic downturn.
Most of Western’s debt covenants stem from the acquisition of the Yorktown refinery and two others from Giant Industries in 2007. In addition to the El Paso and Yorktown plants, Western operates two refineries in New Mexico.
Western stock closed Friday at $8.53.
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