Alon USA Partners, LP - FORM 8-K - EX-99.2 - November 12, 2014

Attached files

file filename
8-K - FORM 8-K - Alon USA Partners, LPd820170d8k.htm
EX-2.1 - EX-2.1 - Alon USA Partners, LPd820170dex21.htm
EX-99.1 - EX-99.1 - Alon USA Partners, LPd820170dex991.htm
EX-99.5 - EX-99.5 - Alon USA Partners, LPd820170dex995.htm
EX-99.3 - EX-99.3 - Alon USA Partners, LPd820170dex993.htm
EX-99.4 - EX-99.4 - Alon USA Partners, LPd820170dex994.htm

Exhibit 99.2

ALON USA PARTNERS, LP AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS INTRODUCTION

(dollars in thousands)

The unaudited pro forma financial statements of Alon USA Partners, LP and subsidiaries have been derived from the historical consolidated financial statements of Alon USA Partners, LP (the “Partnership”) and from the historical financial statements of Alon Refining Krotz Springs, Inc. (“Alon Krotz Springs”). The unaudited pro forma consolidated financial statements give effect to the following transactions (the “Transactions”):

 

  •   the contribution by Alon USA Energy, Inc. (“Alon Energy”) of its equity interests in Alon Krotz Springs, which will be converted into a limited liability company, to the Partnership for total consideration of $437,500, consisting of $100,000 in cash to Alon Energy and the issuance of 17,980,820 common units of the Partnership to Alon Energy;

 

  •   the application of the $450,000 proceeds received from the issuance of senior notes offered hereby as described in “Use of Proceeds,” including the repayment of $245,625, and a prepayment premium of $4,913, relating to the Partnership’s term loan facility and the repayment of $50,000 outstanding under the Partnership’s revolving credit facility;

 

  •   the payment of debt issuance costs of $8,500;

 

  •   the contribution of the Alon Krotz Springs related party accounts payable balance of $231,708 prior to or in connection with the closing of this offering; and

 

  •   the repurchase of Alon Krotz Springs notes during the nine months ended September 30, 2014.

The pro forma adjustments have been prepared as if the Transactions had taken place as of September 30, 2014, in the case of the pro forma consolidated balance sheet, and as of January 1, 2013, in the case of the pro forma consolidated statements of operations for the year ended December 31, 2013 and for the nine months ended September 30, 2014 and 2013. The unaudited pro forma consolidated statement of operations for all periods presented exclude the effect of the write-off of unamortized debt issuance costs on the term loan facility because they are non-recurring changes directly related to the transaction.

The pro forma adjustments are based upon currently available information and certain estimates and assumptions; therefore, actual results may differ from the pro forma adjustments. Management believes that these assumptions provide a reasonable basis for presenting the significant effects of the Transactions, are factually supportable, directly attributable, and are expected to have a continuing impact on profit and loss and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the pro forma consolidated financial information.

The unaudited pro forma consolidated financial statements of the Partnership are not necessarily indicative of the results that actually would have occurred if the Partnership had completed the Transactions during the periods presented.

The Partnership’s acquisition of Alon Krotz Springs from Alon Energy represents a sale of assets between entities under common control. Alon Energy is the indirect owner of the Partnership’s general partner.

 

1

ALON USA PARTNERS, LP AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS

As of September 30, 2014

(dollars in thousands)

 

     Alon USA
Partners, LP		      Alon Krotz
Springs		     Pro Forma
Adjustments		     Alon USA
Partners, LP
Pro Forma		  
ASSETS          

Current assets:

          

Cash and cash equivalents

    $ 115,295       $ 392      $ 40,962 (a)    $ 156,649   

Accounts and other receivables, net

      108,524         43,478        —        152,002   

Accounts and other receivables, net—related parties

      15,212         —        —        15,212   

Inventories

      58,815         49,687        —        108,502   

Prepaid expenses and other current assets

      12,129         1,158        —        13,287   
  

 

 

     

 

 

    

 

 

    

 

 

  

Total current assets

      309,975         94,715        40,962        445,652   
  

 

 

     

 

 

    

 

 

    

 

 

  

Property, plant and equipment, net

      452,489         324,850        —        777,339   

Other assets, net

      79,971         16,803        3,878 (b)      100,652   
  

 

 

     

 

 

    

 

 

    

 

 

  

Total assets

    $ 842,435       $ 436,368      $ 44,840      $ 1,323,643   
  

 

 

     

 

 

    

 

 

    

 

 

  
LIABILITIES AND PARTNERS’ EQUITY          

Current liabilities:

          

Accounts payable

    $ 257,598       $ 293,479      $ (231,708 )(c)    $ 319,369   

Accrued liabilities

      39,081         29,337        —        68,418   

Current portion of long-term debt

      2,500         —        (2,500 )(d)      —   
  

 

 

     

 

 

    

 

 

    

 

 

  

Total current liabilities

      299,179         322,816        (234,208 )      387,787   
  

 

 

     

 

 

    

 

 

    

 

 

  

Other non-current liabilities

      42,870         33,504        —        76,374   

Long-term debt

      290,358         —        159,642 (d)      450,000   
  

 

 

     

 

 

    

 

 

    

 

 

  

Total liabilities

      632,407         356,320        (74,566 )      914,161   
  

 

 

     

 

 

    

 

 

    

 

 

  

Commitments and contingencies

          

Partners’ equity:

          

General Partner

      —         —        —        —   

Common unitholders

      210,028         —        178,697 (e)      388,725   

Additional paid-in capital

      —         388,881        (388,881 )(f)      —   

Accumulated other comprehensive income

      —         20,757        —        20,757   

Retained deficit

      —         (329,590 )      329,590 (f)      —   
  

 

 

     

 

 

    

 

 

    

 

 

  

Total partners’ equity

      210,028         80,048        119,406        409,482   
  

 

 

     

 

 

    

 

 

    

 

 

  

Total liabilities and partners’ equity

    $ 842,435       $ 436,368      $ 44,840      $ 1,323,643   
  

 

 

     

 

 

    

 

 

    

 

 

  

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

 

2

ALON USA PARTNERS, LP AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the Nine Months Ended September 30, 2014

(dollars in thousands except per unit data)

 

     Alon USA
Partners, LP		     Alon Krotz
Springs		     Pro Forma
Adjustments		     Alon USA
Partners, LP
Pro Forma		  

Net sales

    $ 2,421,194      $ 2,198,795      $ —      $ 4,619,989   

Operating costs and expenses:

         

Cost of sales

      2,125,775        2,038,913        —        4,164,688   

Direct operating expenses

      79,816        78,477        —        158,293   

Selling, general and administrative expenses

      19,505        6,320        —        25,825   

Depreciation and amortization

      33,427        20,421        —        53,848   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating costs and expenses

      2,258,523        2,144,131        —        4,402,654   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      162,671        54,664        —        217,335   

Interest expense

      (34,477 )      (22,476 )      311 (g)      (56,642 ) 

Other income, net

      627        9        —        636   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income before state income tax expense

      128,821        32,197        311        161,329   

State income tax expense

      1,785        —        —        1,785   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 127,036      $ 32,197      $ 311      $ 159,544   
  

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per unit

    $ 2.03          $ 1.98   
  

 

 

        

 

 

  

Weighted average common units outstanding (in thousands)

      62,505          17,981 (h)      80,486   
  

 

 

      

 

 

    

 

 

  

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

 

3

ALON USA PARTNERS, LP AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the Nine Months Ended September 30, 2013

(dollars in thousands except per unit data)

 

     Alon USA
Partners, LP		     Alon Krotz
Springs		     Pro Forma
Adjustments		     Alon USA
Partners, LP
Pro Forma		  

Net sales

    $ 2,551,763      $ 1,935,959      $ —      $ 4,487,722   

Operating costs and expenses:

         

Cost of sales

      2,261,948        1,827,164        —        4,089,112   

Direct operating expenses

      84,017        72,871        —        156,888   

Selling, general and administrative expenses

      16,864        6,448        —        23,312   

Depreciation and amortization

      34,282        19,328        —        53,610   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating costs and expenses

      2,397,111        1,925,811        —        4,322,922   
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss on disposition of assets

      (21 )      —        —        (21 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      154,631        10,148        —        164,779   

Interest expense

      (30,489 )      (33,291 )      19,787 (g)      (43,993 ) 

Other income, net

      18        9        —        27   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income (loss) before state income tax expense

      124,160        (23,134 )      19,787        120,813   

State income tax expense

      1,434        —        —        1,434   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss)

    $ 122,726      $ (23,134 )    $ 19,787      $ 119,379   
  

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per unit

    $ 1.96          $ 1.48   
  

 

 

        

 

 

  

Weighted average common units outstanding (in thousands)

      62,502          17,981 (h)      80,483   
  

 

 

      

 

 

    

 

 

  

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

 

4

ALON USA PARTNERS, LP AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended December 31, 2013

(dollars in thousands except per unit data)

 

     Alon USA
Partners, LP		     Alon Krotz
Springs		     Pro Forma
Adjustments		     Alon USA
Partners, LP
Pro Forma		  

Net sales

    $ 3,430,287      $ 2,680,112      $ —      $ 6,110,399   

Operating costs and expenses:

         

Cost of sales

      3,073,044        2,510,720        —        5,583,764   

Direct operating expenses

      110,940        96,570        —        207,510   

Selling, general and administrative expenses

      22,276        8,870        —        31,146   

Depreciation and amortization

      45,329        26,565        —        71,894   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating costs and expenses

      3,251,589        2,642,725        —        5,894,314   
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss on disposition of assets

      (21 )      —        —        (21 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      178,677        37,387        —        216,064   

Interest expense

      (40,474 )      (48,535 )      30,470 (g)      (58,539 ) 

Other income, net

      23        10        —        33   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income (loss) before state income tax expense

      138,226        (11,138 )      30,470        157,558   

State income tax expense

      2,004        —        —        2,004   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss)

    $ 136,222      $ (11,138 )    $ 30,470      $ 155,554   
  

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per unit

    $ 2.18          $ 1.93   
  

 

 

        

 

 

  

Weighted average common units outstanding (in thousands)

      62,502          17,981 (h)      80,483   
  

 

 

      

 

 

    

 

 

  

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

 

5

ALON USA PARTNERS, LP AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands)

 

(1) Organization and Basis of Presentation

The unaudited pro forma consolidated financial statements present the impact on our financial position and results of operations of the following transactions:

 

  •   the contribution by Alon Energy of its equity interests in Alon Krotz Springs, which will be converted into a limited liability company, to the Partnership for total consideration of $437,500, consisting of $100,000 in cash to Alon Energy and the issuance of 17,980,820 common units of the Partnership to Alon Energy;

 

  •   the application of the $450,000 proceeds received from the issuance of senior notes offered hereby as described in “Use of Proceeds,” including the repayment of $245,625, and a prepayment premium of $4,913, relating to the Partnership’s term loan facility and the repayment of $50,000 outstanding under the Partnership’s revolving credit facility;

 

  •   the payment of debt issuance costs of $8,500;

 

  •   the contribution of the Alon Krotz Springs related party accounts payable balance of $231,708 prior to or in connection with the closing of this offering; and

 

  •   the repurchase of Alon Krotz Springs notes during the nine months ended September 30, 2014.

The unaudited pro forma consolidated financial statements have been prepared based on certain pro forma adjustments to our historical consolidated financial statements. The pro forma adjustments have been prepared as if the Transactions had taken place as of September 30, 2014, in the case of the pro forma consolidated balance sheet, and as of January 1, 2013, in the case of the pro forma consolidated statements of operations for the year ended December 31, 2013 and for the nine months ended September 30, 2014 and 2013. The pro forma consolidated financial statements include financial data related to the acquisition of Alon Krotz Springs at historical cost as this transaction represents a sale of assets between entities under common control. The unaudited pro forma consolidated financial statements should be read in conjunction with the accompanying notes and with the historical consolidated financial statements and related notes thereto. Pro forma adjustments are discussed below under Note 2, Pro Forma Adjustments and Assumptions.

The pro forma adjustments are based upon currently available information and certain estimates and assumptions; therefore actual results may differ from the pro forma adjustments. Management believes that these assumptions provide a reasonable basis for presenting the significant effects of the Transactions, are factually supportable, directly attributable, and are expected to have a continuing impact on profit and loss and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the pro forma consolidated financial information.

The unaudited pro forma consolidated financial statements of the Partnership are not necessarily indicative of the results that actually would have occurred if the Partnership had completed the Transactions during the periods presented.

 

6

ALON USA PARTNERS, LP AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(dollars in thousands)

 

(2) Pro Forma Adjustments and Assumptions

A general description of these pro forma adjustments follows:

 

  (a) Reflects the changes in the cash and cash equivalents balance as of September 30, 2014 giving effect to the Transactions described in Note (1) as if they occurred on September 30, 2014 as follows:

 

     As of
September 30,
2014		  

Proceeds from the issuance of senior notes offered hereby

    $ 450,000   

Less:

   

Debt issuance costs

      (8,500 ) 

Repayment of the Partnership term loan facility

      (245,625 ) 

Prepayment premium for early repayment of the Partnership term loan facility

      (4,913 ) 

Repayment of the Partnership revolving credit facility

      (50,000 ) 

Cash consideration paid to Alon Energy for Alon Krotz Springs

      (100,000 ) 
  

 

 

  

Subtotal

      (409,038 ) 
  

 

 

  

Net change in cash and cash equivalents

    $ 40,962   
  

 

 

  

 

  (b) Reflects the pro forma adjustment for debt issuance costs of $8,500 related to the $450,000 senior notes offered hereby, as well as $4,622 for the write-off of unamortized debt issuance costs related to the Partnership’s term loan facility.

 

  (c) Reflects the pro forma adjustment for the contribution of the Alon Krotz Springs related party accounts payable balance of $231,708 to common unitholders’ equity in connection with our acquisition of Alon Krotz Springs. Refer to item (e).

 

  (d) Reflects the pro forma adjustment for the issuance of $450,000 senior notes offered hereby and the repayment of $245,625, net of $2,767 of unamortized original issuance discount, of the Partnership’s term loan facility and the repayment of $50,000 outstanding under the Partnership’s revolving credit facility.

 

  (e) Reflects the changes in the common unitholders’ equity balance as of September 30, 2014 giving effect to the Transactions described in Note (1) as if they occurred on September 30, 2014 as follows:

 

     As of
September 30,
2014		  

Contribution of the Alon Krotz Springs related party accounts payable balance

    $ 231,708   

Total stockholders’ equity of Alon Krotz Springs

      80,048   

Accumulated other comprehensive income of Alon Krotz Springs

      (20,757 ) 

Write-off of unamortized debt issuance costs on the Partnership term loan facility

      (4,622 ) 

Prepayment premium for early repayment of the Partnership term loan facility

      (4,913 ) 

Write-off of unamortized original issuance discount on the Partnership term loan facility

      (2,767 ) 

Cash consideration paid to Alon Energy for Alon Krotz Springs

      (100,000 ) 
  

 

 

  

Net change in common unitholders’ equity

    $ 178,697   
  

 

 

  

 

7

ALON USA PARTNERS, LP AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(dollars in thousands)

 

  (f) Reflects the pro forma adjustment to eliminate the Alon Krotz Springs additional paid-in capital and retained deficit balances. Refer to item (e).

 

  (g) Reflects the pro forma adjustment for interest expense related to the $450,000 senior notes offered hereby at an assumed rate of 7.00% per annum and the amortization of debt issuance costs of $8,500, amortized on a straight line basis over an eight-year period. A one-eighth percent change in interest rate would result in an approximately $0.6 million change in annual interest expense. This pro forma adjustment also reduces the historical interest expense charged on obligations that were either repaid in full during the pro forma period or will be repaid in full using proceeds from this offering. These pro forma adjustments are summarized below:

 

     For the Nine Months Ended
September 30,		     For the Year
Ended
December 31,
2013		  
             2014                     2013            

Reduction in interest expense on Alon Krotz Springs notes

    $ 6,333      $ 25,684      $ 38,295   

Reduction in interest expense on the Partnership term loan facility

      18,400        18,525        24,738   

Interest expense on senior notes offered hereby

      (23,625 )      (23,625 )      (31,500 ) 

Amortization of debt issuance costs on senior notes offered hereby

      (797 )      (797 )      (1,063 ) 
  

 

 

    

 

 

    

 

 

  

Total interest expense adjustments

    $ 311      $ 19,787      $ 30,470   
  

 

 

    

 

 

    

 

 

  

 

  (h) Reflects the pro forma amount of Partnership common units to be issued to Alon Energy in connection with our acquisition of Alon Krotz Springs, which was determined based on a volume weighted average price per unit of $18.77 for the ten day period ending November 10, 2014.

 

8

Alon USA Partners, LP Reports