11% for the taking?...CVR Energy Enters Into Transaction Agreement With Carl Icahn
--Agreement Provides Additional Protections for CVR Energy Stockholders and Would
Permit Icahn's Tender Offer to Close if He Achieves Majority in Tender, Including
His Shares --CVR Energy Announces Updated Financial Information
SUGAR LAND, Texas, April 19, 2012 /PRNewswire via COMTEX/ -- CVR Energy, Inc.
(CVI), a refiner and marketer of petroleum fuels and a majority owner of CVR
Partners, LP (UAN), a nitrogen fertilizer producer, today announced that it has
signed a transaction agreement with Carl C. Icahn and certain entities under his
control that would permit Mr. Icahn to complete his tender offer for $30 in cash
per share plus a "contingent cash payment" right (CCP), if he obtains a majority
of the shares. The agreement also provides important protections for CVR Energy
stockholders. The Board initiated negotiations with Mr. Icahn after CVR Energy
stockholders recently indicated their support for a near-term transaction at $30
per share plus the CCP.
The Board is not recommending that stockholders tender into Mr. Icahn's offer and
continues to believe CVR Energy's potential long-term value exceeds $30 per
share. But the Board also understands, based on the results of Mr. Icahn's tender
offer on April 2, that many of the Company's stockholders may prefer to realize
value in the near term and would consider the offer, as revised, an attractive
near-term alternative. Accordingly, the Board has decided to permit CVR Energy
stockholders to determine whether or not they wish to sell their shares at the
price offered by Mr. Icahn.
If a majority of shares (taking into account those already owned by Mr. Icahn)
are not tendered into his offer, Mr. Icahn will terminate his offer and his
pending proxy contest for control of the CVR Energy Board of Directors.
Transaction Structure
The transaction agreement provides that:
Mr. Icahn will amend his existing tender offer within the next three business
days to eliminate or reduce certain conditions to the offer and will extend the
expiration date until 10 business days after the date of such amendment.
At the end of this 10-business day period, if the shares tendered into the
revised offer represent more than a majority of the outstanding shares when added
to those shares already owned by the Icahn entities (meaning approximately 36
percent of the company's outstanding shares tender into the offer), Mr. Icahn
will be permitted to complete his offer.
If the offer is completed, Mr. Icahn has agreed to immediately provide a
subsequent 10-business day offering period during which stockholders who did not
initially tender but do not wish to be stockholders in the company after the
change of control could tender any remaining outstanding shares for the same
offer price plus the CCP.
If at any time Mr. Icahn owns 90% of the outstanding shares, he will complete a
short-form merger under Delaware law pursuant to which all remaining outstanding
shares will be cancelled in exchange for receiving the same per share
consideration as paid in the tender offer plus the CCP.
Whether Mr. Icahn buys a stockholder's shares during the tender offer period or
during the subsequent offering period or as part of the short form merger, such
stockholder will receive $30 in cash plus a CCP right.
During the tender offer period, the company will be permitted to seek alternative
acquisition proposals but will not be permitted to terminate the agreement with
Mr. Icahn. Mr. Icahn has also agreed to continue to seek alternative acquisition
proposals, with the assistance of nationally recognized investment bankers, for
60 days beginning promptly after he completes his acquisition of majority control
of the company. Mr. Icahn also has committed to accept any cash offer at a price
equal to or greater than $35 per share, net of investment banking fees, during
that period. In the event of any subsequent sale, CVR Energy stockholders will
receive additional consideration in accordance with the terms of the CCP.
Agreement Includes Additional Stockholder Protections
The agreement, as structured, contains several protections for stockholders that
did not exist in Mr. Icahn's initial tender offer, including:
Reduced conditionality to the offer: The transaction agreement eliminates or
reduces many of the conditions to Mr. Icahn's offer and increases the certainty
of closing should the minimum tender percentage be reached.
Subsequent offering period: Minority stockholders who do not tender in the
initial offer period but who would prefer not to be stockholders in a company
controlled by Mr. Icahn will have an additional opportunity to sell their shares.
No forced sale: Stockholders will not be forced to sell their shares unless Mr.
Icahn acquires 90% of the outstanding shares.
Back-end merger: If Mr. Icahn acquires more than 90% of the outstanding shares as
a result of the tender offer or the subsequent offering period, he is required to
complete a merger transaction whereby all remaining stockholders will receive the
same per share consideration that they would have received if they had tendered
those shares into the offer.
Potential upside from a future sale: Stockholders who tender or whose shares are
cancelled and paid out in the short-form merger may receive additional
consideration pursuant to the CCP if the company is subsequently sold.
CVR Provides Additional Financial Information
CVR Energy today also announced preliminary results for the first quarter ended
March 31, 2012. Preliminary estimated sales for the quarter were $1.8 billion to
$2.1 billion compared to $1.167 billion for the three months ended March 31,
2011. Preliminary estimated operating income for the quarter was between $140
million and $150 million compared to operating income of $109.6 million for the
first quarter ended March 31, 2011. Results for the quarter were impacted by
several factors, including increases in crack spreads and beneficially wider
crude oil differentials, a shorter-than-planned turnaround at the Coffeyville
refinery and strong operating results from the Wynnewood refinery for the first
full quarter of operations as part of CVR Energy.
Coffeyville and Wynnewood both benefited from a positive operating environment.
The average NYMEX 2-1-1 crack spread increased 17 percent from $23.49 for the
fourth quarter of 2011 to $27.53 for the first quarter of 2012. During the
quarter, the Coffeyville refinery turnaround was completed ahead of schedule and
under budget. The refinery was fully operational by late March and is operating
at approximately 117,000 barrels per day of crude throughput as of April 17,
2012.
The first quarter of 2012 represented the first full quarter of operating our
Wynnewood refinery since acquiring it in December 2011. Our technical expertise
has already aided us in enhancing refinery operations as we increased refinery
capacity and optimized product yields with little incremental capital. For the
quarter the refinery averaged approximately 58,000 barrels per day of crude
throughput after the impact of a maintenance-related partial refinery shutdown
during the second half of January. The refinery was restored to full operations
in early February and is running crude throughput of approximately 69,000 barrels
per day as of April 17, 2012. Since acquiring the asset, synergies are on track
to be greater than initially estimated driven by stronger crude throughput,
beneficially wider crude oil differentials and enhanced unit rates and yields.
Wynnewood has also aided us in increasing our gathering business where we have
added 7,000 bpd in capacity.
Detailed documents describing the revised offer, the agreement with Mr. Icahn and
the company's position will be made available to stockholders by early next week
and will contain additional information about the company's financial performance
and prospects.
Forward Looking Statements |
