Table of Contents
CVR Energy Inc., the oil refiner controlled by American billionaire Carl Icahn, raised $500 million by selling new shares at a 15% discount to help pay for its $4.2 billion purchase of two refineries from Marathon Petroleum Corp.
The company priced 10,515,248 shares at $47.55 each, it said on Nov. 4. That is 15% below the $55.92 at which the stock closed on Nov. 2, the day before the deal and the offering were announced. CVR expects net proceeds of about $490 million after fees, and the sale is due to close on Nov. 5. Barclays and Jefferies are running the offering, and the underwriters have 30 days to buy up to 1,577,287 more shares from the company.
The final deal is smaller than the one CVR launched on Nov. 3. That plan called for a $750 million sale, with $500 million of new shares from CVR and $250 million of existing stock from IEP Energy Holding LLC, a unit of Icahn's holding company, Icahn Enterprises LP. The priced offering includes no shares from IEP Energy Holding, so Icahn's group keeps its stock.
CVR shares fell nearly 13% on Nov. 3 as investors weighed the cost of the acquisition and the dilution from new stock.
Icahn's backstop
Raising $500 million also ends a pledge by Icahn Enterprises to buy up to $500 million of CVR's mandatory convertible preferred stock. That commitment shrank dollar for dollar with any money CVR raised from selling common shares and lapses once such a sale brings in at least $500 million. Chief Executive Officer Ted Papapostolou had told investors on Nov. 3 that he did not expect the backstop to be needed.
CVR will use the money, along with cash on hand, about $2.5 billion of new secured debt and an $800 million preferred share investment from commodities trader Trafigura, to buy the St. Paul Park refinery in Minnesota and the Mandan refinery in North Dakota, together with a wholesale fuel business. It will also redeem its 5.750% notes due 2028. The purchase would lift CVR's refining capacity to about 384,000 barrels a day from about 207,000 barrels and is expected to close by the end of the year.
Icahn Enterprises and its affiliates, including Icahn, owned about 71% of CVR at the end of September. Icahn, 90, took control of the Sugar Land, Texas-based refiner in 2012. Forbes estimated his fortune at $4.2 billion in September.
The intelligence satisfies curiosity. The paid briefings satisfy strategy.
Every Monday, Elite subscribers receive an Investor Memo breaking down the deal, the structure and the positioning behind the week's most consequential African wealth story — the kind of analysis that doesn't appear anywhere else.
Twice a month, a Wealth Intelligence brief profiles a single billionaire's holdings, cash flows and expansion pipeline in detail no public source matches.
→ Executive ($25/mo): Daily newsletter + Deep-Dive Reports
→ Elite ($75/mo): Everything above + Investor Memos + Wealth Intelligence + Quarterly Analyst Briefings
Subscribe now
