CVR Energy Inc. announced June 18 the commencement of an exchange offer to acquire common units of its refining master limited partnership, with the offer set to expire at 5 p.m. ET on July 27.
The exchange offer reflects terms announced by CVR Energy on May 29.
Through the deal, CVR Energy and its affiliates, including Icahn Enterprises LP, are seeking control of at least 80% of the common units of CVR Refining LP.
At or above that threshold, the general partner and its affiliates have the option to purchase all outstanding units of the MLP owned by unaffiliated entities.
CVR Energy said it does not have immediate plans to exercise that option.
The exchange offer gives CVR Energy's MLP unit holders the option to hold their investment in the form of common stock rather than partnership interests as U.S. tax reform has driven investors to favor C corporations, which unlike MLPs are taxed separately from their owners under U.S. law.
Based on the respective June 15 closing price of CVR Energy and CVR Refining of $38.29 per common share and $22.95 per common unit, the exchange ratio of one common unit of CVR Refining for 0.6335 share of CVR Energy common stock values CVR Energy at $24.26 per common unit, a 5.7% premium over the June 15 closing price.
CVR Energy noted the value of the exchange offer will change as the market prices of CVR Energy and CVR Refining equities fluctuate during the offer period.