Clark USA Announces Merger Agreements with Occidental Petroleum and Gulf Resources

Strategic Insights -

Clark USA, Inc., a refining and marketing company, has announced two separate merger agreements that will result in Occidental Petroleum Corporation and Gulf Resources Corporation owning 19% and 4% of Clark's shares respectively. The agreements will enable Clark to acquire the right to receive approximately 21 million barrels of crude oil over the next six years in exchange for $100 million of cash and the issuance of 6,676,818 new common shares with a value of $146.9 million. This move is expected to improve Clark's balance sheet and strengthen its equity base, allowing the company to pursue investment opportunities and continue to grow its business.

Key Takeaways:

  • Clark USA, Inc. has announced two merger agreements with Occidental Petroleum Corporation and Gulf Resources Corporation, which will result in the companies owning 19% and 4% of Clark's shares respectively.
  • The agreements will enable Clark to acquire the right to receive approximately 21 million barrels of crude oil over the next six years in exchange for $100 million of cash and the issuance of 6,676,818 new common shares with a value of $146.9 million.
  • The transactions will improve Clark's balance sheet and strengthen its equity base, allowing the company to pursue investment opportunities and continue to grow its business.
  • Clark intends to finance the cash portion of the proposed transactions with the proceeds of a long-term $150 million private financing.
  • The mergers and the financing will require the consent of Clark's existing zero coupon bondholders and certain other customary approvals.
  • The company's existing equity holder, The Horsham Corporation, will have its ownership reduced to 46% as a result of the agreements.

Statistics:

  • 19%: the percentage of Clark USA, Inc.'s shares that Occidental Petroleum Corporation will own after the merger.
  • 4%: the percentage of Clark USA, Inc.'s shares that Gulf Resources Corporation will own after the merger.
  • 21 million: the number of barrels of crude oil that Clark USA, Inc. will acquire over the next six years.
  • $100 million: the cash payment made by Clark USA, Inc. in exchange for the crude oil.
  • $146.9 million: the value of the 6,676,818 new common shares issued by Clark USA, Inc. in exchange for the crude oil.

Sources:

  • Clark USA Inc.'s press release, dated November 6, 1995
  • Clark USA Inc.'s investor relations contact, Bruce Steinke, 314-854-1424
  • Clark USA Inc.'s media relations contact, Krista Shepard, 314-854-9631
  • Occidental Petroleum Corporation's stock symbol, NYSE: OXY
  • Gulf Resources Corporation's stock symbol, NYSE: (not specified)
  • The Horsham Corporation's stock symbol, NYSE: HSM