Clark USA Inc. Secures Cash Deal with Occidental Petroleum Corp.

Strategic Insights -

Clark USA Inc. announced a strategic deal with Occidental Petroleum Corp. (Oxy) and Gulf Resources Corp., where it will receive cash instead of crude oil in exchange for equity positions and a $100 million cash commitment. The arrangement involves the transfer of approximately 21 million barrels of crude over six years, with Clark's existing bondholders to approve the financing through a $150 million private debt issue. The transactions will see Oxy take a 19% equity stake in Clark and Gulf Resources receive a 4% equity stake in return for the sales revenues of the crude barrels.

Key Takeaways:

  • Clark USA Inc. will receive approximately $100 million in cash from Occidental Petroleum Corp. and Gulf Resources Corp. in exchange for equity positions and a cash commitment.
  • The arrangement involves the transfer of approximately 21 million barrels of crude oil over six years, with Clark receiving the sales revenues from Oxy and Gulf Resources.
  • Clark will issue 6.68 million new common shares with a value of $146.9 million as part of the transactions, reducing the equity stake of its parent company Horsham Corp. to 46%.
  • Occidental Petroleum Corp. will take a 19% equity stake in Clark, while Gulf Resources will receive a 4% equity stake in return for the sales revenues of 3.34 million barrels of crude oil.
  • The transactions will involve a $150 million private debt issue to finance the deal, with existing bondholders to approve the financing.
  • Clark USA Inc. will use the proceeds of the private debt issue to finance the deal and complete the transactions.

Statistics:

  • Approximately 21 million barrels of crude oil will be transferred over six years as part of the deal.
  • $100 million in cash will be received by Clark USA Inc. from Occidental Petroleum Corp. and Gulf Resources Corp.
  • 6.68 million new common shares will be issued with a value of $146.9 million.
  • 19% equity stake will be taken by Occidental Petroleum Corp. in Clark USA Inc.
  • 4% equity stake will be received by Gulf Resources in return for the sales revenues of 3.34 million barrels of crude oil.

Sources:

  • Clark USA Inc. news release, Monday, [Source not provided]
  • Spokesman for Clark USA Inc., Tuesday, "actual cash stream from those crude barrels will be received" [Source not provided]
  • "Clark USA Inc. to Get Cash, Equity in Oil Deal", Bloomberg [Source: Bloomberg]