HOUSTON - Par Pacific Holdings, Inc. (NYSE:PARR) has announced its intention to reprice its existing term loan credit agreement, which is anticipated to result in reduced interest rates and annual cash savings. The amendment to the term loan, due in 2030, is expected to lower the Applicable Margin by 50 basis points, setting the base rate loans at 2.75% plus the applicable base rate, and SOFR loans at 3.75%.
The company also plans to eliminate the Term SOFR Adjustment of 10 basis points. This financial maneuver follows a recent upgrade of Par Pacific's corporate family rating by Moody's (NYSE:MCO) Investors Service to Ba3 from B1 on March 22, 2024. Should the company secure a further ratings upgrade from S&P, they will benefit from an additional 0.25% reduction in annual interest rates under the term loan facility.
Shawn Flores, the Chief Financial Officer, stated that the company's strong operating performance and record financial results over the past year have facilitated these improved terms. The repricing is projected to save over $3 million annually, in addition to the estimated $10 million in annual savings from the recent increase to their asset-based revolving credit facility and the replacement of the Hawaii intermediation facility.
The successful execution of the repricing amendment is contingent upon finalizing definitive documentation and meeting customary closing conditions. Par Pacific's forward-looking statements caution that there can be no assurance that the terms will be acceptable or that the amendment will be completed as expected, citing potential uncertainties and risks.
Par Pacific Holdings, based in Houston, Texas, operates a diversified energy business with a focus on both renewable and conventional fuels in the western United States. The company manages a significant energy infrastructure network and the nomnom convenience store chain, while also holding a substantial interest in Laramie Energy, LLC, a natural gas production company.
InvestingPro Insights
Par Pacific Holdings, Inc. (NYSE:PARR) has been navigating the financial waters with strategic moves aimed at reducing costs and maximizing savings. In light of their recent announcement to reprice their term loan credit agreement, the following insights from InvestingPro may offer additional context to their financial health and market performance.
InvestingPro Data shows a robust revenue growth of 12.43% over the last twelve months as of Q4 2023, which supports CFO Shawn Flores' remarks on the company's strong operating performance. This is further bolstered by a significant EBITDA growth of 48.61% in the same period, indicating efficient earnings before interest, taxes, depreciation, and amortization.
The company's P/E Ratio stands at an attractive 3.04, with an even more favorable adjusted P/E Ratio of 2.89 for the last twelve months as of Q4 2023. This low P/E ratio may suggest that the stock is undervalued, especially when paired with a PEG Ratio of just 0.03, hinting at the potential for growth relative to earnings.
InvestingPro Tips highlight that analysts have revised their earnings expectations downwards for the upcoming period and anticipate a drop in net income this year. These factors, combined with the company's volatile stock price movements, as indicated by a 7.99% decrease in the 1-week price total return, could be crucial for investors to consider in light of the recent financial restructuring efforts.
Despite these challenges, it's worth noting that Par Pacific Holdings has been profitable over the last twelve months and has delivered a strong return over the last five years. However, the company does not pay a dividend to shareholders, which might be a consideration for income-focused investors.
For those interested in a deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/PARR. Utilize coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover more insights that could influence your investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.