Oil refiner CVR Energy Inc., Sugar Land, Texas, said on May 21 it has engaged Bank of America Merrill Lynch as its financial advisor to assist it in evaluating potential strategic alternatives, including a potential sale.
The energy firm owns 34 percent of nitrogen producer CVR Partners LP, which is traded on the New York Stock Exchange under the symbol UAN. CVR Partners has plants in Coffeyville, Kan., and East Dubuque, Ill. CVR Energy subsidiaries also serve as the general partner of CVR Partners.
CVR Energy said it intends to evaluate alternatives in combination with its ongoing focus on accomplishing its strategic objectives, prudently managing costs, and operating its businesses safely and reliably.
CVR Energy also announced that a subsidiary has entered into a definitive agreement for the sale of its 1.5-million-barrel Cushing, Okla., crude oil terminal and related assets to an affiliate of Plains All American Pipeline LP for total consideration of approximately $36 million, and concurrently closed the transaction.
“CVR Energy is committed to maximizing value for its stockholders,” said CVR Energy CEO Dave Lamp. “Both the sale of the Cushing terminal, which allowed us to derive value from an underutilized asset, and the exploration of potential strategic alternatives, support this commitment. We are excited about the company’s prospects and ability to enhance stockholder value through our initiatives, regardless of the outcome of a strategic alternative process.”
CVR Energy said it does not have a defined timeline for the exploration of strategic alternatives and makes no assurances that its evaluation will result in any transaction being announced or consummated. The company does not currently intend to discuss or disclose further developments with respect to this process, unless and until its board of directors approves a specific transaction or otherwise determines that further disclosure is appropriate.
CVR Energy operates the Coffeyville refinery in Kansas and the Wynnewood refinery in Oklahoma. The company “is already trading at a hefty price,” analysts at Tudor, Pickering, Holt & Co. said in a note to clients, cited by Bloomberg. “We struggle to see who the likely buyer would be.” Shares closed down 1.76 percent on May 22 to $46.42.
Billionaire investor Carl Icahn took a controlling stake in CVR Energy in 2012. As of April 10, Icahn Associates Holding held 71 percent of the company, according to Bloomberg.
Icahn has long been a vocal opponent of the biofuel credits that independent U.S. refiners such as CVR pay when they can’t blend renewable fuels like ethanol or biodiesel with petroleum. Icahn became a special regulatory adviser to President Donald Trump following his election, before stepping down in August 2017.
In an April filing with the U.S. Securities and Exchange Commission, CVR reiterated that it is cooperating with the U.S. Attorney’s office for the Southern District of New York following a September 2017 subpoena related to Icahn’s activities regarding renewable fuels policy and his role as special adviser.