CVR Energy Inc. announced on Nov. 21 that its Board of Directors has authorized management to explore a potential spin-off of its interests in its nitrogen fertilizer business, which is owned by CVR Energy through the general and limited partner interests it holds in CVR Partners LP, a publicly traded limited partnership.
If effected, the potential spin-off would create a new public company to hold such interests and separate the nitrogen fertilizer business from CVR Energy’s refining and renewables businesses.
If CVR Energy proceeds with the potential spin-off, it would likely be structured as a tax-free, pro-rata distribution to all CVR Energy stockholders as of a record date to be determined by the Board of CVR Energy.
If completed, upon effectiveness of the potential spin-off transaction, CVR Energy stockholders would own shares of both CVR Energy, holding the refinery and renewables businesses; and a holding company, holding CVR Energy’s current ownership of the general partner interest in, and approximately 37% of the common units (representing limited partner interests) of, CVR Partners.
“We are exploring a potential spin-off transaction which we think would, among other value-enhancing benefits, create a pure-play renewables and refining company, as well as a pure play fertilizer company,” said Dave Lamp, President and CEO of CVR Energy.
The company said there can be no assurance that the potential spin-off transaction will be completed in the manner described above – or at all. CVR Energy has not set a timetable for completion of this potential transaction.
Earlier this month, CVR Energy rallied more than 3% in postmarket trading after billionaire investor Carl Icahn told CNBC the oil refiner is his favorite stock. Icahn held about 71% of CVR’s outstanding shares as of June 30, according to data compiled by Bloomberg.