SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 16, 2007 (October 10, 2007)
 
HOLLY ENERGY PARTNERS, L.P.
(Exact name of Registrant as specified in its charter)
         
Delaware   001-32225   20-0833098
(State or other   (Commission File Number)   (I.R.S. Employer
jurisdiction of incorporation)       Identification Number)
         
100 Crescent Court,       75201-6915
Suite 1600       (Zip code)
Dallas, Texas        
(Address of principal        
executive offices)        
Registrant’s telephone number, including area code: ( 214) 871-3555
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

Item 1.01 Entry into a Material Definitive Agreement.
     On October 10, 2007, HEP Pipeline Assets, Limited Partnership (“HEP Pipeline”), a wholly owned subsidiary of Holly Energy Partners, L.P. (the “Partnership”), and Alon USA, LP (“Alon”) entered into an Agreement Relating to Corrected Version Of Amendment and Supplement to Pipeline Lease Agreement and a corrected version (the “Amendment As Corrected”) of the Amendment and Supplement to Pipeline Lease Agreement originally entered into between HEP Pipeline and Alon on August 31, 2007 (the “Original Amendment”). The Original Amendment amended and supplemented the Pipeline Lease Agreement dated February 21, 1997, between Navajo Pipeline Company (predecessor in interest to HEP Pipeline) and American Petrofina Pipe Line Company (predecessor in interest to Alon USA, LP) and was described in and filed with the Current Report on Form 8-K filed by the Partnership with the Securities and Exchange Commission on September 10, 2007. The Amendment as Corrected corrects the Original Amendment with respect to the date of effectiveness of capacity reductions, payment obligations and the option to expand the leased capacity and supersedes the Original Amendment in its entirety. The Amendment as Corrected (1) reduces the amount of leased capacity on the Partnership’s Orla, Texas to El Paso, Texas pipeline by 2,500 barrels per day effective September 1, 2008, (2) extends the terms of two of Alon’s separate capacity leases on the pipeline for an additional 10 years (through August 31, 2018 and July 31, 2020, respectively), and (3) proportionately reduces the amount of lease rental payments based on the reduction in the amount of leased capacity effective September 1, 2008. Additionally, the Amendment as Corrected provides Alon with an option, after September 1, 2008 and with 60 days notice, to expand the leased capacity by 2,500 barrels per day for a term of 10 years, and provides Alon with the right to renew the capacity lease expiring on August 31, 2018 for an additional 10 year term. Under the Amendment as Corrected, from September 1, 2008 the total capacity leased by Alon on the pipeline will be reduced from 20,000 barrels per day to 17,500 barrels per day, subject to Alon’s right to expand the capacity as described above.
     In addition to the relationship between the Partnership and Alon created under the Pipeline Lease Agreement, as amended by the Amendment as Corrected, Alon owns 937,500 Class B subordinated units of the Partnership, which are all of the Partnership’s Class B subordinated units and which comprise approximately 5.7% of the Partnership’s total outstanding equity ownership, and the Partnership is a party to a pipelines and terminals agreement with Alon that expires in 2020 as described in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2006.
     A copy of the Amendment as Corrected is attached hereto as Exhibit 10.1.
Item 9.01 Financial Statements and Exhibits.
         
10.1
  —   Corrected Version Dated October 10, 2007 of Amendment and Supplement to Pipeline Lease Agreement effective as of August 31, 2007 between HEP Pipeline Assets, Limited Partnership and Alon USA, LP.

 

 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
                 
    HOLLY ENERGY PARTNERS, L.P.
 
               
    By:   HEP Logistics Holdings, L.P.
        its General Partner
 
               
        By:   Holly Logistic Services, L.L.C.
            its General Partner
 
               
 
          By:   /s/ Stephen J. McDonnell
 
               
 
              Stephen J. McDonnell
 
              Vice President & Chief
Financial Officer
Date: October 16, 2007

 

 

EXHIBIT INDEX
         
Exhibit        
Number       Exhibit Title
 
       
10.1
  —   Corrected Version Dated October 10, 2007 of Amendment and Supplement to Pipeline Lease Agreement effective as of August 31, 2007 between HEP Pipeline Assets, Limited Partnership and Alon USA, LP.

 

 

Exhibit 10.1
Corrected Version Dated
October 10, 2007
Amendment and Supplement to Pipeline Lease Agreement
     This Amendment and Supplement to Pipeline Lease Agreement (this “Amendment”) is made and entered into effective August 31, 2007, by and between HEP Pipeline Assets, Limited Partnership, a Delaware limited partnership (“HEP”), and Alon USA, LP, a Texas limited partnership (“Alon”). HEP and Alon sometimes shall be referred to herein, collectively, as the “Parties.”
RECITALS
     A. On February 21, 1997, Navajo Pipeline Company, a Delaware corporation (“Navajo”), and American Petrofina Pipe Line Company, a Delaware corporation (“American Petrofina”), executed that certain Pipeline Lease Agreement pursuant to which Navajo leased to American Petrofina certain undivided interests in the capacity of Navajo’s 12” — 8” petroleum products pipeline that extends between Orla, Texas and El Paso, Texas (said Pipeline Lease Agreement shall be hereinafter referred to as the “Pipeline Lease Agreement”).
     B. Effective July 13, 2004, HEP became the owner of the pipeline that is the subject of the Pipeline Lease Agreement and the successor-in-interest to all of Navajo’s rights, interests, and obligations under the Pipeline Lease Agreement.
     C. Effective July 31, 2000, Alon became the successor-in-interest to all of American Petrofina’s rights, interests, and obligations under the Pipeline Lease Agreement.
     D. HEP and Alon desire to amend and supplement certain provisions of the Pipeline Lease Agreement that address leased pipeline capacity, lease terms, and rent.
     NOW, THEREFORE, in exchange for the mutual covenants and other considerations described in this Amendment, the receipt and sufficiency of which are hereby acknowledged, HEP and Alon agree as follows:
     1.  Definitions. As used in this Amendment, the term the “pipeline” shall have the meaning ascribed to such term in Recital Paragraph A of the Pipeline Lease Agreement. All other terms used, but not otherwise defined in this Amendment, shall have the meanings ascribed to such terms in the Pipeline Lease Agreement.
     2.  Recitals Paragraphs. The Parties acknowledge and agree that the recital paragraphs above are an integral part of this Amendment.
     3.  Amendment to Initial Lease. The Parties acknowledge that, prior to this Amendment, the Initial Lease was for a lease of an undivided interest in the capacity of the pipeline equal to 7,500 barrels per day, and that the Initial Lease Term would expire on August 31, 2008. The Parties agree that the Initial Lease is amended such that, from September 1, 2008, the Initial Lease shall be a lease of an undivided interest in the capacity of the pipeline equal to 5,000 barrels per day. The Parties further agree that the Initial Lease Term is amended such that the expiration of the Initial Lease Term shall occur on August 31, 2018. The Parties acknowledge

 

 

and agree that the Initial Lease Renewal Option provided for in Section 4.A.2 of the Pipeline Lease Agreement shall continue to exist, but that the second sentence of Section 4.A.2 of the Pipeline Lease Agreement shall be amended to read as follows: “Lessee may exercise the Initial Lease Renewal Option by delivering Lessor written notice of the exercise of the Initial Lease Renewal Option no later than August 31, 2017.”
     4.  Option for Expansion Lease. During the period between September 1, 2008 and the expiration of the Initial Lease Term (as amended in the immediately preceding section of this Amendment), Alon shall have the option to lease an additional undivided interest in the capacity of the pipeline equal to 2,500 barrels per day. The option described in the preceding sentence shall be hereinafter referred to as the “Expansion Option.” In order to exercise the Expansion Option, Alon shall provide HEP with notice of the exercise of such option at least sixty (60) days in advance of the date on which Alon desires to commence the additional lease (hereinafter referred to as the “Expansion Lease”) of an additional undivided interest in the capacity of the pipeline equal to 2,500 barrels per day. The commencement date of the term of any such Expansion Lease shall be hereinafter referred to as the “Expansion Date,” and must be on the first day of a calendar month. In the event that Alon exercises the Expansion Option, the term of the Expansion Lease shall commence on the Expansion Date and expire on the last day of the calendar month that immediately precedes the tenth (10 th ) anniversary of the Expansion Date. For the sake of clarity, the Expansion Lease provided for in this Section 4 of the Amendment would be in addition to the Initial Lease (as amended in this Amendment), the Second Lease, and the Option Lease provided for in the Pipeline Lease Agreement.
     5.  Amendments to Rent Amount. Effective September 1, 2008, the Base Rent and the Rent Amount for the Initial Lease shall be reduced to the amounts that are two-thirds the Base Rent and Rent Amount, respectively, that were in effect for the Initial Lease on July 31, 2008. In the event that Alon exercises the Expansion Option, Alon shall pay to HEP rent for the Expansion Lease, in monthly installments in advance, beginning on the Expansion Date, as follows: The Base Rent and the Rent Amount for the Expansion Lease shall, effective on the Expansion Date, be equal to the amounts that are fifty percent (50%) of the Base Rent and Rent Amount, respectively, in effect for the Initial Lease during the month when the Expansion Date occurs. The Rent Amount for the Initial Lease, the Second Lease, the Option Lease, and any Expansion Lease shall be adjusted on each anniversary of the Execution Month as provided in Section 5.B of the Pipeline Lease Agreement (which is entitled “ Base Rent Adjuster ”).
     6.  Exercise of Second Lease Renewal Option. Pursuant to Section 4(B)(2) of the Pipeline Lease Agreement (which is entitled “ Option to Renew ”), Alon hereby exercises the Second Lease Renewal Option, and the Second Lease Renewal Term shall expire on July 31, 2020.
     7.  Deletion of Section 24 . Section 24 of the Pipeline Lease Agreement (which is entitled “ EARLIER TERMINATION ”) is hereby deleted in its entirety from the Pipeline Lease Agreement.
     8.  Effect of Amendment. Except as provided herein, all of the provisions of the Pipeline Lease Agreement shall be and remain in full force and effect.

 

 

     IN WITNESS WHEREOF, HEP and Alon have caused this Amendment to be executed on the dates shown below, but effective as of August 31, 2007.
         
    HEP PIPELINE ASSETS, LIMITED PARTNERSHIP
 
       
 
  By:   HEP Pipeline GP, L.L.C .
 
      its General Partner,
 
       
 
  By:   Holly Energy Partners — Operating, L.P.
 
      its Sole Member
 
       
 
  By:    
 
       
 
      David G. Blair
 
      Senior Vice President
 
       
 
       
 
       
 
      Date of Signature
 
       
    ALON USA, LP
 
       
 
  By:   ALON USA, GP, LLC , a Delaware limited liability company, its General Partner
 
     
 
       
 
  By:    
 
       
 
       
 
       
 
       
 
      Date of Signature