Marathon issues senior notes to finance Hess purchase

To help finance its pending purchase of Hess Corp.’s retail business this month, Marathon Petroleum Corp. has priced $1.95 billion in unsecured senior notes in a public offering. The notes are being offered in three series:

  • $750 million in 3.625 percent senior notes due 2024.
  • $800 million in 4.75 percent senior notes due 2044.
  • $400 million in 5.00 percent senior notes due 2054.

The 2024 senior notes, the 2044 senior notes and the 2054 senior notes were offered at a price to the public of  99.641 percent, 98.862 percent and 98.77 percent of par, respectively.

A recently announced $700 million loan also will be used to finance the pending Hess retail purchase.

The closing of the senior notes offering is expected to occur on Friday.

Marathon Petroleum’s Speedway subsidiary is expected to double its $14.5 billion in 2013 sales when it adds the 1,256 Hess stores in 16 East Coast and Southeastern states, said Fadel Gheit, senior energy analyst for Oppenheimer.

With the purchase of the Hess stores, Speedway will become the nation’s largest company-owned convenience store chain by revenue, said Tony Kenney, Speedway president. It now is the fourth-largest, dominating the Midwest. Hess, dominant on the East Coast and Southeast, is fifth-largest.

The addition of the stores assures Marathon of more sales of its refined products, since it expanded its refining capacity with the Galveston Bay purchase. The Hess stores will be an important outlet for gasoline produced at Marathon’s seven refineries as the export market for gasoline and diesel becomes increasingly competitive, Platts Commodity News reported.


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