Form 8-K

 

 

UNITED STATES

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): February 13, 2012

 

 

CVR ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-33492   61-1512186

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

  (I.R.S. Employer
Identification Number)

2277 Plaza Drive, Suite 500

Sugar Land, Texas 77479

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (281) 207-3200

 

 

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:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 7.01. Regulation FD Disclosure.

On February 13, 2012, CVR Energy, Inc., or the “Company,” issued a press release announcing that the Board of Directors of the Company had approved a regular quarterly cash dividend of $0.08 per common share, the first of which will be paid following the end of the Company’s first quarter on a date to be set by the Board of Directors, and announcing that the Board of Directors intends to sell a portion of the Company’s investment in CVR Partners, LP. This press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. On February 13, 2012, the Company also posted an investor presentation to its website at www.cvrenergy.com under the tab “Investor Relations”. The information included in the presentation provides an overview of the approval of the regular quarterly cash dividend and other elements of the Company’s strategic plan. The presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K and Exhibits 99.1 and 99.2 attached hereto are being furnished pursuant to Item 7.01 of Form 8-K and will not, except to the extent required by applicable law or regulation, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor will any of such information or exhibits be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.

 

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

The following exhibits are being “furnished” as part of this Current Report on Form 8-K:

 

99.1    Press release, dated February 13, 2012
99.2    Slides from Management Presentation, dated February 13, 2012


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 hereunto duly authorized.

Date: February 13, 2012

 

CVR ENERGY, INC.
By:  

/s/ John J. Lipinski

  John J. Lipinski
  Chief Executive Officer and President
Press release, dated February 13, 2012

Exhibit 99.1

 

LOGO

CVR ENERGY TO BEGIN A REGULAR QUARTERLY

CASH DIVIDEND OF $0.08 PER SHARE

BOARD ALSO ANNOUNCES INTENT TO SELL A PORTION OF CVR PARTNERS INVESTMENT

SUGAR LAND, Texas (Feb. 13, 2012) – CVR Energy, Inc. (NYSE: CVI), a refiner and marketer of petroleum fuels and a majority owner of CVR Partners, LP (NYSE:UAN), a nitrogen fertilizer producer, announced today that its Board of Directors has approved a regular quarterly cash dividend of $0.08 per common share, the first of which will be paid following the end of the company’s first quarter on a date to be set by the Board. The Board reached its decision to initiate a regular quarterly dividend after an extensive review of the company’s financial performance and confidence in its future prospects and believes it is consistent with its continuing commitment to deliver long-term value for shareholders.

As part of that commitment, the Board also intends to sell a portion of the company’s investment in CVR Partners to pay for a special dividend to shareholders and strengthen the company’s balance sheet. The Board believes that a sale of a portion of the company’s interest offers the best opportunity to deliver significant value to shareholders in a reasonable time frame with minimal execution risk or structural impediments. The size, time and manner of the sale will be disclosed when the transaction is implemented.

“Given the projected cash generation of our refining business, the distributions we receive from our ownership in CVR Partners and our strong financial position, our Board determined after careful review of all its strategic options that it was appropriate to return a meaningful amount of cash to our shareholders. We intend to introduce a regular quarterly cash dividend that is in-line with our refining peers and a special dividend funded from the sale of a portion of our interest in CVR Partners,” said Jack Lipinski, chief executive officer of CVR Energy. “We are proud of our performance, confident in our prospects and look forward to continuing our long-term strategy of providing outstanding returns for our shareholders.”

Forward Looking Statements

This news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,


as amended. You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “explore,” “evaluate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “seek,” “should,” or “will,” or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. For a discussion of risk factors which may affect our results, please see the risk factors and other disclosures included in our Annual Report on Form 10-K for the year ended Dec. 31, 2010, and any subsequently filed quarterly reports on Form 10-Q. These risks may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. CVR Energy disclaims any intention or obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About CVR Energy, Inc.

Headquartered in Sugar Land, Texas, CVR Energy, Inc.’s subsidiary and affiliated businesses operate independent refining assets in Coffeyville, Kan., and Wynnewood, Okla., with more than185,000 barrels per day of processing capacity, a marketing network for supplying high value transportation fuels to customers through tanker trucks and pipeline terminals, and a crude oil gathering system serving central Kansas, Oklahoma, western Missouri and southwest Nebraska. In addition, CVR Energy subsidiaries own a majority interest in and serve as the general partner of CVR Partners, LP, a producer of ammonia and urea ammonium nitrate, or UAN, fertilizers.

For further information, please contact:

 

Investor Relations:

Ed Morgan

CVR Energy, Inc.

281-207-3388

or

Jay Finks

CVR Energy, Inc.

281-207-3588

InvestorRelations@CVREnergy.com

  

Media Relations:

Steve Eames

CVR Energy, Inc.

281-207-3550

MediaRelations@CVREnergy.com

or

Tom Johnson or Chuck Burgess

Abernathy MacGregor Group

212-371-5999

Slides from Management Presentation, dated February 13, 2012
Returning Capital to Shareholders
February 13, 2012
Exhibit 99.2


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1
1
1
1
We are taking action to prudently return
cash to shareholders
CVR Energy announced today its Board of Directors approved a regular quarterly cash dividend of $0.08 per
common share
Dividend will be payable following the end of the first quarter
Decision to initiate a regular quarterly dividend was reached after an extensive review of the company’s
financial performance and confidence in its future prospects
CVR Energy’s Board believes a regular dividend is consistent with its continuing commitment to deliver long
term value for shareholders
CVR Energy intends to sell a portion of its investment in CVR Partners
The net proceeds will be used to pay a special dividend to CVR Energy’s shareholders and to strengthen the
company’s balance sheet
Sizing broadly consistent with MLP offering precedent so that it
can provide the greatest cash return to
shareholders without significant negative impact on the market for CVR Partners
The size, time and manner of the sale will be disclosed when the
transaction is implemented
CVR Energy’s Board has evaluated various financial and structural alternatives and believes these actions offer
the best opportunity to enhance returns for shareholders in a reasonable time frame with minimal execution risk
or structural impediments
CVR Energy Declares Regular Quarterly Dividend and
Intends to Monetize a Portion of its Investment in CVR Partners


2
2
2
2
2
This plan is focused on shareholder value
Institutes a regular quarterly dividend to benefit shareholders
Monetizes a portion of the CVR Partners stake after strong post-IPO performance
Returns a majority of the after-tax sale proceeds to CVR Energy shareholders via special
dividend
Strengthens the balance sheet to better weather refining business cycles
Increases
the
float
and
liquidity
of
CVR
Partners
without
introducing
an
unproven
new
equity security to the market
Our plan provides transparency and certainty of execution and will deliver additional
immediate and long-term value to CVR Energy shareholders


3
3
3
3
3
Delivering value to CVR Energy
shareholders
Note:
Total return based on period from October 22, 2007 to February 10, 2012. CVI initial value based on IPO price of $19.00 per share. CVI total return compared to total return of  
refining peers:  ALJ, DK, HFC, TSO and WNR. Peer index equal weighted.
Source:  Capital IQ
Refiners relative total return performance
CVI
Refining peers
S&P 500
Since IPO
43%
(34%)
(2%)
3-year
357%
77%
73%
2-year
243%
160%
31%
1-year
44%
27%
4%
1-month
29%
23%
4%
Since
IPO,
CVR
Energy
is
#1
in
total
return
among
refining
peers
and
remains focused on creating value for shareholders
0
20
40
60
80
100
120
140
160
180
Oct-07
May-08
Nov
-08
Jun
-09
Dec-09
Jun
-10
Jan
-11
Jul
-11
Feb-12
CVI
Refining Peers Index
S&P 500
(2%)
(34%)
43%


4
4
4
4
4
CVR Partners has outperformed the Alerian
MLP index and fertilizer corporations
Note:
Total return based on period from April 7, 2011 to February 10, 2012. CVR Partners initial value based on IPO price of $16.00 per unit. AMZX is based on the total return of the
Alerian
MLP
index.
Corporate
fertilizer
index
equal
weighted
and
includes
AGU,
CF
and
YAR.
Performance
calculated
using
local
currency
returns.
Source:  Bloomberg, Capital IQ, Alerian
Total return of UAN vs. Alerian MLP index and fertilizer corporations
CVR Partners has provided a total return of 86% since IPO
60
80
100
120
140
160
180
200
220
Apr-11
May-11
Jun
-11
Jul
-11
Sep-11
Oct-11
Nov
-11
Jan
-12
Feb-12
CVR Partners
AMZX
Corporate Fertilizer Index
86 %
10 %
4 %


5
5
5
5
5
Your Board’s commitment to shareholders
Commitment to operational excellence
Commitment to building shareholder value in accordance with prudent capital allocation
Continuously evaluating opportunities and alternatives to enhance value for or return cash to shareholders
Transparency regarding our objectives
Identifying outcomes that deliver value to our shareholders on a
risk-adjusted basis within reasonable
timeframes
Meaningful return of capital within definitive time frame
Dividend signals our commitment to regularly return capital
Our decision came following a review of other alternatives, including a full spin-off of CVR Partners, but our
plan:
Provides greater certainty of shareholder return
Rapidly delivers cash to our shareholders
Maintains our ability to retain future cash and appreciation from CVR Partners distributions
Does not create the uncertainties related to introducing a new security without true comparables
Our principles
Our announcement today is consistent with those principles


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Separating Refining and Fertilizer at this
time is not an optimal strategy
Tax-free separation is complex and requires corporate holding company for UAN units (UAN Holdco)
UAN Holdco would pay cash taxes on UAN distributions received, with an effective tax rate in excess of 40%
Separation is time consuming and exposes shareholders to more market risk
May require refinancing of existing CVR Energy’s debt at significant premiums over par
A Fertilizer separation has significant structural, execution
and valuation risks compared with our plan
Structural and execution risks
Valuation risks
UAN Holdco’s valuation would be subject to significant uncertainty
No true comparable companies
UAN’s variable distribution policy makes valuation inherently more volatile than other corporate GP
holding companies
Unlike other corporate GP holding companies, there are no incentive distribution rights associated with
CVR Energy’s GP interest and no associated incremental cash flows
CVR Energy and its shareholders would receive no cash proceeds today and forego future cash and
appreciation from UAN distributions and unit sales
Potential impact on financial flexibility, ratings and cost of debt at CVR Energy
To create value for shareholders, post-spin entities must trade at multiples above current levels and closest
peers


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7
7
7
7
We have a demonstrated track record of
creating shareholder value
Operational excellence and enhancements
Increased total refining capacity and crude gathering
Expanding UAN capacity
Improving financial strength
Conservative leverage metrics led to Ba3 rating upgrade
Tactical hedging and risk management
Willing to take action
IPO of CVR Partners
Accretive and synergistic acquisition of GWEC
Instituting a regular quarterly dividend
Selling a portion of CVR Partners interest
Our plan is consistent with our commitment to creating value through operating
improvements, focused growth initiatives, conservative
capital management and structural actions