CVR Refining LP (CVRR) Prices Public Offering; Stock Down

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CVR Refining LP (NYSE:CVRR) made a surprise announcement regarding a secondary stock offering Tuesday afternoon, and shares of the company have plunged more than 6% today on the news.

The company also released a PR today saying that the offering consists of 6,500,000 common units representing limited partner interests at the public offering price of $26.07 per common unit. The firm and CVR Refining Holdings have awarded the underwriters of the secondary an option to buy up to an extra 975,000 common units from CVR Refining LP (NYSE:CVRR) at the public offering price. Barring unforeseen circumstances and subject to the usual closing conditions, the offering is expected to close by June 30, 2014.

Details on the secondary

In its statement, CVR Refining LP (NYSE:CVRR) said it intends to use the net proceeds from the offering, including from the option to purchase additional units, in order to redeem from CVR Refining Holdings, LLC a number of common units equal to the number of Common Units sold in the offering.

It should be noted that CVR Refining will not receive any funds from the sale of common units by sold by CVR Refining Holdings. Therefore, the number of common units outstanding will remain the same.

Prior to the offering, CVR Refining Holdings owned a total of 104,790,764 common units, around 71% of the limited partner interest in CVR Refining. After the offering, CVR Refining Holdings will own a total of 98,790,764 common units, or 98,201,655 common units if the underwriters exercise in full their option, totaling just over 66.9% or 66.5% limited partner interest in CVR Refining, respectively

Credit Suisse, Barclays, Citigroup, Jefferies, J.P. Morgan, Morgan Stanley and UBS Investment Bank are all serving as joint book running managers for the secondary offering.

Shares of CVR Refining LP (NYSE:CVRR) are trading down $1.62 at $25.52 as of 1:20 PM ET today. The stock currently offers an annual dividend yield of 14.4%.

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