CVR Refining raises $600M in IPO

By Mark Chediak and Bradley Olson

CVR Refining LP, the U.S. oil refiner controlled by billionaire investor Carl Icahn, raised $600 million in its initial public offering after pricing an increased number of units at the midpoint of the price range.

CVR sold 24 million units for $25 each, according to data compiled by Bloomberg, after offering 20 million units for $24 to $26. CVR Energy Inc. said Oct. 1 it planned to put its refineries into a master-limited partnership called CVR Refining LP and sell units after failing to find a buyer for the plants. Icahn Enterprises LP took control of CVR Energy last year.

CVR Refining, based in Sugar Land, Texas, is at least the third refiner in the past year to sell its plants to the public and distribute the operating profits to investors. Master- limited partnerships don’t pay corporate income tax, leaving more cash for payments to holders.

An abundance of cheap U.S. oil was at the heart of record profits in 2012 for CVR and some other U.S. refiners. Profits at refiners vary based on the margin between the cost of crude and the price of refined fuels such as gasoline. Based on U.S. benchmark oil prices, the so-called crack spread averaged $29.34 a barrel last year, an all-time record.

CVR Energy, which also controls a partnership that makes fertilizer, will own 86 percent of CVR Refining and control it as its general partner after the IPO. The partnership owns refineries in Coffeyville, Kansas, and Wynnewood, Oklahoma, that together can process 185,000 barrels a day, as well as oil pipelines, tanks and a fuel-sales business.

Proceeds will be used to repurchase debt and fund some maintenance and equipment expenses through 2014, regulatory filings show.

CVR Refining will be listed under the symbol CVRR on the New York Stock Exchange. Credit Suisse Group AG, Citigroup Inc., Barclays Plc, UBS AG and Jefferies Group Inc. handled the offering.

—With assistance from Jim Polson and Lee Spears in New York and Mike Lee in Dallas.