CVR Energy has long been a small, two-refinery operator whose fortunes swing with Mid-Continent margins, and its majority owner is now committing a financing backstop in an attempt to change that. In an amended Schedule 13D, Icahn Enterprises, which controls 70.8% of CVR's shares, disclosed that a subsidiary agreed to buy up to $500 million of non-voting mandatory convertible preferred stock at $53.37 per share, a pledge that shrinks dollar for dollar if CVR sells common stock to the public before the money is drawn, the filing said. The commitment is a backstop rather than a guaranteed investment. Completion of CVR’s announced public equity offering would eliminate American Entertainment Properties Corp’s funding obligation and dilute Icahn’s percentage ownership.
The deal behind the commitment would reshape the company. That is a large step for a company whose refining system has consisted of two Mid-Continent plants near the Cushing, Oklahoma crude hub, a September investor presentation showed. The acquired plants sit in a different region, and expands CVR into new regional markets. CVR's refining capacity, as a result of the acquisition, is expected to increase from around 207,000 to 384,000 barrels per day, an increase of about 86%.
Funding is coming from several directions at once. Alongside the Icahn commitment, CVR arranged $2.5 billion of committed secured debt and an $800 million equity investment from commodity trader Trafigura, whose trading arm will supply crude to the two plants, and it expects to complete the purchase by the end of 2026, the company said. Trafigura's role ties a global merchant to refineries that have been run by one of the biggest names in U.S. refining. Marathon, for its part, is parting with two plants at the northern edge of its system.
Closing still hinges on regulators. Antitrust review of refinery combinations typically centers on regional fuel supply. If the deal goes through on schedule, CVR will enter 2027 as a very different company.