Debt

HollyFrontier Credit Agreement

In February 2017, we increased the size of our senior unsecured revolving credit facility from $1 billion to $1.35 billion and extended the maturity date to February 2022 (the “HollyFrontier Credit Agreement”). The Holly Frontier Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes. During the six months ended June 30, 2017, we received advances totaling $26.0 million and repaid $26.0 million under the HollyFrontier Credit Agreement. At June 30, 2017, we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $3.1 million under the HollyFrontier Credit Agreement.

HEP Credit Agreement

At June 30, 2017, HEP had a $1.2 billion senior secured revolving credit facility maturing in November 2018 (the “HEP Credit Agreement”). During the six months ended June 30, 2017, HEP received advances totaling $479.0 million and repaid $189.0 million under the HEP Credit Agreement. At June 30, 2017, HEP was in compliance with all of its covenants, had outstanding borrowings of $843.0 million and no outstanding letters of credit under the HEP Credit Agreement.

In July 2017, the HEP Credit Agreement was amended to increase the size of the facility to $1.4 billion and to extend the maturity to July 2022 (the “HEP Amended Credit Agreement”) The HEP Amended Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments, working capital and for general partnership purposes. It is also available to fund letters of credit up to a $50 million sub-limit and has a $300 million accordion.

HEP’s obligations under the HEP Amended Credit Agreement are collateralized by substantially all of HEP’s assets and is guaranteed by HEP’s material wholly-owned subsidiaries. Any recourse to the general partner would be limited to the extent of HEP Logistics Holdings, L.P.’s assets, which other than its investment in HEP are not significant. HEP’s creditors have no recourse to our other assets. Furthermore, our creditors have no recourse to the assets of HEP and its consolidated subsidiaries.

HollyFrontier Senior Notes

Our 5.875% senior notes ($1 billion aggregate principal amount maturing April 2026) (the “HollyFrontier Senior Notes”) are unsecured and unsubordinated obligations of ours and rank equally with all our other existing and future unsecured and unsubordinated indebtedness.

HollyFrontier Financing Obligation

In March 2016, we extinguished a financing obligation at a cost of $39.5 million and recognized an $8.7 million loss on the early termination. The financing obligation related to a sale and lease-back of certain crude oil tankage that we sold to an affiliate of Plains in October 2009 for $40.0 million.

HollyFrontier Term Loan

In April 2016, we entered into a $350 million senior unsecured term loan (the “HollyFrontier Term Loan”) maturing in April 2019. The HollyFrontier Term Loan was fully repaid with proceeds received upon the November 2016 issuance of the HollyFrontier Senior Notes.

HEP Senior Notes

HEP’s 6.0% senior notes ($400 million aggregate principal amount maturing August 2024) (the “HEP Senior Notes”) are unsecured and impose certain restrictive covenants, including limitations on HEP’s ability to incur additional indebtedness, make investments, sell assets, incur certain liens, pay distributions, enter into transactions with affiliates, and enter into mergers. At any time when the HEP Senior Notes are rated investment grade by both Moody’s and Standard & Poor’s and no default or event of default exists, HEP will not be subject to many of the foregoing covenants. Additionally, HEP has certain redemption rights under the HEP Senior Notes.

In January 2017, HEP redeemed its $300 million aggregate principal amount of 6.5% senior notes maturing March 2020 at a redemption cost of $309.8 million, at which time HEP recognized a $12.2 million early extinguishment loss consisting of a $9.8 million debt redemption premium and unamortized discount and financing costs of $2.4 million. HEP funded the redemption with borrowings under the HEP Credit Agreement.

Indebtedness under the HEP Senior Notes is guaranteed by HEP’s wholly-owned subsidiaries. HEP’s creditors have no recourse to our assets. Furthermore, our creditors have no recourse to the assets of HEP and its consolidated subsidiaries.

The carrying amounts of long-term debt are as follows:



	June 30, 2017			December 31, 2016
	(In thousands)
HollyFrontier 5.875% Senior Notes
Principal	$	1,000,000		$	1,000,000
Unamortized discount and debt issuance costs	(8,788		)	(8,775		)
	991,212			991,225

HEP Credit Agreement	843,000			553,000

HEP 6% Senior Notes
Principal	400,000			400,000
Unamortized discount and debt issuance costs	(6,261		)	(6,607		)
	393,739			393,393
HEP 6.5% Senior Notes
Principal	—			300,000
Unamortized discount and debt issuance costs	—			(2,481		)
	—			297,519

Total HEP long-term debt	1,236,739			1,243,912

Total long-term debt	$	2,227,951		$	2,235,137

The fair values of the senior notes are as follows:



	June 30, 2017		December 31, 2016
	(In thousands)

HollyFrontier senior notes	$	1,065,000	$	1,022,500

HEP senior notes	$	418,000	$	723,750

These fair values are based on estimates provided by a third party using market quotes for similar type instruments, a Level 2 input. See Note 4 for additional information on Level 2 inputs.

We capitalized interest attributable to construction projects of $0.6 million and $3.5 million for the three months ended June 30, 2017 and 2016, respectively, and $3.2 million and $4.2 million for the six months ended June 30, 2017 and 2016, respectively.