Business Context and Reporting Period
Company: Delek Logistics Partners, LP (DKL)
Filing Type: Form 8-K (Current Report)
Date of Report: October 13, 2022
Event: Entry into a Material Definitive Agreement (Fourth Amended and Restated Senior Secured Revolving Credit Agreement).
Key Financial Metrics and Debt Structure
This filing details a restructuring of the company's credit facilities rather than reporting operational financial results (revenue, profit, or cash flow) for a specific period.
| Metric | Value/Detail |
|---|---|
| Total Aggregate Commitments | $1.2 billion |
| Revolving Facility | $900.0 million (eliminated Canadian dollar tranche) |
| Letters of Credit Sublimit | $115.0 million |
| Swing Line Loans Sublimit | $25.0 million |
| Term Facility | $300.0 million (drawn in full on Oct 13, 2022) |
| Revolving Facility Maturity | October 13, 2027 |
| Term Facility Maturity | October 13, 2024 |
Material Changes Versus Prior Period
- Facility Restructuring: Amended and restated the 2018 Facility to increase total commitments to $1.2 billion.
- New Term Loan: Established a new $300.0 million senior secured term loan facility, which was drawn in full immediately.
- Accordion Feature: Reset to allow aggregate revolving commitments to increase up to $1.15 billion with lender agreement.
- Maturity Extension: Extended the Revolving Facility maturity from the prior date to October 13, 2027.
- Prepayment Requirement: The Term Facility includes a prepayment requirement using proceeds from certain senior unsecured notes issuances.
Guidance, Outlook, Risks, and Covenants
Financial Covenants: The agreement imposes the following limits as of the last day of each fiscal quarter:
- Total Leverage Ratio: Maximum 5.25 to 1.0 (increases to 5.50 to 1.0 during a Temporary Increase Period through March 31, 2023, related to the 3 Bear Acquisition).
- Senior Leverage Ratio: Maximum 3.75 to 1.00.
- Interest Coverage Ratio: Minimum 2.00 to 1.00.
Interest Rates:
- Revolving Facility: Prime + 1.00% to 2.00% OR SOFR + spread adjustment + 2.00% to 3.00% (based on leverage).
- Term Facility: Prime + 2.50% (Year 1) / 3.00% (Year 2) OR SOFR + spread adjustment + 3.50% (Year 1) / 4.00% (Year 2).
Risks and Contingencies: The filing notes that the agreement is secured by a first priority lien on substantially all tangible and intangible assets. It explicitly states that representations and warranties in the agreement are for the benefit of lenders and should not be relied upon by investors as characterizations of actual facts.
Important Facts for Investor Verification
- Verify the impact of the new $300 million term loan on the company's immediate liquidity and leverage ratios.
- Confirm the status of the "Temporary Increase Period" for the Total Leverage Ratio related to the 3 Bear Acquisition.
- Review the full text of Exhibit 10.1 for specific definitions of "Total Leverage Ratio" and "Senior Leverage Ratio" to assess covenant headroom.
- Monitor future issuances of senior unsecured notes, as proceeds are contractually required to prepay the Term Facility.