Business Context and Reporting Period
Company: Delek Logistics Partners, LP
Filing Type: Form 8-K (Current Report)
Date of Report: September 28, 2018
Event: Entry into a Material Definitive Agreement (Third Amended and Restated Senior Secured Revolving Credit Agreement).
Key Financial Metrics and Facility Terms
This filing details the restructuring of the company's credit facility rather than reporting operational financial results (revenue, profit, or cash flow). Key terms of the new "DKL Credit Facility" include:
- Total Commitment: Increased from $700.0 million to $850.0 million.
- Tranche Structure:
- U.S. dollar-only borrowing tranche: $750.0 million (up from $620.0 million).
- U.S. or Canadian dollar borrowing tranche: $100.0 million (up from $80.0 million).
- Swing Line Loans: Increased from $18.0 million to $25.0 million total.
- Letter of Credit Sub-limit: Increased from $100.0 million to $115.0 million total.
- Accordion Feature: Capacity to increase the facility to an aggregate of $1.0 billion subject to lender commitments.
- Maturity Date: Extended to September 28, 2023 (previously December 30, 2019).
- Security: First priority lien on substantially all tangible and intangible assets of the Partnership and subsidiaries.
Material Changes Versus Prior Period
The new agreement amends and restates the 2014 Facility with the following material changes:
- Leverage Covenants:
- Total Leverage Ratio: Increased from a maximum of 5.00 to 1.0 to 5.25 to 1.0 (with a temporary increase period allowance of 5.50 to 1.0).
- Senior Leverage Ratio: Increased from a maximum of 3.50 to 1.00 to 3.75 to 1.00 (with a temporary increase period allowance of 4.00 to 1.00).
- Guaranty Structure: Delek Marketing & Supply, LLC continues to provide a limited guaranty secured by a pledge of a promissory note ("Holdings Note") from Delek US Holdings, Inc. As of September 28, 2018, the principal amount of the Holdings Note was $102.0 million plus accrued interest.
Guidance, Outlook, and Risks
Management Commentary: The filing states that the agreement was entered into to amend and restate the existing facility, providing increased borrowing capacity and an extended maturity date. Interest rates are variable, based on Prime or LIBOR/CDOR plus an applicable margin determined by the Total Leverage Ratio.
Risks and Contingencies:
- The facility contains customary affirmative and negative covenants and events of default.
- Compliance with the amended financial covenants (Total and Senior Leverage Ratios) is required as of the last day of each fiscal quarter.
- The filing includes a disclaimer that representations and warranties in the credit agreement are for the benefit of lenders and may not reflect the actual state of facts for investors.
Missing Data: The filing text does not provide current revenue, profit, cash flow, or specific liquidity positions (e.g., cash on hand) outside of the credit facility terms.
Investor Verification Checklist
- Verify the current Total Leverage Ratio and Senior Leverage Ratio to ensure compliance with the new 5.25:1.0 and 3.75:1.00 covenants.
- Review the full text of Exhibit 10.1 (Third Amended and Restated Credit Agreement) for specific definitions of "Temporary Increase Period" and other covenant details.
- Confirm the status of the $102.0 million Holdings Note and the limited guaranty provided by the Subsidiary Guarantor.
- Monitor the company's utilization of the new $850.0 million facility and any potential exercise of the accordion feature to reach $1.0 billion.