Business Context and Reporting Period
Company: Delek Logistics Partners, LP (DKL)
Filing Type: Form 8-K (Current Report)
Date of Report: May 28, 2019 (Earliest event reported: May 24, 2019)
Context: The Partnership, through its subsidiary DKL Pipeline, LLC, entered into a strategic transaction to acquire a partial ownership interest in Red River Pipeline Company LLC.
Key Financial Metrics and Transaction Details
- Investment Amount: Approximately $128.0 million contributed to Red River Pipeline Company LLC.
- Ownership Stake Acquired: 33% membership interest in Red River.
- Expansion Commitment: Committed to invest approximately $20 million (pro rata with Plains) for pipeline capacity expansion; approximately $3.5 million paid with the initial investment.
- Asset Scope: The transaction grants access to the Red River Pipeline segments from Cushing, Oklahoma to Hewitt, Oklahoma (60% interest) and Hewitt, Oklahoma to Longview, Texas (100% interest).
- Counterparty Retention: Plains Pipeline, L.P. retains a 67% membership interest in Red River.
Material Changes Versus Prior Period
This filing reports a discrete material event rather than a periodic financial performance update. The primary material change is the entry into a definitive agreement and the subsequent completion of the asset acquisition on May 28, 2019. No comparative financial data (revenue, profit, or cash flow) for prior periods is provided in this specific 8-K filing.
Guidance, Outlook, and Risks
- Outlook: The transaction is intended to increase the throughput capacity of the Red River Pipeline via the committed expansion project.
- Regulatory Disclosure: Information regarding the transaction was furnished under Regulation FD via a joint press release with Delek US Holdings, Inc.
- Financial Statement Status: Financial statements of the acquired business and pro forma financial information are not included in this filing. They are scheduled to be filed via an amendment within 71 days of the report date.
- Risks/Contingencies: The agreement contains representations, warranties, covenants, and indemnities, the full details of which are in the attached Exhibit 2.1.
Investor Verification Checklist
- Verify the final closing terms and any conditions precedent in the full Contribution and Subscription Agreement (Exhibit 2.1).
- Monitor the upcoming amendment to this 8-K (due within 71 days) for the financial statements of Red River and pro forma financial information.
- Confirm the timeline and capital expenditure schedule for the $20 million expansion project.
- Review the joint press release (Exhibit 99.1) for additional strategic commentary from management.