Delek Logistics Partners, LP - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K, dated May 20, 2021, details a material definitive agreement entered into by Delek Logistics Partners, LP (the "Partnership") and its subsidiary, Delek Logistics Finance Corp. The report covers the issuance of senior notes completed on May 24, 2021.
Key Financial Metrics and Transaction Details
- Debt Issuance: $400,000,000 aggregate principal amount of 7.125% Senior Notes due 2028.
- Interest Rate: 7.125% per annum, payable semi-annually in arrears.
- Maturity Date: June 1, 2028.
- Use of Proceeds: Net proceeds are intended to repay a portion of outstanding borrowings under the Partnership's revolving credit facility.
- Security Status: General unsecured senior obligations, unconditionally guaranteed jointly and severally by the Partnership's existing and future subsidiaries.
- Revenue/Profit/Cash Flow: The filing text does not provide specific values for revenue, profit, cash flow, or operating margins.
Material Changes and Covenants
The issuance of the 2028 Notes represents a significant change in the Partnership's capital structure, adding $400 million in long-term debt. The Indenture imposes restrictive covenants limiting the Partnership's ability to:
- Incur additional indebtedness or issue convertible/redeemable equity securities.
- Create liens to secure indebtedness.
- Pay distributions on equity interests or repurchase equity securities.
- Make investments or consolidate/merge with other entities.
- Sell assets or enter into affiliate transactions.
Outlook, Risks, and Redemption Terms
Redemption Provisions:
- Equity Offerings: Prior to June 1, 2024, up to 35% of the notes may be redeemed at 107.125% of principal using net proceeds from equity offerings.
- Make-Whole: Prior to June 1, 2024, the Issuers may redeem notes at principal plus a Make Whole Premium.
- Scheduled Redemption: On or after June 1, 2024, redemption prices decline from 103.563% in 2024 to 100.000% in 2026 and thereafter.
- Change of Control: Holders may require repurchase at 101% of principal plus accrued interest if a Change of Control Triggering Event occurs.
Risks and Contingencies: Events of default include failure to pay interest or principal, bankruptcy, failure to comply with covenants, and cross-defaults on indebtedness aggregating $50.0 million or more. The notes were sold in a private placement exempt from registration under the Securities Act of 1933.
Investor Verification Checklist
- Verify the exact amount of revolving credit facility debt repaid with the net proceeds.
- Review the full text of the Indenture (Exhibit 4.1) for specific definitions of "Change of Control" and "Make Whole Premium."
- Confirm the impact of the new 7.125% interest rate on the Partnership's overall weighted average cost of debt.
- Assess the liquidity impact of the new debt service obligations (semi-annual interest payments starting December 1, 2021).
- Check for any subsequent filings regarding the status of the revolving credit facility post-repayment.