Delek Logistics Partners, LP and Delek Logistics Finance Corp. Announce Tender Offer for Any and All of their Outstanding 6.75% Senior Notes due 2025
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The announcement of a cash tender offer for outstanding senior notes by Delek Logistics Partners, LP is a strategic financial maneuver that can have a significant impact on the company's capital structure and debt profile. By offering to repurchase the 6.75% Senior Notes due in 2025, Delek Logistics is potentially reducing its future interest obligations, which could result in an improved debt-to-equity ratio and interest coverage ratios. This action may be interpreted by the market as a signal of the company's strong liquidity position and commitment to managing its debt levels effectively.
From a financial analysis perspective, the tender offer's success will depend on the participation rate of the current note holders and the company's ability to satisfy the Financing Condition through the Concurrent Offering. If the company secures lower interest rates on the new debt, it could lead to reduced cost of capital and an improvement in net interest margins. However, investors should be cautious and consider the potential for increased leverage if the new debt issued under the Concurrent Offering is substantial relative to the company's equity base.
Delek Logistics' decision to initiate a tender offer is likely influenced by the current interest rate environment and market conditions. In a scenario where interest rates are lower than when the original notes were issued, the company may be looking to capitalize on the opportunity to refinance its debt at a more favorable rate. For stakeholders, this could indicate proactive financial management and a positive outlook on the company's operational efficiency and cost management.
Additionally, the timing of the tender offer and its alignment with the Concurrent Offering could reflect the company's strategic planning. By aligning these financial activities, Delek Logistics is likely aiming to streamline its financial operations, which can be seen as a positive move by market participants who value corporate governance and strategic financial planning.
In the context of securities law and regulatory compliance, the offer and concurrent bond offering must adhere to strict guidelines. The Offer Documents and related communications must be complete, transparent and in compliance with securities regulations to prevent any legal repercussions. It is also important to note that the offer is not being made in jurisdictions where it would not comply with local securities laws, indicating Delek Logistics' awareness and adherence to legal and regulatory standards.
For investors, the conditional notice of full redemption for outstanding notes not purchased in the offer is a critical piece of information. It implies that the company intends to retire the remaining debt, subject to the terms of the indenture, which could result in a cleaner balance sheet. However, investors should closely review the terms of the indenture and the offer to fully understand their rights and the implications of the redemption process.
Holders who validly tender (and do not validly withdraw) their Notes prior to the Expiration Time, and whose Notes are accepted for purchase, will be entitled to receive the tender consideration equal to
Payments for Notes purchased will include accrued and unpaid interest from and including the last interest payment date up to, but excluding, the applicable settlement date accepted for purchase. Provided the conditions to the Offer, including the Financing Condition (as defined below), have been satisfied or waived, settlement for Notes tendered prior to the Expiration Time and accepted for purchase is expected to occur on March 13, 2024.
The Offer is contingent upon, among other things, the Offerors' consummation, on terms and conditions satisfactory to the Offerors, of the concurrent bond offering announced today (the "Concurrent Offering") and the receipt of net proceeds therefrom, together with other sources of liquidity, sufficient to purchase the Notes tendered in the Offer and the fees and expenses related thereto (the "Financing Condition"). The Offer is not conditioned on any minimum amount of Notes being tendered. The Offer may be amended, extended or terminated, and any condition with respect thereto may be waived by the Offerors in their sole discretion. There is no assurance that the Offer will be subscribed for in any amount.
Substantially concurrently with the commencement of the Offer, the Offerors issued a conditional notice of full redemption to redeem all outstanding Notes not purchased in the Offer and that remain outstanding pursuant to the indenture governing the Notes. Nothing in this announcement should be construed as a notice of redemption with respect to the Notes, as any redemption will be made pursuant to a notice of redemption in accordance with the indenture governing the Notes.
Available Documents and Other Details
In connection with the Offer, the Offerors have retained Wells Fargo Securities, LLC as the Dealer Manager. Questions regarding the Offer should be directed to Wells Fargo Securities, LLC at liabilitymanagement@wellsfargo.com, Attn: Liability Management Group or by calling collect at (704) 410-4820 or toll-free at (866) 309-6316. Requests for copies of the Offer Documents should be directed to D.F. King & Co., Inc., the Tender Agent and Information Agent for the Offer, at delek@dfking.com or by calling (888) 628-1041 (toll free) or (212) 269-5550. These documents are also available at www.dfking.com/delek.
None of the Offerors, the Dealer Manager, the Tender Agent and Information Agent, the trustee under the indenture governing the Notes or any of their respective affiliates is making any recommendation as to whether holders should tender any Notes in response to the Offer. Holders must make their own decision as to whether to participate in the Offer and, if so, the principal amount of Notes as to which action is to be taken.
This press release is for information purposes only, and does not constitute an offer to sell, a solicitation to buy or an offer to purchase or sell any securities. Neither this press release nor the Offer Documents is an offer to sell or a solicitation of an offer to buy debt securities in the Concurrent Offering or any other securities. The Offer is not being made in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction.
About Delek Logistics Partners, LP
Delek Logistics is a midstream energy master limited partnership headquartered in
Delek US Holdings, Inc. (NYSE: DK) owns the general partner interest as well as a majority limited partner interest in Delek Logistics and is also a significant customer.
Forward-Looking Statements
This press release contains "forward-looking statements," including statements regarding the Offerors' intention to purchase any Notes or to engage in any debt financing transactions. These statements may contain words such as "possible," "believe," "should," "could," "would," "predict," "plan," "estimate," "intend," "may," "anticipate," "will," "if," "expect" or similar expressions, as well as statements in the future tense, are made as of the date they were first issued and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Delek Logistics' control. Delek Logistics' actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including, but not limited to, market risks and uncertainties, including those which might affect the offering, and the impact of any natural disasters or public health emergencies. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed in Delek Logistics' filings and reports with the Securities and Exchange Commission ("SEC"), including the Annual Report on Form 10-K for the year ended December 31, 2023 and other reports and filings with the SEC.
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SOURCE Delek Logistics Partners, LP
