Delek Logistics Partners, LP Announces Closing of Public Offering of Common Units and Full Exercise of Underwriters' Option to Purchase Additional Units

Rhea-AI Summary

Delek Logistics Partners, LP (NYSE: DKL) successfully closed an underwritten public offering of 3,584,416 common units, raising approximately $132.5 million to repay outstanding borrowings. The offering price per unit was $38.50, with underwriters exercising their option to purchase additional units. The offering was made under an effective shelf registration statement filed with the SEC.

Financial Analyst

The closure of Delek Logistics Partners' public offering of common units is a significant financial event that directly impacts the company's capital structure and liquidity. The successful exercise of the underwriters' option to purchase additional units not only demonstrates market confidence but also increases the total capital raised to approximately $132.5 million. This capital infusion is earmarked for the repayment of existing debts under the revolving credit agreement, which is a strategic move to manage the company's leverage and interest expenses.

From a financial perspective, this transaction could improve Delek Logistics' debt-to-equity ratio, a key metric that investors use to gauge a company's financial health. By paying down debt, Delek Logistics may potentially lower its risk profile and improve its creditworthiness. However, it is essential to consider the dilutive effect of issuing additional equity on existing shareholders, which could impact earnings per share and, consequently, investor returns in the short term.

Market Research Analyst

The energy infrastructure sector, in which Delek Logistics operates, requires substantial capital for both maintenance and growth projects. The use of proceeds from the public offering to repay borrowings is a common strategy that allows companies to reallocate financial resources more efficiently. It is indicative of Delek Logistics' proactive approach to capital management, ensuring they maintain the operational flexibility required in a capital-intensive industry.

Market conditions at the time of the offering, including investor appetite for energy sector investments and prevailing interest rates, would have influenced the pricing and success of the offering. The participation of multiple reputable financial institutions as book-runners and co-managers suggests a well-received offering, which could bode well for Delek Logistics' future market endeavors.

Legal Expert

The offering's compliance with the Securities Act of 1933 is crucial, as it ensures the legal sale of securities. The mention of a shelf registration statement indicates that Delek Logistics had previously filed the necessary documentation with the SEC, allowing for a more streamlined process when the market conditions were favorable. The prospectus and prospectus supplement provide detailed information about the offering, which is vital for investors to make informed decisions.

The legal framework surrounding public offerings includes strict regulations to protect investors and maintain market integrity. The stipulation that there will be no sale in jurisdictions where it would be unlawful prior to registration or qualification under the securities laws is standard and reaffirms the offering's adherence to legal standards. It's imperative for stakeholders to understand these legal nuances, as they have a direct bearing on the legitimacy and success of financial transactions such as this.

BRENTWOOD, Tenn., March 12, 2024 /PRNewswire/ -- Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") announced today that it has closed its previously announced underwritten public offering of 3,584,416 common units representing limited partner interests in Delek Logistics, including 467,532 common units sold pursuant to the underwriters' full exercise of their option to purchase additional common units, at a price of $38.50 per unit. Delek Logistics intends to use the gross proceeds of approximately $132.5 million, after underwriting fees and commissions and before other offering-related expenses, to repay outstanding borrowings under its revolving credit agreement.

The offering was made pursuant to an effective shelf registration statement previously filed with the Securities and Exchange Commission (the "SEC"). A prospectus supplement relating to the offering has also been filed with the SEC.

Truist Securities, BofA Securities, Raymond James, MUFG, Barclays, Fifth Third Securities, Wells Fargo Securities and Citizens JMP acted as joint book-running managers for the offering; Mizuho, PNC Capital Markets LLC and TPH & Co. acted as co-managers for the offering. A copy of the prospectus supplement and accompanying base prospectus relating to the offering may be obtained from any of the underwriters, including Truist Securities at 3333 Peachtree Road NE, 9th Floor, Atlanta, Georgia 30326, Attention Equity Capital Markets or by email at TruistSecurities.prospectus@Truist.com; BofA Securities, NC1-022-02-25 at 201 North Tryon Street, Charlotte, North Carolina 28255, Attention: Prospectus Department or by email at dg.prospectus_requests@bofa.com; and Raymond James at 880 Carillon Parkway, St. Petersburg, Florida 33716 or by email at prospectus@raymondjames.com. You may also obtain these documents for free when they are available by visiting the SEC's website at www.sec.gov.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The offering may be made only by means of a prospectus and related prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933, as amended (the "Securities Act").

About Delek Logistics Partners, LP

Delek Logistics is a midstream energy master limited partnership headquartered in Brentwood, Tennessee. Through its owned assets and joint ventures located primarily in and around the Permian Basin, the Delaware Basin and other select areas in the Gulf Coast region, Delek Logistics provides gathering, pipeline, transportation, and other services for its customers in crude oil, intermediates, refined products, natural gas, storage, wholesale marketing, terminalling water disposal and recycling.

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" within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including statements regarding the closing of the offering and the anticipated use of the net proceeds therefrom. 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 SEC, including the Annual Report on Form 10-K for the year ended December 31, 2023 and other reports and filings with the SEC.

Information about Delek Logistics Partners, LP can be found on its website (www.deleklogistics.com), investor relations webpage (https://www.deleklogistics.com/investor-relations), news webpage (https://www.deleklogistics.com/news-releases) and its Twitter account (@DelekLogistics).

 

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SOURCE Delek Logistics Partners, LP

How many common units were sold in the underwritten public offering by Delek Logistics Partners, LP (NYSE: DKL)?

Delek Logistics Partners, LP (NYSE: DKL) sold 3,584,416 common units in the underwritten public offering.

What was the price per unit in the underwritten public offering by Delek Logistics Partners, LP (NYSE: DKL)?

The price per unit in the underwritten public offering by Delek Logistics Partners, LP (NYSE: DKL) was $38.50.

How much gross proceeds did Delek Logistics Partners, LP (NYSE: DKL) raise from the underwritten public offering?

Delek Logistics Partners, LP (NYSE: DKL) raised approximately $132.5 million from the underwritten public offering.

What was the intended use of the gross proceeds from the underwritten public offering by Delek Logistics Partners, LP (NYSE: DKL)?

The gross proceeds from the underwritten public offering by Delek Logistics Partners, LP (NYSE: DKL) were intended to repay outstanding borrowings.

Which underwriters were involved in the underwritten public offering by Delek Logistics Partners, LP (NYSE: DKL)?

Truist Securities, BofA Securities, Raymond James, MUFG, Barclays, Fifth Third Securities, Wells Fargo Securities, and Citizens JMP acted as joint book-running managers for the offering.