Delek Logistics Partners, LP Announces Proposed Public Offering of Common Units

Rhea-AI Summary

Delek Logistics Partners, LP announces a public offering of $120,000,000 of common units to repay outstanding borrowings under its revolving credit agreement. Delek Holdings shows interest in purchasing up to $30,000,000 of the units. Truist Securities, BofA Securities, and Raymond James are the joint book-running managers for the offering.

Financial Analyst

The public offering by Delek Logistics of $120 million in common units represents a significant capital-raising event, which is expected to have implications for the company's capital structure and liquidity. The decision to offer a 30-day option for underwriters to purchase additional units up to $13.5 million suggests a proactive approach in securing additional funding, potentially to accommodate for over-allotments.

From a financial standpoint, the use of proceeds to repay outstanding borrowings under the company's revolving credit agreement is a strategic move to manage debt levels and improve the balance sheet. This could lead to a reduction in interest expenses and an improved debt-to-equity ratio. However, it is also crucial to consider the dilutive effect on existing shareholders, as the issuance of new units will spread the company's earnings over a larger number of shares.

Delek Holdings' indication of interest in purchasing up to $30 million of the common units may be viewed positively, signaling sponsor confidence in the logistics partner's value proposition. However, it's important to note that this is not a binding commitment and the final decision by the underwriters and Delek Holdings will be determined by market conditions and other factors at the time of the offering.

Market Research Analyst

Assessing the market dynamics, the timing of Delek Logistics' public offering could be influenced by current market conditions and investor appetite for energy infrastructure investments. The role of the joint book-running managers, Truist Securities, BofA Securities and Raymond James, is pivotal in marketing the offering and determining the pricing based on investor demand.

It is essential to analyze the energy sector's performance and investor sentiment towards midstream operations to gauge the potential success of the offering. The midstream sector, which includes logistics and transportation services for the energy industry, tends to be less volatile than the upstream sector but is still subject to fluctuations in energy prices and demand.

Furthermore, the impact of this offering on Delek Logistics' stock performance will depend on the market's perception of the company's growth prospects and the effectiveness of its use of proceeds. If the market views the debt repayment favorably and anticipates stronger financial health, it could lead to positive momentum in the stock price.

Legal Expert

In terms of regulatory compliance, Delek Logistics' adherence to SEC regulations by filing a preliminary prospectus supplement and using an effective shelf registration statement is a standard procedure for public offerings. The importance of these legal documents cannot be overstated, as they provide investors with critical information regarding the offering's terms, risks and the company's financial status.

It is also noteworthy that the press release explicitly states that the offering is not an offer to sell or a solicitation of an offer to buy in any jurisdiction where such actions would be unlawful. This disclaimer highlights the legal intricacies of securities offerings across different states and jurisdictions and the necessity for compliance with the Securities Act of 1933.

The potential purchasers of the securities must rely on the prospectus and prospectus supplement, which must meet the requirements of Section 10 of the Securities Act, ensuring that they contain fully disclosed and accurate material information.

BRENTWOOD, Tenn., March 7, 2024 /PRNewswire/ -- Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") announced today that it has commenced an underwritten public offering of $120,000,000 of common units representing limited partner interests in Delek Logistics pursuant to an effective shelf registration statement previously filed with the Securities and Exchange Commission (the "SEC"). A preliminary prospectus supplement relating to the offering will also be filed with the SEC. Delek Logistics intends to grant the underwriters a 30-day option to purchase up to an additional $13,500,000 of common units. The offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering.

Delek Logistics intends to use the net proceeds from the offering (including any net proceeds from the underwriters' exercise of their option to purchase additional common units) to repay outstanding borrowings under its revolving credit agreement.

Delek US Holdings, Inc. ("Delek Holdings"), the sponsor of Delek Logistics and owner of its general partner, has indicated an interest in purchasing up to $30,000,000 of the common units offered in the offering at the price offered to the public. Because this indication is not a binding agreement or commitment to purchase, Delek Holdings may elect not to purchase any units in the offering, or the underwriters may elect not to sell any units in the offering to Delek Holdings. In the event that Delek Holdings confirms its interest, Delek Logistics will request that the underwriters consider selling to Delek Holdings such amount of the common units offered in the offering.

Truist Securities, BofA Securities and Raymond James are acting as joint book-running managers for the offering. A copy of the preliminary prospectus supplement and accompanying base prospectus relating to this 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 Holdings (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 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

What is Delek Logistics Partners, LP announcing?

Delek Logistics Partners, LP is announcing a public offering of $120,000,000 of common units.

How does Delek Logistics intend to use the net proceeds from the offering?

Delek Logistics intends to use the net proceeds from the offering to repay outstanding borrowings under its revolving credit agreement.

Who has shown interest in purchasing up to $30,000,000 of the common units offered?

Delek Holdings, the sponsor of Delek Logistics, has shown interest in purchasing up to $30,000,000 of the common units offered.

Who are the joint book-running managers for the offering?

Truist Securities, BofA Securities, and Raymond James are acting as joint book-running managers for the offering.

Where can the preliminary prospectus supplement and base prospectus be obtained?

The documents can be obtained from any of the underwriters, including Truist Securities, BofA Securities, and Raymond James, or for free on the SEC's website.