Delek Logistics Partners, LP (NYSE:DKL) Files An 8-K Entry into a Material Definitive Agreement

ME Staff 8-k
-
0

Delek Logistics Partners, LP (NYSE:DKL) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement

In connection with the consummation of the Transaction, the parties entered into long-term agreements whereby the Partnership’s subsidiaries will provide logistics, asphalt handling and marketing services to the Sellers.

Pipelines, Storage and Throughput Facilities Agreement

In connection with the Transaction, Alon USA, LP, a Texas limited partnership and indirect, wholly-owned subsidiary of Delek US (“Alon USA”), and the Buyer entered into the Pipelines, Storage and Throughput Facilities Agreement (Big Spring Refinery Logistics Assets and Duncan Terminal) (the “Logistics Agreement”). Under the Logistics Agreement, the Buyer will provide storage and throughput services at certain of the Transferred Assets for Alon USA. The Buyer will act as bailee of crude oil and refined petroleum products owned by Alon USA or its assignee held in such assets owned and operated by the Buyer. The Buyer will charge fees to Alon USA based on storage capacity of $0.55 per barrel and throughput volumes received or delivered ranging from $0.05 to $0.66 per barrel depending on the facility. The fees under the Logistics Agreement may be adjusted annually for inflation. The initial term of the Logistics Agreement is ten years; the Buyer has the one-time option to extend the Logistics Agreement for up to five additional years; and the Logistics Agreement will continue on a year-to-year basis following such renewal term unless terminated by either party.

As set forth in the Logistics Agreement, the Buyer is obligated to maintain certain minimum storage and throughput capacities. Failure to meet such obligations may result in a reduction of fees payable by Alon USA under the Logistics Agreement. Delek US is a party to the Logistics Agreement to guarantee Alon USA’s payment obligations.

The foregoing description of the Logistics Agreement is not complete and is qualified in its entirety by reference to the Logistics Agreement, which is filed as Exhibit10.1 to this Current Report on Form8-K.

Big Spring Asphalt Services Agreement

Further, in connection with the Transaction, Alon USA and the Buyer entered into the Big Spring Asphalt Services Agreement (the “Asphalt Services Agreement”). Under the Asphalt Services Agreement, the Buyer will provide asphalt storage and handling services at certain of the Transferred Assets (such assets, the “Asphalt Facilities”). The Buyer will provide services to Alon USA at the Asphalt Facilities and serve as bailee of all raw materials, including crude oil and other hydrocarbons, used to make asphalt products owned by Alon USA or its assignee held in the Asphalt Facilities. The Buyer will charge fees to Alon USA based on storage capacity of $1.00 per barrel and throughput volumes received or delivered ranging from $0.40 to $8.30 per barrel depending on the facility. The fees under the Asphalt Services Agreement may be adjusted annually for inflation. The initial term of the Asphalt Services Agreement is ten years; the Buyer has the one-time option to extend the Asphalt Services Agreement for up to five additional years; and the Asphalt Services Agreement will continue on a year-to-year basis following such renewal term unless terminated by either party.

As set forth in the Asphalt Services Agreement, the Buyer is obligated to maintain certain minimum storage and throughput capacities. Failure to meet such obligations may result in a reduction of fees payable by Alon USA under the Asphalt Services Agreement. Delek US is a party to the Asphalt Services Agreement to guarantee Alon USA’s payment obligations.

The foregoing description of the Asphalt Services Agreement is not complete and is qualified in its entirety by reference to the Asphalt Services Agreement, which is filed as Exhibit10.2 to this Current Report on Form8-K.

Marketing Agreement

Further, in connection with the Transaction, Alon USA and the Buyer entered into the Marketing Agreement (the “Marketing Agreement”). Under the Marketing Agreement, the Buyer will provide Alon USA with services for the marketing and selling

of certain refined petroleum products that are produced or sold from the refinery near Big Spring, Texas. The Buyer will charge Alon USA fees for such marketing and selling services of $0.50 to $0.71 per barrel depending on the type of product. The fees under the Marketing Agreement may be adjusted annually for inflation. The initial term of the Marketing Agreement is ten years; Alon USA has the one-time option to extend the Marketing Agreement for up to five additional years; and the Marketing Agreement will continue on a year-to-year basis following such renewal term unless terminated by either party.

As set forth in the Marketing Agreement, Alon USA is obligated to provide minimum volumes available for marketing and sale by the Buyer. Failure to meet such obligations may result in Alon USA making a shortfall payment to the Buyer. Delek US is a party to the Marketing Agreement to guarantee Alon USA’s payment obligations.

The foregoing description of the Marketing Agreement is not complete and is qualified in its entirety by reference to the Marketing Agreement, which is filed as Exhibit10.3 to this Current Report on Form8-K.

Other

Additionally, Alon USA will lease real property on which certain Transferred Assets are located to the Buyer to a lease and access agreement and will provide the Buyer with shared use of certain services, utilities, materials and facilities that are necessary to operate and maintain the Transferred Assets to a site services agreement.

Supplemental Indenture and Additional Guarantor

In connection with the Transaction, the Buyer will become a guarantor under the Partnership’s revolving credit facility. Additionally, as required under the Indenture, dated as of May23, 2017, among the Partnership, Delek Logistics Finance Corp., the guarantors named therein and U.S. Bank, National Association, as trustee, on March22, 2018, the Buyer executed a supplemental indenture whereby the Buyer became a guarantor under the Indenture. The foregoing description of the Supplemental Indenture is not complete and is qualified in its entirety by reference to the Supplemental Indenture, which is filed as Exhibit4.1 to this Current Report on Form8-K.

Relationships

Delek US owns a 62.0% limited partnership interest in the Partnership and a 94.6% interest in Delek Logistics GP, LLC, a Delaware limited liability company (the “General Partner”), which owns the entire 2.0% general partner interest and all incentive distribution rights in the Partnership. Each of the Partnership, the General Partner, the Buyer, and the Sellers and the other subsidiaries of the Partnership is a direct or indirect subsidiary of Delek US. As a result, certain individuals, including officers and directors of Delek US and the General Partner, serve as officers and/or directors of more than one of such other entities. Additionally, the Partnership and Delek US have certain commercial relationships as further described in the Partnership’s Annual Report on Form10-K for the year ended December31, 2017.

Transactions

The Conflicts Committee of the Board of Directors of the General Partner (the “Conflicts Committee”), which is comprised solely of independent directors, authorized and approved the Transaction and the agreements discussed above or contemplated by the Purchase Agreement to the Partnership’s First Amended and Restated Agreement of Limited Partnership and the General Partner’s Related Party Transactions Policy. The Conflicts Committee retained independent legal and financial advisors to assist it in evaluating, negotiating and acquiring the assets and documentation connected to the Transaction. In approving the Transaction, the Conflicts Committee based its decisions in part on an opinion from its independent financial advisor that the consideration to be paid by the Partnership was fair to the Partnership and its subsidiaries and the unaffiliated common unitholders of the Partnership from a financial point of view.

Item 2.01 Completion of Acquisition or Disposition of Assets

The text set forth under “Introductory Note” above is incorporated herein by reference.

On March20, 2018, the Partnership completed the Transaction to the terms of the Purchase Agreement as described in the Introductory Note of this Current Report on Form8-K, which description is incorporated by reference into this Item 2.01. Additionally, Delek US, the Partnership, the General Partner, the Sellers and the Buyer have relationships with one another as described in Item 1.01 of this Current Report on Form8-K, which description is incorporated by reference into this Item 2.01.


Delek Logistics Partners, LP Exhibit
EX-4.1 2 a18-8740_1ex4d1.htm EX-4.1 Exhibit 4.1   FIRST SUPPLEMENTAL INDENTURE   This FIRST SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”),…
To view the full exhibit click here

About Delek Logistics Partners, LP (NYSE:DKL)

Delek Logistics Partners, LP owns and operates logistics and marketing assets for crude oil, and intermediate and refined products. The Company’s business primarily consists of certain crude oil, intermediate and refined products pipelines and transportation, storage, wholesale marketing, terminaling and offloading assets, which were previously owned, operated or held by Delek US Holdings, Inc. (Delek), and assets acquired from unrelated third parties. The Company operates through two segments: Pipelines and Transportation segment, and Wholesale Marketing and Terminalling segment. The Company engaged in the gathering, transporting and storing crude oil; storing intermediate products and feed stocks, and marketing, distributing, transporting and storing refined products. The Company also provides crude oil, intermediate and refined products transportation services for terminaling, and marketing services to third parties primarily in Texas, Tennessee and Arkansas.