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.
Purchase Agreement
On May 18, 2017, Delek Logistics Partners, LP, a Delaware limited
partnership (the Partnership), Delek Logistics Finance Corp., a
Delaware corporation and a wholly owned subsidiary of the
Partnership (Finance Corp. and together with the Partnership, the
Issuers), and the Partnerships existing subsidiaries (other than
Finance Corp., the Guarantors), entered into a purchase agreement
(the Purchase Agreement) with Merrill Lynch, Pierce, Fenner Smith
Incorporated, as representative of the several initial purchasers
named therein (the Initial Purchasers), to which the Issuers
agreed to sell $250,000,000 in aggregate principal amount of the
Issuers 6.750% Senior Notes due 2025 (the 2025 Notes), along with
the related guarantees of the 2025 Notes. The 2025 Notes were
offered and sold in a transaction exempt from the registration
requirements under the Securities Act of 1933, as amended (the
Securities Act). The 2025 Notes are expected to be sold to
qualified institutional buyers in reliance on Rule 144A under the
Securities Act and to persons outside the United States in
reliance on Regulation S under the Securities Act.
partnership (the Partnership), Delek Logistics Finance Corp., a
Delaware corporation and a wholly owned subsidiary of the
Partnership (Finance Corp. and together with the Partnership, the
Issuers), and the Partnerships existing subsidiaries (other than
Finance Corp., the Guarantors), entered into a purchase agreement
(the Purchase Agreement) with Merrill Lynch, Pierce, Fenner Smith
Incorporated, as representative of the several initial purchasers
named therein (the Initial Purchasers), to which the Issuers
agreed to sell $250,000,000 in aggregate principal amount of the
Issuers 6.750% Senior Notes due 2025 (the 2025 Notes), along with
the related guarantees of the 2025 Notes. The 2025 Notes were
offered and sold in a transaction exempt from the registration
requirements under the Securities Act of 1933, as amended (the
Securities Act). The 2025 Notes are expected to be sold to
qualified institutional buyers in reliance on Rule 144A under the
Securities Act and to persons outside the United States in
reliance on Regulation S under the Securities Act.
The Purchase Agreement contains customary representations and
warranties of the parties and indemnification and contribution
provisions under which the Issuers and the Guarantors, on one
hand, and the Initial Purchasers, on the other, have agreed to
indemnify each other against certain liabilities, including
liabilities under the Securities Act, and customary conditions to
closing, obligations of the parties and termination provisions.
warranties of the parties and indemnification and contribution
provisions under which the Issuers and the Guarantors, on one
hand, and the Initial Purchasers, on the other, have agreed to
indemnify each other against certain liabilities, including
liabilities under the Securities Act, and customary conditions to
closing, obligations of the parties and termination provisions.
Some of the Initial Purchasers and their affiliates have engaged
in, and may in the future engage in, investment banking and other
commercial dealings in the ordinary course of business with the
Partnership or its affiliates. The Initial Purchasers have
received, or may in the future receive, customary fees and
commissions for these transactions. In particular, affiliates of
certain of the Initial Purchasers are lenders under the
Partnerships revolving credit facility.
in, and may in the future engage in, investment banking and other
commercial dealings in the ordinary course of business with the
Partnership or its affiliates. The Initial Purchasers have
received, or may in the future receive, customary fees and
commissions for these transactions. In particular, affiliates of
certain of the Initial Purchasers are lenders under the
Partnerships revolving credit facility.
The foregoing description of the Purchase Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Purchase Agreement, which is
filed with this Current Report on Form 8-K as Exhibit 1.1.
purport to be complete and is qualified in its entirety by
reference to the full text of the Purchase Agreement, which is
filed with this Current Report on Form 8-K as Exhibit 1.1.
Indenture and the 2025 Notes
On May 23, 2017, the Issuers, the Guarantors named therein and
U.S. Bank, National Association, as trustee, entered into an
indenture (the Indenture), to which the Issuers issued the 2025
Notes. The 2025 Notes are general unsecured senior obligations of
the Issuers. The 2025 Notes are unconditionally guaranteed
jointly and severally on a senior unsecured basis by the
Guarantors and will be unconditionally guaranteed on the same
basis by certain of the Partnerships future subsidiaries. The
2025 Notes rank equal in right of payment with all existing and
future senior indebtedness of the Issuers, and senior in right of
payment to any future subordinated indebtedness of the Issuers.
U.S. Bank, National Association, as trustee, entered into an
indenture (the Indenture), to which the Issuers issued the 2025
Notes. The 2025 Notes are general unsecured senior obligations of
the Issuers. The 2025 Notes are unconditionally guaranteed
jointly and severally on a senior unsecured basis by the
Guarantors and will be unconditionally guaranteed on the same
basis by certain of the Partnerships future subsidiaries. The
2025 Notes rank equal in right of payment with all existing and
future senior indebtedness of the Issuers, and senior in right of
payment to any future subordinated indebtedness of the Issuers.
Interest and Maturity
The 2025 Notes will mature on May 15, 2025, and interest on the
2025 Notes is payable semi-annually in arrears on each May 15 and
November 15, commencing November 15, 2017. Interest will be
payable to holders of record on the May 1 and November 1
immediately preceding the related interest payment date, and will
be computed on the basis of a 360-day year consisting of twelve
30-day months.
2025 Notes is payable semi-annually in arrears on each May 15 and
November 15, commencing November 15, 2017. Interest will be
payable to holders of record on the May 1 and November 1
immediately preceding the related interest payment date, and will
be computed on the basis of a 360-day year consisting of twelve
30-day months.
Optional Redemption
At any time prior to May 15, 2020, the Issuers may on one or more
occasions redeem up to 35% of the aggregate principal amount of
2025 Notes issued under the Indenture, upon not less than 30 or
more than 60 days notice, at a redemption price of 106.750% of
the principal amount, plus accrued and unpaid interest, if any,
to the redemption date (subject to the right of holders of record
on the relevant record date to receive interest due on an
interest payment date that is on or prior to the redemption
date), in an amount not greater than the net cash proceeds of one
or more equity offerings by the Partnership, provided that:
occasions redeem up to 35% of the aggregate principal amount of
2025 Notes issued under the Indenture, upon not less than 30 or
more than 60 days notice, at a redemption price of 106.750% of
the principal amount, plus accrued and unpaid interest, if any,
to the redemption date (subject to the right of holders of record
on the relevant record date to receive interest due on an
interest payment date that is on or prior to the redemption
date), in an amount not greater than the net cash proceeds of one
or more equity offerings by the Partnership, provided that:
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at least 65% of the aggregate principal amount of the 2025
Notes issued under the Indenture remains outstanding immediately after the occurrence of such redemption (excluding 2025 Notes held by the Partnership and its subsidiaries); and |
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the redemption occurs within 180 days of the date of the
closing of each such equity offering. |
Prior to May 15, 2020, the Issuers may on one or more occasions
redeem all or part of the 2025 Notes, upon not less than 30 or
more than 60 days notice, at a redemption price equal to the sum
of:
redeem all or part of the 2025 Notes, upon not less than 30 or
more than 60 days notice, at a redemption price equal to the sum
of:
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the principal amount thereof, plus
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the Make Whole Premium (as defined in the Indenture) at the
redemption date, plus |
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accrued and unpaid interest, if any, to the redemption date
(subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date). |
On and after May 15, 2020, the Issuers may on one or more
occasions redeem all or a part of the 2025 Notes, upon not less
than 30 or more than 60 days notice, at the redemption prices
(expressed as percentages of principal amount) set forth below,
plus accrued and unpaid interest, if any, on the 2025 Notes
redeemed to the applicable redemption date (subject to the right
of holders of record on the relevant record date to receive
interest due on an interest payment date that is on or prior to
the redemption date), if redeemed during the twelve-month period
beginning on May 15 of the years indicated below:
occasions redeem all or a part of the 2025 Notes, upon not less
than 30 or more than 60 days notice, at the redemption prices
(expressed as percentages of principal amount) set forth below,
plus accrued and unpaid interest, if any, on the 2025 Notes
redeemed to the applicable redemption date (subject to the right
of holders of record on the relevant record date to receive
interest due on an interest payment date that is on or prior to
the redemption date), if redeemed during the twelve-month period
beginning on May 15 of the years indicated below:
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YEAR
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PERCENTAGE
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105.063
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%
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103.375
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%
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101.688
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%
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2023 and thereafter
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100.000
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%
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The Issuers may also redeem all (but not a portion of) the 2025
Notes under certain circumstances if 90% or more of the aggregate
principal amount of the outstanding 2025 Notes are purchased in
connection with a change of control or alternate offer.
Notes under certain circumstances if 90% or more of the aggregate
principal amount of the outstanding 2025 Notes are purchased in
connection with a change of control or alternate offer.
Change of Control
If a Change of Control Triggering Event (as defined in the
Indenture) occurs, each holder of 2025 Notes may require the
Partnership to repurchase all or any part of that holders 2025
Notes for cash at a price equal to 101% of the aggregate
principal amount of the 2025 Notes repurchased, plus any accrued
and unpaid interest on the notes repurchased, to the date of
settlement (subject to the right of holders of record on the
relevant record date to receive interest due on an interest
payment date that is on or prior to the settlement date).
Indenture) occurs, each holder of 2025 Notes may require the
Partnership to repurchase all or any part of that holders 2025
Notes for cash at a price equal to 101% of the aggregate
principal amount of the 2025 Notes repurchased, plus any accrued
and unpaid interest on the notes repurchased, to the date of
settlement (subject to the right of holders of record on the
relevant record date to receive interest due on an interest
payment date that is on or prior to the settlement date).
Certain Covenants
The Indenture contains covenants that, among other things, limit
the Partnerships ability and the ability of its restricted
subsidiaries to: (i) incur, assume or guarantee additional
indebtedness or issue certain convertible or redeemable equity
securities; (ii) create liens to secure indebtedness; (iii) pay
distributions on equity interests, repurchase equity securities
or redeem subordinated securities; (iv) make investments; (v)
restrict distributions, loans or other asset transfers from the
Partnerships restricted subsidiaries; (vi) consolidate with or
merge with or into, or sell substantially all of the Partnerships
properties to, another person; (vii) sell or otherwise dispose of
assets, including equity interests in subsidiaries; and (viii)
enter into transactions with affiliates.
the Partnerships ability and the ability of its restricted
subsidiaries to: (i) incur, assume or guarantee additional
indebtedness or issue certain convertible or redeemable equity
securities; (ii) create liens to secure indebtedness; (iii) pay
distributions on equity interests, repurchase equity securities
or redeem subordinated securities; (iv) make investments; (v)
restrict distributions, loans or other asset transfers from the
Partnerships restricted subsidiaries; (vi) consolidate with or
merge with or into, or sell substantially all of the Partnerships
properties to, another person; (vii) sell or otherwise dispose of
assets, including equity interests in subsidiaries; and (viii)
enter into transactions with affiliates.
Events of Default
Upon a continuing event of default, the trustee or the holders of
25% of the principal amount of the then outstanding 2025 Notes
may declare all the 2025 Notes immediately due and payable,
except that a default resulting from a bankruptcy or insolvency
with respect to the Partnership or any restricted subsidiary of
the Partnership that is a significant subsidiary or any group of
its restricted subsidiaries that, taken as a whole, would
constitute a significant subsidiary of the Partnership, will
automatically cause all outstanding 2025 Notes to become due and
payable immediately without further action or notice. Each of the
following constitutes an event of default under the Indenture:
25% of the principal amount of the then outstanding 2025 Notes
may declare all the 2025 Notes immediately due and payable,
except that a default resulting from a bankruptcy or insolvency
with respect to the Partnership or any restricted subsidiary of
the Partnership that is a significant subsidiary or any group of
its restricted subsidiaries that, taken as a whole, would
constitute a significant subsidiary of the Partnership, will
automatically cause all outstanding 2025 Notes to become due and
payable immediately without further action or notice. Each of the
following constitutes an event of default under the Indenture:
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default for 30 days in the payment when due of interest on
the 2025 Notes; |
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default in payment when due of the principal of, or
premium, if any, on the 2025 Notes; |
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failure by the Partnership to comply with the covenant
relating to consolidations, mergers or transfers of all or substantially all of the Partnerships assets or failure by the Partnership to purchase notes when required to the asset sale or change of control provisions of the Indenture; |
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failure by the Partnership for 180 days after notice to
comply with its reporting obligations under the Indenture; |
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failure by the Partnership for 60 days after notice by the
trustee or the holders of at least 25% in aggregate principal amount of the 2025 Notes then outstanding to comply with any of the other agreements in the Indenture; |
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default under any mortgage, indenture or instrument
governing certain indebtedness for money borrowed or guaranteed by the Partnership or any of its restricted subsidiaries, if such default: (i) is caused by a failure to pay principal, interest or premium, if any, on said indebtedness within any applicable grace period; or (ii) results in the acceleration of such indebtedness prior to its stated maturity, and, in each case, the principal amount of the indebtedness, together with the principal amount of any other such |
indebtedness under which there has been a payment default or
acceleration of maturity, aggregates at such time $50.0 million
or more, subject to a cure or waiver provision;
acceleration of maturity, aggregates at such time $50.0 million
or more, subject to a cure or waiver provision;
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failure by the Partnership or any of its restricted
subsidiaries to pay final non-appealeable judgments aggregating in excess of $50.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; |
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except as permitted by the Indenture, any guarantee is held
in any judicial proceeding to be unenforceable or invalid, or ceases for any reason to be in full force and effect, or any Guarantor, or any person acting on behalf of any Guarantor, denies or disaffirms its obligations under its guarantee; and |
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certain events of bankruptcy or insolvency described in the
Indenture with respect to the Partnership, or any of the Partnerships restricted subsidiaries that is a significant subsidiary or any group of its restricted subsidiaries that, taken as a whole, would constitute a significant subsidiary of the Partnership. |
The foregoing description of the Indenture does not purport to be
complete and is qualified in its entirety by reference to the
full text of the Indenture and the form of 6.750% Senior Note due
2025, which are filed with this Current Report on Form 8-K as
Exhibit 4.1 and Exhibit 4.2, respectively.
complete and is qualified in its entirety by reference to the
full text of the Indenture and the form of 6.750% Senior Note due
2025, which are filed with this Current Report on Form 8-K as
Exhibit 4.1 and Exhibit 4.2, respectively.
Registration Rights Agreement
On May 23, 2017, in connection with the issuance of the 2025
Notes, the Issuers, the Guarantors and Merrill Lynch, Pierce,
Fenner Smith Incorporated, as representative of the Initial
Purchasers, entered into a registration rights agreement (the
Registration Rights Agreement). Under the Registration Rights
Agreement, the Issuers and the Guarantors will use their
commercially reasonable efforts to cause to be filed with the
Securities and Exchange Commission a registration statement on an
appropriate registration form with respect to a registered
exchange offer to exchange the 2025 Notes for new notes with
terms substantially identical in all material respects with the
2025 Notes (except the new notes will not contain terms with
respect to transfer restrictions). The Issuers and the Guarantors
will use their commercially reasonable efforts to cause such
exchange offer registration statement to become effective under
the Securities Act.
Notes, the Issuers, the Guarantors and Merrill Lynch, Pierce,
Fenner Smith Incorporated, as representative of the Initial
Purchasers, entered into a registration rights agreement (the
Registration Rights Agreement). Under the Registration Rights
Agreement, the Issuers and the Guarantors will use their
commercially reasonable efforts to cause to be filed with the
Securities and Exchange Commission a registration statement on an
appropriate registration form with respect to a registered
exchange offer to exchange the 2025 Notes for new notes with
terms substantially identical in all material respects with the
2025 Notes (except the new notes will not contain terms with
respect to transfer restrictions). The Issuers and the Guarantors
will use their commercially reasonable efforts to cause such
exchange offer registration statement to become effective under
the Securities Act.
The Issuers and the Guarantors will use their commercially
reasonable efforts to cause the exchange offer to be consummated
not later than 365 days after May 23, 2017. Under some
circumstances, in lieu of, or in addition to, a registered
exchange offer, the Issuers and the Guarantors will use their
commercially reasonably efforts to file a shelf registration
statement covering resales of the 2025 Notes. If the Issuers and
the Guarantors fail to satisfy such obligations (a registration
default), the annual interest rate on the 2025 Notes will
increase by 0.25%. The annual interest rate on the 2025 Notes
will increase by an additional 0.25% for each subsequent 90-day
period during which the registration default continues, up to a
maximum additional interest rate of 0.75% per year over the
applicable interest rate listed in the Indenture. If the
registration default is corrected, the applicable interest rate
will be reduced to the interest rate listed in the Indenture.
reasonable efforts to cause the exchange offer to be consummated
not later than 365 days after May 23, 2017. Under some
circumstances, in lieu of, or in addition to, a registered
exchange offer, the Issuers and the Guarantors will use their
commercially reasonably efforts to file a shelf registration
statement covering resales of the 2025 Notes. If the Issuers and
the Guarantors fail to satisfy such obligations (a registration
default), the annual interest rate on the 2025 Notes will
increase by 0.25%. The annual interest rate on the 2025 Notes
will increase by an additional 0.25% for each subsequent 90-day
period during which the registration default continues, up to a
maximum additional interest rate of 0.75% per year over the
applicable interest rate listed in the Indenture. If the
registration default is corrected, the applicable interest rate
will be reduced to the interest rate listed in the Indenture.
The foregoing description of the Registration Rights Agreement
does not purport to be complete and is qualified in its entirety
by reference to the full text of the Registration Rights
Agreement, which is filed with this Current Report on Form 8-K as
Exhibit 4.3.
does not purport to be complete and is qualified in its entirety
by reference to the full text of the Registration Rights
Agreement, which is filed with this Current Report on Form 8-K as
Exhibit 4.3.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information required by Item 2.03 relating to the 2025 Notes
and the Indenture is contained in Item 1.01 of this Current
Report on Form 8-K above and is incorporated herein by reference.
and the Indenture is contained in Item 1.01 of this Current
Report on Form 8-K above and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Shell company transactions.
Not applicable.
(d) Exhibits.
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1.1
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Purchase Agreement, dated as of May 18, 2017, among the
Partnership, Finance Corp., the Guarantors named therein and Merrill Lynch, Pierce, Fenner Smith Incorporated, as representative of the Initial Purchasers named therein. |
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4.1
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Indenture, dated as of May 23, 2017, among the Partnership,
Finance Corp., the Guarantors named therein and U.S. Bank, National Association, as trustee. |
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4.2
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Form of 6.750% Senior Note due 2025 (included as Exhibit A
in Exhibit 4.1). |
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4.3
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Registration Rights Agreement, dated as of May 23, 2017,
among the Partnership, Finance Corp., the Guarantors named therein and Merrill Lynch, Pierce, Fenner Smith Incorporated, as representative of the Initial Purchasers, relating to the 2025 Notes.> |
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. DELEK LOGISTICS PARTNERS, LP (NYSE:DKL) Recent Trading Information
DELEK LOGISTICS PARTNERS, LP (NYSE:DKL) closed its last trading session up +0.15 at 30.85 with 44,713 shares trading hands.
