Delek US Holdings,Inc. (NYSE:DK) Files An 8-K Entry into a Material Definitive Agreement

ME Staff 8-k
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Delek US Holdings,Inc. (NYSE:DK) 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.

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.

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, Delek US 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.

Item 9.01. Financial Statements and Exhibits

(a) Financial statements of business acquired.

Not applicable.

(b) Pro forma financial information.

Not applicable.

(c) Shell company transactions.

Not applicable.

(d) Exhibits.

ExhibitNo.

Description

2.1*

Asset Purchase Agreement, dated as of February26, 2018, by and among DKL Big Spring, LLC, Delek US Holdings,Inc., Alon USA Partners, LP, Alon USA GP II, Alon USA Delaware, LLC, Alon USA Refining, LLC, and Alon USA, LP (incorporated by reference herein to Exhibit2.1 to Delek US’ Current Report on Form8-K filed on March2, 2018, File No.001-38142).

10.1

Pipelines, Storage and Throughput Facilities Agreement (Big Spring Refinery Logistics Assets and Duncan Terminal), dated March20, 2018 and effective as of March1, 2018, by and among Alon USA, LP, DKL Big Spring, LLC, for the limited purposes specified therein, Delek US, and for the limited purposes specified therein, J. Aron& Company LLC.

10.2

Big Spring Asphalt Services Agreement, dated March20, 2018 and effective as of March1, 2018, by and among Alon USA, LP, DKL Big Spring, LLC, for the limited purposes specified therein, Delek US, and for the limited purposes specified therein, J. Aron& Company LLC.


Delek US Holdings, Inc. Exhibit
EX-10.1 2 a18-8738_1ex10d1.htm EX-10.1 Exhibit 10.1   Execution Version   PIPELINES,…
To view the full exhibit click here

About Delek US Holdings,Inc. (NYSE:DK)

Delek US Holdings, Inc. is an integrated energy business focused on petroleum refining, the transportation, storage and wholesale of crude oil, intermediate and refined products and convenience store retailing. The Company operates through three segments: Refining, Logistics and Retail. Its Refining Segment operates independent refineries in Tyler, Texas, and El Dorado, Arkansas with a combined design crude distillation capacity of approximately 155,000 barrels per day (bpd). The Logistics Segment gathers, transports and stores crude oil and markets, distributes, transports and stores refined products in select regions of the southeastern United States and west Texas for both its refining segment and third parties. Its Retail Segment markets gasoline, diesel, other refined petroleum products and convenience merchandise through a network of over 360 Company-operated retail fuel and convenience stores located in Alabama, Arkansas, Georgia, Kentucky, Mississippi, Tennessee and Virginia.