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DKL > SEC Filings for DKL > Form 8-K on 7-Nov-2012All Recent SEC Filings

Show all filings for DELEK LOGISTICS PARTNERS, LP

Form 8-K for DELEK LOGISTICS PARTNERS, LP


7-Nov-2012

Entry into a Material Definitive Agreement, Completion of Acquisitio


Item 1.01. Entry Into a Material Definitive Agreement.

Underwriting Agreement

On November 1, 2012, Delek Logistics Partners, LP (the "Partnership") entered into an Underwriting Agreement (the "Underwriting Agreement"), by and among the Partnership, Delek Logistics GP, LLP (the "General Partner"), Delek US Holdings, Inc. ("Delek"), Delek Marketing & Supply, Inc. and Lion Oil Company ("Lion Oil" and, together with the Partnership, the General Partner, Delek and Delek Marketing & Supply, Inc., the "Partnership Parties"), and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital Inc., as representatives of the several underwriters named therein (the "Underwriters"), providing for the offer and sale by the Partnership (the "Offering"), and purchase by the Underwriters, of 8,000,000 common units representing limited partner interests in the Partnership (the "Common Units") at a price to the public of $21.00 per Common Unit. Pursuant to the Underwriting Agreement, the Partnership also granted the Underwriters an option for a period of 30 days to purchase up to an additional 1,200,000 Common Units (the "Option Units") to cover over-allotments, if any, on the same terms. On November 5, 2012, the Underwriters exercised in full their option to purchase the Option Units.

The material terms of the Offering are described in the prospectus, dated November 1, 2012 (the "Prospectus"), filed by the Partnership with the United States Securities and Exchange Commission (the "Commission") pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act"). The Offering is registered with the Commission pursuant to a Registration Statement on Form S-1, as amended (File No. 333-182631).

The Underwriting Agreement contains customary representations, warranties and agreements of the Partnership Parties, and customary conditions to closing, obligations of the parties and termination provisions. The Partnership Parties have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the Underwriters may be required to make because of any of those liabilities.

The Offering closed on November 7, 2012. The Partnership received proceeds from the Offering (net of underwriting discounts and after deducting the structuring fee and estimated offering expenses) of approximately $176.2 million. The Partnership will use the net proceeds from the sale of the Common Units to:

to fund an approximately $76.5 million cash distribution to Delek;

to retire the approximately $63.0 million of outstanding indebtedness under the Partnership's predecessor's revolving credit facility;

to provide approximately $35.0 million in working capital to replenish certain amounts distributed to Delek, in the form of trade and other accounts receivable, in connection with the closing of the Offering; and

for other general partnership purposes.


As more fully described under the caption "Underwriting" in the Prospectus, certain of the Underwriters and their affiliates have engaged, and may in the future engage, in commercial banking, investment banking and advisory services for the Partnership, Delek and their respective affiliates from time to time in the ordinary course of their business for which they have received customary fees and reimbursement of expenses. Affiliates of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., Wells Fargo Securities, LLC and Raymond James & Associates, Inc. are lenders under the revolving credit facility described below. Certain of the underwriters or their affiliates have performed or will perform commercial banking, investment banking and advisory . . .


Item 2.01. Completion of Acquisition or Disposition of Assets.

Contribution, Conveyance and Assumption Agreement

On November 7, 2012, in connection with the closing of the Offering, the following transactions, among others, occurred pursuant to the Contribution, Conveyance and Assumption Agreement by and among the Partnership, the General Partner, Delek Operating, Delek Crude Logistics, Delek, Delek Marketing & Supply, LLC ("Delek Marketing"), Delek Marketing & Supply, LP ("Marketing LP"), Lion Oil and the Services Company (the "Contribution Agreement"):

Delek Crude Logistics and Delek Marketing LP transferred all right, title and interest in and to their accounts receivable (the "Accounts Receivable") to Delek Marketing;

The General Partner contributed its 100% membership interest in Paline to the Partnership in exchange for (1) 489,766 General Partner units representing a continuation of its 2.0% general partner interest in the Partnership, (2) all of the incentive distribution rights of the Partnership and (3) the right to receive a distribution;



Lion Oil contributed the Memphis terminal and the Nashville terminal and 100% of its interests in each of SALA, El Dorado and Magnolia to the Partnership in exchange for (1) 11,999,258 subordinated units representing an aggregate 49% limited partner interest in the Partnership and
(2) 612,207 Common Units representing an aggregate 2.5% limited partner interest in the Partnership.

Delek Marketing contributed 100% of its interest in each of Marketing LP and Delek Marketing & Supply GP, LLC, a Delaware limited liability company ("Marketing GP"), to the Partnership in exchange for (1) 2,187,051 Common Units representing an aggregate 8.9% limited partner interest in the Partnership; (2) the right to receive the Borrowed Funds Distribution (as defined below); (3) the right to receive the Marketing Distribution (as defined below) and (4) the right to receive the Deferred Issuance and Distribution (as defined in the Partnership Agreement (as defined below)). The Partnership received its 100% interest in each of Marketing LP and Marketing GP subject to (i) the working capital accounts payable of Marketing LP and Marketing GP of $22.3 million (the "Working Capital Borrowings") and (ii) indebtedness of $63.0 million under the Partnership's predecessor's revolving credit facility (the "Existing Credit Agreement Debt").

The Partnership issued 9,200,000 Common Units representing an aggregate 37.6% limited partner interest in the Partnership to the public in exchange for the contribution by the public, through the Underwriters, to the Partnership of gross proceeds of $193.2 million.

The Partnership contributed the Memphis terminal and the Nashville terminal and 100% interests in each of SALA, El Dorado, Magnolia, Paline, Marketing LP and Marketing GP to Delek Operating.

The Partnership borrowed $90.0 million pursuant to the credit facility described under "Revolving Credit Agreement" above (the "Borrowed Funds"), and Delek Marketing & Supply LLC ("Marketing LLC") guaranteed such borrowings.

The Partnership distributed the Borrowed Funds to Marketing LLC (the "Borrowed Funds Distribution"), and Marketing LLC loaned the Borrowed Funds and a portion of the Marketing Distribution and the distribution received in the Deferred Issuance and Distribution to Delek and Marketing LLC guaranteed the Borrowed Funds and certain other obligations of the Partnership under the revolving credit facility and agreed to pledge any payment with respect to or proceeds from the sale of the note delivered by Delek evidencing the obligation in a cash collateralized account to secure its guarantee.

. . .



Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The description of the Revolving Credit Agreement provided above under Item 1.01 is incorporated in this Item 2.03 by reference.



Item 3.02. Unregistered Sales of Equity Securities.

The description in Item 2.01 above of the issuances by the Partnership of securities to the General Partner, Lion Oil and Delek Marketing on November 7, 2012 in connection with the consummation of the transactions contemplated by the Contribution Agreement is incorporated herein by reference. The foregoing transactions were undertaken in reliance upon the exemption from the registration requirements in Section 4(2) of the Securities Act. The Partnership believes that exemptions other than the foregoing exemption may exist for these transactions.

Each of the Subordinated Units granted under the Contribution Agreement will convert into one Common Unit and then will participate pro rata with the other Common Units in distributions of available cash at the end of the subordination period. The subordination period will end on the first business day after the Partnership has earned and paid at least (i) $1.50 (the minimum quarterly distribution on an annualized basis) on each outstanding Common Unit, Subordinated Unit and general partner unit, for each of three consecutive, non-overlapping four-quarter periods ending on or after December 31, 2015, or
(ii) $2.25 (150% of the annualized minimum quarterly distribution) on each outstanding Common Unit, Subordinated Unit and general partner unit, in addition to any distribution made in respect of the incentive distribution rights, for any four-consecutive-quarter period ending on or after December 31, 2013, in each case provided that (a) the conflicts committee, or the board of directors of the General Partner based on the recommendation of our conflicts committee, reasonably expects to satisfy the tests set forth above for the succeeding four-quarter period without treating as earned any shortfall payments under the commercial agreements with Delek described above and (b) there are no arrearages on the Common Units at that time. In addition, the subordination period will end upon the removal of the General Partner other than for cause if the units held by the General Partner and its affiliates are not voted in favor of such removal.


The description of the subordination period contained in the section of the Prospectus entitled "Provisions of Our Partnership Agreement Relating to Cash Distributions- Subordination Period" is incorporated herein by reference.



Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The description of the Long-Term Incentive Plan provided above under Item 1.01 is incorporated in this Item 5.02 by reference.



Item 5.03. Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.

First Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP

On November 7, 2012, in connection with the closing of the Offering, the Partnership amended and restated its Limited Partnership Agreement (as amended, the "Partnership Agreement"). A description of the Partnership Agreement is contained in the section of the Prospectus entitled "The Partnership Agreement" and is incorporated herein by reference.

The foregoing description and the description contained in the Prospectus are not complete and are qualified in their entirety by reference to the full text of the Partnership Agreement, which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated in this Item 5.03 by reference.

First Amended and Restated Limited Liability Company Agreement of Delek Logistics GP, LLC

On November 7, 2012, in connection with the closing of the Offering, the General Partner amended and restated its Limited Liability Company Agreement (as amended, the "LLC Agreement"). The amendments to the LLC Agreement included, among other things, outlining the rights of the sole member and management by the board of directors of the Partnership's business. On November 7, 2012, following the completion of the Offering, the LLC Agreement was further amended (the "LLC Agreement Amendment") in connection with the transfer of the membership interest in the General Partner from Delek to the Services Company.

The foregoing description is not complete and is qualified in its entirety by reference to the full text of the LLC Agreement and the LLC Agreement Amendment, which are filed as Exhibit 3.2 and 3.2, respectively, to this Current Report on Form 8-K and are incorporated in this Item 5.03 by reference.



Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

--------------------------------------------------------------------------------
Number                                    Description

1.1          Underwriting Agreement, dated as of November 7, 2012, by and among
             Delek Logistics Partners, LP, Delek Logistics GP, LLC, Delek US
             Holding, Inc., Lion Oil Company and Delek Marketing & Supply, Inc. and
             the Underwriters named therein.

3.1          First Amended and Restated Agreement of Limited Partnership of Delek
             Logistics Partners, LP, dated November 7, 2012.

3.2          First Amended and Restated Limited Liability Company Agreement of
             Delek Logistics GP, LLC, dated November 7, 2012.

3.3          Amendment to First Amended and Restated Limited Liability Company
             Agreement of Delek Logistics GP, LLC, dated November 7, 2012.

10.1         Omnibus Agreement, dated November 7, 2012, by and among Delek US
             Holdings, Inc., Delek Refining, Ltd., Lion Oil Company, Delek
             Logistics Partners, LP, Paline Pipeline Company, LLC, SALA Gathering
             Systems, LLC, Magnolia Pipeline Company, LLC, El Dorado Pipeline
             Company, LLC, Delek Crude Logistics, LLC, Delek Marketing-Big Sandy,
             LLC, Delek Logistics Operating, LLC and Delek Logistics GP, LLC.

10.2         Operation and Management Services Agreement, dated November 7, 2012,
             by and among Delek Logistics Services Company, Delek Logistics
             Partners, LP and Delek Logistics GP, LLC.

10.3         Revolving Credit Agreement, dated November 7, 2012, by and among Delek
             Logistics Partners, LP, Delek Logistics Operating, LLC, Delek
             Marketing GP, LLC, Delek Marketing & Supply, LP, Delek Crude
             Logistics, LLC, Delek Marketing-Big Sandy, LLC, Magnolia Pipeline
             Company, LLC, El Dorado Pipeline Company, LLC, SALA Gathering Systems,
             LLC, and Paline Pipeline Company, LLC and Fifth Third Bank, as
             administrative agent, and the other lenders party thereto.

10.4         Contribution, Conveyance and Assumption Agreement, dated November 7,
             2012, by and among Delek Logistics Partners, LP, Delek Logistics GP,
             LLC, Delek Logistics Operating, LLC, Delek Crude Logistics, LLC, Delek
             US Holdings, Inc., Delek Marketing & Supply, LLC, Delek Marking and
             Supply, LP, Lion Oil Company and Delek Logistics Services Company.

10.5         Delek Logistics GP, LLC 2012 Long-Term Incentive Plan, dated November
             7, 2012.

10.6**       Marketing Agreement, dated November 7, 2012, by and between Delek
             Refining, Ltd. and Delek Marketing & Supply, LP.

10.7         Pipelines and Tankage Agreement, dated November 7, 2012, by and
             between Delek Refining, Ltd. and Delek Crude Logistics, LLC.

10.8         Terminalling Services Agreement (Big Sandy Terminal), dated November
             7, 2012, by and between Delek Refining, Ltd. and Delek Marketing-Big
             Sandy, LLC.

--------------------------------------------------------------------------------
10.9     Pipelines and Storage Facilities Agreement, dated November 7, 2012, by
         and among Lion Oil Company, Delek Logistics Partners, LP, SALA Gathering
         Systems, LLC, El Dorado Pipeline Company, LLC, Magnolia Pipeline Company,
         LLC and J. Aron & Company.

10.10    Terminalling Services Agreement (Memphis Terminal), dated November 7,
         2012, by and between Lion Oil Company, Delek Logistics Operating, LLC and
         J. Aron & Company.

** Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the SEC.


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