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DK > SEC Filings for DK > Form 8-K on 15-Nov-2012All Recent SEC Filings

Show all filings for DELEK US HOLDINGS, INC.

Form 8-K for DELEK US HOLDINGS, INC.


15-Nov-2012

Entry into a Material Definitive Agreement, Termination of a Material Def


Item 1.01. Entry Into a Material Definitive Agreement.

On November 7, 2012, Delek Logistics Partners, LP ("Delek Logistics"), a subsidiary of Delek US Holdings, Inc. ("Delek"), completed its initial public offering (the "Offering") of 8,000,000 common units representing limited partner interests in Delek Logistics (the "Common Units") at a price to the public of $21.00 per Common Unit. The Offering was underwritten by a group of underwriters, including Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital Inc., as representatives for the underwriters (the "Underwriters"). Delek Logistics 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, and 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 Delek Logistics 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).

Omnibus Agreement

On November 7, 2012, in connection with the closing of the Offering, Delek entered into an Omnibus Agreement (the "Omnibus Agreement") by and among Delek Logistics, Delek Logistics GP, LLP, the general partner of Delek Logistics (the "General Partner"), Lion Oil Company ("Lion Oil"), Delek Refining, Ltd. ("Delek Refining"), Paline Pipeline Company, LLC ("Paline"), SALA Gathering Systems, LLC ("SALA"), Magnolia Pipeline Company, LLC ("Magnolia"), El Dorado Pipeline Company, LLC ("El Dorado"), Delek Crude Logistics, LLC ("Delek Crude Logistics"), Delek Marketing-Big Sandy, LLC ("Delek Big Sandy") and Delek Logistics Operating, LLC (the "Delek Operating").

Pursuant to the Omnibus Agreement, Delek agreed to provide Delek Logistics with a license to use the name "Delek" and related marks in connection with Delek Logistics' business. The Omnibus Agreement also provides for certain indemnification and reimbursement obligations between Delek and Delek Logistics.

The Omnibus Agreement addresses the following matters:



Delek's and its subsidiaries' agreement not to compete with Delek Logistics under certain circumstances;

Delek Logistics' right of first offer to acquire certain of Delek's logistics assets, including certain logistics assets that Delek may construct or acquire in the future;

Delek's right of first refusal to purchase Delek Logistics' assets that serve Delek's refineries and Delek Logistics' Paline Pipeline System and to enter into an agreement with respect to all or a portion of the capacity of the Paline Pipeline System's 185-mile, 10-inch crude oil pipeline running between Longview and Nederland, Texas following the termination of Delek Logistics' current contract with a third-party customer;

Delek's obligation to indemnify Delek Logistics for certain environmental and other liabilities and Delek Logistics' obligation to indemnify Delek for liabilities associated with the operation of Delek Logistics' assets after the closing of the Offering and for environmental liabilities related to Delek Logistics' assets to the extent Delek is not required to indemnify Delek Logistics for such liabilities; and

Delek's obligation to indemnify or reimburse Delek Logistics for certain maintenance, capital and other expenditures related to Delek Logistics' initial assets for a period of five years after the closing of the Offering.

The foregoing description is qualified in its entirety by reference to the full text of the Omnibus Agreement, which is filed as Exhibit 10.1 to this Form 8-K and incorporated in this Item 1.01 by reference.

Delek Logistics Revolving Credit Facility

On November 7, 2012, Delek Logistics, Delek Operating, Delek Marketing GP, LLC ("Delek Marketing GP"), Delek Marketing & Supply, LP ("Delek Marketing LP"), Delek Crude Logistics, Delek Big Sandy, Magnolia, El Dorado, SALA and Paline entered into a $175.0 million senior secured revolving credit agreement with Fifth Third Bank, as administrative agent, and a syndicate of lenders ("Delek Logistics Revolving Credit Facility"). The Delek Logistics Revolving Credit Facility contains an accordion feature whereby Delek Logistics can increase the size of the credit facility up to an aggregate of $225.0 million, subject to receiving increased or new commitments from lenders and the satisfaction of certain other conditions precedent. Delek Logistics and each of its existing subsidiaries are borrowers under the Delek Logistics Revolving Credit Facility. The Delek Logistics Revolving Credit Facility includes a $50.0 million sublimit for letters of credit and a $7.0 million sublimit for swing line loans. Upon the closing of the Offering, Delek Logistics had $90.0 million in outstanding revolver borrowings and $12.0 million in issued and outstanding letters of credit, leaving $73.0 million available for future borrowings or letter of credit issuances (subject to the letter of credit sublimit in the facility). The . . .



Item 1.02. Termination of a Material Definitive Agreement.

Prior to the closing of the Offering, Delek was party to the Existing Fifth Third Revolver, which carried a credit limit of $75.0 million, including a $35.0 million sub-limit for letters of credit. Borrowings under the Existing Fifth Third Revolver were secured by substantially all of the assets of Delek Marketing. On November 7, 2012, in connection with the closing of the Offering and the entry into the Delek Logistics Revolving Credit Facility, Delek Logistics repaid the outstanding principal balance of $63.0 million on the Existing Fifth Third Revolver with the cash proceeds from the Offering, and, following such payment of the outstanding principal balance, the Existing Fifth Third Revolver was terminated.




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 (the "Contribution Agreement") by and among Delek Logistics, the General Partner, Delek Operating, Delek Crude Logistics, Delek, Delek Marketing, Delek Marketing LP, Lion Oil and Delek Logistics Services Company (the "Services Company"):

Delek Crude Logistics and Delek Marketing LP contributed 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 Delek Logistics in exchange for (1) 489,766 General Partner units representing a continuation of its 2.0% general partner interest in Delek Logistics, (2) all of the incentive distribution rights of Delek Logistics 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 Delek Logistics in exchange for (1) 11,999,258 subordinated units representing an aggregate 49% limited partner interest in Delek Logistics and (2) 612,207 Common Units representing an aggregate 2.5% limited partner interest in Delek Logistics.

Delek Marketing contributed 100% of its interest in each of Delek Marketing LP and Delek Marketing GP to Delek Logistics in exchange for (1) 2,187,051 Common Units representing an aggregate 8.93% limited partner interest in Delek Logistics; (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 Limited Partnership Agreement of Delek Logistics Agreement). Delek Logistics received its 100% interest in each of Delek Marketing LP and Delek Marketing GP subject to (i) the working capital accounts payable of Delek Marketing LP and Delek Marketing GP of approximately $22.3 million (the "Working Capital Borrowings") and
(ii) indebtedness of $63.0 million under the Existing Fifth Third Revolver.

Delek Logistics issued 9,200,000 Common Units representing an aggregate 37.57% limited partner interest in Delek Logistics to the public in exchange for the contribution by the public, through the Underwriters, to Delek Logistics of gross proceeds of $192.3 million.

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



Delek Logistics borrowed $90.0 million pursuant to the credit facility described above (the "Borrowed Funds"), and Delek Marketing guaranteed such borrowings.

Delek Logistics distributed the Borrowed Funds to Delek Marketing (the "Borrowed Funds Distribution"), and Delek Marketing loaned the Borrowed Funds to Delek.

Delek Logistics used or will use the proceeds from the Offering to (1) pay transaction expenses, estimated to be approximately $3.5 million (excluding the underwriting discounts and a structuring fee); (2) pay the underwriting discounts; (3) pay the structuring fee to Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital Inc.; (4) distribute $50.0 million to the General Partner (the "General Partner Distribution") and approximately $26.5 million to Delek Marketing (the "Marketing Distribution"); (5) repay the outstanding balance under the Existing Fifth Third Revolver; and
(6) replace the working capital lost in the distribution of the Accounts Receivable to Delek Marketing.

Delek contributed to the Services Company its 100% membership interest in the General Partner.

The foregoing description is qualified in its entirety by reference to the full text of the Contribution Agreement, which is filed as Exhibit 10.3 to this Form 8-K and is incorporated in this Item 2.01 by reference.



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 Delek Logistics Revolving Credit Facility provided above under Item 1.01 is incorporated in this Item 2.03 by reference.




Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Number                                   Description

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        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.

10.3        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.

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

10.5        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.


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