8-K: Delek Logistics Secures $1.3B Revolving Credit Facility

Delek Logistics Partners, LP has entered into a new $1.3 billion revolving credit facility, replacing its prior credit agreements and enhancing financial flexibility.

Summary

• Delek Logistics Partners, LP (the Partnership) entered into a new Credit Agreement on March 26, 2026, providing for revolving commitments up to $1,300.0 million.
• The new facility includes a sublimit of $150.0 million for letters of credit and $50.0 million for swing line loans.
• It replaces the Partnership's existing revolving credit facility and term loan facility under the Fourth Amended and Restated Credit Agreement, dated October 13, 2022.
• The maturity date for the Revolving Facility is the earliest of March 26, 2031, 180 days prior to the earliest maturity of the Partnership's 8.625% Senior Notes due 2029 (if at least $500.0 million remains outstanding), or termination due to default.
• Proceeds from the Revolving Facility will be used for repayment of outstanding borrowings under the Prior Credit Agreement, working capital, permitted acquisitions, other permitted investments, general corporate purposes (including capital expenditures and refinancing existing indebtedness), restricted payments, and any other purpose not expressly prohibited.
• An accordion feature allows the Partnership to increase available revolving borrowings by an aggregate amount not exceeding the greater of $525.0 million or 100% of EBITDA for the most recently ended Test Period, subject to certain conditions.
• Borrowings bear interest at either a base rate (ranging from 0.50% to 1.50% plus an applicable margin) or a Term SOFR-based tranche rate (ranging from 1.50% to 2.50% plus an applicable margin), depending on the Partnership's Total Leverage Ratio.
• Unused revolving commitments incur a commitment fee ranging from 0.30% to 0.50% per annum, also dependent on the Total Leverage Ratio.
• The New Credit Agreement contains customary affirmative and negative covenants and events of default, which are noted to allow additional flexibility compared to the Prior Credit Agreement.
• Financial covenants include a Total Leverage Ratio not greater than 5.25 to 1.00 (or 5.50 to 1.00 during a Temporary Increase Period), a Senior Leverage Ratio not greater than 3.75 to 1.00, and an Interest Coverage Ratio greater than 2.00 to 1.00.
• The obligations under the New Credit Agreement are secured by first priority liens on substantially all tangible and intangible assets of the Partnership and its Guarantors, with certain customary exceptions.
• The Prior Credit Agreement was repaid in full and all related liabilities and obligations were satisfied on March 26, 2026, funded by borrowings under the New Credit Agreement.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive and expected development, as it secures significant liquidity and financial flexibility for Delek Logistics Partners, LP, supporting ongoing operations and strategic growth initiatives within typical industry financial parameters.

Positives

• Secured a substantial $1,300.0 million revolving credit facility, providing significant liquidity.
• The new agreement replaces prior credit facilities, streamlining debt structure and potentially offering improved terms.
• Includes an accordion feature allowing for future expansion of borrowing capacity by up to $525.0 million or 100% of EBITDA, providing flexibility for growth.
• The covenants are noted to allow additional flexibility to the Partnership and its restricted subsidiaries compared to the Prior Credit Agreement.
• Broad permitted uses of proceeds support various strategic and operational needs, including acquisitions and capital expenditures.

Negatives

• The facility is secured by first priority liens on substantially all tangible and intangible assets of the Partnership and Guarantors, which is a significant encumbrance.
• Financial covenants impose limits on leverage and interest coverage, requiring ongoing compliance.
• Commitment fees are incurred on unused revolving commitments, adding to financing costs.

Risks

• Changes in general economic conditions, including the impact of inflation, interest rates, and commodity prices.
• The ability to comply with the covenants and other terms of the New Credit Agreement.
• The impact of changes in benchmark interest rates on borrowing costs under the New Credit Agreement.
• The ability to generate sufficient cash flow from operations to service obligations under the New Credit Agreement.
• Changes in laws and regulations applicable to the Partnership's business.
• The ability to maintain the security interests and collateral contemplated by the New Credit Agreement.
• The impact of any change of control or event of default under the New Credit Agreement.
• Other risks and uncertainties described in the Partnership's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Future Outlook

The filing contains forward-looking statements regarding anticipated borrowing capacity, expected uses of proceeds under the New Credit Agreement, the ability to increase commitments, the Partnership's ability to maintain compliance with the financial covenants, and the Partnership's expectations regarding the sufficiency of borrowing availability under the New Credit Agreement. These statements are subject to various risks and uncertainties, including changes in economic conditions, interest rates, commodity prices, regulatory changes, and the ability to generate sufficient cash flow.

Management Comments

• The General Partner's Chief Financial Officer or other financial/accounting officer is responsible for certifying compliance with financial covenants and the accuracy of financial statements.
• The General Partner's Chief Financial Officer or other acceptable officer attests to the Solvency of the Consolidated Group after giving effect to the initial Credit Event.

Industry Context

StockSavvy.ai notes that securing a substantial revolving credit facility is a standard practice for midstream logistics companies like Delek Logistics Partners, LP. This type of financing is crucial for managing working capital, funding strategic acquisitions, and supporting capital expenditures in an asset-intensive industry. The inclusion of an accordion feature is common and provides flexibility for future growth initiatives, such as pipeline expansions or terminal upgrades, without needing to renegotiate the entire facility. The refinancing of existing debt at potentially more favorable terms or with increased flexibility is a positive sign in the current interest rate environment.

Comparison to Industry Standards

• The $1.3 billion revolving credit facility with an accordion feature up to $525 million or 100% of EBITDA is a significant financing package, comparable to those secured by other large-cap midstream companies for their operational and growth needs.
• The financial covenants (Total Leverage Ratio <= 5.25x, Senior Leverage Ratio <= 3.75x, Interest Coverage Ratio > 2.00x) are within typical ranges for investment-grade or strong sub-investment-grade midstream operators, reflecting a balance between financial flexibility and prudent leverage management. For example, many peers in the midstream sector aim for Total Leverage Ratios in the 3.5x to 4.5x range, with some flexibility for acquisitions. The temporary increase period for the Total Leverage Ratio to 5.50x for acquisitions or material joint venture projects is a common feature designed to accommodate growth.
• The interest rate margins (Base Rate + 0.50%-1.50%, Term SOFR + 1.50%-2.50%) are competitive for a secured revolving facility of this size and credit profile.
• The maturity date of March 26, 2031, provides a solid five-year tenor, which is standard for such facilities, offering long-term liquidity.

Related Party Transactions

• The Credit Agreement outlines conditions for contracts, agreements, or business arrangements with Affiliates (Section 6.8).
• Restricted Payments may include repurchases of Common Units from Holdings (Section 6.15(a)(ix)).
• Investments may include the Permian Acquisition from Holdings and other investments in the Permian Joint Venture (Section 6.14(s)).

Stakeholder Impact

• Shareholders: Increased financial stability and flexibility could support future distributions and growth, potentially enhancing shareholder value.
• Creditors: The new facility refinances existing debt, and the first-priority liens provide strong security for the new lenders.
• Employees: Stable financing supports ongoing operations and potential growth, which benefits employees.
• Customers/Suppliers: Enhanced financial health ensures the company's ability to meet its obligations, fostering stable relationships.

Next Steps

• Ongoing compliance with financial covenants (Total Leverage Ratio, Senior Leverage Ratio, Interest Coverage Ratio) on a quarterly basis.
• Potential utilization of the accordion feature for future growth initiatives, including Material Projects and the Permian Expansion.
• Continued adherence to information covenants, including timely submission of quarterly and annual financial statements and officer certifications.
• Compliance with all applicable environmental laws and regulations.
• Completion of post-closing matters outlined in Schedule 6.24 of the Credit Agreement.

Key Dates

Recommendation

The new credit facility is a positive, but largely expected, development that enhances Delek Logistics' financial flexibility and liquidity. It refinances existing debt and provides capacity for future growth. However, it does not introduce new, transformative information that would warrant a 'buy' or 'sell' recommendation. The terms appear standard for the industry, and while beneficial, they are unlikely to significantly alter the company's fundamental outlook or valuation in the short term. Investors should continue to monitor operational performance and broader market conditions.

Keywords

Credit Agreement, Revolving Facility, Debt Refinancing, Corporate Finance, Midstream, Logistics, Capital Expenditures, Financial Covenants, SEC Filing, Delek Logistics, DKL, Truist Bank