Delek Logistics Partners, LP Files 8-K: Announces New Credit Agreement and Termination of Prior Credit Facility

Key Highlights From the 8-K Filing

• Delek Logistics Partners, LP (NYSE: DKL) has entered into a new Credit Agreement, replacing its prior credit facility.
• The new agreement is effective as of March 26, 2026.
• The new facility introduces updated financial covenants and is secured by first priority liens on nearly all assets of the Partnership and its guarantors.
• The previous credit agreement has been repaid in full and terminated, except for surviving indemnities and contingent obligations.
• The new Credit Agreement is governed by New York law and involves a syndicate of major banks, including Truist Securities, Bank of America, Citizens Bank, Mizuho Bank, MUFG Bank, and Wells Fargo.

Details of the New Credit Agreement

• Financial Covenants:
  • Senior Leverage Ratio must not exceed 3.75 to 1.00 at the end of each fiscal quarter.
  • Interest Coverage Ratio must not fall below 2.00 to 1.00 at the end of each fiscal quarter.
• Collateral:
  • Secured by first priority liens on substantially all tangible and intangible assets, including equity interests in subsidiaries and permitted joint ventures, personal property, fixtures, and real estate (subject to specific exceptions).
• Termination of Prior Facility:
  • All obligations under the prior credit agreement have been repaid and terminated as of March 26, 2026, except for certain indemnity and contingent obligations.
• Borrowing Capacity:
  • While the specific borrowing limits are not disclosed in the summary, management highlights anticipated borrowing capacity and ability to increase commitments, subject to compliance with covenants and terms.
• Forward-Looking Statements:
  • The company acknowledges that statements regarding borrowing capacity, use of proceeds, compliance with covenants, and future expectations about the new facility are forward-looking and subject to material risks, including interest rates, economic conditions, regulatory changes, and the company’s operating performance.

Implications for Shareholders

• Potential Impact on Share Value:
  • The new credit agreement strengthens the Partnership’s financial flexibility and liquidity, enabling it to respond to market opportunities and challenges.
  • Improved covenant terms may signal lender confidence in the Partnership’s financial stability.
  • The termination of the prior facility and immediate repayment removes legacy debt risk and refreshes the company’s balance sheet.
  • Any failure to comply with the financial covenants could have significant adverse effects, including the potential for default and acceleration of debt obligations, which would be highly material for shareholders.
  • Shareholders should be aware that the representations and warranties in the new facility are only for the benefit of the lenders and may not reflect the operational or financial realities that investors are concerned with.

Additional Details

• The new agreement contains numerous sections covering definitions, manner of borrowing, letters of credit, interest rates, prepayments, payment applications, restrictions on mergers/investments, and detailed representations/warranties.
• Exhibits and schedules included in the agreement cover borrowing notices, compliance certificates, and specific lists of indebtedness, liens, investments, and post-closing matters.
• The agreement is detailed and complex, running over 175 pages, and includes extensive legal, operational, and financial requirements.

Conclusion

The execution of a new, comprehensive credit agreement and the settlement of the previous credit facility are significant corporate finance events for Delek Logistics Partners, LP. These changes provide the company with enhanced financial stability and flexibility, while also imposing stricter financial covenants that must be observed to avoid default. Investors should closely monitor future performance relative to these covenants and be aware of the risks disclosed regarding forward-looking statements and compliance.

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