Delek Logistics Partners LP
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the quarter ended June 30, 2024, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act)adopted, modified orterminated a "Rule 10b5-1 trading arrangement" or "non-Rule 105b-1 trading arrangement" (as those terms are defined in Item 408 of Regulation S-K).
Intercompany Transactions
On August 5, 2024, Delek Holdings and certain of its subsidiaries entered into a series of intercompany transactions with the Partnership and certain of itssubsidiaries, as described below. The transactions, including the consideration therefor, were negotiated and approved by the Audit Committee of the Board of Directors of Delek Holdings, which is comprised solely of independent directors, and by the Conflicts Committee of the Board of Directors of our general partner, which is also comprised solely of independent directors. The Board of Directors of Delek Holdings engaged Barclays to act as its exclusive financial advisor and Bradley Arant Boult Cummings LLP to act as its legal counsel. The Conflicts Committee engaged Intrepid Partners, LLC to act as its exclusive financial advisor and Gibson, Dunn & Crutcher LLP to act as its legal counsel.
Wink to Webster Contribution
On August 5, 2024, Delek Holdings contributed all of its interest in the Wink to Webster pipeline joint venture (the “Contribution”) to the Partnership. The Contribution was made pursuant to a Contribution Agreement (the “Contribution Agreement”) between Delek US Energy, Inc. (“DKE”), a wholly-owned subsidiary of Delek Holdings, and the Partnership. Total consideration for the Contribution, including the approximately $280 million of joint venture indebtedness included therewith, was approximately $500 million, subject to post-closing adjustment, and included (i) $68 million in cash, (ii)2,300,000 newly issued common units of limited partnership interest in the Partnership (our “common units”) and (iii) cancellation of a$60.0 million intercompany receivable owed by Delek Holdings to the Partnership. The Partnership also paid Delek Holdings approximately $18.6 million for an additional 0.6% interest in the Wink to Webster pipeline joint venture that was acquired by Delek Holdings from a joint venture partner on August 1, 2024, bringing the total interest in the Wink to Webster pipeline joint venture contributed to the Partnership to 15.6%.
The Contribution was effected by DKE transferring 100% of the limited liability company interests in Delek Permian Pipeline Holdings, LLC, which holds certain subsidiaries that collectively included joint venture financing entities and the 15.6% Wink to Webster pipeline joint venture interest. The offering and sale of our common units pursuant to the Contribution Agreement are intended to be exempt under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of the exemption afforded by Section 4(2) and Rule 506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws.
The foregoing description of the Contribution Agreement is not complete and is qualified in its entirety by reference to the full text of the Contribution Agreement, which is attached as Exhibit 2.1 to this Quarterly Report on Form 10-Q.
Fourth Amended and Restated Omnibus Agreement
On August 5, 2024, Delek Holdings and the Partnership entered into a Fourth Amended and Restated Omnibus Agreement with certain of their respective subsidiaries (the “Amended Omnibus Agreement”). The Amended Omnibus provides Delek Holdings an option to purchase certain critical assets from the Partnership at market value during the period beginning upon any change in control or sale of substantially all assets involving the Partnership (“Deconsolidation”) and extending (i) in the case of a Deconsolidation involving a third party, for six months following closing, and (ii) for any other Deconsolidation, for four years following closing.
The foregoing description of the Amended Omnibus Agreement is not complete and is qualified in its entirety by reference to the full text of the Amended Omnibus Agreement, which is attached as Exhibit 10.1 to this Quarterly Report on Form 10-Q.
Amended and Restated Intercompany Agreements
On August 5, 2024, certain subsidiaries of Delek Holdings and the Partnership agreed to amend and restate 12 intercompany services agreements as listed below. The amendments, among other things, extend the terms of the respective agreements for up to seven years, with an option for Delek Holdings to extend such agreements for an additional five years. Certain of the agreements also have revised financial terms which will phase in over the time periods noted below.
The following is a list of the 12 intercompany services agreements which were amended and restated:
(1)Second Amendment and Restatement of the Throughput and Tankage Agreement (Tyler Terminal and Tankage) between DK Trading & Supply, LLC (“DKTS”) and Delek Marketing & Supply, LP (“DMS”) – seven year term extension effective July 1, 2024, with decrease of throughput and storage fees to become effective April 1, 2026;
(2)Amended and Restated Terminalling Services Agreement (Memphis Terminal) between DKTS, Delek Logistics Operating, LLC (“DLO”), and, for limited purposes, Citigroup Energy Inc. (“Citi”) – seven year term extension effective July 1, 2024;
43 |
(3)Amended and Restated Terminalling Services Agreement (North Little Rock Terminal) between DKTS, DLO, and, for limited purposes, CEI – seven year term extension effective July 1, 2024;
(4)Amended and Restated Throughput and Tankage Agreement (El Dorado Terminal and Tankage) between DKTS, DLO, and, for limited purposes, CEI – seven year term extension effective July 1, 2024, with decrease of throughput and storage fees to become effective February 1, 2025;
(5)Amended and Restated Throughput Agreement (El Dorado Rail Offloading Facility) between DKTS and DLO – seven year term extension effective July 1, 2024, with decrease of throughput fee and removal of minimum volume commitment to become effective August 1, 2025;
(6)Amended and Restated Tankage Agreement (Tyler Crude Storage Tank 701) between DKTS and Delek Marketing & Supply, LP – seven year term extension effective July 1, 2024, with decrease of storage fee to become effective April 1, 2026;
(7)Second Amended and Restated Services Agreement (Big Sandy Terminal and Pipeline) between DKTS and Delek Marketing-Big Sandy, LLC (“DMBS”) – seven year term extension effective July 1, 2024;
(8)Amended and Restated Pipelines and Storage Facilities Agreement between DKTS, the Partnership, SALA Gathering Systems LLC (“SALA”), El Dorado Pipeline Company, LLC (“EDR”), Magnolia Pipeline Company, LLC (“MPC”), and, for limited purposes, CEI – seven year term extension effective July 1, 2024, with decrease of crude oil throughput fees to become effective September 1, 2026;
(9)Amended and Restated Pipelines and Tankage Agreement (East Texas Crude Logistics System) between DKTS and Delek Crude Logistics, LLC – seven year term extension effective July 1, 2024;
(10)Amended and Restated Terminalling Services Agreement (Mt. Pleasant Terminal) between DKTS and DMBS – seven year term extension effective July 1, 2024;
(11)Amended and Restated Services Agreement (Greenville Facility) between DKTS and DMBS – seven year term extension effective July 1, 2024; and
(12)Amended and Restated Slurry Clarifying Services Agreement (Krotz Springs) between DKTS, DLO, and DKE – five year term extension effective July 1, 2024.
Certain of the amended and restated intercompany agreements are attached to this Quarterly Report on Form 10-Q as Exhibits 10.2 through 10.8. The foregoing description of such intercompany agreements is not complete and is qualified in its entirety by reference to the full text of such intercompany agreements.
Assignment of Big Spring Refinery Marketing Agreement
On August 5, 2024, DKL Big Spring, LLC (“DKL Big Spring”), a subsidiary of the Partnership, entered into an assignment and assumption agreement (the “Assignment Agreement”) with Alon USA, LP (“Alon”), DKTS, and Delek Logistics Services Company (“DLSC”). Under the Assignment Agreement, DKL Big Spring assigned to DLSC its right, title, and interest in that certain Marketing Agreement dated as of March 1, 2018, as amended to date, and as consideration for such assignment, Alon caused 2,500,000 of our common units to be transferred to the Partnership from DLSC and subsequently cancelled.
Relationships
Prior to the transaction, Delek Holdings owned the general partner interest and a 72.6% limited partnership interest in the Partnership. Each of the Partnership and the other parties to the Contribution Agreement, Omnibus Agreement, Intercompany Agreements and Assignment Agreement are direct or indirect subsidiaries of Delek Holdings. As a result, certain individuals, including officers and directors of Delek Holdings, serve as officers and/or directors of more than one of such other entities. Additionally, the Partnership and Delek Holdings have certain commercial relationships as further described in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.