Delek Logistics: New pipeline agreements, increased credit facility

Delek Logistics Partners LP (NYSE: DKL) has new agreements for the Paline Pipeline, along with an increase in lender commitments under a newly amended and restated revolving credit facility.  

Under the new Paline Pipeline agreements, two third parties will each pay a fixed monthly fee allowing them to use their respective capacities on this pipeline, which account for a combined 35,000 barrels per day. The initial term of these agreements is for 18 months beginning Jan. 1. Incremental annual distributable cash flow from this pipeline should be $13.6 million and revenue per barrel will be effectively increased by $1.00 compared to 2014.

On Dec. 30, 2014, Delek Logistics entered into an amendment and restatement of its revolving credit facility, which increased lender commitments to $700 million from $400 million to support the future growth of its business. While the majority of the terms and conditions of the amended and restated credit facility are substantially unchanged from the predecessor facility, among other changes, adjustments were made to increase the initial maximum leverage ratio, as defined in the credit agreement, to 4.25 times from 4.00 times. The maturity date for the credit facility was extended to December 2019.

Fifth Third Bank is the administrative agent. Bank of America NA, Compass Bank, and Royal Bank of Canada are co-syndication agents under this facility. In addition, the Bank of Tokyo Mitsubishi UFJ, Ltd.; Barclays Bank PLC; Citizens Bank of Pennsylvania; PNC Bank, National Association; US Bank National Association; and The Bank of Nova Scotia are co-documentation agents.

In additional company news, on Dec. 17, 2014, a subsidiary of Delek Logistics purchased the assets of Frank Thompson Transport for $12 million. These transportation assets, which primarily consist of approximately 130 tractors and 210 trailers, are expected to contribute $2.4 million of incremental earnings before interest, taxes, depreciation and amortization (EBITDA) on an annual basis.

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