| Item 1.01. | Entry into a Material Definitive Agreement. |
On October 13, 2022, Delek Logistics Partners, LP and all of its subsidiaries (collectively, the “Partnership” and occasionally referred to herein as “we,” “us” and “our”) entered into a fourth amended and restated senior secured revolving credit agreement (the “DKL Credit Agreement”) with Fifth Third Bank, National Association (“Fifth Third”), as administrative agent; a syndicate of lenders; Fifth Third, BofA Securities Inc., PNC Bank Capital Markets LLC, MUFG Bank, Ltd., Wells Fargo Bank, N.A., Citizens Bank, N.A. and Royal Bank of Canada, as co-syndication agents; and Barclays Bank PLC, U.S. Bank National Association, Regions Bank and Truist Bank as co-documentation agents. The DKL Credit Agreement became effective on October 13, 2022 and amends and restates the senior secured credit facility that the Partnership entered into with Fifth Third, as administrative agent, and a subset of the current syndicate of lenders, on September 28, 2018 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “2018 Facility”).
The DKL Credit Agreement, among other things, (i) increased total aggregate commitments to $1.2 billion, comprised of (A) senior secured revolving commitments of $900.0 million in aggregate (eliminating the Canadian dollar tranche), with sublimit of up to $115.0 million for letters of credit and $25.0 million for swing line loans (the “Revolving Facility”), and (B) a new senior secured term loan facility for a term loan in the original principal amount of $300.0 million (the “Term Facility”), (ii) reset the accordion feature under the Revolving Facility, such that aggregate revolving commitments can be increased to up to $1.15 billion upon the agreement of the Partnership and one or more existing or new lenders, (iii) extended the maturity date of the Revolving Facility to October 13, 2027 and (iv) provided for the Term Facility be drawn in full on October 13, 2022, with a maturity date of October 13, 2024 and with a prepayment requirement for the proceeds obtained from certain senior unsecured notes issuances.
Borrowings under the Revolving Facility bear interest at the election of the Partnership at either a U.S. dollar prime rate, plus an applicable margin ranging from 1.00% to 2.00% depending on the Partnership’s Total Leverage Ratio (as defined in the DKL Credit Agreement), or a SOFR rate plus a credit spread adjustment of 0.10% for one-month interest periods and 0.25% for three-month interest periods plus an applicable margin ranging from 2.00% to 3.00% depending on the Partnership’s Total Leverage Ratio. Unused revolving commitments under the Revolving Facility incur a commitment fee that ranges from 0.30% to 0.50% depending on the Partnership’s Total Leverage Ratio. Borrowings under the Term Facility bear interest at the election of the Partnership at either a U.S. dollar prime rate, plus an applicable margin of 2.50% for the first year of the Term Facility and 3.00% for the second year of the Term Facility, or a SOFR rate plus a credit spread adjustment of 0.10% for one-month interest periods and 0.25% for three-month interest periods plus an applicable margin of 3.50% for the first year of the Term Facility and 4.00% for the second year of the Term Facility.
The DKL Credit Agreement contains affirmative and negative covenants and events of default which the Partnership considers customary and are similar to those in our 2018 Facility. Under the financial covenants in the amended DKL Credit Agreement, the Partnership cannot:
| | • | | permit, as of the last day of each fiscal quarter, the Total Leverage Ratio (as defined in the DKL Credit Agreement) to be greater than 5.25 to 1.0; provided, that during any Temporary Increase Period (as defined in the DKL Credit Agreement), the Partnership cannot permit the foregoing ratio to be greater than 5.50 to 1.0 (a Temporary Increase Period with respect to the 3 Bear Acquisition (as defined in the DKL Credit Agreement) shall be in effect through March 31, 2023); |
| | • | | permit, as of the last day of each fiscal quarter, the Senior Leverage Ratio (as defined in the DKL Credit Agreement) to be greater than 3.75 to 1.00; |
| | • | | permit, as of the last day of each fiscal quarter, the interest coverage ratio to be equal to or less than 2.00 to 1.00. |
The obligations under the DKL Credit Agreement remain secured by a first priority lien on substantially all of the Partnership’s and its subsidiaries’ tangible and intangible assets.
