| Item 1.01. | Entry into a Material Definitive Agreement. |
Amended and Restated Term Loan Credit Agreement
On November 18, 2022 (the “Closing Date”), Delek US Holdings, Inc. (the “Company”) entered into an amended and restated term loan credit agreement (the “Amended and Restated Term Loan Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent (the “Term Administrative Agent”), the Company, as borrower, and the lenders party thereto, providing for a senior secured term loan facility in an initial principal amount of $950 million (the “Term Credit Facility”).
The term loans under the Term Credit Facility were borrowed in full on the Closing Date and were issued with original issue discount of 4%. Proceeds under the Term Credit Facility, as well as proceeds of a borrowing under the Company’s revolving credit facility (the “Revolving Credit Facility”) and cash on hand were used to refinance the Company’s existing term loan facility. As a result of the refinancing effected pursuant to the Amended and Restated Term Loan Credit Agreement, outstanding term loans of the Company were reduced by an aggregate amount of approximately $300 million.
The interest rates applicable to borrowings under the Term Credit Facility are based on a fluctuating rate of interest measured by reference to either, at the Company’s option, (i) a base rate, plus an applicable margin, or (ii) an Adjusted Term Secured Overnight Financing Rate (“SOFR”), plus an applicable margin. The applicable margin for the Term Credit Facility borrowings is 2.5% per annum with respect to base rate borrowings and 3.5% per annum with respect to SOFR borrowings.
The Amended and Restated Term Loan Credit Agreement requires the Company to prepay outstanding term loans, subject to certain exceptions, with (i) 100% of the net cash proceeds of non-ordinary course asset sales or other dispositions of property by the Company or any of the restricted subsidiaries and 100% of the net cash proceeds from certain insurance and condemnation events with respect to the Company’s assets, subject to certain thresholds and reinvestment rights; (ii) 100% of the Company’s and its restricted subsidiaries’ net cash proceeds from the issuance or incurrence of debt obligations for borrowed money not permitted under the Amended and Restated Term Loan Credit Agreement; and (iii) a variable percentage of excess cash flow, ranging from 50% to 0% depending on the Company’s consolidated secured net leverage ratio from time to time. The Company may voluntarily prepay outstanding loans under the Company’s Term Credit Facility at any time subject to customary “breakage” costs with respect to SOFR loans and subject to a prepayment premium of 1.00% in connection with certain customary repricing events that may occur within six months after the Closing Date.
In connection with the Term Credit Facility, the Company must make scheduled quarterly principal payments of $2.375 million, with the balance of the principal due on November 19, 2029.
Pursuant to certain guaranty and security agreements, the obligations of the borrowers under the Amended and Restated Term Loan Credit Agreement are guaranteed by each of the Company’s direct and indirect, existing and future, wholly-owned domestic subsidiaries, subject to customary exceptions and limitations, and excluding Delek Logistics Partners, LP, a Delaware limited partnership (“Delek MLP”), and Delek Logistics GP, LLC, a Delaware limited liability company (“Delek MLP GP”), certain other publicly traded limited partnership affiliates of the Company that may be acquired in the future and each subsidiary of the foregoing (collectively, the “MLP Subsidiaries”). Borrowings under the Amended and Restated Term Loan Credit Agreement are also guaranteed by DK Canada Energy ULC, a British Columbia unlimited liability company and a wholly-owned restricted subsidiary of the Company.
The Term Credit Facility is secured by a second priority lien over substantially all of the Company’s and each guarantor’s receivables, inventory, renewable identification numbers, instruments, intercompany loan receivables, deposit and securities accounts and related books and records and certain other personal property, subject to certain customary exceptions (the “Revolving Priority Collateral”), and a first priority lien over substantially all of the Company’s and each guarantor’s other assets, including all of the equity interests of any subsidiary held by the Company or any guarantor (other than equity interests in certain MLP Subsidiaries, including Delek MLP and Delek MLP GP) and real property owned by the Company and Guarantors (such real property and equity interests, the “Term
