Delek Logistics Partners, LP (NYSE: DKL) ("Delek Logistics") and Delek US Holdings Inc. (NYSE:DK) (“Delek US”) announced today that Delek Logistics has acquired, from a subsidiary of Delek US, certain storage tanks and the product terminal at Delek US’s Tyler, Texas refinery for $94.8 million in cash.
Uzi Yemin, Chairman and Chief Executive Officer of Delek Logistics' general partner and Delek US, remarked: “This is Delek US’s first drop down to Delek Logistics and demonstrates a commitment to grow Delek Logistics and unlock the value of these assets. This transaction is expected to increase the annual EBITDA forecast provided in Delek Logistics’ IPO prospectus by approximately 21 percent, creating a significant level of growth without issuing equity. This step supports Delek Logistics’ ability to grow its cash distribution and its management currently expects to recommend to the Board of Directors of its general partner an increase in the quarterly distribution to at least $0.405 per unit for the period ending September 30, 2013. Delek Logistics also recently increased its revolving credit facility to $400 million from $175 million. This provides financial flexibility for third party acquisitions as well as further asset drop downs, which will unlock additional logistics value for Delek US over the next 18 months.”
Assets acquired by Delek Logistics as part of this transaction include substantially all of the storage tanks and the sole refined products terminal at the Tyler refinery. These assets are expected to contribute at least $10.5 million of EBITDA (earnings before interest, taxes, depreciation and amortization) annually. The tank farm has approximately two million barrels of aggregate shell capacity and consists of 96 tanks and related assets, including piping. The product terminal operated at an approximate total throughput of 55,000 barrels per day in 2012 and has an estimated capacity of 72,000 barrels per day. These assets are located adjacent to Delek US’s Tyler, Texas refinery and will continue to support that operation in the future. The transaction was approved by the Conflicts Committee of Delek Logistics’ general partner, which is comprised solely of independent outside directors.