Delek Logistics plans to offer $500 million in senior notes

BRENTWOOD, Tenn. - Delek Logistics Partners, LP (NYSE:DKL) announced Wednesday its intention to offer $500 million in senior notes due 2033 through a private placement to qualified institutional buyers, subject to market conditions. This debt offering comes as its parent company Delek US Holdings (NYSE:DK), with a market capitalization of $1.26 billion, operates with a total debt of $3.37 billion and a concerning current ratio of 0.85, according to InvestingPro data.

The midstream energy master limited partnership plans to use the net proceeds to repay a portion of its outstanding revolving credit facility borrowings, according to a company press release. This refinancing move comes as InvestingPro analysis shows DK faces significant debt challenges, with short-term obligations exceeding liquid assets.

The notes will be offered only to qualified institutional buyers under Rule 144A of the Securities Act and to non-U.S. persons outside the United States under Regulation S. The securities have not been registered under the Securities Act or state securities laws and cannot be sold in the United States without registration or an applicable exemption.

Delek Logistics, headquartered in Tennessee, provides gathering and pipeline transportation services primarily for crude oil and natural gas customers. The company also offers storage, wholesale marketing and terminalling services for intermediate and refined product customers, along with water disposal and recycling services.

The company’s operations are concentrated in the Permian Basin, Delaware Basin and select Gulf Coast regions. Delek US Holdings, Inc. (NYSE:DK) owns the general partner interest and a majority limited partner interest in Delek Logistics.

The offering is subject to market conditions and may not proceed as described.

In other recent news, Delek US Holdings reported a net loss of $173 million for the first quarter of 2025, with earnings per share (EPS) at -$2.78, missing the forecasted EPS of -$1.81. However, the company exceeded revenue expectations, bringing in $2.64 billion compared to the anticipated $2.57 billion. The refining segment showed significant EBITDA growth, with an increase of $42.2 million, indicating operational efficiency gains. In terms of analyst ratings, Mizuho upgraded Delek US Holdings to "Outperform" and set a new price target of $23, citing potential improvements in U.S. refining fundamentals and a favorable outlook for natural gas prices. Meanwhile, JPMorgan adjusted its price target for Delek to $19, maintaining a "Neutral" rating. Fitch Ratings downgraded Delek’s Issuer Default Rating to ’B+’ from ’BB-’, reflecting elevated leverage and increased business risk after the divestiture of its retail business. Moody’s also downgraded Delek’s Corporate Family Rating to B1 from Ba3, citing weak credit metrics and high gross debt. Despite these challenges, Delek continues to focus on strategies to enhance shareholder value, including potential business unit separations and cost reduction initiatives.

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