Delek US Holdings closed on a new $1 billion senior secured revolving ABL credit facility and a $700 million senior secured term loan B.
Wells Fargo Bank is the administrative agent under both the revolver and the term loan.
These facilities are expected to simplify the debt structure as they consolidate borrowings at the Delek US Holdings level, while reducing overall interest expense. Proceeds will be used to repay outstanding borrowings under several debt instruments and for other corporate purposes.
Kevin Kremke, EVP and CFO of Delek US, said, “Both the revolver and term loan were oversubscribed, and we appreciate the strong support from our lender group. This financing provides additional financial flexibility to Delek US and simplifies our debt structure. It was an important step to improve our cost of capital and should bring us closer to capturing approximately $30 million of cost of capital synergies on an annualized basis that we outlined as part of the Alon USA transaction.”
The terms and conditions of the new $1 billion revolver include a springing compliance requirement with a minimum fixed charge coverage ratio financial covenant if excess availability under the revolver borrowing base is below certain thresholds, as defined in the credit agreement. Borrowings under this the revolver bear interest at a rate of LIBOR plus 1.25% to 1.75% based on excess availability. The maturity date is March 30, 2023. Approximately $300 million was borrowed on the revolver at closing of the transaction.
The joint lead arrangers and joint book runners for the revolver were Wells Fargo Bank, Barclays Bank, Regions Capital Markets and SunTrust Robinson Humphrey.
The $700 million term loan carries an interest rate of LIBOR plus 2.50% and matures on March 30, 2025. It does not have any financial maintenance covenants and was fully drawn at close. The joint lead arrangers and joint book runners for the term loan were Wells Fargo Securities, Barclays Bank, Regions Capital Markets and SunTrust Robinson Humphrey.
Delek US Holdings is a diversified downstream energy company with assets in petroleum refining, logistics, asphalt, renewable fuels and convenience store retailing.