Delek Logistics Closes Public Offering and Exercises Underwriters' Option

Delek Logistics Partners, LP (NYSE: DKL) recently announced the successful closing of its public offering of common units and the full exercise of the underwriters' option to purchase additional units. This strategic move has significant implications for the company's capitalization, growth, and ownership structure.

The offering, priced at $39.00 per unit, raised $149.9 million from the sale of 3,846,153 common units. Additionally, the underwriters exercised their option to purchase an additional 576,922 units, generating an additional $22.3 million. The total proceeds from the offering and the exercise of the option amount to $172.2 million.

The offering had a notable impact on Delek Logistics' market capitalization and stock price. The increased number of outstanding common units diluted the ownership of existing shareholders, with Delek Holdings' ownership declining from 70.4% to approximately 65.2%. However, the additional capital raised will be used to redeem outstanding convertible preferred units and repay outstanding borrowings under the revolving credit agreement, strengthening the company's financial position.

The Executives' interest in purchasing up to $300,000 of the common units offered in the offering at the public price provided a vote of confidence in the company's prospects. Although their indication was not a binding agreement, it demonstrated their belief in Delek Logistics' growth potential.

The full exercise of the underwriters' option will allocate an additional $22.3 million to Delek Logistics, further bolstering the company's financial flexibility. This additional capital can be invested in growth strategies, expansion plans, and potential acquisitions, driving future value creation for shareholders.

In conclusion, Delek Logistics' successful public offering and the full exercise of the underwriters' option have strengthened the company's financial position and provided it with the necessary capital to execute its growth strategies. The offering has also had an impact on the company's ownership structure, with Delek Holdings' ownership declining. As Delek Logistics continues to execute its growth plans, investors will be closely watching the company's progress and the potential impact on its stock price and market capitalization.