BRENTWOOD, Tenn. - Delek Logistics Partners, LP (NYSE: NYSE:DKL), a midstream energy partnership, has announced its intention to offer an additional $100 million in senior notes, with an 8.625% yield maturing in 2029. This offering, which is subject to market conditions, is a follow-up to the $650 million and $200 million issuances on March 13 and April 12, 2024, respectively. The new notes will be integrated into the same series as the existing notes.
The company plans to use the net proceeds from this private placement to reduce the debt from its revolving credit facility. The offering targets qualified institutional buyers and non-U.S. persons outside the United States, adhering to specific securities regulations.
Delek Logistics, based in Brentwood, Tennessee, operates primarily in the Permian and Delaware Basins, as well as the Gulf Coast region. Its services encompass crude oil, intermediates, refined products, natural gas, storage, wholesale marketing, terminalling, water disposal, and recycling. Delek US Holdings, Inc. (NYSE: NYSE:DK) holds the general partner interest and a majority of the limited partner interest in Delek Logistics and is also one of its significant customers.
The announcement includes forward-looking statements regarding the offering and its anticipated financial implications. These statements are subject to various market risks and uncertainties, which could potentially affect the outcome of the offering. The company's actual results may differ from current expectations due to factors such as market behavior and unforeseen events.
This news is based on a press release statement and contains no offers to sell or solicitations of an offer to buy the additional notes or any securities. It is also not a sale of the additional notes in any jurisdiction where such actions would be considered unlawful.
InvestingPro Insights
As Delek Logistics Partners, LP (NYSE: DKL) prepares for its additional senior notes offering, investors are closely monitoring the company's financial health and market position. According to InvestingPro data, Delek Logistics carries a market capitalization of $1.36 billion, which reflects the company's size and market value as of the second quarter of 2024. Despite a challenging period, the company has seen a significant return over the past week, with a 10.31% price total return, signaling a momentary boost in investor confidence.
InvestingPro Tips indicate that analysts have recently revised their earnings expectations downwards for the upcoming period, which could be a response to the company's anticipated sales decline in the current year. This aligns with the reported revenue growth of -13.82% over the last twelve months as of Q1 2023. Additionally, Delek Logistics is trading at a low revenue valuation multiple, with a price-to-book ratio of 1.69, which may suggest that the stock is undervalued relative to the company's book value.
Despite a recent uptick in the company's share price, analysts remain cautious. They do not anticipate the company will be profitable this year, and Delek Logistics has not been profitable over the last twelve months. Furthermore, with a negative P/E ratio of -12.76, the company's earnings do not currently support the share price, a concern for potential investors considering the new notes offering. However, for those interested in the company's dividend prospects, the dividend yield stands at 4.84%, which could be appealing for income-focused investors.
For readers seeking a deeper dive into Delek Logistics' financials and future outlook, InvestingPro offers additional insights and tips. There are currently six more tips available that could provide valuable context for the company's strategic moves and market performance. To explore these insights, visit https://www.investing.com/pro/DKL.
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