Delek US Announces Settlement and Conversion of $150 million of Senior Notes
September 18 2018 - 5:00PM
Delek US Holdings, Inc. (NYSE: DK) (“Delek US”) announced today
that it paid $150 million in cash for the principal amount and
issued 2,692,218 shares of its common stock upon the conversion of
the 3.00% convertible senior notes due 2018 (the “Notes”). The
issuance of shares related to this conversion was offset by a hedge
that was in place resulting in no dilution to Delek US from the
Notes. Delek US acquired the Notes from Alon USA Energy, Inc.
(“Alon”) when Delek US acquired Alon in July 2017. The Notes became
convertible into Delek US shares pursuant to the Supplemental
Indenture entered into between Delek US and U.S. Bank National
Association, as trustee.
Delek US paid $1,000 in cash for every $1,000 in
principal amount of the Notes for a total payment of $150 million
to the holders of the Notes. Delek also made a cash payment to the
holders of the Notes for accrued interest on the Notes, cash in
lieu of fractional shares, and cash associated with the dividend
payment that occurred during the final stock price averaging
period. For conversion rights in excess of the $150 million, Delek
US issued 2,692,218 Delek US shares to the holders of the Notes. In
connection with converting the Notes, Delek US received an
offsetting number of Delek US shares under certain existing
convertible note hedge transactions, resulting in no dilution. Such
Delek US shares will become treasury shares upon receipt by Delek
US.
Uzi Yemin, Chairman, President and Chief
Executive Officer of Delek US, said, “Current market conditions
remain attractive for our operations with a discount between WTI
Midland and Brent crude oil of $19.85 per barrel in the fourth
quarter 2018 and $14.57 per barrel in 2019 based on the September
17, 2018 forward curve. The current market environment has the
potential to continue to drive our strong cash flow generation and
further support our financial flexibility. This flexibility allows
us to continue to use a disciplined approach regarding our capital
allocation program. We expect to return cash to shareholders
through our repurchase plan by repurchasing $100 million of Delek
US stock in the third quarter 2018, reducing the debt on our
balance sheet by paying off the Notes and investing in our business
with a focus on creating long term value for our shareholders.”
About Delek US Holdings,
Inc.Delek US Holdings, Inc. is a diversified downstream
energy company with assets in petroleum refining, logistics,
renewable fuels and convenience store retailing. The refining
assets consist of refineries operated in Tyler and Big Spring,
Texas, El Dorado, Arkansas and Krotz Springs, Louisiana with a
combined nameplate crude throughput capacity of 302,000 barrels per
day. The logistics operations primarily consist of Delek Logistics
Partners, LP. Delek US Holdings, Inc. and its affiliates own
approximately 63% (including the 2 percent general partner
interest) of Delek Logistics Partners, LP. Delek Logistics
Partners, LP (NYSE: DKL) is a growth-oriented master limited
partnership focused on owning and operating midstream energy
infrastructure assets. The convenience store retail business is the
largest 7-Eleven licensee in the United States and operates
approximately 300 convenience stores in central and west Texas and
New Mexico.
Safe Harbor Provisions Regarding
Forward-Looking StatementsThis press release contains
forward-looking statements that are based upon current expectations
and involve a number of risks and uncertainties. Statements
concerning current estimates, expectations and projections about
future results, performance, prospects, opportunities, plans,
actions and events and other statements, concerns, or matters that
are not historical facts are “forward-looking statements,” as that
term is defined under the federal securities laws. These
forward-looking statements include, but are not limited to,
statements regarding share repurchases; cash and liquidity;
opportunities and anticipated performance and financial
position.
Investors are cautioned that the following
important factors, among others, may affect these forward-looking
statements. These factors include, but are not limited to: risks
and uncertainties related to the ability to successfully integrate
the businesses of Delek US and Alon USA Energy, Inc.; risks related
to disruption of management time from ongoing business operations
due to the integration implementation; the risk that the combined
company may be unable to fully achieve anticipated cost-cutting
synergies or it may take longer than expected to achieve those
synergies; uncertainty related to timing and amount of future share
repurchases and dividend payments; risks and uncertainties with
respect to the quantities and costs of crude oil we are able to
obtain and the price of the refined petroleum products we
ultimately sell, risks related to Delek US’ exposure to Permian
Basin crude oil, such as supply, pricing, gathering, production and
transportation capacity; the ability to close the pipeline joint
venture, obtain commitments and construct the pipeline, gains and
losses from derivative instruments; management's ability to execute
its strategy of growth through acquisitions and the transactional
risks associated with acquisitions and dispositions; acquired
assets may suffer a diminishment in fair value as a result of which
we may need to record a write-down or impairment in carrying value
of the asset; changes in the scope, costs, and/or timing of capital
and maintenance projects; operating hazards inherent in
transporting, storing and processing crude oil and intermediate and
finished petroleum products; our competitive position and the
effects of competition; the projected growth of the industries in
which we operate; general economic and business conditions
affecting the southern United States; and other risks described in
Delek US’ filings with the United States Securities and Exchange
Commission (the “SEC”), including risks disclosed in our Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and other
filings and reports with the SEC.
Forward-looking statements should not be read as
a guarantee of future performance or results and will not be
accurate indications of the times at, or by, which such performance
or results will be achieved. Forward-looking information is
based on information available at the time and/or management's good
faith belief with respect to future events, and is subject to risks
and uncertainties that could cause actual performance or results to
differ materially from those expressed in the statements.
Delek US undertakes no obligation to update or revise any such
forward-looking statements, except as required by applicable law or
regulation.
Investor Relations
Contact:Keith JohnsonVice President of Investor
Relations
Delek US Holdings,
Inc.
615-435-1366
Media/Public Affairs
Contact:Michael P. RalskyVice President - Government
Affairs, Public Affairs & CommunicationsDelek US Holdings,
Inc.615-435-1407
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