Delek Logistics (DKL) Prices Senior Notes Worth $250 Million
Zacks Investment Research | May 19, 2017 05:04AM ET
Delek Logistics Partners, LP (NYSE:DKL) along with subsidiary Delek Logistics Finance Corp., announced the pricing of 6.75% senior unsecured notes worth $250 million. The notes are offered at a discount and priced at 99.245% of par and are scheduled to mature in 2025.
Delek Logistics’ Debt Position
As of Mar 31, 2017, it had total debt of $392.0 million. Delek Logistics’ additional borrowing capacity, subject to certain covenants, under the $700.0 million credit facility is approximately $300.5 million. The partnership will utilize the proceeds from the offering to repay a portion of the outstanding borrowings under its revolving credit facility.
The borrowing from credit facilities exposes the partnership to interest rate risk as it bears a floating rate of interest. Amid the rising interest rate scenario, the interest burden of the partnership is likely to further increase due to this revolving credit facility.
New Issue Can Lower Burden
The interest rate of the partnership at the end of the first quarter was $4.1 million up 27.3% from the year-ago quarter, primarily due to interest costs under its revolving credit facility.
The new debts will carry a fixed rate of interest and will help the partnership to lower interest burden compared with the floating rate in the credit facility.
Price Movement
In the last twelve months, Delek Logistics’ has outperformed the Zacks categorized Oil and Gas - Production Pipeline - MLB industry. During this period, the company’s shares gained 27.7%, much higher than the industry’s gain of 11.2%.
Stocks to Consider
Delek Logistics Partners currently carries a Zacks Rank #3 (Hold).
Some better-ranked players from the Oil & Energy space include Canadian Natural Resources Ltd. (TO:CNQ) , Contura Energy (NS:CNTE) and SolarEdge Technologies, Inc. (NASDAQ:SEDG) . All the three companies sport a Zacks Rank #1 (Strong-Buy). You can see
Canadian Natural Resources’ reported a positive earnings surprise of 30.77% in the first quarter. Its 2017 estimates have risen by 36 cents to $1.30 per share in the last 30 days.
Contura reported a positive earnings surprise of 628.57% in the first quarter. Its 2017 estimates have risen by $3.25 per share to $12.39 per share in the last 30 days
SolarEdge Technologies reported a positive earnings surprise of 39.13% in the first quarter. Its 2017 estimates have risen by 14 cents to $1.11 per share in the last 30 days.
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