The pipeline and storage unit of Delek US Holdings has kicked off the process of selling its limited partner interests to the public for the first time.
Delek Logistics Partners announced plans for an initial public offering in July, saying it wanted to raise $135 million. That number has since grown a good bit: If the company's seven underwriters sell the extra shares allocated to the deal, Delek Logistics will pull in almost $168 million. If that happens, the venture will, among other things, pay its parent company an $80 million dividend and retire about $51 million of revolving debt. The division also plans to borrow another $90 million from a new debt facility and give that money to Delek US.
Interests in Delek Logistics are being marketed at $20 each and will be listed under the ticker DKL. Executives — the same people who are running Delek US, which will still own more than 60 percent of the company post-offering — say they intend to pay quarterly dividends of 37.5 cents per partner interest. Based on the $20 offering price, that would give the company a 7.5 percent yield.
Delek Logistics owns almost 400 miles of transportation and crude pipelines and a 600-mile crude oil gathering system as well as various storage facilities. In the first six months of this year, it posted a profit of $17.5 million on $405 million. Those numbers are in line with 2011's pro forma performance.