Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Delek US Holdings, Inc. | dk-8kxalonx123016.htm |
| EX-99.1 - EXHIBIT 99.1 - Delek US Holdings, Inc. | dk-8kxex991jointpressrelea.htm |
| EX-99.4 - EXHIBIT 99.4 - Delek US Holdings, Inc. | dk-8kxex994leadershiptalki.htm |
| EX-2.1 - EXHIBIT 2.1 - Delek US Holdings, Inc. | dk-8kxex21mergeragreementx.htm |
| EX-10.1 - EXHIBIT 10.1 - Delek US Holdings, Inc. | dk-8kxex101votingagreement.htm |
| EX-10.3 - EXHIBIT 10.3 - Delek US Holdings, Inc. | dk-8kxex103votingagreement.htm |
| EX-10.2 - EXHIBIT 10.2 - Delek US Holdings, Inc. | dk-8kxex102votingagreement.htm |
| EX-99.3 - EXHIBIT 99.3 - Delek US Holdings, Inc. | dk-8kxex993lettertoemploye.htm |
January 3, 2017
Delek US Holdings Inc. to Acquire Remaining Shares of Alon USA
2
Cautionary Statements
Delek US Holdings, Inc. (“Delek US”) and Delek Logistics Partners, LP (defined as “we”, “our”) are traded on the New York Stock Exchange in the United States
under the symbols “DK” and ”DKL” respectively, and, as such, are governed by the rules and regulations of the United States Securities and Exchange
Commission. These slides and any accompanying oral and written presentations contain forward-looking statements that are based upon our current
expectations and involve a number of risks and uncertainties. Statements concerning current estimates, expectations and projections about our future results,
performance, prospects and opportunities and other statements, concerns, or matters that are not historical facts are “forward-looking statements,” as that
term is defined under United States securities laws. These forward-looking statements include, but are not limited to, statements regarding the proposed merger
with Alon, integration and transition plans, synergies, opportunities, anticipated future performance and financial positon, and other factors.
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 expected timing and likelihood of completion of the proposed merger, including the timing, receipt and terms
and conditions of any required governmental and regulatory approvals of the proposed merger that could reduce anticipated benefits or cause the parties to
abandon the transaction, the ability to successfully integrate the businesses, the occurrence of any event, change or other circumstances that could give rise to
the termination of the merger agreement, the possibility that stockholders of Delek US may not approve the issuance of new shares of common stock in the
merger or that stockholders of Alon may not approve the merger agreement, the risk that the parties may not be able to satisfy the conditions to the proposed
transaction in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the proposed transaction, the
risk that any announcements relating to the proposed transaction could have adverse effects on the market price of Delek US' common stock or Alon's common
stock, the risk that the proposed transaction and its announcement could have an adverse effect on the ability of Delek US and Alon to retain customers and
retain and hire key personnel and maintain relationships with their suppliers and customers and on their operating results and businesses generally, the risk that
problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and
efficiently as expected, the risk that the combined company may be unable to achieve 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; 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 contained in Delek US’ and Alon’s filings with the United
States Securities and Exchange Commission.
Strategic Combination with Financial Flexibility to Support
Growth and Unlock Value
3
• Grown through opportunistic acquisitions across
multiple market cycles
• Expertise to invest in/improve operations
• Strong balance sheet
• Low cost reliable operator
• Retail expertise/largest 7-Eleven licensee
• Asphalt blending and marketing expertise
• Historically capital constrained
Creates a Permian Focused Refining System with Broadened Marketing Reach
Ability to unlock approximately $95 million of synergies (3) and $78 million of Logistics EBITDA(3)
Refining
• 7th largest independent refiner
• 4 locations – (2 )TX, (1) AR, (1) LA
• More than 300,000 bpd of crude
throughput capacity
• Near uniform technology and
configuration
• Colonial Pipeline space of 600,000
barrels per month
• TEPPCO Pipeline space of 600,000
to 1.0m barrels per month (2)
Retail
• Integrated system supported
by Big Spring refinery
• Approximately 307 stores in
central/west Texas and New
Mexico
• West Texas wholesale
marketing business
Asphalt
• 15 terminals serving markets
from Tennessee to the West
Coast
• Approaching 1,000,000
tons/year of sales
Logistics
• Consists of Delek Logistics
Partners, LP (NYSE: DKL)
• Drop-able logistics assets fuel
40%+ (1) increase in EBITDA
and further supports double
digit long term distribution
growth
• Material GP benefits
Renewables
• 3 plants / 61 million gal/yr of
biodiesel capacity
1) Growth based on asphalt and Big Spring drop downs. Please see slide 10 for additional information.
2) TEPPCO line space range based on allocation and seasonality through a year. Amounts will vary by month
3) Represents mid points of estimated ranges. Additional information provided on page 9 and page 10. Please see slide 21 for a Logistics EBITDA reconciliation.
Consideration/
Valuation
• All stock transaction for remaining 53% equity ownership
• Each Alon USA Energy, Inc. (“Alon”) shareholder will receive 0.5040 shares of Delek US Holdings, Inc. (“Delek”)
common stock, resulting in pro forma ownership of approximately 76% to Delek shareholders and
approximately 24% to Alon shareholders. This represents a 5.6% premium above the 20 trading day volume
weighted ratio through and including December 30, 2016 of 0.477
• $675 million enterprise value of 53% interest, including proportionate assumption of Alon net debt of
approximately $152 million and $59 million of market value for the non-controlling interest in Alon USA
Partners, LP
Synergies
• Anticipated annual synergies of $85 - $105 million
• Target 3% to 5% capital expenditures savings due to increased scale
• Expect to achieve synergies on a run-rate basis in 2018, the first full year after transaction close through a
combination of commercial, operational, cost of capital and corporate synergies
Financial Strength
and Flexibility
• Transaction expected to be highly accretive to Delek’s earnings per share in 2018 (1)
• 0.9x combined Net Debt / 2017E EBITDA (2); Balance sheet creates the possibility for cost-of-capital synergies
• New $150 million share repurchase authorization in effect, which does not have an expiration date
Dropdown Inventory
• DK can leverage relationship with DKL to take advantage of logistics value to be unlocked from ALJ
• Estimated increase in dropdown inventory of approximately $70 to $85 million in EBITDA (3)
• Provides improved visibility for DKL future growth and supports distribution growth
• As DKL distribution increases, higher cash flow to Delek US through GP, IDR and LP ownership
Growth
Opportunities
• Financial flexibility will provide opportunity to support growth initiatives
• Evaluate organic growth projects created by refining project backlog
• Explore options for value creation from larger asset base
Timing / Closing
Conditions
• Expect to close in the first half of 2017
• Subject to customary closing conditions, including regulatory and shareholder approvals
Transaction Highlights
4
1) Based on 2018 consensus estimates from Factset on 12/30/16 for DK and ALJ plus $95.0 million of pre-tax synergies.
2) Based on 9/30 balance sheet. Delek US cash includes $377 million of proceeds from the sales of the retail related asset before taxes related to the transaction. Taxes are expected to be
paid in early 2017. Based on 2017 consensus estimates for DK and ALJ plus $75.0 million of synergies excluding cost of capital synergies.
3) Please see slide 21 for a reconciliation of the logistics EBITDA.
5
Financial strength and
flexibility to invest in
operations
Highly Accretive
Transaction
Combination Creates Opportunities to Unlock Significant
Shareholder Value
Unlock approximately
$72 to $84 million of
annual Logistics EBITDA
Estimated $85 to $105
million of synergy
opportunity
An integrated and
diversified refining,
logistics and marketing
company
Permian-Focused
Refining System
Increased Scale and Asset Diversity
Complementary Businesses with Strategically Located Assets; Increased Permian Basin Exposure
6
Alon USA Asset Overview(1)
Refining
• 147,000 bpd in total
• Big Spring
• 73,000 bpd
• 10.5 complexity
• Krotz Springs
• 74,000 bpd
• 8.4 complexity
Retail
• Approximately 307
stores
• Southwest US locations
• Largest licensee of 7-
Eleven stores in the US
Asphalt
• 11 asphalt terminals
located in TX, WA, CA,
AZ and NV
• Largest asphalt supplier
in CA and second
largest asphalt supplier
in TX
Alon USA Partners
• ALJ owns 100% of the
general partner and
81.6% of the limited
partner interest
interests in ALDW
• ALDW owns the Big
Spring refinery
Delek US Asset Overview
Refining
• 155,000 bpd in total
• El Dorado, AR
• 80,000 bpd
• 10.2 complexity
• Tyler, TX
• 75,000 bpd
• 8.7 complexity
Delek Logistics Partners
• 9 terminals
• Approximately 1,250
miles of pipeline
• 8.5 million bbls of
storage capacity
• West Texas wholesale
• Joint venture crude oil
pipelines: RIO / Caddo
1) ALJ California refineries have not operated since 2012.
Delek US Renewables
• Biodiesel production:
• Crossett, AR 12.3m gallon/yr
• Cleburne, TX 10.6m gallon/yr
Alon Renewables
• Renewable Diesel
• California – Alt Air
37.8m gallon capacity
Premier Permian Based Refining System
Over 300,000 bpd of Crude Throughput Capacity (~69% Permian Basin Based)
7
Key Value Drivers
• Creates the premier Permian based refining company
• 7th largest independent refiner with 302,000 barrels
per day crude throughput capacity
• Access to approximately 207,000 barrels per day of
Permian sourced crude
• Largest exposure to Permian crude of the independent
refiners as percentage of crude slate
• Permian Basin production expected to continue to
grow
• Improved drilling efficiencies have benefited
production economics
• Combined company benefits through refining
and logistics position
Permian Basin Crude Oil Production (2)
Combined Access to Permian Basin Crude
Permian Crude Access as % of Crude Slate (3)
1) Barclays research. Company reports. TSO includes WNR.
2) TPH Research report, “Permian Basin Crude Oil Supply/Demand”, Drillinginfo, EIA, - December 2016.
3) TPH Research; Crude slate - TSO includes WNR acquisition; WNR includes 100% of NTI; PBF includes both Chalmette & Torrance
90 117
207
61%
75%
69%
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Delek US Refining Capex Declining Creates Flexibility
Combined low operating cost per barrel system with refining project backlog
8
Key Value Drivers
• Competitive operating expense per barrel
refining system
• Combines Delek US’ expertise in investing/
improving assets with Alon’s focus on
reliability
• Delek US has completed large capital
investment program in refining
• Creates potential to apply resources to
backlog of refining projects in Alon’s
assets
• Refineries that are near uniform technology
and similar size
• Allows more efficient application of
best practices/expertise to larger
system
Low Opex vs. Peers (2016 Cash Cost / bbl)(1)
Delek Alon
1) Source: TPH Research year to date basis through June 2016.
2) 2016 includes sustaining maintenance, regulatory and discretionary related spending. No significant growth related capital expenditures in the forecast.
Delek US Completes Large Refining Investment Plan
$46.1
$123.6
$199.1
$164.5
$27.1
2012A 2013A 2014A 2015 2016E (2)
($ in millions)
Robust Synergy Opportunity
9
Expect to achieve run-rate synergies of approximately $85 - $105 million in 2018
Commercial
• Logistics, purchase and
trading benefits from a
larger platform
• $20-$35 m
Operational
• Sharing of resources
across the platform;
improved insurance and
procurement efficiencies
• $13-$15 m
Cost of
Capital
• Benefit from Delek US’
financial position to
reduce interest expense
through refinancing
efforts
• $19-$20 m
Corporate
• Reducing the number of
public companies;
consolidating functions
to improve efficiencies
• $33-$35 m
Corporate
Cost of
Capital
Operational
Commercial
$85-$105
($ in millions)
Strong Platform for Logistics Growth
Growing Logistics Assets Support Crude Sourcing and Product Marketing
10
Key Value Drivers
• Delek Logistics Partners provides
platform to unlock logistics value
• Increased access to Permian and
Delaware basin through presence of
Big Spring refinery
• Improves ability to develop
crude oil gathering and
terminalling assets
1) 2017E based on current sell-side consensus per Factset as of 12/30/16. Information for illustrative purposes only to show potential based on estimated dropdown assets
listed. Actual amounts will vary based on market conditions, which assets are dropped, timing of dropdowns, actual performance of the assets and Delek Logistics in the
future.
2) Based on 7x multiple.
3) Please see slide 21 for a reconciliation of EBITDA.
Strong EBITDA Growth Profile Supporting Distribution Growth (1)
$112
$12
$34
$32 $190
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
$200.0
2017 DKL
EBITDA (1)
Asphalt Drop
down Inventory
Big Spring Drop
Down Inventory
Krotz Springs
Drop Down
Inventory
Total EBITDA
Potential
• Drop downs, excluding Krotz Springs, create significant cash flow to Delek
• $42-$50m EBITDA equates to ~$300-350m cash proceeds to DK (2)
• Provides visibility for continued DKL LP double digit distribution growth
• Significant GP benefits
Dropdown Item
Estimated EBITDA
($ million / year)
Asphalt Terminals $11-13
Big Spring Asphalt Terminal $9-11
Big Spring assets $8-10
Big Spring Wholesale Marketing $14-16
Total Excluding Krotz Springs $42-50
Krotz Springs assets $30-34
Total $72-84 (3)
($ in millions)
11
Delek US GP and IDR Ownership is in DKL in the high splits
Future Potential Dropdowns to DKL Benefit Delek US Cash Flow
Supports Long Term Distribution Growth at Delek Logistics
Total Quarterly Distribution Per Unit
Target Amount
Unitholders General Partner
Minimum Quarterly Distribution below $0.37500 98.0% 2.0%
First Target Distribution $0.37500 to $0.43125 98.0% 2.0%
Second Target Distribution $0.43125 to $0.46875 85.0% 15.0%
Third Target Distribution $0.46875 to $0.56250 75.0% 25.0%
Thereafter above $0.56250 50.0% 50.0%
• DKL Distribution was
$0.655/unit for 3Q 2016
• DKL Distribution growth
target of 10% in 2017
• Delek US Ownership:
• 60% of LP Units
• 2% GP Interest
(1) Based on no change in number of units and assumes all units are paid distribution, including IDRs to Delek US and its affiliates. Targeted annual growth rate in distribution
based on 15% (per DKL target in 3Q16 earnings press release) from 2015 to 2016 and 10% from 2016 to 2017 based on declared amounts. Growth from 2017 to 2020 based on
10% per year. Currently, DKL has provided guidance for 2017 only. Delek US and affiliates own approximately 60% of limited partner units and 100% of the general partner
units. Information for illustrative purposes only, actual amounts will be determined by Delek Logistics based on future performance and pursuant to its partnership
agreement.
Assumed Annual Distribution (LP and GP) to Delek US if Delek Logistics were to have a long term distribution
growth of 10% per year.(1) Combination of all Alon logistic assets, including asphalt, could potentially support
growth to 2020
$28.1 $33.1
$37.4 $41.9 $46.0
$51.0 $56.0
$1.9 $5.0
$12.4
$18.7
$26.0
$33.0
$42.0
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
2014 2015 2016E 2017E 2018E 2019E 2020E
Distribution - LP Distribution - GP
$ in millions Potential 2016E – 2020E GP distribution CAGR +36%
Expands Retail/ Wholesale System in Southwest
Integrated wholesale marketing and retail network at Big Spring; complementary to DKL west Texas
12
Alon Refinery
Legend:
Big Spring
Krotz
Springs
Branded license agreement and payment card location
Branded company-operated and distributor location
Unbranded supply available
Phoenix
Tucson
El Paso
Abilene
Wichita
Falls
Albuquerque
DKL served terminals
• Combination diversifies asset base with Alon’s product marketing platform and 307 store retail system
in Central/west Texas and New Mexico
• Flexibility to sell product east and west of the refinery depending on market dynamics and can
access the Phoenix and Tucson markets
• Supplies ~640 branded sites, including substantially all of Alon’s retail sites
• In 2015, wholesale fuel sales volumes totaled over 1 billion gallons
• Extends Delek’s marketing reach beyond the west Texas wholesale business that serves terminals in
San Angelo, Abilene, Odessa, and Aledo through DKL
Broad Marketing Platform Created
Combination of refinery locations and pipeline access extends geographic area
DK/ALJ Assets
DK Refinery
DK/DKL Terminal
DK/DKL Pipeline
Alon Refinery
3rd Party Terminal
Krotz Springs
El Dorado
Tyler
Big Spring
Memphis
Nashville
Knoxville
Midland
Phoenix
Tucson
Bloomfield
Abilene
San Angelo
Houston
Duncan
Princeton
Roanoke
Greensboro
Charlotte
Spartanburg
Nederland
El Paso
Birmingham
Minneapolis
Chicago
St. Louis
Denver
Wichita
Indianapolis
Kansas City
Des Moines
Omaha
Sioux Falls
Fargo
Borger
Albuquerque
Tulsa
Dallas
Cape
Cheyenne
TEPPCO
Colonial
Plantation
Explorer
Area Pipelines
Magellan
3rd Party Pipelines
Southeast
• TEPPCO & Colonial access for
El Dorado and Krotz Springs
• 600,000 barrels a month of
space on Colonial provides
access to Southeastern US
markets
Southwest
• Big Spring refinery connected
to Midwest via Duncan and
can access Tucson/Phoenix
• Tyler refinery serves niche
market around its location
13
Note: The El Dorado refinery is connected to the TEPPCO pipeline system with access to 600,000 to 1.0 million barrels per month depending on allocation and seasonality.
14
Combination Creates Larger Wholesale Asphalt Operation
Market presence from Tennessee to California
Key Value Drivers
• Ability to leverage technical expertise to
optimize production and marketing system
• Combined company nearing 1.0 million tons of
sales(1) annually
• Sales supported by 50% production and
50% supply/exchange
• Positioned to benefit from infrastructure
spending
• $205 billion Highway Bill in place
• Aug. 2016 Texas Transportation
Commission approved 10 yr plan for
approximately $70 billion of projects
• Potential infrastructure investment focus
from incoming Administration
(1) Based on year to date combined sales volumes through September 30, 2016 of 14,800 bpd to determine estimated annual run rate. Market demand and company
performance will determine actual amounts in the future.
(2) Includes both leased and owned assets of Delek US and Alon.
Assets (2)
Delek
US
Alon Total
Terminals 4 11 15
Trailers 76 0 76
Railcars 150 500 650
15
Renewable Operations
Combined capacity of approximately 61 million gallons a year
Key Value Drivers
• Combined renewable fuels business becoming a
larger contributor performance
• Creates potential for logistics efficiencies when
supplying refineries
• Larger market position provides the potential to
optimize system
Renewables Becomes a Larger Contributor
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
DK ALJ Total
S
in
milli
o
n
s
3Q16 Operating Income (1)
Operational Summary, in millions of gallons
Annual
Capacity Delek US Alon (2) Total
Arkansas 10.6 10.6
Texas 12.3 12.3
California 38.0 38.0
Total 22.9 38.0 60.9
Products Biodiesel Renewable
Diesel/Jet
Primary
Feedstock
Tallow/ Yellow
Grease
Tallow
/soybean oil
Big Spring
Krotz
Springs
El Dorado
Crossett
Cleburne
Tyler
Delek US Renewable Fuels
Delek US Refineries
Assets
Alon Refineries
Delek US Renewables
1) Represents third quarter 2016 operating income to illustrate combined performance for that period. Future performance will be based on market conditions and operating
performance of the business.
2) Alon owns approximately 77% of the renewables company. Amount represents full capacity of the operation.
Financial Strength and Flexibility for the Combined Company
Benefits from Delek’s financial position
16
Key Value Drivers
• Combined company net debt/EBITDA
estimated to be 0.9x based on 9/30 balance
sheet and $75 million of run rate synergies
• Opportunity for cost of capital
benefits from combination estimated
to be approximately $20 million
• Financial position allows capital allocation
program to include:
• Evaluation of organic growth
opportunities of a larger company
• Return cash to shareholders through
dividends and share repurchases
(1) Delek US cash includes $377 million of proceeds from the sales of the retail related asset before taxes related to the transaction. Taxes are expected to be paid in early 2017.
(2) Estimates based on Factset as of 12/30/16. Includes $75 million of synergies before potential cost of capital savings from the combined company.
Impressive Leverage Profile and Liquidity
Projected Capitalization (Based on Sept. 30 balance sheet)
($ in mill ions) Delek US(1) Alon Synergies Combined
Current Debt $84 $16 $101
Long-Term Debt 743 534 1,277
Total Debt $828 $550 $1,378
Cash (692) (265) (957)
Net Debt $135 $286 $421
2017 EBITDA Estimates (2) 215 174 75 465
Net Debt / 2017 EBITDA 0.6x 1.6x 0.9x
Comparable Analysis on Financial Position
Attractive Implied Transaction Multiple
17
Implied Transaction Value
(1) Factset EBITDA consensus estimate as of 12/30/16 adjusted for the proportionate 53% that is being purchased in this transaction.
(2) Assumes $75mm of run rate synergies (excluding cost of capital synergies).
(3) $2.8 billion EV pro forma DK estimate based on combined company shares outstanding of an estimated 81.3 million, DK share price as of December 30, 2016 of $24.07 and combined
9/30/16 balance sheet capitalization including $377 million of proceeds from DK’s sales of the retail related asset before taxes. 2017E Factset EBITDA as of 12/30/16 of each company plus
$75.0m synergies.
(4) EV/EBITDA multiples for peer companies are based on Factset as of 12/30/16, which uses a book value for minority interest in its calculation.
Peer Comparison (EV / 2017E EBITDA) (4)
• Transaction multiple for this transaction for 3.6x based on 2018 consensus EBITDA estimates
• Includes benefit of $75 million of run rate synergies 2018, the first full year of operation
following the transaction
4.0x
5.9x
11.4x
8.7x
8.0x
6.7x 6.4x 6.3x 6.1x
Imp
lied
Tra
n
sactio
n
M
u
ltip
le
PF
D
K
(3
)
C
V
I
PS
X
MP
C
H
FC
TSO
P
B
F
V
LO
In millions, except per share
Purchase of
Remaining 53% of
Alon USA
Delek US Stock Price as of 12/28/16 $24.07
Shares issued for remaining 53% of Alon USA 19.3
Equity Value $464.1
Current Debt 8.7
Long-term Debt 284.0
Minority Interest (Market Value) 58.8
Less: Cash (140.8)
Enterprise Value for remaining 53% $674.8
2017E EBITDA (53% share) (1)(2) $168.0
2017 Implied EV/EBITDA 4.0x
2018E EBITDA (53% share) (1)(2) $187.0
2018 Implied EV/EBITDA 3.6x
Well positioned refining
system with access to
advantaged crude in the
Permian Basin
Concluding Highlights
18
Significant synergies
opportunity
Strong platform for logistics
growth with combined
dropdown inventory
Delek’s financial strength
provides flexibility for the
combined entity
Increased
Value to All
Shareholders
Significant organic growth
opportunities
Appendix
19
Pro Forma Organizational Structure
20
Public
Big Spring, TX
Refinery & Wholesale
Marketing
Retail Asphalt
Krotz Springs
Refinery
California Refineries
18.4% LP
81.6% LP Alon USA Partners, LP
Delek Logistics GP, LLC
(the General Partner)
Alon Energy, Inc
Delek Logistics Partners, LP
Delek US Holdings, Inc.
95.1%
interest
59.7%
interest
2.0% GP / IDRs
interest
Public
38.3%
interest
Non GAAP Reconciliations of Potential Dropdown EBITDA (1)
21
(1) Based on projected range of potential future logistics assets that could be dropped to Delek Logistics from Delek US in the future. Amounts of EBITDA, net income and timing
will vary, which will affect the potential future EBITDA and associated deprecation and interest at DKL. Actual amounts will be based on timing, performance of the assets,
DKL’s growth plans and valuation multiples for such assets at the time of any transaction.
Reconciliation of Forecasted Logistics Dropdown EBITDA to Forecasted Amounts under US GAAP
Delek Logistics Partners LP
($ in millions)
Forecasted Net Income Range 13.6$ 15.9$
Add: Depreciation and amortization expenses 33.6$ 39.2$
Add: Interest and financing costs, net 24.8$ 28.9$
Forecasted EBITDA Range 72.0$ 84.0$
Potential Dropdown Range
22
Additional Information
No Offer or Solicitation
This communication relates to a proposed business combination between Delek US and Alon. This announcement is for informational purposes only
and is neither an offer to purchase, nor a solicitation of an offer to sell, any securities or the solicitation of any vote in any jurisdiction pursuant to the
proposed transactions or otherwise, nor shall there be any sale, issuance or transfer or securities in any jurisdiction in contravention of applicable
law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as
amended.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed transaction between Delek US and Alon. In connection with
the proposed transaction, Delek US and/or Alon may file one or more proxy statements, registration statements, proxy statement/prospectuses or
other documents with the SEC. This communication is not a substitute for the proxy statement, registration statement, proxy statement/prospectus or
any other documents that Delek US or Alon may file with the SEC or send to stockholders in connection with the proposed transaction.
STOCKHOLDERS OF DELEK US AND ALON ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE
PROXY STATEMENT(S), REGISTRATION STATEMENT(S) AND/OR PROXY STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Any definitive proxy statement(s) (if and when available) will be mailed to
stockholders of Delek US and/or Alon, as applicable. Investors and security holders will be able to obtain copies of these documents, including the
proxy statement/prospectus, and other documents filed with the SEC (when available) free of charge at the SEC's website, http://www.sec.gov.
Copies of documents filed with the SEC by Delek US will be made available free of charge on Delek US’ website at http://www.delekus.com or by
contacting Delek US’ Investor Relations Department by phone at 615-435-1366. Copies of documents filed with the SEC by Alon will be made
available free of charge on Alon's website at http://www.alonusa.com or by contacting Alon's Investor Relations Department by phone at 972-367-
3808.
Participants in the Solicitation
Delek US and its directors and executive officers, and Alon and its directors and executive officers, may be deemed to be participants in the
solicitation of proxies from the holders of Delek US common stock and Alon common stock in respect of the proposed transaction. Information about
the directors and executive officers of Delek US is set forth in the proxy statement for Delek US’ 2016 Annual Meeting of Stockholders, which was
filed with the SEC on April 5, 2016, and in the other documents filed after the date thereof by Delek US with the SEC. Information about the directors
and executive officers of Alon is set forth in the proxy statement for Alon's 2016 Annual Meeting of Shareholders, which was filed with the SEC on
April 1, 2016, and in the other documents filed after the date thereof by Alon with the SEC. Investors may obtain additional information regarding the
interests of such participants by reading the proxy statement/prospectus regarding the proposed transaction when it becomes available. You may
obtain free copies of these documents as described in the preceding paragraph.
Investor Relations Contact:
Assi Ginzburg Keith Johnson
Chief Financial Officer Vice President of Investor Relations
615-435-1452 615-435-1366