Delek Logistics Partners, LP (DKL) is a midstream MLP with total assets of $2.91B as of March 31, 2026. Under the liquidation lens, equity recovery is deeply negative. MFFAIS CLV/LLV are both reported at -$2.87B, consistent with a balance sheet where face-value liabilities substantially exceed any plausible haircut-adjusted asset base. Total debt at face value stands at $2.31B ($161M revolving, $400M 2028 Notes at 7.125%, $1.05B 2029 Notes at 8.625%, $700M 2033 Notes at 7.375%), plus $29M in finance lease liabilities and $6M in operating lease liabilities. Against this, tangible asset recoveries are constrained: cash of $9.9M (100% recovery), AR/receivables in the current asset pool of ~$536M current assets net of cash and inventory, PP&E gross $1.88B less accumulated depreciation of $432M gives net PP&E of $1.44B—at a 50-70% recovery haircut, PP&E yields roughly $722M-$1.01B. Equity method investments of $334M (pipeline JV interests, illiquid minority stakes) would face severe haircuts in forced liquidation, realistically 20-40 cents on the dollar given limited buyer pool for undivided JV interests. Net investment in leases (noncurrent) of $159M represents a sales-type lease receivable from Delek Holdings—counterparty credit quality is a concern given sponsor interdependency, and recovery would depend entirely on Delek Holdings' financial condition at hypothetical wind-up. Intangibles of $143M and goodwill of $12M would carry zero recovery. Partners' capital is already negative at -$20M on a GAAP basis, confirming equity is underwater before applying any liquidation haircuts. Key developments this quarter: (1) New $1.3B revolving credit facility executed March 26, 2026, replacing prior credit agreement—this is covenant-relevant but does not shift total debt materially; (2) Committed $60M finance lease for Libby sour gas equipment not yet on balance sheet as construction incomplete—this off-balance-sheet liability is disclosed in MD&A but is not tagged in XBRL and represents an incremental future obligation; (3) Asset sales to Delek Holdings ($19M Tyler tank closed April 1, 2026 post-period; $66M El Dorado terminal targeted October 2027) reduce tangible asset base while shifting some recovery to receivable from a financially stressed sponsor; (4) Quarterly distribution of $1.130/unit ($60.5M/quarter annualized ~$242M) continues to drain cash from the enterprise at a rate exceeding net income of $32M for the quarter. Interest burden of $51.6M/quarter against operating income of $40M means interest coverage is below 1x at the operating income level; equity holders depend entirely on non-cash items (sales-type lease interest income of $32M/quarter) to close the gap.
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