Delek US Holdings executives have sold a California refinery they picked up via their acquisition of Alon USA Energy but that doesn’t connect to their Texas-Arkansas-Louisiana refining footprint.
Global Clean Energy Holdings, which is based in Southern California, has paid Delek $40 million in cash for the refinery, which was no longer operating. GCE plans to convert the plant to produce renewable diesel and maybe renewable jet fuel and has given Delek the option to buy up to a third of the subsidiary that bought the plant.
The disposition also relieves Delek of about $14 million in annual operating costs and lets it remove some liability reserves from its balance sheet.
Delek CEO Uzi Yemin and his team also are moving to boost their cash reserves during the COVID-19 crisis — the Brentwood-based company ended March with $785 million in cash and equivalents on its books — and are working on securing a $200 million term loan. Analysts at Moody’s Investors Service say the move doesn’t affect their ratings for Delek, which they say is moderately leveraged and has enough liquidity to nurse it through volatile times.
Shares of Delek (Ticker: DK) were off nearly 9 percent to $18.55 Wednesday. They began 2020 around $34.
Another local manufacturing company beefing up its balance sheet is Louisiana-Pacific: The construction materials maker early this month agreed to a deal with its bank group led by American AgCredit that adds a $200 million, three-year tranche to its revolving debt facility.
As part of the deal, downtown-based LP also agreed to a few new covenants for its debt. CEO Brad Southern and his team last month said they would cut production, capital spending and its share buyback this year to save money during the COVID pandemic. The company finished March with about $480 million in cash on hand.
LP shares (Ticker: LPX) were down about 5 percent to $19.16 in midday trading Wednesday. They have since the beginning of the year risen from about $30 to $34 and change before sliding below $13 and then gradually recovering some ground.