Business Context and Reporting Period
This Form 8-K Current Report was filed by The Carlyle Group L.P. on September 13, 2017. The filing documents the completion of a previously announced underwritten public offering and the associated amendments to the company's governing partnership agreements.
Key Financial Metrics and Capital Structure
- Issuance: 16,000,000 5.875% Series A Preferred Units.
- Distribution Rate: 5.875% per annum (non-cumulative).
- Payment Schedule: Quarterly on March 15, June 15, September 15, and December 15, commencing December 15, 2017.
- Redemption Price (Standard): $25.00 per unit, exercisable by the Partnership on or after September 15, 2022.
- Redemption Price (Change of Control/Tax Event): $25.25 per unit if redeemed prior to September 15, 2022.
- Redemption Price (Rating Agency Event): $25.50 per unit if redeemed prior to September 15, 2022.
The filing text does not provide specific values for revenue, profit, cash flow, operating margins, total debt, or liquidity ratios, as this report focuses on a specific capital transaction rather than periodic financial performance.
Material Changes Versus Prior Period
The primary material change is the creation of a new class of securities (Series A Preferred Units) and the corresponding amendment of the Second Amended and Restated Limited Partnership Agreement. Additionally, the limited partnership agreements for Carlyle Holdings I L.P., Carlyle Holdings II L.P., and Carlyle Holdings III L.P. were amended to mirror the economic terms of the Series A Preferred Units.
Outlook, Risks, and Unusual Items
- Distribution Restrictions: Unless distributions are declared and paid (or set apart) on the Series A Preferred Units for a quarterly period, the Partnership is restricted from declaring or paying distributions on Junior Units or repurchasing Junior Units for the remainder of that period. This restriction does not apply to the initial period ending December 15, 2017.
- Change of Control Penalty: If a Change of Control Event occurs and the Partnership fails to redeem the units within 31 days, the distribution rate increases by 5.00% (to 10.875%) beginning on the 31st day following the event.
- Redemption Rights: Holders of the Series A Preferred Units have no right to require redemption; redemption is solely at the Partnership's option subject to the terms outlined above.
Investor Verification Checklist
- Verify the total capital raised by multiplying the 16,000,000 units issued by the $25.00 liquidation preference.
- Review the "Second Amended and Restated Limited Partnership Agreement" (Exhibit 3.1) for detailed definitions of "Change of Control Event," "Tax Redemption Event," and "Rating Agency Event."
- Confirm the impact of the new preferred units on the distribution waterfall for existing common unit holders (Junior Units).
- Check subsequent filings to confirm the declaration of the first quarterly distribution on December 15, 2017.