Business Context and Reporting Period
This Form 6-K filing by Dynagas LNG Partners LP (the "Partnership") covers the month of July 2015. The Partnership is a growth-oriented limited partnership organized under the laws of the Republic of The Marshall Islands, with its principal executive office in Monaco. The filing primarily discloses the execution of an Underwriting Agreement dated July 13, 2015, and a press release announcing the pricing of a public offering of preferred units.
Key Financial Metrics and Offering Details
The filing details a public offering of 3,000,000 9.0% Series A Cumulative Redeemable Preferred Units (the "Series A Preferred Units") at a public offering price of $25.00 per unit, totaling $75,000,000. The Partnership granted underwriters an option to purchase up to an additional 450,000 units. The underwriting discount is $0.7875 per unit ($2,362,500 total). The units have a liquidation preference of $25.00 per unit and pay distributions quarterly at a rate of 9.00% per annum ($2.25 per unit), commencing November 12, 2015. The units are perpetual unless redeemed by the issuer on or after August 12, 2020.
The filing does not provide specific revenue, profit, cash flow, or margin figures for the period ending July 31, 2015, as this document focuses on the capital raise transaction rather than interim operating results. The Partnership's fleet consists of five LNG carriers with an aggregate carrying capacity of approximately 759,100 cubic meters.
Material Changes and Use of Proceeds
The primary material change is the capital raise described above. The Partnership intends to use the net proceeds from the offering, together with a portion of borrowings under a new secured debt facility, to finance the acquisition of one operating LNG carrier and its respective time charter from Dynagas Holding Ltd., the Partnership's sponsor (the "Optional Vessel Acquisition").
If the Optional Vessel Acquisition is not completed, the net proceeds will be used for general partnership purposes, including working capital. The closing of the vessel acquisition is subject to several conditions, including the identification of the vessel, agreement on the purchase price, approval by the conflicts committee, and the entry into the new debt facility. The Partnership provided no assurance that the acquisition would be completed.
Guidance, Outlook, and Risks
The filing contains forward-looking statements regarding the Optional Vessel Acquisition and the listing of the Series A Preferred Units on the New York Stock Exchange (expected symbol: DLNGPRA). Risks include the failure to complete the vessel acquisition, the inability to secure the new debt facility, and general market risks associated with the LNG shipping industry. The Partnership represents that it is an "emerging growth company" and that it was not a passive foreign investment company (PFIC) for the taxable year ended December 31, 2014.
Important Facts for Investor Verification
- Offering Terms: Verify the final closing date (expected July 20, 2015) and whether the underwriters exercised the 450,000 unit over-allotment option.
- Use of Proceeds: Confirm whether the "Optional Vessel Acquisition" from the sponsor was successfully completed or if proceeds were diverted to general working capital.
- Debt Facility: Verify the terms and closing of the "new secured debt facility" mentioned as a co-funding source for the vessel acquisition.
- Listing Status: Confirm the listing of the Series A Preferred Units on the NYSE under the symbol "DLNGPRA."
- Dividend Payments: Monitor the first distribution payment date of November 12, 2015, to ensure the 9.0% cumulative rate is honored.