Westlake Chemical Partners LP - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K covers events occurring on September 26, 2017, and September 29, 2017, for Westlake Chemical Partners LP (the "Partnership"). The filing details a significant capital transaction involving the acquisition of additional equity interests in an affiliate and the funding thereof through a public offering and debt financing.
Key Financial Metrics and Transaction Details
- Acquisition Cost: Approximately $229.2 million to purchase an additional 5.0% limited partner interest in Westlake Chemical OpCo LP ("OpCo").
- Post-Transaction Ownership: The Partnership now owns approximately 18.3% of OpCo.
- Equity Financing: The Partnership completed a public offering of 5,175,000 common units (including 675,000 units from the underwriters' full exercise of the over-allotment option) on September 29, 2017.
- Debt Financing: Approximately $118.6 million was borrowed under the $300.0 million senior unsecured revolving credit agreement (the "MLP Revolver") with Westlake Chemical Finance Corporation.
- Use of Proceeds: OpCo intends to use the $229.2 million proceeds to repay borrowings under its intercompany debt agreements with Westlake Chemical Corporation.
Material Changes
The primary material change is the increase in the Partnership's ownership stake in OpCo from approximately 13.3% to 18.3%. This transaction was funded by a combination of new equity issuance and increased leverage under the existing MLP Revolver. The filing notes that the transaction terms were approved by the General Partner's board and its Conflicts Committee, which determined the deal was fair and reasonable.
Guidance, Risks, and Related Party Transactions
This filing does not provide updated financial guidance or outlook. It highlights significant related party relationships, as the Partnership, OpCo, the General Partner, and the lender are all subsidiaries or affiliates of Westlake Chemical Corporation. The transaction was reviewed by an independent financial advisor and legal counsel to ensure fairness to the Partnership.
Key Facts for Investor Verification
- Verify the exact net proceeds from the September 29, 2017, public offering of 5,175,000 common units, as the filing states the offering closed but does not explicitly list the total dollar amount raised from equity alone.
- Confirm the remaining available capacity under the $300.0 million MLP Revolver after the $118.6 million drawdown.
- Review the full text of the Equity Purchase Agreement (Exhibit 2.1) for specific covenants or conditions attached to the 18.3% ownership stake.
- Assess the impact of the increased debt load on the Partnership's liquidity and distribution coverage ratios.