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TABLE OF CONTENTS
TABLE OF CONTENTS
Table of Contents
Filed Pursuant to Rule 424(b)(5)
File No. 333-211367
The information in this preliminary prospectus supplement is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer
to sell these securities, and we are not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted.
Subject to Completion, dated November 8, 2017
PRELIMINARY
PROSPECTUS SUPPLEMENT
(to Prospectus Dated September 2, 2016)
TRANSMONTAIGNE PARTNERS L.P.
2,500,000 Common Units
Representing Limited Partner Interests
We are selling 2,500,000 common units representing limited partner interests in TransMontaigne Partners L.P. Our common units are traded
on the New York Stock Exchange under the symbol "TLP."
On November 7, 2017, the last reported sale price of our common units on the New York Stock Exchange was $42.21 per common unit.
Investing in our common units involves risk. Please read "Risk Factors" on page S-12 of this prospectus supplement and on page 8 of
the accompanying prospectus before you make an investment in our securities.
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Per
Common Unit
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Total
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Public Offering Price
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$
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$
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Underwriting Discount
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$
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$
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Proceeds to TransMontaigne Partners L.P. (before expenses)
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$
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$
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We
have granted the underwriters a 30-day option to purchase up to an additional 375,000 common units on the same terms and conditions as set forth above if the underwriters sell more
than 2,500,000 common units in this offering.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the
accompanying prospectus are truthful or complete. Any representation to the contrary is a criminal offense.
The
underwriters expect to deliver the common units on or about , 2017.
BofA Merrill Lynch
The date of this prospectus supplement is , 2017
Table of Contents
TABLE OF CONTENTS
S-i
Table of Contents
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is the prospectus supplement, which describes the specific terms of this offering and also adds
to and updates information contained in the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying prospectus. The second part, the
accompanying prospectus, gives more general information about securities we may offer from time to time, some of which does not apply to this offering. To the extent the information contained in this
prospectus supplement differs from the information contained in the accompanying prospectus, the information in this prospectus supplement controls. Before you invest in our common units, you should
carefully read this prospectus supplement, along with the accompanying prospectus, in addition to the information contained in the documents we refer to under the headings "Where You Can Find More
Information" and "Incorporation by Reference of Information Filed with the SEC" in this prospectus supplement and the accompanying prospectus.
Neither
we nor the underwriters have authorized anyone to provide you with information that is different from that contained or incorporated by reference into this prospectus
supplement, the accompanying prospectus or any "free writing prospectus" we may authorize to be delivered to you. We take no responsibility for, and can provide no assurance as to the reliability of,
any other information that others may give you. This prospectus supplement is not an offer to sell or a solicitation of an offer to buy our common units in any jurisdiction where such offer or sale
would be unlawful. You should not assume that the information in this prospectus supplement, the accompanying prospectus or any free writing prospectus that we may authorize to be delivered to you,
including any information incorporated by reference, is accurate as of any date other than their respective dates. If any statement in one of these documents is inconsistent with a statement in
another document having a later datefor example, a document incorporated by reference into this prospectus supplement or the accompanying prospectusthe statement in the
document having the later date modifies or supersedes the earlier statement.
S-ii
Table of Contents
SUMMARY
This summary highlights information contained elsewhere in this prospectus supplement or the accompanying prospectus.
It does not contain all of the information that you should consider before investing in our common units. You should read the entire prospectus supplement and the accompanying prospectus, the
documents incorporated by reference herein, any free writing prospectus that we may authorize to be provided to you and the other documents to which we refer for a more complete understanding of our
business and this offering. You should read the "Risk Factors" beginning on page S-12 of this prospectus supplement and on page 8 of the accompanying prospectus for more information
about important risks that you should consider before investing in our common units. Unless we indicate otherwise, the information we present in this prospectus supplement, including references to
common units outstanding and ownership percentages, assumes that the underwriters do not exercise their option to purchase additional common units.
Unless the context requires otherwise, references to "we," "us," "our," "TransMontaigne Partners" or the "Partnership" are intended to mean TransMontaigne
Partners L.P. and our wholly owned and controlled operating subsidiaries. References to "TransMontaigne GP" or "our general partner" are intended to mean TransMontaigne GP L.L.C.,
our general partner. References to "ArcLight" are intended to mean ArcLight Energy Partners Fund VI, L.P. and its subsidiaries other than TransMontaigne GP, us and our
subsidiaries.
TransMontaigne Partners L.P.
We are a terminaling and transportation partnership with operations in the United States along the Gulf Coast, in the Midwest, in Houston and
Brownsville, Texas, along the Mississippi and Ohio Rivers, and in the Southeast. We provide integrated terminaling, storage, transportation and related services for customers engaged in the
distribution and marketing of light refined petroleum products, heavy refined petroleum products, crude oil, chemicals, fertilizers and other liquid products. Light refined products include gasolines,
diesel fuels, heating oil and jet fuels. Heavy refined products include residual fuel oils and asphalt. We do not purchase or market products that we handle or transport. Therefore, we do not have
material direct exposure to changes in commodity prices, except for the value of refined product gains and losses arising from terminaling services agreements with certain customers.
We
use our terminaling facilities to, among other things: receive refined products from the pipeline, ship, barge or railcar making delivery on behalf of our customers and transfer
those refined products to the tanks located at our terminals; store the refined products in our tanks for our customers; monitor the volume of the refined products stored in our tanks; distribute the
refined products out of our terminals in vessels or truckloads using truck racks and other distribution equipment located at our terminals, including pipelines; heat residual fuel oils and asphalt
stored in our tanks; and provide other ancillary services related to the throughput process.
Our
existing operated facilities are located in five geographic regions, which we refer to as our Gulf Coast, Midwest, Brownsville, River and Southeast facilities. In addition, we have
unconsolidated investments in BOSTCO and Frontera.
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Gulf Coast.
Our Gulf Coast facilities consist of
eight refined product terminals, which are all located in Florida. These facilities currently have approximately 6.9 million barrels of aggregate active storage capacity.
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Midwest.
Our Midwest facilities consist of a
67-mile, interstate refined products pipeline between Missouri and Arkansas, which we refer to as the Razorback pipeline, three refined product terminals and one crude oil terminal with approximately
1.6 million barrels of aggregate active storage capacity.
S-1
Table of Contents
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Brownsville.
We are a 50% owner of, and operate,
Frontera Brownsville LLC, or Frontera, a joint venture between us and P.M.I. Services North America Inc., an indirect subsidiary of Petroleos Mexicanos, or PEMEX, the Mexican
state-owned petroleum company, at our Brownsville, Texas terminal. We also own and operate approximately 0.9 million barrels of additional tankage in Brownsville independent of Frontera. In
addition, we own and operate an LPG pipeline from our Brownsville facilities to a third party owned terminal in Matamoros, Mexico, which we refer to as the Diamondback pipeline, and we lease
capacity on a second LPG pipeline, which we refer to as the Ella-Brownsville pipeline, transporting from two points of origin in Texas. We also operate a bi-directional refined products
pipeline for PMI for deliveries to and from Brownsville and Reynosa and Cadereyta, Mexico.
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River.
Our River facilities are composed of 12
refined product terminals located along the Mississippi and Ohio Rivers with approximately 2.7 million barrels of aggregate active storage capacity. Our River facilities also include a dock
facility in Baton Rouge, Louisiana that is connected to the Colonial pipeline.
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Southeast.
Our Southeast facilities consist of 22
refined product terminals located along the Colonial and Plantation pipelines in Alabama, Georgia, Mississippi, North Carolina, South Carolina and Virginia with an aggregate active storage capacity of
approximately 11.9 million barrels.
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Investment in BOSTCO.
We own a 42.5% general voting
interest in Battleground Oil Specialty Terminal Company LLC ("BOSTCO"), which we acquired in 2012 from Kinder Morgan Battleground Oil, LLC, a wholly owned subsidiary of Kinder
Morgan, Inc. BOSTCO is a terminal facility located on the Houston Ship Channel designed to handle residual fuel, feedstocks, distillates and other black oils. BOSTCO has fully subscribed
capacity of approximately 7.1 million barrels.
We
derive revenues from our terminal and pipeline transportation operations by charging fees for providing integrated terminaling, transportation and related services. The fees we
charge and our other sources of revenue are composed of:
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Terminaling Services Fees.
We generate terminaling
services fees by receiving, storing and distributing products for our customers. Terminaling services fees include throughput fees based on the volume of product distributed from the facility,
injection fees based on the volume of product injected with additive compounds and storage fees based on a rate per barrel of storage capacity per month.
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Pipeline Transportation Fees.
We earn pipeline
transportation fees at our Diamondback and Ella-Brownsville pipelines based on the volume of product transported and the distance from the origin point to the delivery point. We earn pipeline
transportation fees at our Razorback pipeline based on an allocation of the aggregate fees charged under the capacity agreement with our customer who has contracted for 100% of our Razorback system.
We own the Razorback and Diamondback pipelines, and we lease the Ella-Brownsville pipeline from a third party. FERC regulates the tariff on our pipelines.
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Management Fees and Reimbursed Costs.
We manage and
operate certain tank capacity at our Port Everglades South terminal for a major oil company and receive a reimbursement of its proportionate share of operating and maintenance costs. We manage and
operate for an affiliate of PEMEX, Mexico's state-owned petroleum company, a bi-directional products pipeline connected to our Brownsville, Texas terminal facility and receive a management fee and
reimbursement of costs. We also manage and operate Frontera and receive a management fee based on our costs incurred.
S-2
Table of Contents
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Other Revenue.
We provide ancillary services
including heating and mixing of stored products, product transfer, railcar handling, butane blending, wharfage and vapor recovery. Pursuant to terminaling services agreements with certain throughput
customers, we are entitled to the volume of net product gained resulting from differences in the measurement of product volumes received and distributed at our terminaling facilities.
Our Relationship with our General Partner and its Affiliates
We are controlled by our general partner, TransMontaigne GP, which is a wholly-owned indirect subsidiary of ArcLight. ArcLight is a
private equity firm focused on North American and Western European energy assets. ArcLight has invested approximately $19 billion in over 100 transactions since its inception in 2001.
Headquartered in Boston, with an additional office in Luxembourg, the firm's investment team brings extensive energy expertise, industry relationships and specialized value creation capabilities to
its portfolio. ArcLight bases its investments on fundamental asset values and execution of defined growth strategies with a focus on cash flow generating assets and service companies with conservative
capital structures. In addition to indirectly owning our general partner and thereby indirectly controlling our partnership, ArcLight indirectly owns our incentive
distribution rights and, as of November 7, 2017, ArcLight owns approximately 3.2 million of our common units, representing an approximate 20% limited partner interest in us.
Recent Developments
On November 2, 2017, we entered into an Asset Purchase Agreement (the "Purchase Agreement") pursuant to which we will purchase the
Martinez Terminal and Richmond Terminal (collectively, the "West Coast Facilities") from Plains Products Terminals LLC ("Plains"), a wholly owned subsidiary of Plains All American
Pipeline, L.P., for a total purchase price of $275 million (the "West Coast Acquisition"). The West Coast Facilities are two waterborne refined product and crude oil terminals with a
total of 64 storage tanks with approximately 5.4 million barrels of aggregate storage capacity and have extensive connectivity to domestic and international refined product and crude oil
markets through significant marine, pipeline, truck and rail logistics capabilities.
For
the first half of 2017, the West Coast Facilities had average daily throughput of approximately 85.0 thousand barrels per day. Substantially all of the West Coast Facilities'
revenue for the first half of 2017 was generated from fee-based contracts with a tenor of up to five years.
We
believe the West Coast Acquisition will strengthen our position as one of the leading refined products terminaling and transportation platforms in the country with increasing scale
and diversity of supply and geography. We have identified several actionable, near-term growth opportunities related to the West Coast Acquisition, including expansion of refined product storage
capacity at both terminals and dredging of the Richmond dock. The West Coast Facilities are strategically located within the San Francisco Bay Area refining complex, one of the largest refining
complexes in North America. The customer base includes many of the largest, most-recognizable refining, refining logistics and merchant trading companies in the world, many of which have significant
assets and operations within the San Francisco Bay Area refining complex. The purchase price reflects a less than ten times multiple of our estimate of the 2018 EBITDA attributable to the West Coast
Facilities based on current customer contracts and historical and anticipated activity levels, revenues and operating costs. We caution that we cannot provide any assurance that the West Coast
Facilities will achieve this anticipated level of EBITDA.
We
plan to use the net proceeds of this offering and borrowings on our revolving credit facility to fund the purchase price. The closing of the West Coast Acquisition is expected to
occur on or about January 1, 2018.
S-3
Table of Contents
Our
obligation to consummate the West Coast Acquisition is subject to certain conditions, including, among others, (i) the expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the absence of any order or legal restraint prohibiting the consummation of the West
Coast Acquisition, (iii) delivery of certificates and a transition services agreement (as described further below), (iv) the absence of a material adverse effect (as defined in the
Purchase Agreement) and (v) receipt of certain governmental authorizations and third party consents.
The
Purchase Agreement generally contains customary representations and warranties and covenants. We and Plains have agreed to indemnify each other and our and its respective affiliates
and other representatives against certain losses resulting from any breach of their representations, warranties or covenants contained in the Purchase Agreement, subject to certain limitations and
survival periods. Plains also has agreed to indemnify us for certain specified liabilities, and we have agreed to assume any pre-closing environmental liabilities associated with the West Coast
Facilities.
The
Purchase Agreement may be terminated by either us or Plains, as applicable, subject to certain exceptions, (i) upon mutual written consent, (ii) if the closing has not
occurred by January 1, 2018 (subject to an additional 90 day extension at our option), (iii) for breaches of representations and warranties or covenants that remain uncured,
(iv) if a governmental body has issued a final order permanently restraining the West Coast Acquisition, or (v) in the case of a casualty loss to the purchased assets.
In
connection with the West Coast Acquisition, we and Plains have agreed to enter into a transition services agreement, whereby Plains will provide certain terminal inventory
accounting, information
systems, human resources and operations services to us, as needed, for up to six months following the closing of the West Coast Acquisition.
We periodically evaluate both strategic and financing alternatives for our business. We recently considered a possible acquisition of a
business that would have been financed in part with a private placement of a new class of preferred units. Between October 18, 2017 and November 2, 2017, as we evaluated the potential
acquisition, we were engaged in preliminary discussions with a number of potential investors concerning the possible private placement of preferred units having an aggregate offering value of
approximately $200.0 million. We and any person acting on our behalf offered securities only to persons that were, or that we reasonably believed to be, accredited investors, as defined in
Regulation D under the U.S. Securities Act of 1933, as amended (the "Securities Act"). The private placement was intended to be completed in reliance upon the exemption from registration
available under Section 4(a)(2) of the Securities Act. On November 2, 2017, we decided we would not pursue the potential acquisition, and we accordingly also abandoned the private
placement, and all offering activity in connection with the private placement was terminated. No offers to buy or indications of interest given in the private placement discussions were accepted. This
prospectus supersedes any offering materials used in the abandoned private placement.
We
intend to continue to evaluate additional acquisition opportunities, our cash needs and business outlook. We actively consider possible acquisitions, both through direct negotiations
with sellers and by participating in auction processes. If we are successful in entering into agreements for additional acquisitions, we may seek additional equity financing to fund those acquisitions
if we consider market conditions favorable.
S-4
Table of Contents
Business Strategies
Our primary business objective is to expand our asset base, enhance the stability of our business and infrastructure, and to increase
utilization of our existing infrastructure. We intend to accomplish this by executing the following strategies:
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Generate stable and predictable cash flows.
We
intend to continue to generate stable and predictable cash flows by capitalizing on our high quality, well positioned and geographically diverse asset base, which is critical infrastructure for our
customers. In addition, we seek to continue to enhance the stability of our business by focusing on our highly contracted assets, long-term relationships with high quality customers, fee-based cash
flows and multi-year minimum revenue commitments.
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Attract additional volumes to our systems.
We
intend to attract new volumes of refined products, crude oil and specialty chemicals to our systems and terminals from existing and new customers by leveraging our existing asset base, continuing to
provide superior customer service and through aggressively marketing our services to additional customers in our areas of operation.
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Capitalize on organic growth opportunities associated with our existing
assets.
We continually seek to identify and evaluate economically attractive organic expansion and asset enhancement opportunities that leverage
our existing asset footprint and strategic relationships with our customers.
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Pursue strategic and accretive acquisitions, including acquisitions from ArcLight and its
affiliates.
In addition to the West Coast Acquisition, we plan to pursue accretive acquisitions of high quality, critical energy infrastructure
assets, including drop down transactions from ArcLight, which controls our general partner, and its affiliates, that are complementary to our existing asset base or that provide attractive returns in
new operating regions or business lines.
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Maintain a disciplined financial policy.
We will
continue to pursue a disciplined financial policy by maintaining a prudent capital structure, managing our exposure to interest rate risk and conservatively managing our cash reserves.
Competitive Strengths
We believe that we are well-positioned to successfully execute our business strategies using the following competitive
strengths:
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High quality, well positioned and diversified asset
base.
We believe that our substantial and geographically diverse asset base will provide us with stable cash flows. Our terminals and truck
loading racks with blending capabilities have substantial connectivity to major liquids pipelines in the Northeast, Southeast, Gulf Coast and Midwest regions and provide critical services to our
customers.
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Long-term relationships with blue chip, creditworthy
customers.
We have strong relationships with blue chip, creditworthy counterparties whose operations are dependent on our services. Our highly
contracted assets are generally utilized by long tenured customers and have high contract renewal rates.
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Minimal direct commodity price exposure.
Our highly
contracted terminaling and transportation asset base mitigates volatility in our cash flows by limiting our direct exposure to commodity prices. Our throughput and related services fees in these
businesses primarily provide us with fee-based cash flows and multi-year minimum revenue commitments. For the nine months ended September 30, 2017, 93% of our revenue was generated from
fee-based
S-5
Table of Contents
Our Organizational and Ownership Structure
We conduct our operations through, and our operating assets are owned by, our subsidiaries. TransMontaigne GP L.L.C., which is an
indirect wholly owned subsidiary of Gulf TLP Holdings, LLC ("Gulf TLP Holdings"), is our general partner and has sole responsibility for conducting our business and managing our operations.
Gulf TLP Holdings is an indirect wholly owned subsidiary of ArcLight.
The
following diagram depicts our organization and ownership structure after giving effect to this offering and prior to the completion of the West Coast Acquisition, assuming no
exercise by the underwriters of their option to purchase additional common units.
Principal Executive Offices
Our principal executive offices are located at 1670 Broadway, Suite 3100, Denver, Colorado 80202 and our telephone number at that
location is (303) 626-8200.
S-6
Table of Contents
The Offering
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Common units offered by us
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2,500,000 common units.
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2,875,000 common units, if the underwriters exercise their option to purchase additional common units in full.
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Units outstanding after this offering
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19,058,523 common units.
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19,433,523 common units, if the underwriters exercise their option to purchase additional common units in full.
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Use of proceeds
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We estimate that we will receive net proceeds from this offering of approximately $ million, or
approximately $ million if the underwriters exercise their option to purchase additional common units in full (in each case, including our general partner's proportionate capital contribution and after
deducting underwriting discounts and commissions and estimated expenses). We plan to use the net proceeds of this offering and borrowings under our revolving credit facility to fund the purchase price of the West Coast Acquisition and for general
partnership purposes.
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Cash distributions
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We must distribute all of our cash on hand at the end of each quarter, less reserves established by our general partner. We refer to this
cash as "available cash," and we define its meaning in our partnership agreement. The amount of available cash may be greater than or less than the minimum quarterly distribution.
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If cash distributions exceed $0.44 per unit in a quarter, our general partner will receive increasing percentages, up to 50%, of the cash we
distribute in excess of that amount. We refer to these distributions as "incentive distributions." See "Cash Distribution Policy" in the accompanying prospectus.
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Issuance of additional securities
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We can issue an unlimited number of securities without the consent of our unitholders. Please read "Description of Our Partnership
AgreementIssuance of Additional Securities" in the accompanying base prospectus.
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Limited voting rights
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Our general partner manages and operates us. Unlike the holders of common stock in a corporation, as a holder of common units in a limited
partnership you will have only limited voting rights on matters affecting our business. You will have no right to elect our general partner or its directors on an annual or other continuing basis. Our general partner may not be removed except by a
vote of the holders of at least 66
2
/
3
% of all outstanding common units, including any common units owned by our general partner and its affiliates, voting together as a single class. Please read "Description of Our
Partnership AgreementVoting Rights" in the accompanying prospectus.
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S-7
Table of Contents
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Estimated ratio of taxable income to distributions
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We estimate that if you own the common units you purchase in this offering through the record date for distributions for the year ending December 31,
2020, you will be allocated, on a cumulative basis, an amount of federal taxable income for that period that will be 20% or less of the cash distributed to you with respect to that period. Please read "Material Federal Income Tax Consequences" in
this prospectus supplement.
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Material tax consequences
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For a discussion of other material federal income tax consequences that may be relevant to prospective unitholders who are individual
citizens or residents of the United States, please read "Material U.S. Federal Income Tax Consequences" in this prospectus supplement and in the accompanying prospectus.
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NYSE symbol
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"TLP."
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Risk factors
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You should carefully read and consider the information set forth under the heading "Risk Factors" on page S-12 of this prospectus
supplement and all other information in this prospectus supplement and the accompanying prospectus, including the information incorporated by reference, before deciding to invest in our common units.
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S-8
Table of Contents
Our Summary Historical Financial and Operational Data
The summary income statement and cash flow data for the fiscal years ended December 31, 2016, 2015 and 2014 and the summary balance
sheet data as of December 31, 2016 and 2015 have been derived from our audited historical consolidated financial statements and the notes thereto included in our Annual Report on
Form 10-K for the year ended December 31, 2016. The summary income statement and cash flow data for the nine months ended September 30, 2017 and 2016 and the summary balance sheet
data as of September 30, 2017 have been derived from our unaudited consolidated financial statements and the notes thereto included in our Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2017.
You
should read the information below in conjunction with our historical financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" appearing elsewhere in this prospectus supplement and the other information, including the financial statements, incorporated by reference into this prospectus supplement and
the accompanying base prospectus. Consolidated EBITDA is a non-GAAP financial measure and should not be construed as an alternative to, or more meaningful than, GAAP financial information. See
"Non-GAAP Financial Measures" for the definition of Consolidated EBITDA, additional qualifications regarding the use of Consolidated EBITDA and a reconciliation of Consolidated EBITDA to net earnings,
the most directly comparable GAAP financial measure.
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Nine Months Ended
September 30,
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Years Ended
December 31,
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2017
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2016
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2016
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2015
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2014
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(in thousands, other than per unit amounts)
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Income Statement Data:
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Revenues
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$
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135,663
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$
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122,400
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$
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164,924
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$
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152,510
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$
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150,062
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Operating income
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46,616
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38,146
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52,711
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49,859
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38,927
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Net earnings
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38,398
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30,905
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44,106
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41,689
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32,463
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Net earnings per limited partnership unitbasic
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1.79
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1.49
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2.14
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2.12
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1.57
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Net earnings per limited partnership unitdiluted
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1.79
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1.49
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2.14
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2.12
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1.57
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Cash Flow Data:
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Net cash provided by operating activities
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$
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83,789
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$
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65,809
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$
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79,107
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$
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87,480
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$
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60,929
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Net cash provided by (used in) investing activities
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(39,472
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)
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(48,330
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)
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(69,089
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)
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(34,153
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)
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(50,702
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)
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Net cash provided by (used in) financing activities
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(40,057
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)
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(17,719
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)
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(10,106
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)
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(55,950
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)
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(10,186
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)
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Distributions paid to common unitholders
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(35,134
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)
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(32,916
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)
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(44,211
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)
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(42,897
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)
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(42,561
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)
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Cash distributions per common unit attributable to period
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$
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2.22
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$
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2.07
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$
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2.78
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$
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2.665
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$
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2.655
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At December 31,
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At
September 30,
2017
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2016
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2015
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(in thousands)
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Balance Sheet Data:
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Total assets
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$
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701,895
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$
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689,694
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$
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656,687
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Long-term debt
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302,000
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291,800
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248,000
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Partners' equity
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369,409
|
|
|
372,734
|
|
|
383,971
|
|
S-9
Table of Contents
Other Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
Years Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2014
|
|
Consolidated EBITDA (in thousands)(1)
|
|
$
|
81,529
|
|
$
|
70,701
|
|
$
|
96,189
|
|
$
|
89,621
|
|
$
|
74,780
|
|
Average daily throughput (MBbl/d)
|
|
|
470
|
|
|
456
|
|
|
452
|
|
|
390
|
|
|
379
|
|
Terminaling and related services revenue (in thousands)
|
|
$
|
135,663
|
|
$
|
122,400
|
|
$
|
164,924
|
|
$
|
152,510
|
|
$
|
150,062
|
|
-
(1)
-
Consolidated
EBITDA is a non-GAAP financial measure. A reconciliation of our non-GAAP financial measures is included below.
Non-GAAP Financial Measures
This prospectus supplement contains references to our Consolidated EBITDA and EBITDA attributable to the West Coast Facilities. Consolidated
EBITDA and EBITDA non-GAAP financial measures. We define Consolidated EBITDA as net earnings (the most directly comparable financial measure that complies with U.S. generally accepted accounting
principles ("GAAP") excluding interest expense, income taxes, depreciation and amortization, earnings and distributions from unconsolidated affiliates, equity-based compensation and other non-cash
charges, gains or losses on the sale of assets and other items which do not affect the underlying cash flows produced by our businesses. Consolidated EBITDA is a non-GAAP, supplemental financial
measure presented here because it is a widely accepted financial indicator used to compare partnership performance. Further, Consolidated EBITDA is calculated consistent with the provisions of our
credit facility and is a financial performance used in the calculation of our leverage ratio requirement. We believe that these measures provide investors with an enhanced perspective of the operating
performance of our assets, the cash we are generating and our ability to make distributions to our unitholders and our general partner. We define EBITDA as earnings before interest, taxes,
depreciation and Amortization. EBITDA is presented here because it is a widely accepted financial indicator and used to compare performance of the acquired assets.
Consolidated
EBITDA and EBITDA have limitations as analytical tools and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.
For example, these measures:
-
-
do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
-
-
do not reflect changes in, or cash requirements for, our working capital needs;
-
-
do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
and
-
-
do not reflect the effect of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations.
Consolidated
EBITDA and EBITDA should not be considered as alternatives to net income, operating income or any other measure of financial performance presented in accordance with GAAP.
Our Consolidated EBITDA and EBITDA attributable to the West Coast Facilities may not be comparable to Consolidated EBITDA or EBITDA similarly titled financial metrics of other entities, as other
entities may not calculate Consolidated EBITDA or EBITDA in the same manner as we do. Our management compensates for the limitations of Consolidated EBITDA and EBITDA as analytical tools by reviewing
the comparable GAAP measures, understanding the differences between the measures and incorporating this knowledge into management's decision-making processes.
S-10
Table of Contents
It
is not practical to provide a reconciliation of forecasted EBITDA for the year 2018 to the most directly comparable GAAP measure, net earnings, because certain items cannot be
reasonably estimated or predicted at this time. Any of those items could be significant to the West Coast Facilities' financial results.
The
following table presents a reconciliation of Consolidated EBITDA to the most directly comparable GAAP measure, net earnings, for the periods indicated.
Our Consolidated EBITDA Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
Years Ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
(in thousands)
|
|
Net earnings
|
|
$
|
38,398
|
|
$
|
30,905
|
|
$
|
44,106
|
|
$
|
41,689
|
|
$
|
32,463
|
|
Depreciation and amortization
|
|
|
26,379
|
|
|
24,168
|
|
|
32,383
|
|
|
30,650
|
|
|
29,522
|
|
Earnings from unconsolidated affiliates
|
|
|
(6,564
|
)
|
|
(6,940
|
)
|
|
(10,029
|
)
|
|
(11,948
|
)
|
|
(4,443
|
)
|
Distributions from unconsolidated affiliates
|
|
|
13,096
|
|
|
12,663
|
|
|
17,861
|
|
|
19,649
|
|
|
10,053
|
|
Equity-based compensation
|
|
|
2,713
|
|
|
2,664
|
|
|
3,263
|
|
|
1,411
|
|
|
721
|
|
Settlement of tax withholding on equity-based compensation
|
|
|
(711
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
7,333
|
|
|
6,627
|
|
|
7,787
|
|
|
7,396
|
|
|
5,489
|
|
Amortization of deferred financing costs
|
|
|
885
|
|
|
614
|
|
|
818
|
|
|
774
|
|
|
975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated EBITDA
|
|
$
|
81,529
|
|
$
|
70,701
|
|
$
|
96,189
|
|
$
|
89,621
|
|
$
|
74,780
|
|
S-11
Table of Contents
RISK FACTORS
An investment in our common units involves risks. You should carefully consider all of the information contained in
this prospectus supplement, the accompanying prospectus and the documents incorporated by reference as provided under "Incorporation by Reference of Information Filed with the SEC," including the risk
factors in our Annual Report on Form 10-K for the year ended December 31, 2016, and the risk factors described under "Risk Factors" in the accompanying prospectus. If any of the risks
discussed in the foregoing documents were to occur, our business, financial condition, results of operations and cash flows could be materially adversely affected and you could lose all or part of
your investment. Please also read "Cautionary Statement Regarding Forward-Looking Information."
Risks Related to the West Coast Acquisition
Even if this offering is completed, the West Coast Acquisition may not be consummated, which could have an
adverse impact on our cash available for distribution.
The closing of this offering is not conditioned on, and is expected to be consummated before, the closing of the West Coast Acquisition. The
West Coast Acquisition is subject to a number of closing conditions that, if not satisfied or waived, would result in the failure of the West Coast Acquisition to be consummated. These conditions
include, but are not limited to, the accuracy of each party's representations and warranties contained in the Purchase Agreement, the performance by each party of its respective obligations under the
Purchase Agreement, the absence of any court order or law restraining consummation of the West Coast Acquisition, the receipt of all necessary governmental and material third-party consents.
Accordingly, if you decide to purchase common units from us, you should be willing to do so whether or not we complete the West Coast Acquisition. Satisfaction of many of these closing conditions is
beyond our control and, as a result, we cannot assure you that all of the closing conditions will be satisfied or that the West Coast Acquisition will be consummated. Our failure to complete the West
Coast Acquisition or any delays in completing the West Coast Acquisition could have an adverse impact on our operations, prospects and cash available for distribution and could negatively impact the
price of our common units.
Any acquisition we complete, including the West Coast Acquisition, is subject to substantial risks that could
adversely affect our financial condition and results of operations and reduce our ability to make distributions to unitholders.
Any acquisition we complete, including the proposed West Coast Acquisition, involves potential risks, including, among other
things:
-
-
the validity of our assumptions about revenues, capital expenditures and operating costs of the acquired business or assets, as well as
assumptions about achieving synergies with our existing business;
-
-
the validity of our assessment of environmental liabilities, including legacy liabilities;
-
-
a significant increase in our interest expense and financial leverage resulting from the additional debt incurred to finance a portion of the
acquisition consideration, which could offset any benefits to our unitholders from such acquisition and could be exacerbated by volatility in the credit or debt capital markets;
-
-
a failure to realize anticipated benefits, such as enhanced competitive position or new customer relationships;
-
-
a decrease in our liquidity by using a significant portion of our cash on hand or borrowing capacity to finance the acquisition; and
S-12
Table of Contents
-
-
the incurrence of other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring
charges.
Integration of the assets acquired in the West Coast Acquisition with our existing business will be a
complex, time-consuming and costly process, particularly given that the acquired assets will increase our size and diversify the geographic areas in which we operate. A failure to successfully
integrate the acquired assets with our existing business in a timely manner may have a material adverse effect on our business, financial condition, results of operations or cash flows. The
difficulties of combining the assets acquired in the West Coast Acquisition include, among other things:
-
-
difficulties operating in a larger combined organization in new geographic areas or new lines of business;
-
-
the inability to hire, train or retrain qualified personnel to manage and operate our growing business and assets;
-
-
the diversion of management's attention from our existing business;
-
-
difficulties in the assimilation of the acquired assets and operations;
-
-
loss of customers or key employees;
-
-
changes in key agreements;
-
-
maintaining an effective system of internal controls and integrating internal controls, compliance under the Sarbanes-Oxley Act of 2002 and
other regulatory compliance and corporate governance matters;
-
-
an inability to complete other internal growth projects and/or acquisitions; and
-
-
difficulties integrating new technology system or financial reporting.
If
we consummate the West Coast Acquisition and if any of these risks or unanticipated liabilities or costs were to materialize, then any desired benefits from the acquisition may not
be fully realized, if at all, and our future results of operations could be negatively impacted. In addition, the assets acquired in the West Coast Acquisition may actually perform at levels below the
forecasts we used to evaluate the acquired assets, due to factors that are beyond our control. If the acquired assets perform at levels below the forecasts we used to evaluate the West Coast
Acquisition, then our future results of operations could be negatively impacted.
Also,
our reviews of businesses or assets proposed to be acquired are inherently imperfect because it generally is not feasible to perform an in-depth review of businesses and assets
involved in each acquisition given time constraints imposed by sellers. Even a detailed review of assets and businesses may not necessarily reveal existing or potential problems, nor will it permit a
buyer to become sufficiently familiar with the assets or businesses to fully assess their deficiencies and potential. Inspections may not always be performed on every asset, and environmental problems
are not necessarily observable even when an inspection is undertaken.
We may not have accurately estimated the benefits to be realized from the West Coast Acquisition.
The expected benefits from the pending West Coast Acquisition may not be realized if our estimates of the potential net cash flows associated
with the assets are materially inaccurate or if we fail to identify operating problems or liabilities prior to closing. We have performed an inspection of assets to be acquired, which we believe to be
generally consistent with industry practices. However, the accuracy of our assessments of the assets and our estimates are inherently
uncertain. There could also be environmental or other problems that are not necessarily observable even when the inspection is
S-13
Table of Contents
undertaken.
If problems are identified after closing the West Coast Acquisition, the Purchase Agreement provides for limited recourse against the sellers.
In
addition, our estimate of the required working capital for the WCT business and targeted working capital set forth in the Purchase Agreement may not be sufficient for actual working
capital needs of the WCT business. If our estimate and the targeted working capital was lower than the actual needs of the acquired business, we may be required to fund such additional working capital
needs out of other operating cash flows or borrowings under our revolving credit facility.
The West Coast Acquisition could result in unexpected disruptions on the combined business.
Current or prospective employees of the West Coast Facilities may experience uncertainty about their future roles with the combined entity
until after the West Coast Acquisition is completed. This may adversely affect our ability to attract and retain key management, marketing and technical personnel. In addition, the diversion of the
attention of our respective management teams away from day-to-day operations during the negotiation and pendency of the West Coast Acquisition could have an adverse effect on the financial condition
and operating results of either us or the West Coast Facilities.
The West Coast Acquisition could expose us to potential significant liabilities.
In connection with the West Coast Acquisition, we will assume certain liabilities, including unknown and contingent liabilities, associated
with the acquired assets, including certain environmental liabilities and obligations arising in connection with or relating to the business, purchased assets, facilities or real property of the West
Coast Facilities. Although Plains has agreed to indemnify us on a limited basis against some of these liabilities, a significant portion of these indemnification obligations will expire within
specified time periods after the date the West Coast Acquisition is completed without any claims having been asserted by us, and these obligations are
subject to limits. Plains' indemnity obligations are capped at 15% of the total purchase price, with the exception of certain indemnification obligations in relation to fundamental representations.
We
may not be able to collect on such indemnification because of disputes with Plains or their inability to pay at the time such indemnification is sought. Moreover, there is a risk
that we could ultimately be liable for unknown obligations related to the West Coast Acquisition, which could materially adversely affect our financial condition, results of operations or cash flows.
S-14
Table of Contents
USE OF PROCEEDS
We estimate that we will receive net proceeds from this offering of approximately
$ million, or approximately
$ million if the underwriters exercise their option to purchase additional common units in full (in each case, including our general partner's proportionate capital
contribution
and after deducting underwriting discounts and commissions and estimated expenses). We plan to use the net proceeds from this offering, including any net proceeds from the underwriters' exercise of
their option, together with borrowings on our revolving credit facility, to fund the purchase price of West Coast Acquisition and for general partnership purposes. We may use the net proceeds of this
offering, including any net proceeds from the underwriters' exercise of their option, to repay borrowings under our revolving credit facility in the period between the closing of this offering and the
closing of the West Coast Acquisition. In the event that the West Coast Acquisition is not consummated, we intend to use the remaining net proceeds from this offering for general partnership purposes,
which may include the repayment of borrowings under our revolving credit facility.
S-15
Table of Contents
CAPITALIZATION
The following table sets forth our cash and capitalization as of September 30, 2017 on:
-
-
an historical basis;
-
-
an as adjusted basis to give effect to the issuance of 2,500,000 common units in this offering and our general partner's capital contribution
to maintain its 2% ownership interest in us; and
-
-
an as further adjusted basis to give effect to the application of the net proceeds of this offering and borrowings on our revolving credit
facility to consummate the West Coast Acquisition.
You
should read the following table in conjunction with "Summary Historical Financial Data," our consolidated financial statements and related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus supplement and contained in our filings with the Securities and Exchange Commission that are
incorporated by reference in this prospectus supplement.
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2017
|
|
|
|
Historical
|
|
As
Adjusted
|
|
As Further
Adjusted
|
|
|
|
(in thousands)
|
|
Cash and cash equivalents(1)
|
|
$
|
4,853
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
Revolving credit facility(2)
|
|
|
302,000
|
|
|
302,000
|
|
|
|
|
Partners' equity:
|
|
|
|
|
|
|
|
|
|
|
Common unitholders
|
|
|
316,090
|
|
|
|
|
|
|
|
General partner interest
|
|
|
53,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total partners' equity
|
|
|
369,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
671,409
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
As
of November 7, 2017, we had approximately $0.1 million of cash and cash equivalents.
-
(2)
-
As
of September 30, 2017, our revolving credit facility provided for borrowings (including letters of credit) of up to $600 million. On
November 7, 2017, we had outstanding borrowings of approximately $334.0 million under our revolving credit facility (including $0.4 outstanding letters of credit).
You
should read our financial statements and notes thereto that are incorporated by reference into this prospectus supplement and the accompanying based prospectus for additional
information about our capital structure. The table above does not reflect any common units that may be sold to the underwriters upon exercise of their option to purchase additional common units.
S-16
Table of Contents
PRICE RANGE OF COMMON UNITS AND DISTRIBUTIONS
Our common units are listed on the New York Stock Exchange under the symbol "TLP." As of November 7, 2017, there were 48 unitholders of
record of our common units. This number does not include unitholders whose common units are held in trust by other entities. The actual number of unitholders is greater than the number of unitholders
of record.
The
following table sets forth the reported high and low per unit sales prices for our common units and cash distributions on our common units for the periods indicated. The last
reported sales price of our common units on the New York Stock Exchange on November 7, 2017 was $42.21 per unit.
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
|
|
High
|
|
Distribution(1)
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
January 1, 2017 through March 31, 2017
|
|
$
|
43.15
|
|
$
|
49.31
|
|
$
|
0.725
|
|
April 1, 2017 through June 30, 2017
|
|
$
|
39.36
|
|
$
|
46.67
|
|
$
|
0.74
|
|
July 1, 2017 through September 30, 2017
|
|
$
|
41.75
|
|
$
|
47.45
|
|
$
|
0.755
|
|
October 1, 2017 through November 7, 2017
|
|
$
|
40.38
|
|
$
|
43.99
|
|
$
|
|
(2)
|
2016
|
|
|
|
|
|
|
|
|
|
|
January 1, 2016 through March 31, 2016
|
|
$
|
25.08
|
|
$
|
41.21
|
|
$
|
0.68
|
|
April 1, 2016 through June 30, 2016
|
|
$
|
35.30
|
|
$
|
42.77
|
|
$
|
0.69
|
|
July 1, 2016 through September 30, 2016
|
|
$
|
38.38
|
|
$
|
46.45
|
|
$
|
0.70
|
|
October 1, 2016 through December 31, 2016
|
|
$
|
36.93
|
|
$
|
45.74
|
|
$
|
0.71
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
January 1, 2015 through March 31, 2015
|
|
$
|
30.36
|
|
$
|
39.12
|
|
$
|
0.665
|
|
April 1, 2015 through June 30, 2015
|
|
$
|
31.94
|
|
$
|
43.00
|
|
$
|
0.665
|
|
July 1, 2015 through September 30, 2015
|
|
$
|
26.58
|
|
$
|
40.23
|
|
$
|
0.665
|
|
October 1, 2015 through December 31, 2015
|
|
$
|
20.26
|
|
$
|
32.48
|
|
$
|
0.67
|
|
-
(1)
-
Represents
cash distributions per unit attributable to the relevant quarter and declared and paid within 45 days after the end of that quarter.
-
(2)
-
Cash
distributions attributable to the fourth quarter of 2017 have not yet been declared.
S-17
Table of Contents
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
Tax consequences to you of an investment in our common units will depend in part on your own tax circumstances. Although this section updates
and adds information related to certain tax considerations, it should be read in conjunction with the risk factors under the caption "Tax Risks" in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2016, and with "Material Federal Income Tax Consequences" in the accompanying prospectus, which provides a discussion of the principal federal income tax considerations
associated with our operations and the purchase, ownership and disposition of our common units. The following discussion is limited as described under the caption "Material Federal Income Tax
Consequences" in the accompanying prospectus. You are urged to consult with your own tax advisor about the federal, state, local and foreign tax consequences particular to your circumstances.
Partnership Status
A partnership is not a taxable entity and incurs no federal income tax liability. Instead, each partner of a partnership is required to take
into account its share of items of income, gain, loss and deduction of the partnership in computing its federal income tax liability, regardless of whether cash distributions are made to him by the
partnership. Distributions by a partnership to a partner are generally not taxable to the partnership or the partner unless the amount of cash distributed to him is in excess of the partner's adjusted
basis in its partnership interest. Section 7704 of the Internal Revenue Code of 1986, as amended (the "Code"), provides that publicly traded partnerships will, as a general rule, be taxed as
corporations. However, an exception, referred to as the "Qualifying Income Exception," exists with respect to publicly traded partnerships of which 90% or more of the gross income for every taxable
year consists of "qualifying income." Qualifying income includes income and gains derived from the transportation, storage and marketing of crude oil, natural gas and other products of a type that are
produced in a petroleum refinery or natural gas processing plant, the transportation and storage of biodiesel and ethanol, certain blending and additization activities, certain related hedging
activities and our allocable share of our subsidiaries' income from these sources. Other types of qualifying income include interest (other than from a financial business), dividends, gains from the
sale of real property and gains from the sale or other disposition of capital assets held for the production of income that otherwise constitutes qualifying income. We estimate that less than 3% of
our current gross income is not qualifying income; however, this estimate could change from time to time. Based upon and subject to this estimate, the factual representations made by us and our
general partner and a review of the applicable legal authorities, Latham & Watkins LLP is of the opinion that at least 90% of our current gross income constitutes qualifying income. The
portion of our income that is qualifying income may change from time to time.
Ratio of Taxable Income to Distributions
We estimate that a purchaser of common units in this offering who owns those common units from the date of closing of this offering through the
record date for distributions for the period ending December 31, 2020, will be allocated, on a cumulative basis, an amount of U.S. federal taxable income for that period that will be 20% or
less of the cash distributed with respect to that period. Thereafter, we anticipate that the ratio of allocable taxable income to cash distributions to the unitholders will increase. Our estimate is
based upon many assumptions regarding our business operations, including assumptions as to our revenues, capital expenditures, cash flow, net working capital and anticipated cash distributions. These
estimates and assumptions are subject to, among other things, numerous business, economic, regulatory, legislative, competitive and political uncertainties beyond our control. Further, the estimates
are based on current tax law and tax reporting positions that we will adopt and with which the IRS could disagree. Accordingly, we cannot assure you that these estimates will prove to be correct.
S-18
Table of Contents
The
actual percentage of distributions that will constitute taxable income could be higher or lower than expected, and any differences could be material and could materially affect the
value of the common units. For example, the ratio of allocable taxable income to cash distributions to a purchaser of common units in this offering will be greater, and perhaps substantially greater,
than our estimate with respect to the period described above if:
-
-
gross income from operations exceeds the amount required to make minimum quarterly distributions on all units, yet we only distribute the
minimum quarterly distributions on all units; or
-
-
we make a future offering of common units and use the proceeds of the offering in a manner that does not produce substantial additional
deductions during the period described above, such as to repay indebtedness outstanding at the time of this offering or to acquire property that is not eligible for depreciation or amortization for
U.S. federal income tax purposes or that is depreciable or amortizable at a rate significantly slower than the rate applicable to our assets at the time of this offering.
Tax-Exempt Organizations and Other Investors
Ownership of common units by employee benefit plans, other tax-exempt organizations, non-resident aliens, foreign corporations and other
foreign persons raises issues unique to those investors and, as described below to a limited extent, may have substantially adverse tax consequences to them. If you are a tax-exempt entity or a
foreign person, you should consult your tax advisor before investing in our common units. Employee benefit plans and most other organizations exempt from federal income tax, including IRAs and other
retirement plans, are subject to federal income tax on unrelated business taxable income. Virtually all of our income allocated to a unitholder that is a tax-exempt organization will be unrelated
business taxable income and will be taxable to it.
Non-resident
aliens and foreign corporations, trusts or estates that own common units will be considered to be engaged in business in the United States because of the ownership of
common units. As a consequence, they will be required to file federal tax returns to report their share of our income, gain, loss or deduction and pay federal income tax at regular rates on their
share of our net income or gain. Moreover, under rules applicable to publicly traded partnerships, our quarterly distribution to foreign unitholders will be subject to withholding at the highest
applicable effective tax rate. Each foreign unitholder must obtain a taxpayer identification number from the IRS and submit that number to our transfer agent on a Form W-8BEN, W-8BEN-E or
applicable substitute form in order to obtain credit for these withholding taxes. A change in applicable law may require us to change these procedures.
In
addition, because a foreign corporation that owns common units will be treated as engaged in a U.S. trade or business, that corporation may be subject to the U.S. branch profits tax
at a rate of 30%, in addition to regular federal income tax, on its share of our earnings and profits, as adjusted for changes in the foreign corporation's "U.S. net equity," that is effectively
connected with the conduct of a U.S. trade or business. That tax may be reduced or eliminated by an income tax treaty between the United States and the country in which the foreign corporate
unitholder is a "qualified resident." In addition, this type of unitholder is subject to special information reporting requirements under Section 6038C of the Code.
A
foreign unitholder who sells or otherwise disposes of a common unit will be subject to U.S. federal income tax on gain realized from the sale or disposition of that unit to the extent
the gain is effectively connected with a U.S. trade or business of the foreign unitholder. Under a ruling published by the IRS, interpreting the scope of "effectively connected income," a foreign
unitholder would be considered to be engaged in a trade or business in the United States by virtue of the U.S. activities of the partnership, and part or all of that unitholder's gain would be
effectively connected with that
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unitholder's
indirect U.S. trade or business. However, in a recent decision, the United States Tax Court declined to follow this ruling and held that such gain is not effectively connected with a
foreign unitholder's U.S. trade or business and would only be taxable to the extent such unitholder recognized gain attributable to its share of the partnership's United States real property
interests. As this decision is still subject to appeal, its exact impact on foreign unitholders is uncertain. You should consult your tax advisor regarding the potential impact of this decision on
your investment in our common units. Moreover, under the Foreign Investment in Real Property Tax Act, a foreign unitholder (other than certain "qualified foreign pension funds" (or an entity all of
the interests of which are held by such a qualified foreign pension fund), which generally are entities or arrangements that are established and regulated by foreign law to provide retirement or other
pension benefits to employees, do not have a single participant or beneficiary that is entitled to more than 5% of the assets or income of the entity or arrangement and are subject to certain
preferential tax treatment under the laws of the applicable foreign country), generally will be subject to U.S. federal income tax upon the sale or disposition of a common unit if (i) it owned
(directly or constructively applying certain attribution rules) more than 5% of our common units at any time during the five-year period ending on the date of such disposition and
(ii) 50% or more of the fair market value of all of our assets consisted of United States real property interests at any time during the shorter of the period during which such unitholder held
the common units or the five-year period ending on the date of disposition. Currently, more than 50% of our assets consist of United States real property interests, and we do not expect that to change
in the foreseeable future. Therefore, foreign unitholders may be subject to federal income tax on gain from the sale or disposition of their common units. Recent changes in law may affect certain
foreign unitholders. Please read "Administrative MattersAdditional Withholding Requirements" under the caption "Material Federal Income Tax Consequences" in the accompanying
prospectus.
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UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated is acting as representative of each of the underwriters named below. Subject to the
terms and conditions set forth in an underwriting agreement among us and the underwriters, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not
jointly, to purchase from us, the number of common units set forth opposite its name below.
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|
|
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Underwriter
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Number of
Common
Units
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|
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
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|
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|
|
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Total
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|
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|
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|
|
|
|
|
|
|
|
|
|
Subject
to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the common units sold under the
underwriting agreement if any of these common units are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the nondefaulting underwriters may
be increased or the underwriting agreement may be terminated.
We
have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required
to make in respect of those liabilities.
The
underwriters are offering the common units, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including
the validity of the common units, and other conditions contained in the underwriting agreement, such as the receipt by
the underwriters of officer's certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
Commissions and Discounts
The representative has advised us that the underwriters propose initially to offer the common units to the public at the public offering price
set forth on the cover page of this prospectus and to dealers at that price less a concession not in excess of $ per common unit. After the initial offering, the public offering
price,
concession or any other term of the offering may be changed.
The
following table shows the public offering price, underwriting discount and proceeds before expenses to us. The information assumes either no exercise or full exercise by the
underwriters of their option to purchase additional common units.
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Per
Common Unit
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Without
Option
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With
Option
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Public offering price
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$
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$
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|
|
$
|
|
|
Underwriting discount
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Proceeds, before expenses, to us
|
|
$
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|
|
$
|
|
|
$
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|
|
The
expenses of the offering, not including the underwriting discount, are estimated at $ and are payable by us.
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Option to Purchase Additional Common Units
We have granted an option to the underwriters, exercisable for 30 days after the date of this prospectus, to purchase up to 375,000
additional common units at the public offering price, less the underwriting discount. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the
underwriting agreement, to purchase a number of additional common units proportionate to that underwriter's initial amount reflected in the above table.
No Sales of Similar Securities
We, our executive officers and directors have agreed not to sell or transfer any common units or securities convertible into, exchangeable for,
exercisable for, or repayable with common units, for 60 days after the date of this prospectus without first obtaining the written consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated. Specifically, we and these other persons have agreed, with certain limited exceptions, not to directly or indirectly
-
-
offer, pledge, sell or contract to sell any common units,
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-
sell any option or contract to purchase any common units,
-
-
purchase any option or contract to sell any common units,
-
-
grant any option, right or warrant for the sale of any common units,
-
-
lend or otherwise dispose of or transfer any common units,
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-
request or demand that we file a registration statement related to the common units, or
-
-
enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any common units whether
any such swap or transaction is to be settled by delivery of common units or other securities, in cash or otherwise.
This
lock-up provision applies to common units and to securities convertible into or exchangeable or exercisable for or repayable with common units. It also applies to common units
owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition.
New York Stock Exchange Listing
The common units are listed on the New York Stock Exchange under the symbol "TLP."
Price Stabilization, Short Positions
Until the distribution of the common units is completed, SEC rules may limit underwriters and selling group members from bidding for and
purchasing our common units. However, the representative may engage in transactions that stabilize the price of the common units, such as bids or purchases to peg, fix or maintain that price.
In
connection with the offering, the underwriters may purchase and sell our common units in the open market. These transactions may include short sales, purchases on the open market to
cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the underwriters of a greater number of common units than they are required to purchase in the
offering. "Covered" short sales are sales made in an amount not greater than the underwriters' option to purchase additional common units described above. The underwriters may close out any covered
short position by either exercising their option to purchase additional common units or purchasing common units in the open
market. In determining the source of common units to close out the covered short position, the underwriters will consider, among other things, the price of common units available for
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purchase
in the open market as compared to the price at which it may purchase common units through the option granted to them. "Naked" short sales are sales in excess of such option. The underwriters
must close out any naked short position by purchasing common units in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward
pressure on the price of our common units in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or
purchases of common units made by the underwriters in the open market prior to the completion of the offering.
Similar
to other purchase transactions, the underwriters' purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common units
or preventing or retarding a decline in the market price of our common units. As a result, the price of our common units may be higher than the price that might otherwise exist in the open market. The
underwriters may conduct these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise.
Neither
we nor the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our
common units. In addition, neither we nor the underwriters make any representation that the underwriters will engage in these transactions or that these transactions, once commenced, will not be
discontinued without notice.
Electronic Distribution
In connection with the offering, the underwriters and/or securities dealers may distribute prospectuses by electronic means, such as e-mail.
Other Relationships
Certain of the underwriters and/or their respective affiliates are lenders and/or agents under our Third Amended and Restated Senior Secured
Credit Facility. In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated has provided us with financial advisory services in connection with the West Coast Acquisition and the abandoned
acquisition and private placement. Certain of the underwriters are also agents under our ATM program. The underwriters and their respective affiliates have engaged in, and may in the future engage in,
investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for
these transactions.
In
addition, in the ordinary course of their business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt
and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities
activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express
independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and
instruments.
Direct Participation Plan Requirements
Because the Financial Industry Regulatory Authority, or FINRA, views the common units offered hereby as interests in a direct participation
program, the offering is being made in compliance with FINRA Rule 2310. Investor suitability with respect to the common units should be judged similarly to the suitability with respect to other
securities that are listed for trading on a national securities exchange.
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Notice to Prospective Investors in Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and
Investments Commission ("ASIC"), in relation to the offering. This prospectus supplement does not constitute a prospectus, product disclosure statement or other disclosure document under the
Corporations Act 2001 (the "Corporations Act"), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the
Corporations Act.
Any
offer in Australia of the common units may only be made to persons (the "Exempt Investors"), who are:
-
(a)
-
"sophisticated
investors" (within the meaning of section 708(8) of the Corporations Act), "professional investors" (within the meaning of
section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act; and
-
(b)
-
"wholesale
clients" (within the meaning of section 761G of the Corporations Act),
so
that it is lawful to offer the common units without disclosure to investors under Chapters 6D and 7 of the Corporations Act.
The
common units applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering,
except in circumstances where disclosure to investors under Chapters 6D and 7 of the Corporations Act would not be required pursuant to an exemption under both section 708 and
Subdivision B of Division 2 of Part 7.9 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapters 6D and 7 of the
Corporations Act. Any person acquiring common units must observe such Australian on-sale restrictions.
This
prospectus supplement contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It
does not contain any securities recommendations or financial product advice. Before making an investment
decision, investors need to consider whether the information in this prospectus supplement is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those
matters.
Notice to Prospective Investors in Hong Kong
No advertisement, invitation or document relating to the common units has been or may be issued or has been or may be in the possession of any
person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted
to do so under the securities laws of Hong Kong) other than with respect to common units which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional
investors" as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.
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LEGAL MATTERS
The validity of the common units and tax matters will be passed upon for us by Latham & Watkins LLP, Houston, Texas. Certain
legal matters in connection with the common units offered hereby will be passed upon for the underwriters by Baker Botts L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of TransMontaigne Partners L.P. and subsidiaries (the "Partnership") incorporated by reference
from the TransMontaigne Partners L.P.'s Annual Report on Form 10-K for the year ended December 31, 2016, and the effectiveness of the Partnership's internal control over financial
reporting, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein
by reference. Such consolidated financial statements have been so incorporated by reference in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
The
financial statements of Battleground Oil Specialty Terminal Company LLC incorporated in this Prospectus by reference to TransMontaigne Partners L.P.'s Annual Report on
Form 10-K for the year ended December 31, 2016 have been so incorporated in reliance on the report (which contains an explanatory paragraph that emphasizes extensive relationships with
the Battleground Oil Specialty Terminal Company LLC's member and other affiliated companies) of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with the SEC. Our filings with the SEC are available to the public on the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference room at 100 F Street, NE, Washington, DC 20549. Please
call the SEC at 1-800-SEC-0330 for more information about their public reference room and their copy charges. Our reports and other information about us may also be inspected at:
The New York Stock Exchange
20 Broad Street
New York, New York 10005
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Table of Contents
INCORPORATION BY REFERENCE OF INFORMATION FILED WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file with the SEC, which means that we can disclose important information to
you by referring you to those
documents. Any information that we refer to in this manner is considered part of this prospectus supplement. Any information that we file with the SEC after the date of this prospectus supplement will
automatically update and, where applicable, supersede the information contained in this prospectus supplement.
We
are incorporating by reference the following documents that we have previously filed with the SEC (Commission File No. 001-32505), except for any document or portion thereof
deemed to be "furnished" and not filed in accordance with SEC rules:
-
-
Our Annual Report on Form 10-K for the year ended December 31, 2016.
-
-
Our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2017, June 30, 2017 and September 30,
2017.
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-
Our Current Reports on Form 8-K filed with the SEC on January 17, 2017, April 17, 2017, April 28, 2017,
July 17, 2017, July 20, 2017, August 9, 2017, September 15, 2017, October 13, 2017 and November 8, 2017.
-
-
The description of our common units contained in our Registration Statement on Form 8-A filed with the SEC on May 17, 2005,
including any amendments or reports filed with the SEC for the purpose of updating such description.
We
are also incorporating by reference any future filings that we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
after the date of this prospectus supplement and prior to the termination of this offering. In no event, however, will any of the information that we "furnish" to the SEC in any Current Report on
Form 8-K from time to time be incorporated by reference into, or otherwise included in, this prospectus supplement.
We
will provide without charge to each person, including any beneficial owner, to whom this prospectus supplement is delivered a copy of any of the documents referred to above by
written or oral request to:
TransMontaigne Partners L.P.
1670 Broadway, Suite 3100
Denver, Colorado 80202
Attention: Investor Relations
Telephone: (303) 626-8200
We
maintain a web site at
www.transmontaignepartners.com
. The reference to our web site does not constitute incorporation by reference of
the information contained at the site and you should not consider it a part of this prospectus supplement or any other document we file with or furnish to the SEC.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Some of the information included in this prospectus supplement, the accompanying prospectus and the documents we incorporate by reference
contain or will contain forward-looking statements, including the following:
-
-
any statements contained in this prospectus supplement, the accompanying prospectus and the documents we incorporate by reference regarding the
prospects for our business or any of our services or our ability to pay distributions;
-
-
any statements preceded by, followed by or that include the words "may," "seeks," "believes," "expects," "anticipates," "intends," "continues,"
"estimates," "plans," "targets," "predicts," "attempts," "is scheduled," or similar expressions; and
-
-
other statements contained in this prospectus supplement, the accompanying prospectus and the documents we incorporate by reference regarding
matters that are not historical facts.
Our
business and results of operations are subject to risks and uncertainties, many of which are beyond our ability to control or predict. Because of these risks and uncertainties,
actual results may differ materially from those expressed or implied by forward-looking statements, and investors are cautioned not to place undue reliance on such statements, which speak only as of
the date thereof.
Important
factors, many of which are described in more detail in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016, that could cause
actual results to differ materially from our expectations include, but are not limited to:
-
-
whether we are able to generate sufficient cash from operations to enable us to maintain or grow the amount of the quarterly distribution to
our unitholders;
-
-
whether and on what terms we complete the pending West Coast Acquisition;
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-
our ability to complete and successfully integrate acquisitions, including our pending West Coast Acquisition, and to realize their anticipated
benefits;
-
-
Gulf TLP Holdings, a wholly-owned subsidiary of ArcLight controls our general partner, which has sole responsibility for conducting our
business and managing our operations. ArcLight and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to our detriment;
-
-
the expiration of our omnibus agreement occurs on the earlier of ArcLight ceasing to control our general partner or following at least
24 months prior written notice;
-
-
upon the expiration or earlier termination of the omnibus agreement, we may incur additional costs to replicate the services currently provided
thereunder, in which event our financial condition and results of operations could be materially adversely affected;
-
-
affiliates of our general partner, including Gulf TLP Holdings and ArcLight, may compete with us and do not have any obligation to present
business opportunities to us;
-
-
failure by any of our significant customers to continue to engage us to provide services after the expiration of existing terminaling services
agreements or our failure to secure comparable alternative arrangements;
-
-
a reduction in revenue from any of our significant customers upon which we rely for a substantial majority of our revenue;
-
-
a material portion of our operations are conducted through joint ventures, over which we do not maintain full control and which have unique
risks;
S-27
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-
-
many of our terminal facilities are connected to, and rely on, pipelines owned and operated by third parties for the receipt and distribution
of refined petroleum products, and such pipeline operators may compete with us, make changes to their transportation service offerings or their pipeline tariffs, or suffer outages or reduced product
transportation;
-
-
competition from other terminals and pipelines that may be able to supply our significant customers with terminaling services on a more
competitive basis;
-
-
the continued creditworthiness of, and performance by, our significant customers;
-
-
we are exposed to the credit risks of our significant customers which could affect our creditworthiness. Any material nonpayment or
nonperformance by such customers could also adversely affect our financial condition and results of operations;
-
-
a lack of access to new capital would impair our ability to expand our operations;
-
-
the lack of availability of acquisition opportunities, constraints on our ability to make acquisitions, failure to successfully integrate
acquired facilities and future performance of acquired facilities, could limit our ability to grow our business successfully and could adversely affect the price of our common units;
-
-
a decrease in demand for products due to high prices, alternative fuel sources, new technologies or adverse economic conditions;
-
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our debt levels and restrictions in our debt agreements that may limit our operational flexibility;
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the ability of our significant customers to secure financing arrangements adequate to purchase their desired volume of product;
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the impact on our facilities or operations of extreme weather conditions, such as hurricanes, and other events, such as terrorist attacks or
war and costs associated with environmental compliance and remediation;
-
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the control of our general partner being transferred to a third party without our consent or unitholder consent;
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the failure of our existing and future insurance policies to fully cover all risks incident to our business;
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cyber-attacks or other breaches of our information security measures could disrupt our operations and result in increased costs;
-
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timing, cost and other economic uncertainties related to the construction of new tank capacity or facilities;
-
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the impact of current and future laws and governmental regulations, general economic, market or business conditions; we may have to refinance
our existing debt in unfavorable market conditions;
-
-
the age and condition of many of our pipeline and storage assets may result in increased maintenance and remediation expenditures;
-
-
fees paid to our general partner and its affiliates for services will continue to be substantial;
-
-
our general partner's limited call right may require unitholders to sell their common units at an undesirable time or price;
-
-
our ability to issue additional units without your approval would dilute your existing ownership interest;
S-28
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-
-
the issuance and sale of substantial amounts of common units, including issuances and sales pursuant to the outstanding sales agreement, or
announcement that such issuances and sales may occur, could adversely affect the market price of our common units;
-
-
the possibility that our unitholders could be held liable under some circumstances for our obligations to the same extent as a general partner;
-
-
our failure to avoid federal income taxation as a corporation or the imposition of state level taxation;
-
-
our inability to make acquisitions and investments to increase our capital asset base may result in future declines in our tax depreciation;
-
-
the impact of new IRS regulations or a challenge of our current allocation of income, gain, loss and deductions among our unitholders;
-
-
unitholders will be required to pay taxes on their respective share of our taxable income regardless of the amount of cash distributions;
-
-
investment in common partnership units by tax-exempt entities and non-United States persons raises tax issues unique to them;
-
-
unitholders will likely be subject to state and local taxes and return filing requirements in states where they do not live as a result of
investing in our units; and
-
-
the sale or exchange of 50% or more of our capital and profits interests within a 12-month period would result in a deemed technical
termination of our partnership for income tax purposes.
We
do not intend to update these forward-looking statements except as required by law.
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PROSPECTUS
TRANSMONTAIGNE PARTNERS L.P.
TLP FINANCE CORP.
$1,000,000,000
Common Units
Debt Securities
TransMontaigne Partners L.P. may offer and sell up to $1,000,000,000 in the aggregate of the securities identified above from time to time
in one or more offerings. This prospectus provides you with a general description of the securities.
TLP
Finance Corp. may act as a co-issuer of the debt securities, and all of our other direct or indirect subsidiaries, other than "minor" subsidiaries (except for TLP Finance Corp.) as
such term is interpreted in the securities regulations governing financial reporting for guarantors, may guarantee the debt securities.
Each
time we offer and sell securities, we will provide a supplement to this prospectus that contains specific information about the offering and the amounts, prices and terms of the
securities. The supplement may also add, update or change information contained in this prospectus with respect to that offering. You should carefully read this prospectus and the applicable
prospectus supplement before you invest in any of our securities.
We
may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters, dealers and agents, or directly to purchasers, or
through a combination of these methods. If any underwriters, dealers or agents are involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or
discount arrangement
between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus supplement. See the sections of this prospectus entitled "About this
Prospectus" and "Plan of Distribution" for more information. No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing the method and terms of
the offering of such securities.
INVESTING IN OUR SECURITIES INVOLVES RISKS. SEE THE "RISK FACTORS" ON PAGE 8 OF THIS PROSPECTUS AND ANY SIMILAR SECTION CONTAINED IN THE
APPLICABLE PROSPECTUS SUPPLEMENT CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES.
Our common units are listed on the New York Stock Exchange (the "NYSE") under the symbol "TLP." On August 30, 2016, the last reported sale
price of our common units on the NYSE was $42.69 per common unit.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is September 2, 2016.
Table of Contents
TABLE OF CONTENTS
Table of Contents
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission (the "SEC") using a "shelf"
registration process. By using a shelf registration statement, we may sell securities from time to time and in one or more offerings up to a total dollar amount of $1,000,000,000 as described in this
prospectus. Each time that we offer and sell securities, we will provide a prospectus supplement to this prospectus that contains specific information about the securities being offered and sold and
the specific terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus with respect to that offering. If there is any inconsistency
between the information in this prospectus and the applicable prospectus supplement, you should rely on the prospectus supplement. Before purchasing any securities, you should carefully read both this
prospectus and the applicable prospectus supplement, together with the additional information described under the heading "Where You Can Find More Information; Incorporation by Reference."
We
have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We will
not make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and the applicable
prospectus supplement to this prospectus is accurate as of the date on its respective cover, and that any information incorporated by reference is accurate only as of the date of the document
incorporated by reference, unless we indicate otherwise. Our business, financial condition, results of operations and prospects may have changed since those dates.
When
we refer to "TransMontaigne," "we," "our," "us," and the "Partnership" in this prospectus, we mean TransMontaigne Partners L.P. and its consolidated subsidiaries, unless
otherwise specified. References to "our general partner" or the "general partner" refer to TransMontaigne GP L.L.C., the general partner of the Partnership, which effectively manages the
business and affairs of the Partnership. When we refer to "you," we mean the holders of the applicable series of securities.
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WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE
Available Information
We file reports and other information with the SEC. Information filed with the SEC by us can be inspected and copied at the Public Reference
Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public Reference Section of the SEC at prescribed
rates. Further information on the operation of the SEC's Public Reference Room in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains
reports, proxy and information statements and other information about issuers, such as us, who file electronically with the SEC. The address of that website is
http://www.sec.gov
.
Our
web site address is
http://www.transmontaignepartners.com
. The information on our web site, however, is not, and should not be deemed
to be, a part of this prospectus.
This
prospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all of the information in the registration statement. The
full registration statement may be obtained from the SEC or us, as provided below. Forms of the indenture and other documents establishing the terms of the offered securities are or may be filed as
exhibits to the registration statement. Statements in this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in all respects by reference to
the document to which it refers. You should refer to the actual documents for a more complete description of the relevant matters. You may inspect a copy of the registration statement at the SEC's
Public Reference Room in Washington, D.C. or through the SEC's website, as provided above.
Incorporation by Reference
The SEC's rules allow us to "incorporate by reference" information into this prospectus, which means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, and subsequent information that we file
with the SEC will automatically update and supersede that information. Any statement contained in a previously filed document incorporated by reference will be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement contained in this prospectus modifies or replaces that statement.
We
incorporate by reference our documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), between the date of this prospectus and the termination of the offering of the securities described in this prospectus. We are not, however, incorporating by
reference any documents or portions thereof, whether specifically listed below or filed in the future, that are not deemed "filed" with the SEC, including our compensation committee report and any
information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or related exhibits furnished pursuant to Item 9.01 of Form 8-K.
This
prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously been filed with the
SEC:
-
-
Our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 10, 2016.
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-
Our Quarterly Reports on Form 10-Q for the three-months ended March 31, 2016 and June 30, 2016, filed with the SEC on
May 5, 2016 and August 9, 2016, respectively.
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-
our Definitive Proxy Statement on Schedule 14A, as filed with the SEC on June 1, 2016.
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Our Current Reports on Form 8-K filed with the SEC on January 19, 2016, February 2, 2016, February 24, 2016,
March 3, 2016, April 18, 2016, May 18, 2016, July 18, 2016 and July 22, 2016.
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The description of our common units contained in our Registration Statement on Form 8-A (File No. 001-32505), as filed with the
SEC on May 17, 2005, and any amendment or report filed with the SEC for the purpose of updating the description.
All
reports and other documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this offering, including all
such documents we may file with the SEC after the date of the initial registration statement and prior to the effectiveness of the registration statement, but excluding any information furnished to,
rather than filed with, the SEC, will also be incorporated by reference into this prospectus and deemed to be part of this prospectus from the date of the filing of such reports and documents.
You
may request a free copy of any of the documents incorporated by reference in this prospectus (other than exhibits, unless they are specifically incorporated by reference in the
documents) by writing or telephoning us at the following address:
TransMontaigne Partners L.P.
Attention: Investor Relations
1670 Broadway, Suite 3100
Denver, Colorado 80202
(303) 626-8200
Exhibits
to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference in this prospectus and any accompanying prospectus supplement.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some of the information included in this prospectus, any prospectus supplement and the documents we incorporate by reference contain or will
contain forward-looking statements, including the following:
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any statements contained in this prospectus, any prospectus supplement and the documents we incorporate by reference regarding the prospects
for our business or any of our services or our ability to pay distributions;
-
-
any statements preceded by, followed by or that include the words "may," "seeks," "believes," "expects," "anticipates," "intends," "continues,"
"estimates," "plans," "targets," "predicts," "attempts," "is scheduled," or similar expressions; and
-
-
other statements contained in this prospectus, any prospectus supplement and the documents we incorporate by reference regarding matters that
are not historical facts.
Our
business and results of operations are subject to risks and uncertainties, many of which are beyond our ability to control or predict. Because of these risks and uncertainties,
actual results may differ materially from those expressed or implied by forward-looking statements, and investors are cautioned not to place undue reliance on such statements, which speak only as of
the date thereof.
Important
factors, many of which are described in more detail in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2015, that could cause
actual results to differ materially from our expectations include, but are not limited to:
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whether we are able to generate sufficient cash from operations to enable us to maintain or grow the amount of the quarterly distribution to
our unitholders;
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Gulf TLP Holdings, LLC, a wholly owned subsidiary of ArcLight Energy Partners Fund VI, L.P. ("ArcLight") controls our general
partner, which has sole responsibility for conducting our business and managing our operations. ArcLight and its affiliates have conflicts of interest and limited fiduciary duties, which may permit
them to favor their own interests to our detriment;
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affiliates of our general partner, including Gulf TLP Holdings, LLC and ArcLight, may compete with us and do not have any obligation to
present business opportunities to us;
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failure by any of our significant customers to continue to engage us to provide services after the expiration of existing terminaling services
agreements or our failure to secure comparable alternative arrangements;
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a reduction in revenue from any of our significant customers upon which we rely for a substantial majority of our revenue;
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a material portion of our operations are conducted through joint ventures, over which we do not maintain full control and which have unique
risks;
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competition from other terminals and pipelines that may be able to supply our significant customers with terminaling services on a more
competitive basis;
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the continued creditworthiness of, and performance by, our significant customers;
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the expiration of our omnibus agreement occurs on the earlier to occur of ArcLight ceasing to control our general partner or following at least
24 months prior written notice;
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NGL Energy Operating will continue to employ the officers and employees that provide services to us under the provisions of a transition
services agreement entered into in connection with the ArcLight acquisition and NGL has conflicts of interest with us and limited duties to us, which
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our failure to avoid federal income taxation as a corporation or the imposition of state level taxation;
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our inability to make acquisitions and investments to increase our capital asset base may result in future declines in our tax depreciation;
-
-
the impact of new Internal Revenue Service ("IRS") regulations or a challenge of our current allocation of income, gain, loss and deductions
among our unitholders;
-
-
unitholders will be required to pay taxes on their respective share of our taxable income regardless of the amount of cash distributions;
-
-
investment in common partnership units by tax-exempt entities and foreign persons raises tax issues unique to them;
-
-
unitholders will likely be subject to state and local taxes and return filing requirements in states where they do not live as a result of
investing in our units; and
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-
the sale or exchange of 50% or more of our capital and profits interests within a 12-month period would result in a constructive termination of
our partnership for income tax purposes.
We
do not intend to update these forward-looking statements except as required by law.
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TRANSMONTAIGNE PARTNERS L.P. AND
TLP FINANCE CORP.
We are a terminaling and transportation company with operations primarily in the United States along the Gulf Coast, in the Midwest, in Houston
and Brownsville, Texas, along the Mississippi and Ohio Rivers, and in the Southeast. We provide integrated terminaling, storage, transportation and related services for customers engaged in the
distribution and marketing of light refined petroleum products, heavy refined petroleum products, crude oil, chemicals, fertilizers and other liquid products. Light refined products include gasolines,
diesel fuels, heating oil and jet fuels. Heavy refined products include residual fuel oils and asphalt. We do not purchase or market products that we handle or transport. Therefore, we do not have
material direct exposure to changes in commodity prices, except for the value of refined product gains and losses arising from terminaling services agreements with certain customers.
TLP
Finance Corp. is one of our wholly owned subsidiaries. It has no assets and does not and will not conduct any operations or have any employees. It was formed for the sole purpose of
acting as a co-issuer for our debt securities and its activities will be limited to co-issuing our debt securities and engaging in other activities incidental thereto.
Our
principal executive offices are located at 1670 Broadway, Suite 3100, Denver, Colorado 80202, and our telephone number is (303) 626-8200.
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RISK FACTORS
Investment in any securities offered pursuant to this prospectus and the applicable prospectus supplement involves risks. You should carefully
consider the risk factors incorporated by reference to our most recent Annual Report on Form 10-K filed with the SEC on March 10, 2016, and any subsequent Quarterly Reports on
Form 10-Q or Current Reports on Form 8-K we file after the date of this prospectus, and all other information contained or incorporated by reference into this prospectus, as updated by
our subsequent filings under the Exchange Act, and the risk factors and other information contained in the applicable prospectus supplement before acquiring any of such securities. The occurrence of
any of these risks might cause you to lose all or part of your investment in the offered securities.
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities as set forth in the applicable prospectus supplement.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed charges for us for each of the periods indicated. See
Exhibit 12.1 to the registration statement on Form S-3, as amended, for the full calculation of the ratio of earnings to fixed charges for all periods presented herein.
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Year Ended December 31,
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Six Months
Ended
June 30, 2016
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2015
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2014
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2013
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2012
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2011
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Ratio of earnings to fixed charges
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4.7
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6.2
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5.1
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4.9
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10.0
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10.9
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DESCRIPTION OF OUR COMMON UNITS
The following description of our common units is not complete and may not contain all the information you should consider before investing in
our common units. This description is summarized from, and qualified in its entirety by reference to, our partnership agreement, which has been publicly filed with the SEC. See "Where You Can Find
More Information; Incorporation by Reference."
The Common Units
The common units represent a class of limited partner interests in us. The holders of common units are entitled to participate in partnership
distributions and exercise the rights or privileges available to limited partners under our partnership agreement. For a description of the relative rights and preferences of holders of common units
in and to partnership distributions, please read this section and "Cash Distribution Policy." For a description of the rights and privileges of limited partners under our partnership agreement,
including voting rights, please read "Description of Our Partnership Agreement."
Transfer Agent and Registrar
Duties
Computershare Trust Company, N.A. serves as registrar and transfer agent for the common units. We pay all fees charged by the transfer agent for
transfers of our common units, except for the following, which must be paid by unitholders:
-
-
surety bond premiums to replace lost or stolen certificates, or to cover taxes and other governmental charges in connection therewith;
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-
special charges for services requested by a holder of a common unit; and
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-
other similar fees or charges.
There
is no charge to unitholders for disbursements of our cash distributions. We will indemnify the transfer agent, its agents and each of their stockholders, directors, officers and
employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence or intentional
misconduct of the indemnified person or entity.
Transfer of Common Units
Upon the transfer of common units or the issuance of common units in a merger or consolidation in accordance with our partnership agreement,
each transferee of common units shall be admitted as a limited partner with respect to the common units transferred when such transfer and admission are reflected in our books and records.
Additionally, each transferee:
-
-
represents that the transferee has the capacity, power and authority to enter into our partnership agreement;
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-
automatically agrees to be bound by the terms and conditions of, and is deemed to have executed, our partnership agreement; and
-
-
gives the consents, waivers and approvals contained in our partnership agreement.
An
assignee will become a substituted limited partner of our partnership for the transferred common units automatically upon the recording of the transfer on our books and records. Our
general partner will cause any transfers to be recorded on our books and records no less frequently than quarterly.
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We
may, at our discretion, treat the nominee holder of a common unit as the absolute owner. In that case, the beneficial holder's rights are limited solely to those that it has against
the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.
Common
units are securities and any transfers are subject to the laws governing the transfer of securities. In addition to other rights acquired upon transfer, the transferor gives the
transferee the right to become a substituted limited partner in our partnership for the transferred common units.
Until
a common unit has been transferred on our books, we and the transfer agent may treat the record holder of the common unit as the absolute owner for all purposes, except as
otherwise required by law or stock exchange regulations.
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DESCRIPTION OF OUR PARTNERSHIP AGREEMENT
The following is a summary of the material provisions of our partnership agreement, as amended to date.
We
summarize the following provisions of our partnership agreement elsewhere in this prospectus:
-
-
with regard to distributions of available cash, please read "Cash Distribution Policy";
-
-
with regard to the duties of our general partner, please read "Risk FactorsRisks Inherent in an Investment in Us" in our Annual
Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 10, 2016;
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-
with regard to the transfer of common units, please read "Description of Our Common UnitsTransfer of Common Units"; and
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-
with regard to allocations of taxable income and taxable loss, please read "Material Federal Income Tax Consequences."
Organization and Duration
We were organized on February 23, 2005, and have a perpetual existence unless terminated pursuant to the terms of our partnership
agreement.
Purpose
Our purpose under the partnership agreement is limited to any business activities that are approved by our general partner and that lawfully may
be conducted by a limited partnership organized under Delaware law; provided that our general partner may not cause us to engage, directly or indirectly, in any business activity that our general
partner determines would cause us to be treated as an association taxable as a corporation or otherwise taxable as an entity for federal income tax purposes.
Although
our general partner has the ability to cause us, TransMontaigne Operating Company L.P. (the "operating partnership") or the operating partnership's subsidiaries to engage
in activities other than the storage, terminaling, transportation and distribution of refined products, our general partner may decline to do so free of any fiduciary duty or obligation whatsoever to
us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. Our general partner is authorized in general to perform all acts it
determines to be necessary or appropriate to carry out our purposes and to conduct our business.
Power of Attorney
Each limited partner, and each person who acquires a unit from a unitholder, by accepting the common unit, automatically grants to our general
partner and, if appointed, a liquidator, a power of attorney to, among other things, execute and file documents required for our qualification, continuance, or dissolution. The power of attorney also
grants our general partner the authority to amend, and to make consents and waivers under, the partnership agreement.
Capital Contributions
Unitholders are not obligated to make additional capital contributions, except as described below under "Limited Liability."
For
a discussion of our general partner's right to contribute capital to maintain its 2% general partner interest if we issue additional common units, please read "Issuance
of Additional Securities."
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Voting Rights
The following matters require the unitholder vote specified below. Various matters require the approval of a "unit majority," which means the
approval of a majority of the outstanding common units.
In
voting their common units, our general partner and its affiliates will have no fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good
faith or in the best interests of us or the limited partners.
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Issuance of additional common units:
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No approval right.
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Amendment of the partnership agreement:
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Certain amendments may be made by our general partner without the approval of the unitholders. Other amendments generally require the approval of a unit majority. See "Amendment of the Partnership
Agreement."
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Merger of our partnership or the sale of all or substantially all of our assets:
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Unit majority in certain circumstances. See "Merger, Consolidation, Sale or Other Disposition of Assets."
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Dissolution of our partnership:
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Unit majority. See "Termination and Dissolution."
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Continuation of our partnership upon dissolution:
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Unit majority. See "Termination and Dissolution."
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Withdrawal of our general partner:
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No approval required at any time. See "Withdrawal or Removal of Our General Partner."
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Removal of our general partner:
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Not less than 66
2
/
3
% of the outstanding common units, including common units held by our general partner and its affiliates. See "Withdrawal or Removal of Our General
Partner."
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Transfer of the general partner interest:
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No approval required at any time. See "Transfer of General Partner Interest."
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Transfer of incentive distribution rights:
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No approval required at any time. See "Transfer of Incentive Distribution Rights."
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Transfer of ownership interests in our general partner:
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No approval required at any time. See "Transfer of Ownership Interests in General Partner."
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Limited Liability
Participation in the Control of Our Partnership
Assuming that a limited partner does not participate in the control of our business within the meaning of the Delaware Revised Uniform Limited
Partnership Act (the "Delaware Act") and that it otherwise acts in conformity with the provisions of the partnership agreement, its liability under the Delaware Act will be limited, subject to
possible exceptions, to the amount of capital it is obligated to
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contribute
to us for its common units plus its share of any undistributed profits and assets. If it were determined, however, that the right, or exercise of the right, by the limited partners as a
group:
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to remove or replace our general partner;
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to approve some amendments to the partnership agreement; or
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to take other action under the partnership agreement;
constituted
"participation in the control" of our business for the purposes of the Delaware Act, then the limited partners could be held personally liable for our obligations under the laws of
Delaware, to the same extent as our general partner. This liability would extend to persons who transact business with us who reasonably believe that a limited partner is a general partner. Neither
the partnership agreement nor the Delaware Act specifically provides for legal recourse against our general partner if a limited partner were to lose limited liability through any fault of our general
partner. While this does not mean that a limited partner could not seek legal recourse, we know of no precedent for such a claim in Delaware case law.
Unlawful Partnership Distributions
Under the Delaware Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the
limited partnership, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specific property of the
partnership, would exceed the fair value of the assets of the limited partnership. For the purpose of determining the fair value of the assets of a limited partnership, the
Delaware Act provides that the fair value of property subject to liability for which recourse of creditors is limited shall be included in the assets of the limited partnership only to the extent that
the fair value of that property exceeds the nonrecourse liability. The Delaware Act provides that a limited partner who receives a distribution and knew at the time of the distribution that the
distribution was in violation of the Delaware Act shall be liable to the limited partnership for the amount of the distribution for three years. Under the Delaware Act, a substituted limited partner
of a limited partnership is liable for the obligations of his assignor to make contributions to the partnership, except that such person is not obligated for liabilities unknown to him at the time it
became a limited partner and that could not be ascertained from the partnership agreement.
Failure to Comply with the Limited Liability Provisions of Jurisdictions in which we do Business
Our subsidiaries conduct business or have the authority to conduct business in several states. Our subsidiaries may conduct business in other
states in the future. Maintenance of our limited liability as a limited partner of the operating partnership may require compliance with legal requirements in the jurisdictions in which the operating
partnership conducts business, including qualifying our subsidiaries to do business there.
Limitations
on the liability of limited partners for the obligations of a limited partner have not been clearly established in many jurisdictions. If, by virtue of our limited partner
interest in the operating partnership or otherwise, it were determined that we were conducting business in any state without compliance with the applicable limited partnership or limited liability
company statute, or that the right or exercise of the right by the limited partners as a group to remove or replace the general partner, to approve some amendments to the partnership agreement, or to
take other action under the partnership agreement constituted "participation in the control" of our business for purposes of the statutes of any relevant jurisdiction, then the limited partners could
be held personally liable for our obligations under the law of that jurisdiction to the same extent as the general partner under the circumstances. We will operate in a manner that our general partner
considers reasonable and necessary or appropriate to preserve the limited liability of the limited partners.
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Issuance of Additional Securities
The partnership agreement authorizes us to issue an unlimited number of additional partnership securities for the consideration and on the terms
and conditions determined by our general partner without the approval of the unitholders.
It
is possible that we will fund acquisitions through the issuance of additional common units or other partnership securities. Holders of any additional common units we issue will be
entitled to share equally with the then-existing holders of common units in our distributions of available cash. In addition, the issuance of additional common units or other partnership securities
may dilute the value of the interests of the then-existing holders of common units in our net assets.
In
accordance with Delaware law and the provisions of our partnership agreement, we may also issue additional partnership securities that, as determined by our general partner, may have
rights to distributions or special voting rights to which the common units are not entitled. In addition, our partnership agreement does not prohibit the issuance by our subsidiaries of equity
securities, which may effectively rank senior to the common units.
Upon
issuance of additional partnership securities, our general partner will have the right, but not the obligation, to make additional capital contributions to the extent necessary to
maintain its 2% general partner interest in us. Our general partner's 2% interest in us will be reduced if we issue additional common units in the future and our general partner does not contribute a
proportionate amount of capital to us to maintain its 2% general partner interest. Moreover, our general partner will have the right, which it may from time to time assign in whole or in part to any
of its affiliates, to purchase common units or other partnership securities whenever, and on the same terms that, we issue those securities to persons other than our general partner and its
affiliates, to the extent necessary to maintain its and its affiliates' percentage interest, including such interest represented by common units, that existed immediately prior to each issuance. The
holders of common units will not have preemptive rights to acquire additional common units or other partnership securities.
Amendment of the Partnership Agreement
General
Amendments to the partnership agreement may be proposed only by or with the consent of our general partner. However, our general partner will
have no duty or obligation to propose any amendment and may decline to do so free of fiduciary any duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith
or in the best interests of us and the limited partners. In order to adopt a proposed amendment, other than the amendments discussed below, our general partner must seek written approval of the
holders of the number of units required to approve the amendment or call a meeting of the limited partners to consider and vote upon the proposed amendment. Except as described below, an amendment
must be approved by a unit majority.
Prohibited Amendments
No amendment may be made that would:
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(1)
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enlarge
the obligations of any limited partner without its consent, unless approved by at least a majority of the type or class of limited partner interests so
affected; or
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(2)
-
enlarge
the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by us
to our general partner or any of its affiliates without the consent of our general partner, which may be given or withheld at its option.
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The
provision of the partnership agreement preventing the amendments having the effects described in clauses (1) or (2) above can be amended upon the approval of the
holders of at least 90% of the outstanding common units voting together as a single class (including common units owned by our
general partner and its affiliates). As of the date of this prospectus, our general partner and its affiliates own approximately 19.6% of the outstanding common units.
No Unitholder Approval
Our general partner may generally make amendments to the partnership agreement without the approval of any limited partner or assignee to
reflect:
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(1)
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a
change in our name, the location of our principal place of business, our registered agent or our registered office;
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(2)
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the
admission, substitution, withdrawal, or removal of partners in accordance with the partnership agreement;
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(3)
-
a
change that our general partner determines to be necessary or appropriate for us to qualify or to continue our qualification as a limited partnership or a
partnership in which the limited partners have limited liability under the laws of any state or to ensure that we, the operating partnership and its subsidiaries will not be treated as an association
taxable as a corporation or otherwise taxed as an entity for federal income tax purposes;
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(4)
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an
amendment that is necessary, in the opinion of our counsel, to prevent us or our general partner or its directors, officers, agents or trustees from, in any
manner, being subjected to the provisions of the Investment Company Act of 1940, the Investment Advisors Act of 1940, or "plan asset" regulations adopted under the Employee Retirement Income Security
Act of 1974 ("ERISA"), each as amended, whether or not substantially similar to plan asset regulations currently applied or proposed by the U.S. Department of Labor;
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(5)
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an
amendment that our general partner determines to be necessary or appropriate for the authorization of additional partnership securities or rights to acquire
partnership securities;
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(6)
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any
amendment expressly permitted in the partnership agreement to be made by our general partner acting alone;
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(7)
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an
amendment effected, necessitated, or contemplated by a merger agreement that has been approved under the terms of the partnership agreement;
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(8)
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any
amendment that our general partner determines to be necessary or appropriate for the formation by us of, or our investment in, any corporation, partnership or
other entity, as otherwise permitted by the partnership agreement;
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(9)
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a
change in our fiscal year or taxable year and related changes;
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(10)
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mergers
with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the merger or
conveyance other than those it receives by way of the merger or conveyance, provided that prior to the amendment our general partner has received an opinion of counsel that the merger or conveyance
would not result in the loss of limited liability status, that the sole purpose of such merger is to effect a change in legal form and that the governing instruments provide the limited partners and
our general partner with the same rights contained in the partnership agreement; or
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(11)
-
any
other amendments substantially similar to any of the matters described in (1) through (10) above.
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In
addition, our general partner may make amendments to the partnership agreement without the approval of any limited partner or assignee in connection with a merger or consolidation
approved in
accordance with our partnership agreement, or if our general partner determines that those amendments:
-
(1)
-
do
not adversely affect the limited partners (or any particular class of limited partners) in any material respect;
-
(2)
-
are
necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or
state agency or judicial authority or contained in any federal or state statute;
-
(3)
-
are
necessary or appropriate to facilitate the trading of limited partner interests or to comply with any rule, regulation, guideline or requirement of any
securities exchange on which the limited partner interests are or will be listed for trading;
-
(4)
-
are
necessary or appropriate for any action taken by our general partner relating to splits or combinations of common units under the provisions of the partnership
agreement; or
-
(5)
-
are
required to effect the intent expressed in this prospectus or the intent of the provisions of the partnership agreement or are otherwise contemplated by the
partnership agreement.
Opinion of Counsel and Unitholder Approval
Our general partner will not be required to obtain an opinion of counsel that an amendment will not result in a loss of limited liability to the
limited partners or result in our being treated as an entity for federal income tax purposes in connection with any of the amendments described under "No Unitholder Approval." Except as
described under "Prohibited Amendments" and "Merger, Consolidation, Sale or Other Disposition of Assets," no other amendments to the partnership agreement will become effective without
the approval of holders of at least 90% of the outstanding common units, voting as a single class, unless we first
obtain an opinion of counsel to the effect that the amendment will not affect the limited liability under applicable law of any of our limited partners.
In
addition to the above restrictions, any amendment that would have a material adverse effect on the rights or preferences of any type or class of outstanding units in relation to other
classes of units will require the approval of at least a majority of the type or class of units so affected. Any amendment that reduces the voting percentage required to take any action must be
approved by the affirmative vote of limited partners whose aggregate outstanding units constitute not less than the voting requirement sought to be reduced.
Merger, Consolidation, Sale or Other Disposition of Assets
A merger or consolidation of our partnership requires the prior consent of our general partner. However, our general partner will have no duty
or obligation to consent to any merger or consolidation and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good
faith or in the best interests of us and the limited partners.
In
addition, the partnership agreement generally prohibits our general partner, without the prior approval of the holders of units representing a unit majority, from causing us to, among
other things, sell, exchange, or otherwise dispose of all or substantially all of our and our subsidiaries' assets in a single transaction or a series of related transactions, including by way of
merger, consolidation, or other combination, or approving on our behalf the sale, exchange, or other disposition of all or substantially all of the assets of our subsidiaries. Our general partner may,
however, mortgage, pledge, hypothecate, or grant a security interest in all or substantially all of and our subsidiaries' our assets without that approval. Our general partner may also sell all or
substantially all of our and our subsidiaries' assets
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under
a foreclosure or other realization upon those encumbrances without that approval. Finally, our general partner may consummate any merger without the prior approval of our unitholders if we are
the surviving entity in the transaction, our general partner has received an opinion of counsel regarding limited liability and tax matters, the transaction would not result in a material amendment to
the partnership agreement (other than an amendment that the general partner could adopt without the consent of the limited partners), each of our units will be an identical unit of our partnership
following the transaction and the aggregate amount of units and other equity interests to be issued do not exceed 20% of our outstanding equity interests immediately prior to the transaction.
If
conditions specified in the partnership agreement are satisfied, our general partner may convert us or any of our subsidiaries into a new limited liability entity or merge us or any
of our subsidiaries into, or convey some or all of our assets to, a newly formed limited liability entity if the sole purpose of that merger or conveyance is to effect a mere change in our legal form
into another limited liability entity, our general partner has received an opinion of counsel regarding limited liability and tax matters and the governing instruments of the new entity provide the
limited partners and our general partner with the same rights and obligations as contained in our partnership agreement. The unitholders are not entitled to dissenters' rights of appraisal under the
partnership agreement or applicable Delaware law in the event of a conversion, merger or consolidation, a sale of substantially all of our assets, or any other transaction or event.
Termination and Dissolution
We will continue as a limited partnership until terminated under the partnership agreement. We will dissolve upon:
-
(1)
-
the
election of our general partner to dissolve us, if approved by the holders of units representing a unit majority;
-
(2)
-
there
being no limited partners, unless we are continued without dissolution in accordance with applicable Delaware law;
-
(3)
-
the
entry of a decree of judicial dissolution of our partnership; or
-
(4)
-
the
withdrawal or removal of our general partner or any other event that results in its ceasing to be our general partner other than by reason of a transfer of its
general partner interest in accordance with the partnership agreement or withdrawal or removal following approval and admission of a successor.
Upon
a dissolution under clause (4), the holders of a unit majority may also elect, within specific time limitations, to continue our business on the same terms and conditions
described in the partnership agreement by appointing as a successor general partner an entity approved by the holders of units representing a unit majority, subject to our receipt of an opinion of
counsel to the effect that:
-
(1)
-
the
action would not result in the loss of limited liability of any limited partner; and
-
(2)
-
neither
our partnership, the operating partnership nor any of our other subsidiaries would be treated as an association taxable as a corporation or otherwise be
taxable as an entity for federal income tax purposes upon the exercise of that right to continue.
Liquidation and Distribution of Proceeds
Upon our dissolution, unless we are continued as a new limited partnership, the liquidator authorized to wind up our affairs will, acting with
all of the powers of our general partner that are necessary or appropriate, liquidate our assets and apply the proceeds of the liquidation as described in "Cash Distribution
PolicyDistributions of Cash Upon Liquidation." The liquidator may defer
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liquidation
or distribution of our assets for a reasonable period of time or distribute assets to partners in kind if it determines that a sale would be impractical or would cause undue loss to the
partners.
Withdrawal or Removal of Our General Partner
Our general partner may withdraw as general partner without first obtaining approval of any unitholder by giving 90 days' written notice,
and that withdrawal will not constitute a violation of the partnership agreement. In addition, the partnership agreement permits our general partner to sell or otherwise transfer all of its general
partner interest in us without the approval of the unitholders. Please read "Transfer of General Partner Interest" and "Transfer of Incentive Distribution Rights."
Upon
withdrawal of our general partner under any circumstances, other than as a result of a transfer by our general partner of all or a part of its general partner interest in us, the
holders of a majority of the outstanding common units may select a successor to that withdrawing general partner. If a successor is not elected, or is elected but an opinion of counsel regarding
limited liability and tax matters cannot be obtained, we will be dissolved, wound up, and liquidated, unless within a specified period of time after that withdrawal, the holders of a unit majority
agree in writing to continue our business and to appoint a successor general partner. Please read "Termination and Dissolution."
Our
general partner may not be removed unless that removal is approved by the vote of the holders of not less than 66
2
/
3
% of the outstanding common units, voting as a
single class, including common units held by our general partner and its affiliates, and we receive an opinion of counsel regarding limited liability and tax matters. Any removal of our general
partner is also subject to the approval of a successor general partner by the vote of the holders of a majority of the outstanding common units. The ownership of more than 33
1
/
3
% of the
outstanding common units by our general partner and its affiliates would give them the practical ability to prevent our general partner's removal. As of the date of this prospectus, our general
partner and its affiliates own approximately 19.6% of the outstanding common units.
The
partnership agreement also provides that if our general partner is removed as our general partner under circumstances where cause does not exist and common units held by our general
partner and its affiliates are not voted in favor of that removal:
-
-
any existing arrearages in payment of the minimum quarterly distribution on the common units will be extinguished; and
-
-
our general partner will have the right to convert its general partner interest and its incentive distribution rights into common units or to
receive cash in exchange for those interests based on the fair market value of the interests at the time.
In
the event of removal of our general partner under circumstances where cause exists or withdrawal of our general partner where that withdrawal violates the partnership agreement, a
successor general partner will have the option to purchase the general partner interest and incentive distribution rights of the departing general partner for a cash payment equal to the fair market
value of those interests. Under all other circumstances where our general partner withdraws or is removed by the limited partners, the departing general partner will have the option to require the
successor general partner to purchase the general partner interest of the departing general partner and its incentive distribution rights for their fair market value. In each case, this fair market
value will be determined by agreement between the departing general partner and the successor general partner. If no agreement is reached, an independent investment banking firm or other independent
expert selected by the departing general partner and the successor general partner will determine the fair market value. Or, if the departing general partner and the successor general partner cannot
agree upon an expert, then an expert chosen by agreement of the experts selected by each of them will determine the fair market value.
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If the option described above is not exercised by either the departing general partner or the successor general partner, the departing general partner's general
partner interest and its incentive distribution rights will automatically convert into common units equal to the fair market value of those interests as determined by an investment banking firm or
other independent expert selected in the manner described in the preceding paragraph without reduction in such partnership interest (but subject to proportionate dilution by reason of admission of its
successor).
In
addition, we will be required to reimburse the departing general partner for all amounts due the departing general partner, including, without limitation, all employee-related
liabilities, including severance liabilities, incurred for the termination of any employees employed by the departing general partner or its affiliates for our benefit.
Transfer of General Partner Interest
Our general partner may transfer all or any of its general partner interest in us without unitholder approval. As a condition of this transfer,
the transferee must, among other things, assume the rights and duties of our general partner, agree to be bound by the provisions of the partnership agreement, and furnish an opinion of counsel
regarding limited liability and tax matters.
Our
general partner and its affiliates may at any time transfer units to one or more persons, without unitholder approval.
Transfer of Ownership Interests in Our General Partner
At any time, Gulf TLP Holdings, LLC may sell or transfer all or part of its membership interests in our general partner to an affiliate
or a third party without the approval of our unitholders.
Transfer of Incentive Distribution Rights
Our general partner or its affiliates or any other holder of incentive distribution rights may transfer any or all of its incentive distribution
rights without unitholder approval.
Change of Management Provisions
The partnership agreement contains specific provisions that are intended to discourage a person or group from attempting to remove
TransMontaigne GP L.L.C. as our general partner or otherwise change our management. If any person or group other than our general partner
and its affiliates acquires beneficial ownership of 20% or more of any class of units, that person or group loses voting rights on all of its units. This loss of voting rights does not apply to any
person or group that acquires the units from our general partner or its affiliates and any transferees of that person or group approved by our general partner or to any person or group who acquires
the units with the prior approval of the board of directors of our general partner.
The
partnership agreement also provides that if our general partner is removed under circumstances where cause does not exist and units held by our general partner and its affiliates are
not voted in favor of that removal:
-
-
any existing arrearages in payment of the minimum quarterly distribution on the common units will be extinguished; and
-
-
our general partner will have the right to convert its general partner interest and its incentive distribution rights into common units or to
receive cash in exchange for those interests.
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Limited Call Right
If at any time our general partner and its affiliates own more than 80% of the then-issued and outstanding partnership securities of any class,
our general partner will have the right, which it may assign in whole or in part to any of its affiliates or to us, to acquire all, but not less than all, of the remaining partnership securities of
the class held by unaffiliated persons as of a record date to be selected by our general partner, on at least 10, but not more than 60, days' written notice. The purchase price in the event of this
purchase is the greater of:
-
-
the highest cash price paid by either of our general partner or any of its affiliates for any partnership securities of the class purchased
within the 90 days preceding the date on which our general partner first mails notice of its election to purchase those partnership securities; and
-
-
the average of the daily closing prices of the partnership securities of such class for the 20 consecutive trading days preceding the
date three days before the date the notice is mailed.
As
a result of our general partner's right to purchase outstanding partnership securities, a holder of partnership securities may have its partnership securities purchased at an
undesirable time or price. The tax consequences to a unitholder of the exercise of this call right are the same as a sale by that unitholder of its common units in the market. Please read "Material
Federal Income Tax ConsequencesDisposition of Common Units."
Meetings; Voting
Except as described below regarding a person or group owning 20% or more of any class of units then outstanding, unitholders or assignees who
are record holders of units on the record date will be entitled to notice of, and to vote at, meetings of our limited partners and to act upon matters for which approvals may be solicited. Common
units that are owned by an assignee who is a record holder, but who has not yet been admitted as a limited partner, will be voted by our general partner at the written direction of the record holder.
Absent direction of this kind, the common units will not be voted, except that, in the case of common units held by our general partner on behalf of non-citizen assignees, our general partner will
distribute the votes on those common units in the same ratios as the votes of limited partners on other units are cast.
Our
general partner intends to hold a special meeting of unitholders to approve the partnership's 2016 Long-Term Incentive Plan (the "2016 Plan"), which, among other things, permits
common units to be reserved and made available for issuance with respect to awards under the 2016 Plan. Except with respect to the 2016 Plan, our general partner does not anticipate that any meeting
of unitholders will be called in the foreseeable future. Any action that is required or permitted to be taken by the unitholders may be taken either at a meeting of the unitholders or, if authorized
by our general partner, without a meeting if consents in writing describing the action so taken are signed by holders of the number of units necessary to authorize or take that action at a meeting.
Meetings of the unitholders may be called by our general partner or by unitholders owning at least 20% of the outstanding units of the class for which a meeting is proposed. Unitholders may vote
either in person or by proxy at meetings. The holders of a majority of the outstanding units of the class or classes for
which a meeting has been called, represented in person or by proxy, will constitute a quorum unless any action by the unitholders requires approval by holders of a greater percentage of the units, in
which case the quorum will be the greater percentage.
Each
record holder of a unit has a vote according to its percentage interest in us, although additional limited partner interests having special voting rights could be issued. Please
read "Issuance of Additional Securities." However, if at any time any person or group, other than our general partner and its affiliates, or a direct or subsequently approved transferee
of our general partner or its affiliates, acquires, in the aggregate, beneficial ownership of 20% or more of any class of units then outstanding,
22
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that
person or group will lose voting rights on all of its units and the units may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of
unitholders, calculating required votes, determining the presence of a quorum, or for other similar purposes. Common units held in nominee or street name account will be voted by the broker or other
nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and its nominee provides otherwise.
Any
notice, demand, request, report or proxy material required or permitted to be given or made to record holders of common units under the partnership agreement will be delivered to the
record holder by us or by the transfer agent.
Status as Limited Partner
By transfer of any common units in accordance with our partnership agreement, each transferee of common units shall be admitted as a limited
partner with respect to the common units transferred when such transfer and admission is reflected in our books and records. Except as described above under "Limited Liability," the
common units will be fully paid, and unitholders will not be required to make additional contributions.
Non-Citizen Assignees; Redemption
If we are or become subject to federal, state, or local laws or regulations that, in the reasonable determination of our general partner, create
a substantial risk of cancellation or forfeiture of any property in which we have an interest because of the nationality, citizenship, or other related status of any limited partner, we may redeem the
common units held by the limited partner at their current market price. In order to avoid any cancellation or forfeiture, our general partner may require each limited partner to furnish information
about its nationality, citizenship, or related status. If a limited partner fails to furnish information about its nationality, citizenship, or other related status within 30 days after a
request for the information or our general partner determines after receipt of the information that the limited partner is not an eligible citizen, the limited partner may be treated as a non-citizen
assignee. A non-citizen assignee is entitled to an interest equivalent to that of a limited partner for the right to share in allocations and distributions from us, including liquidating
distributions. A non-citizen assignee does not have the right to direct the voting of its common units and may not receive distributions in kind upon our liquidation.
Indemnification
Under the partnership agreement, in most circumstances, we will indemnify the following persons, to the fullest extent permitted by law, from
and against all losses, claims, damages, or similar events:
-
(1)
-
our
general partner;
-
(2)
-
any
departing general partner;
-
(3)
-
any
person who is or was an affiliate of our general partner or any departing general partner;
-
(4)
-
any
person who is or was an officer, director, member, partner, fiduciary or trustee of any entity described in (1), (2) or (3) above;
-
(5)
-
any
person who is or was serving as a director, officer, member, partner, fiduciary or trustee of another person at the request of our general partner or any
departing general partner; or
-
(6)
-
any
person designated by our general partner.
Any
indemnification under these provisions will only be out of our assets. Unless it otherwise agrees, our general partner will not be personally liable for, or have any obligation to
contribute or
23
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lend
funds or assets to us to enable us to effectuate, indemnification. We may purchase insurance against liabilities asserted against and expenses incurred by persons for our activities, regardless
of whether we would have the power to indemnify the person against liabilities under the partnership agreement.
Reimbursement of Expenses
Our partnership agreement requires us to reimburse our general partner for all direct and indirect expenses it incurs or payments it makes on
our behalf and all other expenses allocable to us or otherwise incurred by our general partner in connection with operating our business. These expenses include salary, bonus, incentive compensation
and other amounts paid to persons who perform services for us or on our behalf on-site at our terminals and pipeline, and expenses allocated to our general partner by its affiliates. Our general
partner is entitled to determine in good faith the expenses that are allocable to us.
Books and Reports
Our general partner is required to keep appropriate books of our business at our principal offices. The books are maintained for both tax and
financial reporting purposes on an accrual basis. For tax and fiscal reporting purposes, our fiscal year ends on December 31.
We
will furnish or make available to record holders of common units, within 120 days after the close of each fiscal year, an annual report containing audited financial statements
and a report on those financial statements by our independent registered public accounting firm. Except for our fourth quarter, we will also furnish or make available summary financial information
within 90 days after the close of each quarter.
We
will furnish each record holder of a unit with information reasonably required for tax reporting purposes within 90 days after the close of each calendar year. This information
is expected to be furnished in summary form so that some complex calculations normally required of partners can be avoided. Our ability to furnish this summary information to unitholders will depend
on the cooperation of unitholders in supplying us with specific information. Every unitholder will receive information to assist him in determining its federal and state tax liability and filing its
federal and state income tax returns, regardless of whether it supplies us with information.
Right to Inspect Our Books and Records
The partnership agreement provides that a limited partner can, for a purpose reasonably related to its interest as a limited partner, upon
reasonable written demand stating the purpose of such demand and at its own expense, obtain:
-
(1)
-
a
current list of the name and last known address of each partner;
-
(2)
-
a
copy of our tax returns;
-
(3)
-
information
as to the amount of cash, and a description and statement of the agreed value of any other property or services, contributed or to be contributed by each
partner and the date on which each became a partner;
-
(4)
-
copies
of the partnership agreement, the certificate of limited partnership of the partnership, related amendments, and powers of attorney under which they have been
executed;
-
(5)
-
information
regarding the status of our business and financial condition; and
-
(6)
-
any
other information regarding our affairs as is just and reasonable.
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Our
general partner may, and intends to, keep confidential from the limited partners trade secrets or other information the disclosure of which our general partner believes in good faith
is not in our best interests, could damage us or our business or that we are required by law or by agreements with third parties to keep confidential.
Registration Rights
Under the partnership agreement, we have agreed to register for resale under the Securities Act of 1933, as amended (the "Securities Act") and
applicable state securities laws any common units or other partnership securities proposed to be sold by our general partner or any of its affiliates or their assignees if an exemption from the
registration requirements is not otherwise available. These registration rights continue for two years following any withdrawal or removal of TransMontaigne GP L.L.C. as our general partner. We
are obligated to pay all expenses incidental to the registration, excluding underwriting discounts and commissions.
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CASH DISTRIBUTION POLICY
General
All cash distributed to unitholders will be characterized as either "operating surplus" or "capital surplus." We distribute available cash from
operating surplus and available cash from capital surplus in different ways. We will treat all available cash distributed as coming from operating surplus until the sum of all available cash
distributed since the closing of our initial public offering equals the operating surplus as of the end of the fiscal quarter before that distribution. We will treat any amount distributed in excess
of operating surplus, regardless of its source, as capital surplus. We do not currently anticipate that we will make any distributions from capital surplus in the foreseeable future.
Distributions of Available Cash
Within approximately 45 days after the end of each quarter, we will distribute all of our
available
cash
, as defined in our partnership agreement, to unitholders of record on the applicable record date. Available cash generally means all cash on hand at the end of the
quarter:
-
-
less
the amount of cash reserves established by our general partner to:
-
-
provide for the proper conduct of our business;
-
-
comply with applicable law, any of our debt instruments, or other agreements; or
-
-
provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters;
-
-
plus,
if our general partner so determines, all or a portion of cash on hand on the date of
determination of available cash for the quarter.
How Distributions of Available Cash Will Be Made
We will make distributions of available cash for any quarter in the following manner:
-
-
First
, 98% to all unitholders, pro rata, and 2% to our general partner until we distribute for
each outstanding unit an amount equal to the minimum quarterly distribution for that quarter; and
-
-
Thereafter
, in the manner described under "Incentive Distribution Rights" below.
Incentive Distribution Rights
Incentive distribution rights are a non-voting limited partner interest that represent the right to receive an increasing percentage of
quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Our general partner currently holds the
incentive distribution rights, but may transfer these rights separately from its general partner interest, subject to restrictions in the partnership agreement.
The
following table illustrates the percentage allocations of the additional available cash from operating surplus between the unitholders and our general partner up to the various
target distribution levels. The amounts set forth under "Marginal percentage interest in distributions" are the percentage interests of our general partner and the unitholders in any available cash
from operating surplus we distribute up to and including the corresponding amount in the column "Total per unit quarterly distribution," until available cash from operating surplus we distribute
reaches the next target distribution level, if any. The percentage interests shown for the unitholders and our general partner for the minimum quarterly distribution are also applicable to quarterly
distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth below for our general
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partner
include its 2% general partner interest and assume our general partner has contributed any additional capital to maintain its 2% general partner interest and has not transferred its incentive
distribution rights.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marginal percentage
interest in
distributions
|
|
|
|
Total per unit
quarterly distribution
|
|
Unitholders
|
|
General partner
|
|
Minimum Quarterly Distribution
|
|
$0.40
|
|
|
98
|
%
|
|
2
|
%
|
First Target Distribution
|
|
up to $0.44
|
|
|
98
|
%
|
|
2
|
%
|
Second Target Distribution
|
|
above $0.44 up to $0.50
|
|
|
85
|
%
|
|
15
|
%
|
Third Target Distribution
|
|
above $0.50 up to $0.60
|
|
|
75
|
%
|
|
25
|
%
|
Thereafter
|
|
Above $0.60
|
|
|
50
|
%
|
|
50
|
%
|
There
is no guarantee that we will be able to pay the minimum quarterly distribution on the common units in any quarter, and we will be prohibited from making any distributions to
unitholders if it would cause an event of default, or an event of default is existing, under our senior secured credit facility.
Distribution from Capital Surplus
How Distributions from Capital Surplus Will Be Made
We will make distributions of available cash from capital surplus, if any, in the following manner:
-
-
First,
98% to all unitholders, pro rata, and 2% to our general partner, until we distribute for
each common unit that was issued in the initial public offering, an amount of available cash from capital surplus equal to the initial public offering price;
-
-
Second,
98% to the common unitholders, pro rata, and 2% to our general partner, until we
distribute for each common unit, an amount of available cash from capital surplus equal to any unpaid arrearages in payment of the minimum quarterly distribution on the common units; and
-
-
Thereafter,
we will make all distributions of available cash from capital surplus as if they
were from operating surplus.
The
preceding discussion is based on the assumptions that our general partner maintains its 2% general partner interest and that we do not issue additional classes of equity securities.
Effect of a Distribution from Capital Surplus
The partnership agreement treats a distribution of capital surplus as the repayment of the initial unit price from the partnership's initial
public offering, which is a return of capital. The initial public offering price less any distributions of capital surplus per unit is referred to as the "unrecovered capital." Each time a
distribution of capital surplus is made, the minimum quarterly distribution and the target distribution levels will be reduced in the same proportion as the corresponding reduction in the unrecovered
capital. Because distributions of capital surplus will reduce the minimum quarterly distribution, after any of these distributions are made, it may be easier for our general partner to receive
incentive distributions. However, any distribution of capital surplus before the unrecovered capital is reduced to zero cannot be applied to the payment of the minimum quarterly distribution or any
arrearages.
Once
we distribute capital surplus on a unit in an amount equal to the initial unit price, we will reduce the minimum quarterly distribution and the target distribution levels to zero.
We would then make all future distributions from operating surplus, with 50% being paid to the holders of common units and 50% to our general partner. The percentage interests shown for our general
partner include its 2% general partner interest and assume our general partner has not transferred the incentive distribution rights.
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Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels
In addition to adjusting the minimum quarterly distribution and target distribution levels to reflect a distribution of capital surplus, if we
combine our common units into fewer common units or subdivide our common units into a greater number of common units, we will proportionately adjust:
-
-
the minimum quarterly distribution;
-
-
target distribution levels; and
-
-
the unrecovered initial unit price.
For
example, if a two-for-one split of the common units should occur, the minimum quarterly distribution, the target distribution levels and the unrecovered capital would each be reduced
to 50% of its initial level. We will not make any adjustment by reason of the issuance of additional common units for cash or property.
In
addition, if legislation is enacted or if existing law is modified or interpreted by a governmental taxing authority, so that we become taxable as a corporation or otherwise subject
to taxation as an entity for federal, state or local income tax purposes, we will reduce the minimum quarterly distribution and the target distribution levels for each quarter by multiplying each
distribution level by a fraction, the numerator of which is available cash for that quarter and the denominator of which is the sum of available cash for that quarter plus our general partner's
estimate of our aggregate liability for the quarter for such income taxes payable by reason of such legislation or interpretation. To the extent that the actual tax liability differs from the
estimated tax liability for any quarter, the difference will be accounted for in subsequent quarters.
Distributions of Cash Upon Liquidation
If we dissolve in accordance with the partnership agreement, we will sell or otherwise dispose of our assets in a process called liquidation. We
will first apply the proceeds of liquidation to the payment of our creditors. We will distribute any remaining proceeds to our unitholders and our general partner, in accordance with their capital
account balances, as adjusted to reflect any gain or loss upon the sale or other disposition of our assets in liquidation.
Manner of Adjustments for Gain
The manner of the adjustment for gain is set forth in the partnership agreement. Upon liquidation, we will allocate any gain to the partners in
the following manner:
-
-
First
, to our general partner and the holders of common units who have negative balances in
their capital accounts to the extent of and in proportion to those negative balances;
-
-
Second
, 98% to the common unitholders, pro rata, and 2% to our general partner, until the
capital account for each common unit is equal to the sum of: (1) the unrecovered initial unit price; (2) the amount of the minimum quarterly distribution for the quarter during which our
liquidation occurs; and (3) any unpaid arrearages in payment of the minimum quarterly distribution;
-
-
Third
, 98% to all unitholders, pro rata, and 2% to our general partner, until we allocate under
this paragraph an amount per unit equal to: (1) the sum of the excess of the first target distribution per unit over the minimum quarterly distribution per unit for each quarter of our
existence; less (2) the cumulative amount per unit of any distributions of available cash from operating surplus in excess of the minimum quarterly distribution per unit that we distributed 98%
to the unitholders, pro rata, and 2% to our general partner, for each quarter of our existence;
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-
-
Fourth
, 85% to all unitholders, pro rata, and 15% to our general partner, until we allocate
under this paragraph an amount per unit equal to: (1) the sum of the excess of the second target distribution per unit over the first target distribution per unit for each quarter of our
existence; less (2) the cumulative amount per unit of any distributions of available cash from operating surplus in excess of the first target distribution per unit that we distributed 85% to
the unitholders, pro rata, and 15% to our general partner for each quarter of our existence;
-
-
Fifth
, 75% to all unitholders, pro rata, and 25% to our general partner, until we allocate
under this paragraph an amount per unit equal to: (1) the sum of the excess of the third target distribution per unit over the second target distribution per unit for each quarter of our
existence; less (2) the cumulative amount per unit of any distributions of available cash from operating surplus in excess of the second target distribution per unit that we distributed 75% to
the unitholders, pro rata, and 25% to our general partner for each quarter of our existence; and
-
-
Thereafter
, 50% to all unitholders, pro rata, and 50% to our general partner.
The
preceding discussion is based on the assumptions that our general partner maintains its 2% general partner interest and that we do not issue additional classes of equity securities.
Manner of Adjustments for Losses
Upon liquidation, we will generally allocate any loss to our general partner and the unitholders in the following
manner:
-
-
First
, 98% to the holders of common units in proportion to the positive balances in their
capital accounts and 2% to our general partner, until the capital accounts of the common unitholders have been reduced to zero; and
-
-
Thereafter
, 100% to our general partner.
Adjustments to Capital Accounts
We will make adjustments to capital accounts upon the issuance of additional common units. In doing so, we will allocate any unrealized and, for
tax purposes, unrecognized gain or loss resulting from the adjustments to the unitholders and our general partner in the same manner as we allocate gain or loss upon liquidation. In the event that we
make positive adjustments to the capital accounts upon the issuance of additional common units, we will allocate any later negative adjustments to the capital accounts resulting from the issuance of
additional units or upon our liquidation in a manner which results, to the extent possible, in our partners' capital account balances equaling the amount which they would have been if no earlier
positive adjustments to the capital accounts had been made.
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DESCRIPTION OF OUR DEBT SECURITIES
The following description, together with the additional information we include in any applicable prospectus supplement, summarizes certain
general terms and provisions of the debt securities that we may offer under this prospectus. When we offer to sell a particular series of debt securities, we will describe the specific terms of the
series in a supplement to this prospectus. We will also indicate in the supplement to what extent the general terms and provisions described in this prospectus apply to a particular series of debt
securities.
We
may issue debt securities either separately, or together with, or upon the conversion or exercise of or in exchange for, other securities described in this prospectus. Debt securities
may be our senior, senior subordinated or subordinated obligations and, unless otherwise specified in a supplement to this
prospectus, the debt securities will be our direct, unsecured obligations and may be issued in one or more series.
The
debt securities will be issued under an indenture between us and U.S. Bank National Association, as trustee. We have summarized select portions of the indenture below. The summary is
not complete. The form of the indenture has been filed as an exhibit to the registration statement and you should read the indenture for provisions that may be important to you. In the summary below,
we have included references to the section numbers of the indenture so that you can easily locate these provisions. Capitalized terms used in the summary and not defined herein have the meanings
specified in the indenture.
As
used in this section only, "we," "our," "us" or "the partnership" refer to TransMontaigne Partners L.P. and TLP Finance Corp. collectively, excluding the other subsidiaries of
TransMontaigne Partners L.P., unless expressly stated or the context otherwise requires. References to "TransMontaigne" and "TLP Finance" refer strictly to TransMontaigne Partners L.P.
and TLP Finance Corp., respectively. References to "our general partner" or the "general partner" refer to TransMontaigne GP L.L.C., the general partner of the partnership, which effectively
manages the business and affairs of the partnership.
General
The terms of each series of debt securities will be established by or pursuant to a resolution of the board of directors of our general partner
and set forth or determined in the manner provided in a resolution of the board of directors of our general partner, in an officer's certificate or by a supplemental indenture. (Section 2.2)
The particular terms of each series of debt securities will be described in a prospectus supplement relating to such series (including any pricing supplement or term sheet).
We
can issue an unlimited amount of debt securities under the indenture that may be in one or more series with the same or various maturities, at par, at a premium, or at a discount.
(Section 2.1) We will set forth in a prospectus supplement (including any pricing supplement or term sheet) relating to any series of debt securities being offered, the aggregate principal
amount and the following terms of the debt securities, if applicable:
-
-
whether TLP Finance will be a co-issuer of the debt securities;
-
-
the title and ranking of the debt securities (including the terms of any subordination provisions);
-
-
the price or prices (expressed as a percentage of the principal amount) at which we will sell the debt securities;
-
-
any limit on the aggregate principal amount of the debt securities;
-
-
the date or dates on which the principal of the securities of the series is payable;
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-
-
the rate or rates (which may be fixed or variable) per annum or the method used to determine the rate or rates (including any commodity,
commodity index, stock exchange index or financial index) at which the debt securities will bear interest, the date or dates from which interest will accrue, the date or dates on which interest will
commence and be payable and any regular record date for the interest payable on any interest payment date;
-
-
the place or places where principal of, and interest, if any, on the debt securities will be payable (and the method of such payment), where
the securities of such series may be surrendered for registration of transfer or exchange, and where notices and demands to us in respect of the debt securities may be delivered;
-
-
the period or periods within which, the price or prices at which and the terms and conditions upon which we may redeem the debt securities;
-
-
any obligation we have to redeem or purchase the debt securities pursuant to any sinking fund or analogous provisions or at the option of a
holder of debt securities and the period or periods within which, the price or prices at which and in the terms and conditions upon which securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
-
-
the dates on which and the price or prices at which we will repurchase debt securities at the option of the holders of debt securities and
other detailed terms and provisions of these repurchase obligations;
-
-
the denominations in which the debt securities will be issued, if other than denominations of $1,000 and any integral multiple thereof;
-
-
whether the debt securities will be issued in the form of certificated debt securities or global debt securities;
-
-
the portion of principal amount of the debt securities payable upon declaration of acceleration of the maturity date, if other than the
principal amount;
-
-
the currency of denomination of the debt securities, which may be United States Dollars or any foreign currency, and if such currency of
denomination is a composite currency, the agency or organization, if any, responsible for overseeing such composite currency;
-
-
the designation of the currency, currencies or currency units in which payment of principal of, premium and interest on the debt securities
will be made;
-
-
if payments of principal of, premium or interest on the debt securities will be made in one or more currencies or currency units other than
that or those in which the debt securities are denominated, the manner in which the exchange rate with respect to these payments will be determined;
-
-
the manner in which the amounts of payment of principal of, premium, if any, or interest on the debt securities will be determined, if these
amounts may be determined by reference to an index based on a currency or currencies other than that in which the debt securities are denominated or designated to be payable or by reference to a
commodity, commodity index, stock exchange index or financial index;
-
-
any provisions relating to any security provided for the debt securities;
-
-
any addition to, deletion of or change in the Events of Default described in this prospectus or in the indenture with respect to the debt
securities and any change in the acceleration provisions described in this prospectus or in the indenture with respect to the debt securities;
-
-
any addition to, deletion of or change in the covenants described in this prospectus or in the indenture with respect to the debt securities;
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-
-
any depositaries, interest rate calculation agents, exchange rate calculation agents or other agents with respect to the debt securities;
-
-
the provisions, if any, relating to conversion or exchange of any debt securities of such series, including if applicable, the conversion or
exchange price and period, provisions as to whether conversion or exchange will be mandatory, the events requiring an adjustment of the conversion or exchange price and provisions affecting conversion
or exchange;
-
-
any other terms of the debt securities, which may supplement, modify or delete any provision of the indenture as it applies to that series,
including any terms that may be required under applicable law or regulations or advisable in connection with the marketing of the securities; and
-
-
whether any of our direct or indirect subsidiaries will guarantee the debt securities of that series, including the terms of subordination, if
any, of such guarantees. (Section 2.2)
We
may issue debt securities that provide for an amount less than their stated principal amount to be due and payable upon declaration of acceleration of their maturity pursuant to the
terms of the indenture. We will provide you with information on the federal income tax considerations and other special considerations applicable to any of these debt securities in the applicable
prospectus supplement.
If
we denominate the purchase price of any of the debt securities in a foreign currency or currencies or a foreign currency unit or units, or if the principal of and any premium and
interest on any series of
debt securities is payable in a foreign currency or currencies or a foreign currency unit or units, we will provide you with information on the restrictions, elections, general tax considerations,
specific terms and other information with respect to that issue of debt securities and such foreign currency or currencies or foreign currency unit or units in the applicable prospectus supplement.
Transfer and Exchange
Each debt security will be represented by either one or more global securities registered in the name of The Depository Trust Company (the
"depositary") or a nominee of the depositary (we will refer to any debt security represented by a global debt security as a "book-entry debt security"), or a certificate issued in definitive
registered form (we will refer to any debt security represented by a certificated security as a "certificated debt security") as set forth in the applicable prospectus supplement. Except as set forth
under the heading "Global Securities" below, book-entry debt securities will not be issuable in certificated form.
Certificated Debt Securities.
You may transfer or exchange certificated debt securities at any office we maintain for this
purpose in accordance with
the terms of the indenture. (Section 2.4) No service charge will be made for any transfer or exchange of certificated debt securities, but we may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection with a transfer or exchange. (Section 2.7)
You
may effect the transfer of certificated debt securities and the right to receive the principal of, premium and interest on certificated debt securities only by surrendering the
certificate representing those certificated debt securities and either reissuance by us or the trustee of the certificate to the new holder or the issuance by us or the trustee of a new certificate to
the new holder.
Global Debt Securities and Book-Entry System.
Each global debt security representing book-entry debt securities will be
deposited with, or on behalf
of, the depositary, and registered in the name of the depositary or a nominee of the depositary. Please see "Global Securities."
Covenants
We will set forth in the applicable prospectus supplement any restrictive covenants applicable to any issue of debt securities.
(Article IV)
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No Protection in the Event of a Change of Control
Unless we state otherwise in the applicable prospectus supplement, the debt securities will not contain any provisions which may afford holders
of the debt securities protection in the event we have a change in control or in the event of a highly leveraged transaction (whether or not such transaction results in a change in control) which
could adversely affect holders of debt securities.
Consolidation, Merger and Sale of Assets
We may not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of our properties and assets to any
person (a "successor person") unless:
-
-
we are the surviving entity or the successor person (if other than TransMontaigne) is an entity organized and validly existing under the laws
of any U.S. domestic jurisdiction and expressly assumes our obligations on the debt securities and under the indenture;
provided
that, if TLP Finance is
a co-issuer, then it may not merge or consolidate with or into another entity other than a corporation satisfying such requirement for so long as TransMontaigne is not a corporation; and
-
-
immediately after giving effect to the transaction, no Default or Event of Default, shall have occurred and be continuing.
Notwithstanding
the above, any of our subsidiaries may consolidate with, merge into or transfer all or part of its properties to us. (Section 5.1)
Events of Default
"Event of Default" means with respect to any series of debt securities, any of the following:
-
-
default in the payment of any interest upon any debt security of that series when it becomes due and payable, and continuance of such default
for a period of 30 days (unless the entire amount of the payment is deposited by us with the trustee or with a paying agent prior to the expiration of the 30-day period);
-
-
default in the payment of principal of any security of that series at its maturity;
-
-
default in the performance or breach of any other covenant or warranty by us in the indenture (other than a covenant or warranty that has been
included in the indenture solely for the benefit of a series of debt securities other than that series), which default continues uncured for a period of 60 days after we receive written notice
from the trustee or TransMontaigne and the trustee receive written notice from the holders of not less than 25% in principal amount of the outstanding debt securities of that series as provided in the
indenture;
-
-
certain voluntary or involuntary events of bankruptcy, insolvency or reorganization of TransMontaigne;
-
-
any other Event of Default provided with respect to debt securities of that series that is described in the applicable prospectus supplement.
(Section 6.1)
No
Event of Default with respect to a particular series of debt securities (except as to certain events of bankruptcy, insolvency or reorganization) necessarily constitutes an Event of
Default with respect to any other series of debt securities. (Section 6.1) The occurrence of certain Events of Default or an acceleration under the indenture may constitute an event of default
under certain indebtedness of ours or our subsidiaries outstanding from time to time.
We
will provide the trustee written notice of any Default or Event of Default within 30 days of becoming aware of the occurrence of such Default or Event of Default, which notice
will describe in
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reasonable
detail the status of such Default or Event of Default and what action we are taking or propose to take in respect thereof. (Section 6.1)
If
an Event of Default with respect to debt securities of any series at the time outstanding occurs and is continuing, then the trustee or the holders of not less than 25% in principal
amount of the outstanding debt securities of that series may, by a notice in writing to us (and to the trustee if given by the holders), declare to be due and payable immediately the principal of (or,
if the debt securities of that series are discount securities, that portion of the principal amount as may be specified in the terms of that series) and accrued and unpaid interest, if any, on all
debt securities of that series. In the case of an Event of Default resulting from certain events of bankruptcy, insolvency or reorganization, the principal (or such specified amount) of and accrued
and unpaid interest, if any, on all outstanding debt securities will become and be immediately due and payable without any declaration or other act on the part of the trustee or any holder of
outstanding debt securities. At any time after a declaration of acceleration with respect to debt securities of any series has been made, but before a judgment or decree for payment of the money due
has been obtained by the trustee, the holders of a majority in principal amount of the outstanding debt securities of that series may rescind and annul the acceleration if all Events of Default, other
than the non-payment of accelerated principal and interest, if any, with respect to debt securities of that series, have been cured or waived as provided in the indenture. (Section 6.2) We
refer you to the prospectus supplement relating to any series of debt securities that are discount securities for the particular provisions relating to acceleration of a portion of the principal
amount of such discount securities upon the occurrence of an Event of Default.
The
indenture provides that the trustee will be under no obligation to exercise any of its rights or powers under the indenture unless the trustee receives indemnity satisfactory to it
against any cost, liability or expense which might be incurred by it in exercising such right or power. (Section 7.1(e)) Subject to certain rights of the trustee, the holders of a majority in
principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or
exercising any trust or power conferred on the trustee with respect to the debt securities of that series. (Section 6.12)
No
holder of any debt security of any series will have any right to institute any proceeding, judicial or otherwise, with respect to the indenture or for the appointment of a receiver or
trustee, or for any remedy under the indenture, unless:
-
-
that holder has previously given to the trustee written notice of a continuing Event of Default with respect to debt securities of that series;
and
-
-
the holders of not less than 25% in principal amount of the outstanding debt securities of that series have made written request, and offered
reasonable indemnity or security, to the trustee to institute the proceeding as trustee, and the trustee has not received from the holders of not less than a majority in principal amount of the
outstanding debt securities of that series a direction inconsistent with that request and has failed to institute the proceeding within 60 days. (Section 6.7)
Notwithstanding
any other provision in the indenture, the holder of any debt security will have an absolute and unconditional right to receive payment of the principal of, premium and
any interest on that debt security on or after the due dates expressed in that debt security and to institute suit for the enforcement of payment. (Section 6.8)
The
indenture requires us, within 120 days after the end of our fiscal year, to furnish to the trustee a statement as to compliance with the indenture. (Section 4.3) If a
Default or Event of Default occurs and is continuing with respect to the securities of any series and if it is known to a responsible officer of the trustee, the trustee shall mail to each holder of
the securities of that series notice of a Default or Event of Default within 90 days after it occurs. The indenture provides that the trustee may
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withhold
notice to the holders of debt securities of any series of any Default or Event of Default (except in payment on any debt securities of that series) with respect to debt securities of that
series if the trustee determines in good faith that withholding notice is in the interest of the holders of those debt securities. (Section 7.5)
Modification and Waiver
We and the trustee may modify and amend the indenture or the debt securities of any series without the consent of any holder of any debt
security:
-
-
to cure any ambiguity, defect or inconsistency;
-
-
to comply with covenants in the indenture described above under the heading "Consolidation, Merger and Sale of Assets";
-
-
to provide for uncertificated securities in addition to or in place of certificated securities;
-
-
to add guarantees with respect to debt securities of any series or secure debt securities of any series;
-
-
to surrender any of our rights or powers under the indenture;
-
-
to add covenants or events of default for the benefit of the holders of debt securities of any series;
-
-
to comply with the applicable procedures of the applicable depositary;
-
-
to make any change that does not adversely affect the rights of any holder of debt securities;
-
-
to provide for the issuance of and establish the form and terms and conditions of debt securities of any series as permitted by the indenture;
-
-
to effect the appointment of a successor trustee with respect to the debt securities of any series and to add to or change any of the
provisions of the indenture to provide for or facilitate administration by more than one trustee; or
-
-
to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act.
(Section 9.1)
We
may also modify and amend the indenture with the consent of the holders of at least a majority in principal amount of the outstanding debt securities of each series affected by the
modifications or amendments. We may not make any modification or amendment without the consent of the holders of each affected debt security then outstanding if that amendment
will:
-
-
reduce the amount of debt securities whose holders must consent to an amendment, supplement or waiver;
-
-
reduce the rate of or extend the time for payment of interest (including default interest) on any debt security;
-
-
reduce the principal of or premium on or change the fixed maturity of any debt security or reduce the amount of, or postpone the date fixed
for, the payment of any sinking fund or analogous obligation with respect to any series of debt securities;
-
-
reduce the principal amount of discount securities payable upon acceleration of maturity;
-
-
waive a default in the payment of the principal of, premium or interest on any debt security (except a rescission of acceleration of the debt
securities of any series by the holders of at least a majority in aggregate principal amount of the then outstanding debt securities of that series and a waiver of the payment default that resulted
from such acceleration);
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-
-
make the principal of or premium or interest on any debt security payable in currency other than that stated in the debt security;
-
-
make any change to certain provisions of the indenture relating to, among other things, the right of holders of debt securities to receive
payment of the principal of, premium and interest on those debt securities and to institute suit for the enforcement of any such payment and to waivers or amendments; or
-
-
waive a redemption payment with respect to any debt security. (Section 9.3)
Except
for certain specified provisions, the holders of at least a majority in principal amount of the outstanding debt securities of any series may on behalf of the holders of all debt
securities of that series waive our compliance with provisions of the indenture. (Section 9.2) The holders of a majority in principal amount of the outstanding debt securities of any series may
on behalf of the holders of all the debt securities of such series waive any past default under the indenture with respect to that series and its consequences, except a default in the payment of the
principal of, premium or any interest on any debt security of that series; provided, however, that the holders of a majority in principal amount of the
outstanding debt securities of any series may rescind an acceleration and its consequences, including any related payment default that resulted from the acceleration. (Section 6.13)
Defeasance of Debt Securities and Certain Covenants in Certain Circumstances
Legal Defeasance.
The indenture provides that, unless otherwise provided by the terms of the applicable series of debt
securities, we may be
discharged from any and all obligations in respect of the debt securities of any series (subject to certain exceptions). We will be so discharged upon the deposit with the trustee, in trust, of money
and/or U.S. government obligations or, in the case of debt securities denominated in a single currency other than U.S. Dollars, government obligations of the government that issued or caused to be
issued such currency, that, through the payment of interest and principal in accordance with their terms, will provide money or U.S. government obligations in an amount sufficient in the opinion of a
nationally recognized firm of independent registered public accounting firm or investment bank to pay and discharge each installment of principal, premium and interest on and any mandatory sinking
fund payments in respect of the debt securities of that series on the stated maturity of those payments in accordance with the terms of the indenture and those debt securities.
This
discharge may occur only if, among other things, we have delivered to the trustee an opinion of counsel stating that we have received from, or there has been published by, the
United States Internal Revenue Service a ruling or, since the date of execution of the indenture, there has been a change in the applicable United States federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm that, the holders of the debt securities of that series will not recognize income, gain or loss for United States federal income tax purposes
as a result of the deposit, defeasance and discharge and will be subject to United States federal income tax on the same amounts and in the same manner and at the same times as would have been the
case if the deposit, defeasance and discharge had not occurred. (Section 8.3)
Defeasance of Certain Covenants.
The indenture provides that, unless otherwise provided by the terms of the applicable series of
debt securities,
upon compliance with certain conditions:
-
-
we may omit to comply with the covenant described under the heading "Consolidation, Merger and Sale of Assets" and certain other covenants set
forth in the indenture, as well as any additional covenants which may be set forth in the applicable prospectus supplement; and
-
-
any omission to comply with those covenants will not constitute a Default or an Event of Default with respect to the debt securities of that
series ("covenant defeasance").
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The
conditions include:
-
-
depositing with the trustee money and/or U.S. government obligations or, in the case of debt securities denominated in a single currency other
than U.S. Dollars, government obligations of the government that issued or caused to be issued such currency, that, through the payment of interest and principal in accordance with their terms, will
provide money in an amount sufficient in the opinion of a nationally recognized firm of independent registered public accounting firm or investment bank to pay and discharge each installment of
principal of, premium and interest on and any mandatory sinking fund payments in respect of the debt securities of that series on the stated maturity of those payments in accordance with the terms of
the indenture and those debt securities; and
-
-
delivering to the trustee an opinion of counsel to the effect that the holders of the debt securities of that series will not recognize income,
gain or loss for United States federal income tax purposes as a result of the deposit and related covenant defeasance and will be subject to United States federal income tax on the same amounts and in
the same manner and at the same times as would have been the case if the deposit and related covenant defeasance had not occurred. (Section 8.4)
Covenant Defeasance and Events of Default.
In the event we exercise our option to effect covenant defeasance with respect to any
series of debt
securities and the debt securities of that series are declared due and payable because of the occurrence of any Event of Default, the amount of money and/or U.S. government obligations or foreign
government obligations on deposit with the trustee will be sufficient to pay amounts due on the debt securities of that series at the time of their stated maturity but may not be sufficient to pay
amounts due on the debt securities of that series at the time of the acceleration resulting from the Event of Default. However, we shall remain liable for those payments. (Section 8.4).
No Personal Liability of Directors, Officers, Employees or Unitholders
None of our general partner, any past, present or future directors, officers or employees of our general partner or unitholders, as such, will
have any liability for any of our obligations under the debt securities or the indenture or for any claim based on, or in respect or by reason of, such obligations or their creation. By accepting a
debt security, each holder waives and releases all such liability. This waiver and release is part of the consideration for the issue of the debt securities. However, this waiver and release may not
be effective to waive liabilities under U.S. federal securities laws, and it is the view of the SEC that such a waiver is against public policy.
Governing Law
The indenture and the debt securities, including any claim or controversy arising out of or relating to the indenture or the securities, will be
governed by the laws of the State of New York (without regard to the conflicts of laws provisions thereof other than Section 5-1401 of the General Obligations Law). (Section 10.10)
Subsidiary Guarantors
The partnership, as the parent company, has no independent assets or operations. The partnership's operations are conducted by its subsidiaries
through its operating company subsidiary, TransMontaigne Operating Company L.P. Each of TransMontaigne Operating Company L.P. and the partnership's other subsidiaries is a guarantor
(other than TLP Finance Corp., a 100% owned subsidiary of the partnership whose sole purpose is to act as co-issuer of any debt securities, and
subsidiaries that are minor). Each guarantor is a 100% owned subsidiary of the partnership. The guarantees registered under this registration statement will be full and unconditional and joint and
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several,
subject to certain automatic customary releases, including sale, disposition, or transfer of the capital stock or substantially all of the assets of a subsidiary guarantor, exercise of legal
defeasance option or covenant defeasance option, and designation of a subsidiary guarantor as unrestricted in accordance with the indenture. There are no significant restrictions on the ability of the
partnership or any guarantor to obtain funds from its subsidiaries by dividend or loan. None of the assets of the partnership or a guarantor represent restricted net assets pursuant to
Rule 4-08(e)(3) of Regulation S-X under the Securities Act.
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GLOBAL SECURITIES
Book-Entry, Delivery and Form
Unless we indicate differently in a prospectus supplement, the securities initially will be issued in book-entry form and represented by one or
more global notes or global securities (collectively, "global securities"). The global securities will be deposited with, or on behalf of, The Depository Trust Company, New York, New York ("DTC"), as
depositary, and registered in the name of Cede & Co., the nominee of DTC. Unless and until it is exchanged for individual certificates evidencing securities under the limited
circumstances described below, a global security may not be transferred except as a whole by the depositary to its nominee or by the nominee to the depositary, or by the depositary or its nominee to a
successor depositary or to a nominee of the successor depositary.
DTC
has advised us that it is:
-
-
a limited-purpose trust company organized under the New York Banking Law;
-
-
a "banking organization" within the meaning of the New York Banking Law;
-
-
a member of the Federal Reserve System;
-
-
a "clearing corporation" within the meaning of the New York Uniform Commercial Code; and
-
-
a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act.
DTC
holds securities that its participants deposit with DTC. DTC also facilitates the settlement among its participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in participants' accounts, thereby eliminating the need for physical movement of securities certificates. "Direct participants"
in DTC include securities brokers and dealers, including underwriters, banks, trust companies, clearing corporations and other organizations. DTC is a wholly owned subsidiary of The Depository
Trust & Clearing Corporation (the "DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered
clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others, which we sometimes refer to as indirect participants, that clear
through or maintain a custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.
Purchases
of securities under the DTC system must be made by or through direct participants, which will receive a credit for the securities on DTC's records. The ownership interest of
the actual purchaser of a security, which we sometimes refer to as a beneficial owner, is in turn recorded on the direct and indirect participants' records. Beneficial owners of securities will not
receive written confirmation from DTC of their purchases. However, beneficial owners are expected to receive written confirmations providing details of their transactions, as well as periodic
statements of their holdings, from the direct or indirect participants through which they purchased securities. Transfers of ownership interests in global securities are to be accomplished by entries
made on the books of participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests in the global securities, except under
the limited circumstances described below.
To
facilitate subsequent transfers, all global securities deposited by direct participants with DTC will be registered in the name of DTC's partnership nominee, Cede & Co.,
or such other name as may be requested by an authorized representative of DTC. The deposit of securities with DTC and their registration in the name of Cede & Co. or such other nominee
will not change the beneficial ownership of the securities. DTC has no knowledge of the actual beneficial owners of the securities. DTC's records reflect only the identity of the direct participants
to whose accounts the securities are credited,
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which
may or may not be the beneficial owners. The participants are responsible for keeping account of their holdings on behalf of their customers.
So
long as the securities are in book-entry form, you will receive payments and may transfer securities only through the facilities of the depositary and its direct and indirect
participants. We will maintain an office or agency in the location specified in the prospectus supplement for the applicable securities, where notices and demands in respect of the securities and the
indenture may be delivered to us and where certificated securities may be surrendered for payment, registration of transfer or exchange.
Conveyance
of notices and other communications by DTC to direct participants, by direct participants to indirect participants and by direct participants and indirect participants to
beneficial owners will be governed by arrangements among them, subject to any legal requirements in effect from time to time.
Redemption
notices will be sent to DTC. If less than all of the securities of a particular series are being redeemed, DTC's practice is to determine by lot the amount of the interest of
each direct participant in the securities of such series to be redeemed.
Neither
DTC nor Cede & Co. (or such other DTC nominee) will consent or vote with respect to the securities. Under its usual procedures, DTC will mail an omnibus proxy to us
as soon as possible after the record date. The omnibus proxy assigns the consenting or voting rights of Cede & Co. to those direct participants to whose accounts the securities of such
series are credited on the record date, identified in a listing attached to the omnibus proxy.
So
long as securities are in book-entry form, we will make payments on those securities to the depositary or its nominee, as the registered owner of such securities, by wire transfer of
immediately available funds. If securities are issued in definitive certificated form under the limited circumstances described below, we will have the option of making payments by check mailed to the
addresses of the persons entitled to payment or by wire transfer to bank accounts in the United States designated in writing to the applicable trustee or other designated party at least 15 days
before the applicable payment date by the persons entitled to payment, unless a shorter period is satisfactory to the applicable trustee or other designated party.
Redemption
proceeds, distributions and dividend payments on the securities will be made to Cede & Co., or such other nominee as may be requested by an authorized
representative of DTC. DTC's practice is to credit direct participants' accounts upon DTC's receipt of funds and corresponding detail information from us on the payment date in accordance with their
respective holdings shown on DTC records. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the
account of customers in bearer form or registered in "street name." Those payments will be the responsibility of participants and not of DTC or us, subject to any statutory or regulatory requirements
in effect from time to time. Payment of redemption proceeds, distributions and dividend payments to Cede & Co., or such other nominee as may be requested by an authorized representative
of DTC, is our responsibility, disbursement of payments to direct participants is the responsibility of DTC, and disbursement of payments to the beneficial owners is the responsibility of direct and
indirect participants.
Except
under the limited circumstances described below, purchasers of securities will not be entitled to have securities registered in their names and will not receive physical delivery
of securities. Accordingly, each beneficial owner must rely on the procedures of DTC and its participants to exercise any rights under the securities and the indenture.
The
laws of some jurisdictions may require that some purchasers of securities take physical delivery of securities in definitive form. Those laws may impair the ability to transfer or
pledge beneficial interests in securities.
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DTC
may discontinue providing its services as securities depositary with respect to the securities at any time by giving reasonable notice to us. Under such circumstances, in the event
that a successor depositary is not obtained, securities certificates are required to be printed and delivered.
As
noted above, beneficial owners of a particular series of securities generally will not receive certificates representing their ownership interests in those securities. However,
if:
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-
DTC notifies us that it is unwilling or unable to continue as a depositary for the global security or securities representing such series of
securities or if DTC ceases to be a clearing agency registered under the Exchange Act at a time when it is required to be registered and a successor depositary is not appointed within 90 days
of the notification to us or of our becoming aware of DTC's ceasing to be so registered, as the case may be;
-
-
we determine, in our sole discretion, not to have such securities represented by one or more global securities; or
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-
an Event of Default has occurred and is continuing with respect to such series of securities,
we
will prepare and deliver certificates for such securities in exchange for beneficial interests in the global securities. Any beneficial interest in a global security that is exchangeable under the
circumstances described in the preceding sentence will be exchangeable for securities in definitive certificated form registered in the names that the depositary directs. It is expected that these
directions will be based upon directions received by the depositary from its participants with respect to ownership of beneficial interests in the global securities.
We
have obtained the information in this section and elsewhere in this prospectus concerning DTC and DTC's book-entry system from sources that are believed to be reliable, but we take no
responsibility for the accuracy of this information.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
This section is a summary of the material tax consequences that may be relevant to prospective unitholders who are individual citizens or
residents of the United States and, unless otherwise noted in the following discussion, is the opinion of Latham & Watkins LLP, counsel to our general partner and us, insofar as it
relates to legal conclusions with respect to matters of U.S. federal income tax law. This section is based upon current provisions of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), existing and proposed Treasury regulations promulgated under the Internal Revenue Code (the "Treasury Regulations") and current administrative rulings and court decisions, all of which
are subject to change. Later changes in these authorities may cause the tax consequences to vary substantially from the consequences described below. Unless the context otherwise requires, references
in this section to "us" or "we" are references to TransMontaigne Partners L.P. and our operating subsidiaries.
The
following discussion does not comment on all federal income tax matters affecting us or our unitholders and does not describe the application of the alternative minimum tax that may
be applicable to certain unitholders. Moreover, the discussion focuses on unitholders who are individual citizens or residents of the United States and has only limited application to corporations,
estates, entities treated as partnerships for U.S. federal income tax purposes, trusts, nonresident aliens, U.S. expatriates and former citizens or long-term residents of the United States or other
unitholders subject to specialized tax treatment, such as banks, insurance companies and other financial institutions, tax-exempt institutions, foreign persons (including, without limitation,
controlled foreign corporations, passive foreign investment companies and foreign persons eligible for the benefits of an applicable income tax treaty with the United States), individual retirement
accounts (IRAs), real estate investment trusts (REITs) or mutual funds, dealers in securities or currencies, traders in securities, U.S. persons whose "functional currency" is not the U.S. dollar,
persons holding their common units as part of a "straddle," "hedge," "conversion transaction" or other risk reduction transaction, and persons deemed to sell their common units under the constructive
sale provisions of the Internal Revenue Code. In addition, the discussion only comments, to a limited extent, on state, local, and foreign tax consequences. Accordingly, we encourage each prospective
unitholder to consult its own tax advisor in analyzing the state, local and foreign tax consequences particular to him of the ownership or disposition of common units and potential changes in
applicable laws.
No
ruling has been requested from the IRS regarding our characterization as a partnership for tax purposes. Instead, we will rely on opinions of Latham & Watkins LLP.
Unlike a ruling, an opinion of counsel represents only that counsel's best legal judgment and does not bind the IRS or the courts. Accordingly, the opinions and statements made herein may not be
sustained by a court if contested by the IRS. Any contest of this sort with the IRS may materially and adversely impact the market for the common units and the prices at which common units trade. In
addition, the costs of any contest with the IRS, principally legal, accounting and related fees, will result in a reduction in cash available for distribution to our unitholders and our general
partner and thus will be borne indirectly by our unitholders and our general partner. Furthermore, the tax treatment of us, or of an investment in us, may be significantly modified by future
legislative or administrative changes or court decisions. Any modifications may or may not be retroactively applied.
All
statements as to matters of federal income tax law and legal conclusions with respect thereto, but not as to factual matters, contained in this section, unless otherwise noted, are
the opinion of Latham & Watkins LLP and are based on the accuracy of the representations made by us and our general partner.
Notwithstanding
the above, and for the reasons described below, Latham & Watkins LLP has not rendered an opinion with respect to the following specific federal income tax
issues: (i) the treatment of a unitholder whose common units are loaned to a short seller to cover a short sale of common units
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(please
read "Tax Consequences of Unit OwnershipTreatment of Short Sales"); (ii) whether all aspects of our method for allocating taxable income and losses is
permitted by existing Treasury Regulations (please read "Disposition of Common UnitsAllocations Between Transferors and Transferees"); and (iii) whether our method for
taking into account Section 743 adjustments is sustainable in certain cases (please read "Tax Consequences of Unit OwnershipSection 754 Election" and
"Uniformity of Common Units").
Partnership Status
A partnership is not a taxable entity and incurs no federal income tax liability. Instead, each partner of a partnership is required to take
into account its share of items of income, gain, loss and deduction of the partnership in computing its federal income tax liability, regardless of whether cash distributions are made to him by the
partnership. Distributions by a partnership to a partner are generally not taxable to the partnership or the partner unless the amount of cash distributed to him is in excess of the partner's adjusted
basis in its partnership interest. Section 7704 of the Internal Revenue Code provides that publicly traded partnerships will, as a general rule, be taxed as corporations. However, an exception,
referred to as the "Qualifying Income Exception," exists with respect to publicly traded partnerships of which 90% or more of the gross income for every taxable year consists of "qualifying income."
Qualifying income includes income and gains derived from the transportation, processing, storage and marketing of crude oil, natural gas and products thereof. Other types of qualifying income include
interest (other than from a financial business), dividends, gains from the sale of real property and gains from the sale or other disposition of capital assets held for the production of income that
otherwise constitutes qualifying income. We estimate that less than 2.6% of our current gross income is not qualifying income; however, this estimate could change from time to time. Based upon and
subject to this estimate, the factual representations made by us and our general partner and a review of the applicable legal authorities, Latham & Watkins LLP is of the opinion that at
least 90% of our current gross income constitutes qualifying income. The portion of our income that is qualifying income may change from time to time.
The
IRS has made no determination as to our status or the status of our operating subsidiaries for federal income tax purposes. Instead, we will rely on the opinion of Latham &
Watkins LLP on such matters. It is the opinion of Latham & Watkins LLP that, based upon the Internal Revenue Code, its regulations, published revenue rulings and court decisions
and the representations described below that:
-
-
We will be classified as a partnership for federal income tax purposes; and
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Each of our subsidiaries, other than TLP Finance Corp. and TLP Operating Finance Corp., will be treated as a partnership or will be disregarded
as an entity separate from us for federal income tax purposes.
In
rendering its opinion, Latham & Watkins LLP has relied on factual representations made by us and our general partner. The representations made by us and our general
partner upon which Latham & Watkins LLP has relied include:
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-
Neither we nor any of our subsidiaries, other than TLP Finance Corp. and TLP Operating Finance Corp., has elected or will elect to be treated,
or is otherwise treated, as a corporation for federal income tax purposes; and has elected or will elect to be treated as a corporation; and
-
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For each taxable year, more than 90% of our gross income has been and will be income of the type that Latham & Watkins LLP has
opined or will opine is "qualifying income" within the meaning of Section 7704(d) of the Internal Revenue Code.
We
believe that these representations have been true in the past and expect that these representations will continue to be true in the future.
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If
we fail to meet the Qualifying Income Exception, other than a failure that is determined by the IRS to be inadvertent and that is cured within a reasonable time after discovery (in
which case the IRS may also require us to make adjustments with respect to our unitholders or pay other amounts), we will be treated as if we had transferred all of our assets, subject to liabilities,
to a newly formed corporation,
on the first day of the year in which we fail to meet the Qualifying Income Exception, in return for stock in that corporation, and then distributed that stock to the unitholders in liquidation of
their interests in us. This deemed contribution and liquidation should be tax-free to unitholders and us so long as we, at that time, do not have liabilities in excess of the tax basis of our assets.
Thereafter, we would be treated as a corporation for federal income tax purposes.
If
we were treated as an association taxable as a corporation in any taxable year, either as a result of a failure to meet the Qualifying Income Exception or otherwise, our items of
income, gain, loss and deduction would be reflected only on our tax return rather than being passed through to our unitholders, and our net income would be taxed to us at corporate rates. In addition,
any distribution made to a unitholder would be treated as taxable dividend income, to the extent of our current and accumulated earnings and profits, or, in the absence of earnings and profits, a
nontaxable return of capital, to the extent of the unitholder's tax basis in its common units, or taxable capital gain, after the unitholder's tax basis in its common units is reduced to zero.
Accordingly, taxation as a corporation would result in a material reduction in a unitholder's cash flow and after-tax return and thus would likely result in a substantial reduction of the value of the
common units.
The discussion below is based on Latham & Watkins LLP's opinion that we will be classified as a partnership for federal income tax
purposes
.
Limited Partner Status
Unitholders of TransMontaigne Partners L.P. will be treated as limited partners of TransMontaigne Partners L.P. for federal income
tax purposes. Also, unitholders whose common units are held in street name or by a nominee and who have the right to direct the nominee in the exercise of all substantive rights attendant to the
ownership of their common units will be treated as limited partners of TransMontaigne Partners L.P. for federal income tax purposes.
A
beneficial owner of common units whose common units have been transferred to a short seller to complete a short sale would appear to lose its status as a partner with respect to those
common units for federal income tax purposes. Please read "Tax Consequences of Unit OwnershipTreatment of Short Sales."
Income,
gains, losses or deductions would not appear to be reportable by a unitholder who is not a partner for federal income tax purposes, and any cash distributions received by a
unitholder who is not a partner for federal income tax purposes would therefore appear to be fully taxable as ordinary income. These holders are urged to consult their tax advisors with respect to the
tax consequences to them of holding common units in TransMontaigne Partners L.P. The references to "unitholders" in the
discussion that follows are to persons who are treated as limited partners in TransMontaigne Partners L.P. for federal income tax purposes.
Tax Consequences of Unit Ownership
Flow-Through of Taxable Income.
Subject to the discussion below under "Entity-Level Collections," we will not pay any federal
income
tax. Instead, each unitholder will be required to report on its income tax return its share of our income, gains, losses and deductions without regard to whether we make cash distributions to him.
Consequently, we may allocate income to a unitholder even if it has not received a cash distribution. Each unitholder will be required to include in income its allocable share of our income, gains,
losses and deductions for our taxable year ending with or within its taxable year. Our taxable year ends on December 31.
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Treatment of Distributions.
Distributions by us to a unitholder generally will not be taxable to the unitholder for federal income tax
purposes,
except to the extent the amount of any such cash distribution exceeds its tax basis in its common units immediately before the distribution. Our cash distributions in excess of a unitholder's tax
basis generally will be considered to be gain from the sale or exchange of the common units, taxable in accordance with the rules described under "Disposition of Common Units." Any
reduction in a unitholder's share of our liabilities for which no partner, including the general partner, bears the economic risk of loss, known as "nonrecourse liabilities," will be treated as a
distribution by us of cash to that unitholder. To the extent our distributions cause a unitholder's "at-risk" amount to be less than zero at the end of any taxable year, it must recapture any losses
deducted in previous years. Please read "Limitations on Deductibility of Losses."
A
decrease in a unitholder's percentage interest in us because of our issuance of additional common units will decrease its share of our nonrecourse liabilities, and thus will result in
a corresponding deemed distribution of cash. This deemed distribution may constitute a non-pro rata distribution. A non-pro rata distribution of money or property may result in ordinary income to a
unitholder,
regardless of its tax basis in its common units, if the distribution reduces the unitholder's share of our "unrealized receivables," including depreciation, recapture and/or substantially appreciated
"inventory items," each as defined in the Internal Revenue Code, and collectively, "Section 751 Assets." To that extent, the unitholder will be treated as having been distributed its
proportionate share of the Section 751 Assets and then having exchanged those assets with us in return for the non-pro rata portion of the actual distribution made to him. This latter deemed
exchange will generally result in the unitholder's realization of ordinary income, which will equal the excess of (i) the non-pro rata portion of that distribution over (ii) the
unitholder's tax basis (often zero) for the share of Section 751 Assets deemed relinquished in the exchange.
Basis of Common Units.
A unitholder's initial tax basis for its common units will be the amount it paid for the common units plus its
share of our
nonrecourse liabilities. That basis will be increased by its share of our income and by any increases in its share of our nonrecourse liabilities. That basis will be decreased, but not below zero, by
distributions from us, by the unitholder's share of our losses, by any decreases in its share of our nonrecourse liabilities and by its share of our expenditures that are not deductible in computing
taxable income and are not required to be capitalized. A unitholder will have no share of our debt that is recourse to our general partner to the extent of the general partner's "net value" as defined
in Treasury Regulations promulgated under Section 752 of the Internal Revenue Code, but will have a share, generally based on its share of profits, of our nonrecourse liabilities. Please read
"Disposition of Common UnitsRecognition of Gain or Loss."
Limitations on Deductibility of Losses.
The deduction by a unitholder of its share of our losses will be limited to the tax basis in its
common units
and, in the case of an individual unitholder, estate, trust, or corporate unitholder (if more than 50% of the value of the corporate unitholder's stock is owned directly or indirectly by or for five
or fewer individuals or some tax-exempt organizations), to the amount for which the unitholder is considered to be "at risk" with respect to our activities, if that is less than its tax basis. A
common unitholder subject to these limitations must recapture losses deducted in previous years to the extent that distributions cause its at-risk amount to be less than zero at the end of any taxable
year. Losses disallowed to a unitholder or recaptured as a result of these limitations will carry forward and will be allowable as a deduction to the extent that its at-risk amount is subsequently
increased, provided such losses do not exceed such common unitholder's tax basis in its common units. Upon the taxable disposition of a unit, any gain recognized by a unitholder can be offset by
losses that were previously suspended by the at-risk limitation but may not be offset by losses suspended by the basis limitation. Any loss previously suspended by the at-risk limitation in excess of
that gain would no longer be utilizable.
In
general, a unitholder will be at risk to the extent of the tax basis of its common units, excluding any portion of that basis attributable to its share of our nonrecourse liabilities,
reduced by (i) any
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portion
of that basis representing amounts otherwise protected against loss because of a guarantee, stop loss agreement or other similar arrangement and (ii) any amount of money it borrows to
acquire or hold its common units, if the lender of those borrowed funds owns an interest in us, is related to the unitholder or can look only to the common units for repayment. A unitholder's at-risk
amount will increase or decrease as the tax basis of the unitholder's common units increases or decreases, other than tax basis increases or decreases attributable to increases or decreases in its
share of our nonrecourse liabilities.
In
addition to the basis and at-risk limitations on the deductibility of losses, the passive loss limitations generally provide that individuals, estates, trusts and some closely held
corporations and personal service corporations can deduct losses from passive activities, which are generally trade or business activities in which the taxpayer does not materially participate, only
to the extent of the taxpayer's income from those passive activities. The passive loss limitations are applied separately with respect to each publicly traded partnership. Consequently, any passive
losses we generate will only be available to offset our passive income generated in the future and will not be available to offset income from other passive activities or investments, including our
investments or a unitholder's investments in other publicly traded partnerships, or the unitholder's salary, active business or other income. Passive losses that are not deductible because they exceed
a unitholder's share of income we generate may be deducted in full when it disposes of its entire investment in us in a fully taxable transaction with an unrelated party. The passive loss limitations
are applied after other applicable limitations on deductions, including the at-risk rules and the basis limitation.
A
unitholder's share of our net income may be offset by any of our suspended passive losses, but it may not be offset by any other current or carryover losses from other passive
activities, including those attributable to other publicly traded partnerships.
Limitations on Interest Deductions.
The deductibility of a non-corporate taxpayer's "investment interest expense" is generally limited
to the amount
of that taxpayer's "net investment income." Investment interest expense includes:
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interest on indebtedness properly allocable to property held for investment;
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-
our interest expense attributed to portfolio income; and
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the portion of interest expense incurred to purchase or carry an interest in a passive activity to the extent attributable to portfolio income.
The
computation of a unitholder's investment interest expense will take into account interest on any margin account borrowing or other loan incurred to purchase or carry a unit. Net
investment income includes gross income from property held for investment and amounts treated as portfolio income under the passive loss rules, less deductible expenses, other than interest, directly
connected with the production of investment income, but generally does not include gains attributable to the disposition of property held for investment or (if applicable) qualified dividend income.
The IRS has indicated that the net passive income earned by a publicly traded partnership will be treated as investment income to its unitholders. In addition, the unitholder's share of our portfolio
income will be treated as investment income.
Entity-Level Collections.
If we are required or elect under applicable law to pay any federal, state, local or foreign income tax on
behalf of any
unitholder or our general partner or any former unitholder, we are authorized to pay those taxes from our funds. That payment, if made, will be treated as a distribution of cash to the unitholder on
whose behalf the payment was made. If the payment is made on behalf of a person whose identity cannot be determined, we are authorized to treat the payment as a distribution to all current
unitholders. We are authorized to amend our partnership agreement in the manner necessary to maintain uniformity of intrinsic tax characteristics of common units and to adjust later distributions, so
that after giving effect to these distributions, the priority and
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characterization
of distributions otherwise applicable under our partnership agreement is maintained as nearly as is practicable. Payments by us as described above could give rise to an overpayment of
tax on behalf of an individual unitholder in which event the unitholder would be required to file a claim in order to obtain a credit or refund.
Allocation of Income, Gain, Loss and Deduction.
In general, if we have a net profit, our items of income,
gain, loss and deduction will be allocated among our general partner and the unitholders in accordance with their percentage interests in us. At any time that incentive distributions are made to our
general partner, gross income will be allocated to the recipients to the extent of these distributions. If we have a net loss, that loss will be allocated first to our general partner and the
unitholders in accordance with their percentage interests in us to the extent of their positive capital accounts, as adjusted for certain items in accordance with applicable Treasury Regulations, and,
second, to our general partner.
Specified
items of our income, gain, loss and deduction will be allocated to account for any difference between the tax basis and fair market value of any property contributed to us that
exists at the time of such contribution, referred to in this discussion as the "Contributed Property." The effect of these allocations, referred to as Section 704(c) Allocations, to a
unitholder purchasing common units from us in an offering will be essentially the same as if the tax bases of our assets were equal to their fair market values at the time of the offering. In the
event we issue additional common units or engage in certain other transactions in the future, "reverse Section 704(c) Allocations," similar to the Section 704(c) Allocations described
above, will be made to the general partner and all of our unitholders immediately prior to such issuance or other transactions to account for the difference between the "book" basis for purposes of
maintaining capital accounts and the fair market value of all property held by us at the time of such issuance or future transaction. In addition, items of recapture income will be allocated to the
extent possible to the unitholder who was allocated the deduction giving rise to the treatment of that gain as recapture income in order to minimize the recognition of ordinary income by some
unitholders. Finally, although we do not expect that our operations will result in the creation of negative capital accounts (subject to certain adjustments), if negative capital accounts (subject to
certain adjustments) nevertheless result, items of our income and gain will be allocated in an amount and manner sufficient to eliminate such negative balance as quickly as possible.
An
allocation of items of our income, gain, loss or deduction, other than an allocation required by the Internal Revenue Code to eliminate the difference between a partner's "book"
capital account, credited with the fair market value of Contributed Property, and "tax" capital account, credited with the tax basis of Contributed Property, referred to in this discussion as the
"Book-Tax Disparity," will generally be given effect for federal income tax purposes in determining a partner's share of an item of income, gain, loss or deduction only if the allocation has
"substantial economic effect." In any other case, a partner's share of an item will be determined on the basis of its interest in us, which will be determined by taking into account all the facts and
circumstances, including:
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his relative contributions to us;
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the interests of all the partners in profits and losses;
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the interest of all the partners in cash flow; and
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the rights of all the partners to distributions of capital upon liquidation.
Latham &
Watkins LLP is of the opinion that, with the exception of the issues described in "Section 754 Election" and "Disposition of
Common UnitsAllocations Between Transferors and Transferees," allocations under our partnership agreement will be given effect for federal income tax purposes in determining a partner's
share of an item of income, gain, loss or deduction.
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Treatment of Short Sales.
A unitholder whose common units are loaned to a "short seller" to cover a short sale of common units may be
considered as
having disposed of those common units. If so, it would no longer be treated for tax purposes as a partner with respect to those common units during the period of the loan and may recognize gain or
loss from the disposition. As a result, during this period:
-
-
any of our income, gain, loss or deduction with respect to those common units would not be reportable by the unitholder;
-
-
any cash distributions received by the unitholder as to those common units would be fully taxable; and
-
-
while not entirely free from doubt, all of these distributions would appear to be ordinary income.
Because
there is no direct or indirect controlling authority on the issue relating to partnership interests, Latham & Watkins LLP has not rendered an opinion regarding the
tax treatment of a unitholder whose common units are loaned to a short seller to cover a short sale of common units; therefore, unitholders desiring to assure their status as partners and avoid the
risk of gain recognition from a loan to a short seller are urged to consult a tax advisor to discuss whether it is advisable to modify any applicable brokerage account agreements to prohibit their
brokers from borrowing and loaning their common units. The IRS has previously announced that it is studying issues relating to the tax treatment of short sales of partnership interests. Please also
read "Disposition of Common UnitsRecognition of Gain or Loss."
Tax Rates.
Currently, the highest marginal U.S. federal income tax rate applicable to ordinary income of individuals is 39.6% and the
highest
marginal U.S. federal income tax rate applicable to long-term capital gains (generally, capital gains on certain assets held for more than twelve months) of individuals is 20%. Such rates are subject
to change by new legislation at any time.
In
addition, a 3.8% Medicare tax (NIIT) is imposed on certain net investment income earned by individuals, estates and trusts. For these purposes, net investment income generally
includes a unitholder's allocable share of our income and gain realized by a unitholder from a sale of common units. In the case of an individual, the tax will be imposed on the lesser of
(i) the unitholder's net investment income or (ii) the amount by which the unitholder's modified adjusted gross income exceeds $250,000 (if the unitholder is married and filing jointly
or a surviving spouse), $125,000 (if the unitholder is married and filing separately) or $200,000 (in any other case). In the case of an estate or trust, the tax will be imposed on the lesser of
(i) undistributed net investment income, or (ii) the excess adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins
for such taxable year. The U.S. Department of the Treasury and the IRS have issued Treasury Regulations that provide guidance regarding the NIIT. Prospective unitholders are urged to consult with
their tax advisors as to the impact of the NIIT on an investment in our common units.
Section 754 Election.
We have made the election permitted by Section 754 of the Internal Revenue Code. That election is
irrevocable
without the consent of the IRS unless there is a constructive termination of the partnership. Please read "Disposition of Common UnitsConstructive Termination." The election
generally permits us to adjust a common unit purchaser's tax basis in our assets ("inside basis") under Section 743(b) of the Internal Revenue Code to reflect its purchase price. This election
does not apply with respect to a person who purchases common units directly from us. The Section 743(b) adjustment belongs to the purchaser and not to other unitholders. For purposes of this
discussion, the inside basis in our assets with respect to a unitholder will be considered to have two
components: (i) its share of our tax basis in our assets ("common basis") and (ii) its Section 743(b) adjustment to that basis.
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We
have adopted the remedial allocation method as to all our properties. Where the remedial allocation method is adopted, the Treasury Regulations under Section 743 of the
Internal Revenue Code require a portion of the Section 743(b) adjustment that is attributable to recovery property that is subject to depreciation under Section 168 of the Internal
Revenue Code and whose book basis is in excess of its tax basis to be depreciated over the remaining cost recovery period for the property's unamortized Book-Tax Disparity. Under Treasury Regulation
Section 1.167(c)-1(a)(6), a Section 743(b) adjustment attributable to property subject to depreciation under Section 167 of the Internal Revenue Code, rather than cost recovery
deductions under Section 168, is generally required to be depreciated using either the straight-line method or the 150% declining balance method.
Under
our partnership agreement, our general partner is authorized to take a position to preserve the uniformity of common units even if that position is not consistent with these and
any other Treasury Regulations. Please read "Uniformity of Common Units."
We
depreciate the portion of a Section 743(b) adjustment attributable to unrealized appreciation in the value of Contributed Property, to the extent of any unamortized Book-Tax
Disparity, using a rate of depreciation or amortization derived from the depreciation or amortization method and useful life applied to the property's unamortized Book-Tax Disparity, or treat that
portion as non-amortizable to the extent attributable to property that is not amortizable. This method is consistent with the methods employed by other publicly traded partnerships but is arguably
inconsistent with Treasury Regulation Section 1.167(c)-1(a)(6), which is not expected to directly apply to a material portion of our assets. To the extent this Section 743(b) adjustment
is attributable to appreciation in value in excess of the unamortized Book-Tax Disparity, we will apply the rules described in the Treasury Regulations and legislative history. If we determine that
this position cannot reasonably be taken, we may take a depreciation or amortization position under which all purchasers acquiring common units in the same month would receive depreciation or
amortization, whether attributable to common basis or a Section 743(b) adjustment, based upon the same applicable rate as if they had purchased a direct interest in our assets. This kind of
aggregate approach may result in lower annual depreciation or amortization deductions than would otherwise be allowable to some unitholders. Please read "Uniformity of Common Units." A
unitholder's tax basis for its common units is reduced by its share of our deductions (whether or not such deductions were claimed on an individual's income tax return) so that any position we take
that understates deductions will overstate the common unitholder's basis in its common units, which may cause the unitholder to understate gain or overstate loss on any sale of such common units.
Please read "Disposition of Common UnitsRecognition of Gain or Loss." Latham & Watkins LLP is unable to opine as to whether our method for taking into account
Section 743 adjustments is sustainable for property subject to depreciation under Section 167 of the Internal Revenue Code or if we use an aggregate approach as described above, as there
is no direct or indirect controlling authority addressing the validity of these
positions. Moreover, the IRS may challenge our position with respect to depreciating or amortizing the Section 743(b) adjustment we take to preserve the uniformity of the common units. If such
a challenge were sustained, the gain from the sale of common units might be increased without the benefit of additional deductions.
A
Section 754 election is advantageous if the transferee's tax basis in its common units is higher than the units' share of the aggregate tax basis of our assets immediately prior
to the transfer. Conversely, a Section 754 election is disadvantageous if the transferee's tax basis in its common units is lower than those units' share of the aggregate tax basis of our
assets immediately prior to the transfer. Thus, the fair market value of the common units may be affected either favorably or unfavorably by the election. A basis adjustment is required regardless of
whether a Section 754 election is made in the case of a transfer of an interest in us if we have a substantial built-in loss immediately after the transfer, or if we distribute property and
have a substantial basis reduction. Generally, a built-in loss or a basis reduction is substantial if it exceeds $250,000.
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The
calculations involved in the Section 754 election are complex and will be made on the basis of assumptions as to the value of our assets and other matters. For example, the
allocation of the Section 743(b) adjustment among our assets must be made in accordance with the Internal Revenue Code. The IRS could seek to reallocate some or all of any Section 743(b)
adjustment allocated by us to our tangible assets to goodwill instead. Goodwill, as an intangible asset, is generally nonamortizable or amortizable over a longer period of time or under a less
accelerated method than our tangible assets. We cannot assure you that the determinations we make will not be successfully challenged by the IRS and that the deductions resulting from them will not be
reduced or disallowed altogether. Should the IRS require a different basis adjustment to be made, and should, in our opinion, the expense of compliance exceed the benefit of the election, we may seek
permission from the IRS to revoke our Section 754 election. If permission is granted, a subsequent purchaser of common units may be allocated more income than it would have been allocated had
the election not been revoked.
Tax Treatment of Operations
Accounting Method and Taxable Year.
We use the year ending December 31 as our taxable year and the
accrual method of accounting for federal income tax purposes. Each unitholder will be required to include in income its share of our income, gain, loss and deduction for our taxable year ending within
or with its taxable year. In addition, a unitholder who has a taxable year ending on a date other than December 31 and who disposes of all of its common units following the close of our taxable
year but before the close of its taxable year must include its share of our income, gain, loss and deduction in income for its taxable year, with the result that it will be required to include in
income for its taxable year its share of more than twelve months of our income, gain, loss and deduction. Please read "Disposition of Common UnitsAllocations Between
Transferors and Transferees."
Tax Basis, Depreciation and Amortization.
The tax basis of our assets will be used for purposes of computing depreciation and cost
recovery
deductions and, ultimately, gain or loss on the disposition of these assets. The federal income tax burden associated with the difference between the fair market value of our assets and their tax
basis immediately prior to an offering will be borne by our unitholders holding interests in us prior to any such offering. Please read "Tax Consequences of Unit
OwnershipAllocation of Income, Gain, Loss and Deduction."
To
the extent allowable, we may elect to use the depreciation and cost recovery methods, including bonus depreciation to the extent available, that will result in the largest deductions
being taken in the early years after assets subject to these allowances are placed in service. Please read "Uniformity of Common Units." Property we subsequently acquire or construct may
be depreciated using accelerated methods permitted by the Internal Revenue Code.
If
we dispose of depreciable property by sale, foreclosure or otherwise, all or a portion of any gain, determined by reference to the amount of depreciation previously deducted and the
nature of the property, may be subject to the recapture rules and taxed as ordinary income rather than capital gain. Similarly, a unitholder who has taken cost recovery or depreciation deductions with
respect to property we own will likely be required to recapture some or all of those deductions as ordinary income upon a sale of its interest in us. Please read "Tax Consequences of Unit
OwnershipAllocation of Income, Gain, Loss and Deduction" and "Disposition of Common UnitsRecognition of Gain or Loss."
The
costs we incur in selling our common units (called "syndication expenses") must be capitalized and cannot be deducted currently, ratably or upon our termination. There are
uncertainties regarding the classification of costs as organization expenses, which may be amortized by us, and as syndication expenses, which may not be amortized by us. The underwriting discounts
and commissions we incur will be treated as syndication expenses.
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The federal income tax consequences of the ownership and disposition of common units will depend in part on our estimates of the relative fair
market values, and the initial tax bases, of our assets. Although we may from time to time consult with professional appraisers regarding valuation matters, we will make many of the relative fair
market value estimates ourselves. These estimates and determinations of basis are subject to challenge and will not be binding on the IRS or the courts. If the estimates of fair market value or
determinations of basis are later found to be incorrect, the character and amount of items of income, gain, loss or deductions previously reported by unitholders might change, and unitholders might be
required to adjust their tax liability for prior years and incur interest and penalties with respect to those adjustments.
Recognition of Gain or Loss.
Gain or loss will be recognized on a sale of common units equal to the difference between the amount
realized and the
unitholder's tax basis for the common units sold. A unitholder's amount realized will be measured by the sum of the cash or the fair market value of other property received by him plus its share of
our nonrecourse liabilities. Because the amount realized includes a unitholder's share of our nonrecourse liabilities, the gain recognized on the sale of common units could result in a tax liability
in excess of any cash received from the sale.
Prior
distributions from us that in the aggregate were in excess of cumulative net taxable income for a common unit and, therefore, decreased a unitholder's tax basis in that common unit
will, in effect, become taxable income if the common unit is sold at a price greater than the unitholder's tax basis in that common unit, even if the price received is less than its original cost.
Except
as noted below, gain or loss recognized by a unitholder, other than a "dealer" in common units, on the sale or exchange of a common unit will generally be taxable as capital gain
or loss. Capital gain recognized by an individual on the sale of common units held for more than twelve months will generally be taxed at the U.S. federal income tax rate applicable to long-term
capital gains. However, a portion of this gain or loss, which will likely be substantial, will be separately computed and taxed as ordinary income or loss under Section 751 of the Internal
Revenue Code to the extent attributable to assets giving rise to "unrealized receivables," including potential recapture items such as depreciation recapture, or to "inventory items" we own. Ordinary
income attributable to unrealized receivables and inventory items may exceed net taxable gain realized upon the sale of a unit and may be recognized even if there is a net taxable loss realized on the
sale of a unit. Thus, a unitholder may recognize both ordinary income and a capital loss upon a sale of common units. Capital losses may offset capital gains and no more than $3,000 of ordinary
income, in the case of individuals, and may only be used to offset capital gains in the case of corporations. Both ordinary income and capital gain recognized on a sale of common units may be subject
to the NIIT in certain circumstances. Please read "Tax Consequences of Unit OwnershipTax Rates."
The
IRS has ruled that a partner who acquires interests in a partnership in separate transactions must combine those interests and maintain a single adjusted tax basis for all those
interests. Upon a sale or other disposition of less than all of those interests, a portion of that tax basis must be allocated to the interests sold using an "equitable apportionment" method, which
generally means that the tax basis allocated to the interest sold equals an amount that bears the same relation to the partner's tax basis in its entire interest in the partnership as the value of the
interest sold bears to the value of the partner's entire interest in the partnership. Treasury Regulations under Section 1223 of the Internal Revenue Code allow a selling unitholder who can
identify common units transferred with an ascertainable
holding period to elect to use the actual holding period of the common units transferred. Thus, according to the ruling discussed above, a common unitholder will be unable to select high or low basis
common units to sell as would be the case with corporate stock, but, according to the
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Treasury
Regulations, it may designate specific common units sold for purposes of determining the holding period of common units transferred. A unitholder electing to use the actual holding period of
common units transferred must consistently use that identification method for all subsequent sales or exchanges of common units. A unitholder considering the purchase of additional common units or a
sale of common units purchased in separate transactions is urged to consult its tax advisor as to the possible consequences of this ruling and application of the Treasury Regulations.
Specific
provisions of the Internal Revenue Code affect the taxation of some financial products and securities, including partnership interests, by treating a taxpayer as having sold an
"appreciated" partnership interest, one in which gain would be recognized if it were sold, assigned or terminated at its fair market value, if the taxpayer or related persons enter(s)
into:
-
-
a short sale;
-
-
an offsetting notional principal contract; or
-
-
a futures or forward contract;
in
each case, with respect to the partnership interest or substantially identical property.
Moreover,
if a taxpayer has previously entered into a short sale, an offsetting notional principal contract or a futures or forward contract with respect to the partnership interest, the
taxpayer will be
treated as having sold that position if the taxpayer or a related person then acquires the partnership interest or substantially identical property. The Secretary of the Treasury is also authorized to
issue regulations that treat a taxpayer that enters into transactions or positions that have substantially the same effect as the preceding transactions as having constructively sold the financial
position.
Allocations Between Transferors and Transferees.
In general, our taxable income and losses will be determined annually, will be
prorated on a monthly
basis in proportion to the number of days in each month and will be subsequently apportioned among our unitholders in proportion to the number of common units owned by each of them as of the opening
of the applicable exchange on the first business day of the month, which we refer to in this prospectus as the "Allocation Date." However, gain or loss realized on a sale or other disposition of our
assets other than in the ordinary course of business will be allocated among our unitholders on the Allocation Date in the month in which that gain or loss is recognized. As a result, a unitholder
transferring common units may be allocated income, gain, loss and deduction realized after the date of transfer.
The
U.S. Department of Treasury and the IRS have issued Treasury Regulations that permit publicly traded partnerships to use a monthly simplifying convention that is similar to ours, but
they do not specifically authorize all aspects of the proration method we have adopted. Accordingly, Latham & Watkins LLP is unable to opine on the validity of this method of allocating
income and deductions between transferor and transferee unitholders. If this method is not allowed under the Treasury Regulations, our taxable income or losses might be reallocated among the
unitholders. We are authorized to revise our method of allocation between transferor and transferee unitholders, as well as unitholders whose interests vary during a taxable year.
A
unitholder who owns common units at any time during a quarter and who disposes of them prior to the record date set for a cash distribution for that quarter will be allocated items of
our income, gain, loss and deductions attributable to that quarter through the month of disposition but will not be entitled to receive that cash distribution.
Notification Requirements.
A unitholder who sells any of its common units is generally required to notify us in writing of that sale
within
30 days after the sale (or, if earlier, January 15 of the year following the sale). A purchaser of common units who purchases common units from another unitholder is also generally
required to notify us in writing of that purchase within 30 days after the purchase. Upon receiving such notifications, we are required to notify the IRS of that transaction and
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to
furnish specified information to the transferor and transferee. Failure to notify us of a purchase may, in some cases, lead to the imposition of penalties. However, these reporting requirements do
not apply to a sale by an individual who is a citizen of the United States and who effects the sale or exchange through a broker who will satisfy such requirements.
Constructive Termination.
We will be considered to have technically terminated our partnership for federal income tax purposes if there
is a sale or
exchange of 50% or more of the total interests in our capital and profits within a twelve-month period. For purposes of determining whether the 50% threshold has been met, multiple sales of the same
interest will be counted only once. Our technical termination would, among other things, result in the closing of our taxable year for all unitholders, which would result in us filing two tax returns
(and our unitholders could receive two Schedules K-1 if relief was not available, as described below) for one fiscal year and could result in a deferral of depreciation deductions allowable in
computing our taxable income. In the case of a unitholder reporting on a taxable year other than a fiscal year ending December 31, the closing of our taxable year may also result in more than
twelve months of our taxable income or loss being includable in its taxable income for the year of termination. Our termination currently would not affect our classification as a partnership for
federal income tax purposes, but instead we would be treated as a new partnership for federal income tax purposes. If treated as a new partnership, we must make new tax elections, including a new
election under Section 754 of the Internal Revenue Code, and could be subject to penalties if we are unable to determine that a termination occurred. The IRS has announced a publicly traded
partnership technical termination relief program whereby, if a publicly traded partnership that technically terminated requests publicly traded partnership technical termination relief and such relief
is granted by the IRS, among other things, the partnership will only have to provide one Schedule K-1 to unitholders for the year notwithstanding two partnership tax years.
Uniformity of Common Units.
Because we cannot match transferors and transferees of common units, we must maintain uniformity of the
economic and tax
characteristics of the common units to a purchaser of these common units. In the absence of uniformity, we may be unable to completely comply with a number of federal income tax requirements, both
statutory and regulatory. A lack of uniformity can result from a literal application of Treasury Regulation Section 1.167(c)-1(a)(6). Any non-uniformity could have a negative impact on the
value of the common units. Please read "Tax Consequences of Unit OwnershipSection 754 Election." We depreciate the portion of a Section 743(b) adjustment
attributable to unrealized appreciation in the value of Contributed Property, to the extent of any unamortized Book-Tax Disparity, using a rate of depreciation or amortization derived from the
depreciation or amortization method and useful life applied to the property's unamortized Book-Tax Disparity, or treat that portion as nonamortizable, to the extent attributable to property the common
basis of which is not amortizable, consistent with the Treasury Regulations under Section 743 of the Internal Revenue Code, even though that position may be inconsistent with Treasury
Regulation Section 1.167(c)-1(a)(6), which is not expected to directly apply to a material portion of our assets. Please read "Tax Consequences of Unit
OwnershipSection 754 Election." To the extent that the Section 743(b) adjustment is attributable to appreciation in value in
excess of the unamortized Book-Tax Disparity, we will apply the rules described in the Treasury Regulations and legislative history. If we determine that this position cannot reasonably be taken, we
may adopt a depreciation and amortization position under which all purchasers acquiring common units in the same month would receive depreciation and amortization deductions, whether attributable to
common basis or a Section 743(b) adjustment, based upon the same applicable rate as if they had purchased a direct interest in our assets. If this position is adopted, it may result in lower
annual depreciation and amortization deductions than would otherwise be allowable to some unitholders and risk the loss of depreciation and amortization deductions not taken in the year that these
deductions are otherwise allowable. This position will not be adopted if we determine that the loss of depreciation and amortization deductions will have a material adverse effect on the unitholders.
If we choose not to utilize this aggregate method, we may use any other reasonable depreciation and amortization method
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to
preserve the uniformity of the intrinsic tax characteristics of any common units that would not have a material adverse effect on the unitholders. In either case, and as stated above under
"Tax Consequences of Unit OwnershipSection 754 Election," Latham & Watkins LLP has not rendered an opinion with respect to these methods. Moreover, the
IRS may challenge any method of depreciating the Section 743(b) adjustment described in this paragraph. If this challenge were sustained, the uniformity of common units might be affected, and
the gain from the sale of common units might be increased without the benefit of additional deductions. Please read "Disposition of Common UnitsRecognition of Gain or Loss."
Tax-Exempt Organizations and Other Investors
Ownership of common units by employee benefit plans, other tax-exempt organizations, non-resident aliens, foreign corporations and other foreign
persons raises issues unique to those investors and, as described below to a limited extent, may have substantially adverse tax consequences to them. If you are a tax-exempt entity or a foreign
person, you should consult your tax advisor before investing in our common units. Employee benefit plans and most other organizations exempt from federal income tax, including IRAs and other
retirement plans, are subject to federal income tax on unrelated business taxable income. Virtually all of our income allocated to a unitholder that is a tax-exempt organization will be unrelated
business taxable income and will be taxable to it.
Non-resident
aliens and foreign corporations, trusts or estates that own common units will be considered to be engaged in business in the United States because of the ownership of common
units. As a consequence, they will be required to file federal tax returns to report their share of our income, gain, loss or deduction and pay federal income tax at regular rates on their share of
our net income or gain. Moreover, under rules applicable to publicly traded partnerships, our quarterly distribution to
foreign unitholders will be subject to withholding at the highest applicable effective tax rate. Each foreign unitholder must obtain a taxpayer identification number from the IRS and submit that
number to our transfer agent on a Form W-8BEN, W-8BEN-E or applicable substitute form in order to obtain credit for these withholding taxes. A change in applicable law may require us to change
these procedures.
In
addition, because a foreign corporation that owns common units will be treated as engaged in a U.S. trade or business, that corporation may be subject to the U.S. branch profits tax
at a rate of 30%, in addition to regular federal income tax, on its share of our earnings and profits, as adjusted for changes in the foreign corporation's "U.S. net equity," that is effectively
connected with the conduct of a U.S. trade or business. That tax may be reduced or eliminated by an income tax treaty between the United States and the country in which the foreign corporate
unitholder is a "qualified resident." In addition, this type of unitholder is subject to special information reporting requirements under Section 6038C of the Internal Revenue Code.
A
foreign unitholder who sells or otherwise disposes of a common unit will be subject to U.S. federal income tax on gain realized from the sale or disposition of that unit to the extent
the gain is effectively connected with a U.S. trade or business of the foreign unitholder. Under a ruling published by the IRS, interpreting the scope of "effectively connected income," a foreign
unitholder would be considered to be engaged in a trade or business in the United States by virtue of the U.S. activities of the partnership, and part or all of that unitholder's gain would be
effectively connected with that unitholder's indirect U.S. trade or business. Moreover, under the Foreign Investment in Real Property Tax Act, a foreign common unitholder (other than certain
"qualified foreign pension funds" (or an entity all of the interests of which are held by such a qualified foreign pension fund), which generally are entities or arrangements that are established and
regulated by foreign law to provide retirement or other pension benefits to employees, do not have a single participant or beneficiary that is entitled to more than 5% of the assets or income of the
entity or arrangement and are subject to certain preferential tax treatment under the laws of the applicable foreign country), generally will be subject to
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U.S.
federal income tax upon the sale or disposition of a common unit if (i) it owned (directly or constructively applying certain attribution rules) more than 5% of our common units at any
time during the five-year period ending on the date of such disposition and (ii) 50% or more of the fair market value of all of our assets consisted of U.S. real property interests at any time
during the shorter of the period during which such unitholder held the common units or the five-year period ending on the date of disposition. Currently, more than 50% of our assets consist of U.S.
real property interests and we do not expect that to change in the foreseeable future. Therefore, foreign unitholders may be subject to federal income tax on gain from the sale or disposition of their
common units. Recent changes in law may affect certain foreign unitholders. Please read "Administrative MattersAdditional Withholding Requirements."
Administrative Matters
Information Returns and Audit Procedures.
We intend to furnish to each unitholder, within 90 days after the close of each calendar
year,
specific tax information, including a Schedule K-1, which describes its share of our income, gain, loss and deduction for our preceding taxable year. In preparing this information, which will
not be reviewed by counsel, we will take various accounting and reporting positions, some of which have been mentioned earlier, to determine each unitholder's share of income, gain, loss and
deduction. We cannot assure you that those positions will yield a result that conforms to the requirements of the Internal Revenue Code, Treasury Regulations or administrative interpretations of the
IRS. Neither we nor Latham & Watkins LLP can assure prospective unitholders that the IRS will not successfully contend in court that those positions are impermissible. Any challenge by
the IRS could negatively affect the value of the common units.
The
IRS may audit our federal income tax information returns. Adjustments resulting from an IRS audit may require each unitholder to adjust a prior year's tax liability, and possibly may
result in an audit of its return. Any audit of a unitholder's return could result in adjustments not related to our returns as well as those related to our returns.
Partnerships
generally are treated as separate entities for purposes of federal tax audits, judicial review of administrative adjustments by the IRS and tax settlement proceedings. The
tax treatment of partnership items of income, gain, loss and deduction are determined in a partnership proceeding rather than in separate proceedings with the partners. The Internal Revenue Code
requires that one partner be designated as the "Tax Matters Partner" for these purposes. Our partnership agreement names our general partner as our Tax Matters Partner.
The
Tax Matters Partner has made and will make some elections on our behalf and on behalf of unitholders. In addition, the Tax Matters Partner can extend the statute of limitations for
assessment of tax deficiencies against unitholders for items in our returns. The Tax Matters Partner may bind a unitholder with less than a 1% profits interest in us to a settlement with the IRS
unless that unitholder elects, by filing a statement with the IRS, not to give that authority to the Tax Matters Partner. The Tax Matters Partner may seek judicial review, by which all the unitholders
are bound, of a final partnership administrative adjustment and, if the Tax Matters Partner fails to seek judicial review, judicial review may be sought by any unitholder having at least a 1% interest
in profits or by any group of unitholders having in the aggregate at least a 5% interest in profits. However, only one action for judicial review will go forward, and each unitholder with an interest
in the outcome may participate.
A
unitholder must file a statement with the IRS identifying the treatment of any item on its federal income tax return that is not consistent with the treatment of the item on our
return. Intentional or negligent disregard of this consistency requirement may subject a unitholder to substantial penalties.
Pursuant
to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it may assess and
collect any taxes
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(including
any applicable penalties and interest) resulting from such audit adjustment directly from us. Generally, we expect to elect to have our general partner and our unitholders take such audit
adjustment into account in accordance with their interests in us during the tax year under audit, but there can be no assurance that such election will be effective in all circumstances. If we are
unable to have our general partner and our unitholders take such audit adjustment into account in accordance with their interests in us during the tax year under audit, our current unitholders may
bear some or all of the tax liability resulting from such audit adjustment, even if such unitholders did not own common units in us during the tax year under audit. If, as a result of any such audit
adjustment, we are required to make payments of taxes, penalties and interest, our cash available for distribution to our unitholders might be substantially reduced. These rules are not applicable to
us for tax years beginning on or prior to December 31, 2017.
Additionally,
pursuant to the Bipartisan Budget Act of 2015, the Internal Revenue Code will no longer require that we designate a Tax Matters Partner. Instead, for tax years beginning
after December 31, 2017, we will be required to designate a partner, or other person, with a substantial presence in the United States as the partnership representative ("Partnership
Representative"). The Partnership Representative will have the sole authority to act on our behalf for purposes of, among other things, federal income tax audits and judicial review of administrative
adjustments by the IRS. If we do not make such a designation, the IRS can select any person as the Partnership Representative. We currently anticipate that we will designate our general partner as our
Partnership Representative. Further, any actions taken by us or by the Partnership Representative on our behalf with respect to, among other things, federal income tax audits and judicial review of
administrative adjustments by the IRS, will be binding on us and all of our unitholders. These rules are not applicable to us for tax years beginning on or prior to December 31, 2017.
Additional Withholding Requirements.
Withholding taxes may apply to certain types of payments made to "foreign financial institutions"
(as specially
defined in the Internal Revenue Code) and certain other foreign entities. Specifically, a 30% withholding tax may be imposed on interest, dividends and other fixed or determinable annual or periodical
gains, profits and income from sources within the United States ("FDAP Income"), or gross proceeds from the sale or other disposition of any property of a type that can produce interest or dividends
from sources within the United States ("Gross Proceeds")
paid to a foreign financial institution or to a "non-financial foreign entity" (as specially defined in the Internal Revenue Code), unless (i) the foreign financial institution undertakes
certain diligence and reporting, (ii) the non-financial foreign entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each
substantial U.S. owner or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial
institution and is subject to the diligence and reporting requirements in clause (i) above, it must enter into an agreement with the U.S. Treasury requiring, among other things, that it
undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to noncompliant
foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing
these requirements may be subject to different rules.
These
rules generally apply to payments of FDAP Income currently and generally will apply to payments of relevant Gross Proceeds made on or after January 1, 2019. Thus, to the
extent we have FDAP Income or have Gross Proceeds on or after January 1, 2019 that are not treated as effectively connected with a U.S. trade or business (please read "Tax-Exempt
Organizations and Other Investors"), unitholders who are foreign financial institutions or certain other foreign entities, or persons that hold their common units through such foreign entities, may be
subject to withholding on distributions they receive from us, or their distributive share of our income, pursuant to the rules described above.
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Prospective
investors should consult their own tax advisors regarding the potential application of these withholding provisions to their investment in our common units.
Nominee Reporting.
Persons who hold an interest in us as a nominee for another person are required to furnish to
us:
-
-
the name, address and taxpayer identification number of the beneficial owner and the nominee;
-
-
whether the beneficial owner is:
-
-
a person that is not a U.S. person;
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-
a foreign government, an international organization or any wholly owned agency or instrumentality of either of the foregoing; or
-
-
a tax-exempt entity;
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-
the amount and description of common units held, acquired or transferred for the beneficial owner; and
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-
specific information including the dates of acquisitions and transfers, means of acquisitions and transfers, and acquisition cost for
purchases, as well as the amount of net proceeds from dispositions.
Brokers
and financial institutions are required to furnish additional information, including whether they are U.S. persons and specific information on common units they acquire, hold or
transfer for their own account. A penalty of $250 per failure, up to a maximum of $3,000,000 per calendar year, is imposed by the Internal Revenue Code for failure to report that information to us.
The nominee is required to supply the beneficial owner of the common units with the information furnished to us.
Accuracy-Related Penalties.
An additional tax equal to 20% of the amount of any portion of an underpayment of tax that is attributable
to one or more
specified causes, including negligence or disregard of rules or regulations, substantial understatements of income tax and substantial valuation misstatements, is imposed by the Internal Revenue Code.
No penalty will be imposed, however, for any portion of an underpayment if it is shown that there was a reasonable cause for that portion and that the taxpayer acted in good faith regarding that
portion.
For
individuals, a substantial understatement of income tax in any taxable year exists if the amount of the understatement exceeds the greater of 10% of the tax required to be shown on
the return for the taxable year or $5,000 ($10,000 for most corporations). The amount of any understatement subject to penalty generally is reduced if any portion is attributable to a position adopted
on the return:
-
-
for which there is, or was, "substantial authority"; or
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-
as to which there is a reasonable basis and the pertinent facts of that position are disclosed on the return.
If
any item of income, gain, loss or deduction included in the distributive shares of unitholders might result in that kind of an "understatement" of income for which no "substantial
authority" exists, we must disclose the pertinent facts on our return. In addition, we will make a reasonable effort to furnish sufficient information for unitholders to make adequate disclosure on
their returns and to take other actions as may be appropriate to permit unitholders to avoid liability for this penalty. More stringent rules apply to "tax shelters," which we do not believe includes
us, or any of our investments, plans or arrangements.
A
substantial valuation misstatement exists if (a) the value of any property, or the adjusted basis of any property, claimed on a tax return is 150% or more of the amount
determined to be the correct amount of the valuation or adjusted basis, (b) the price for any property or services (or for the use of
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property)
claimed on any such return with respect to any transaction between persons described in Internal Revenue Code Section 482 is 200% or more (or 50% or less) of the amount determined
under Section 482 to be the correct amount of such price, or (c) the net Internal Revenue Code Section 482 transfer price adjustment for the taxable year exceeds the lesser of
$5 million or 10% of the taxpayer's gross receipts. No penalty is imposed unless the portion of the underpayment attributable to a substantial valuation misstatement exceeds $5,000 ($10,000 for
most corporations). If the valuation claimed on a return is 200% or more than the correct valuation or certain other thresholds are met, the penalty imposed increases to 40%. We do not anticipate
making any valuation misstatements.
In
addition, the 20% accuracy-related penalty also applies to any portion of an underpayment of tax that is attributable to transactions lacking economic substance. To the extent that
such transactions are not disclosed, the penalty imposed is increased to 40%. Additionally, there is no reasonable cause defense to the imposition of this penalty to such transactions.
Reportable Transactions.
If we were to engage in a "reportable transaction," we (and possibly you and others) would be required to make
a detailed
disclosure of the transaction to the IRS. A transaction may be a reportable transaction based upon any of several factors, including the fact that it is a type of tax avoidance transaction publicly
identified by the IRS as a "listed transaction" or that it produces certain kinds of losses for partnerships, individuals, S corporations, and trusts in excess of $2 million in any single year,
or $4 million in any combination of six successive tax years. Our participation in a reportable transaction could increase the likelihood that our federal income tax information return (and
possibly your tax return) would be audited by the IRS. Please read "Information Returns and Audit Procedures."
Moreover,
if we were to participate in a reportable transaction with a significant purpose to avoid or evade tax, or in any listed transaction, you may be subject to the following
additional consequences:
-
-
accuracy-related penalties with a broader scope, significantly narrower exceptions, and potentially greater amounts than described above at
"Accuracy-Related Penalties";
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-
for those persons otherwise entitled to deduct interest on federal tax deficiencies, nondeductibility of interest on any resulting tax
liability; and
-
-
in the case of a listed transaction, an extended statute of limitations.
We
do not expect to engage in any "reportable transactions."
Recent Legislative Developments
The present federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units may be modified by
administrative, legislative or judicial interpretation at any time. For example, from time to time, members of Congress and the President propose and consider substantive changes to the existing
federal income tax laws that affect publicly traded partnerships, including the elimination of partnership tax treatment for publicly traded partnerships. Any modification to the federal income tax
laws and interpretations thereof may or may not be retroactively applied and could make it more difficult or impossible to meet the exception for us to be treated as a partnership for federal income
tax purposes. Please read "Partnership Status." We are unable to predict whether any such changes will ultimately be enacted. However, it is possible that a change in law could affect us,
and any such changes could negatively impact the value of an investment in our common units.
State, Local, Foreign and Other Tax Considerations
In addition to federal income taxes, you will likely be subject to other taxes, such as state, local and foreign income taxes, unincorporated
business taxes, and estate, inheritance or intangible taxes that
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may
be imposed by the various jurisdictions in which we do business or own property or in which you are a resident. Although an analysis of those various taxes is not presented here, each prospective
unitholder should consider their potential impact on its investment in us. We currently own property or do business in many states. Several of these states impose a personal income tax on individuals;
certain of these states also impose an income tax on corporations and other entities. We may also own property or do business in other jurisdictions in the future. Although you may not be required to
file a return and pay taxes in some jurisdictions because your income from that jurisdiction falls below the filing and payment requirement, you will be required to file income tax returns and
to pay income taxes in many of these jurisdictions in which we do business or own property and may be subject to penalties for failure to comply with those requirements. In some jurisdictions, tax
losses may not produce a tax benefit in the year incurred and may not be available to offset income in subsequent taxable years. Some of the jurisdictions may require us, or we may elect, to withhold
a percentage of income from amounts to be distributed to a unitholder who is not a resident of the jurisdiction. Withholding, the
amount of which may be greater or less than a particular unitholder's income tax liability to the jurisdiction, generally does not relieve a nonresident unitholder from the obligation to file an
income tax return. Amounts withheld will be treated as if distributed to unitholders for purposes of determining the amounts distributed by us. Please read "Tax Consequences of Unit
OwnershipEntity-Level Collections." Based on current law and our estimate of our future operations, our general partner anticipates that any amounts required to be withheld will not be
material.
It is the responsibility of each unitholder to investigate the legal and tax consequences, under the laws of pertinent states, localities and foreign
jurisdictions, of its investment in us. Accordingly, each prospective unitholder is urged to consult its own tax counsel or other advisor with regard to those matters. Further, it is the
responsibility of each unitholder to file all state, local and foreign, as well as U.S. federal tax returns, that may be required of him. Latham & Watkins LLP has not rendered an opinion
on the state tax, local tax, alternative minimum tax or foreign tax consequences of an investment in us.
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INVESTMENT IN TRANSMONTAIGNE PARTNERS L.P. BY EMPLOYEE BENEFIT PLANS
An investment in us by an employee benefit plan is subject to additional considerations because the investments of these plans are subject to
the fiduciary responsibility and prohibited transaction provisions of ERISA and the restrictions imposed by Section 4975 of the Internal Revenue Code, and provisions under any federal, state,
local, foreign or other laws or regulations that are similar to such provisions of the Internal Revenue Code or ERISA (collectively, "Similar Laws"). For these purposes, the term "employee benefit
plan" includes, but is not limited to, qualified pension, profit-sharing and stock bonus plans, Keogh plans, simplified employee pension plans, tax deferred annuities or IRAs or other arrangements
established or maintained by an employer or employee organization, and entities whose underlying assets are considered to include "plan assets" of such plans, accounts and arrangements. Among other
things, consideration should be given to:
-
-
whether the investment is prudent under Section 404(a)(1)(B) of ERISA;
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-
whether in making the investment, that plan will satisfy the diversification requirements of Section 404(a)(l)(C) of ERISA; and
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whether the investment will result in recognition of unrelated business taxable income by the plan and, if so, the potential after-tax
investment return. Please read "Material Federal Income Tax ConsequencesTax-Exempt Organizations and Other Investors"; and
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-
whether making such an investment will comply with the delegation of control and prohibited transaction provisions of ERISA, the Internal
Revenue Code and any other applicable Similar Laws.
The
person with investment discretion with respect to the assets of an employee benefit plan, often called a fiduciary, should determine whether an investment in us is authorized by the
appropriate governing instrument and is a proper investment for the plan.
Section 406
of ERISA and Section 4975 of the Internal Revenue Code prohibit employee benefit plans, and IRAs that are not considered part of an employee benefit plan, from
engaging in specified transactions involving "plan assets" with parties that, with respect to the plan, are "parties in interest" under ERISA or "disqualified persons" under the Internal Revenue Code
unless an exemption is available. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under
ERISA and the Internal Revenue Code. In addition, the fiduciary of the ERISA plan that engaged in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and
the Internal Revenue Code.
In
addition to considering whether the purchase of common units is a prohibited transaction, a fiduciary should consider whether the plan will, by investing in us, be deemed to own an
undivided interest in our assets, with the result that our general partner would be a fiduciary of such plan and our operations would be subject to the regulatory restrictions of ERISA, including its
prohibited transaction
rules, as well as the prohibited transaction rules of the Internal Revenue Code, ERISA and any other applicable Similar Laws.
The
Department of Labor regulations provide guidance with respect to whether, in certain circumstances, the assets of an entity in which employee benefit plans acquire equity interests
would be deemed "plan assets." Under these regulations, an entity's assets would not be considered to be "plan assets" if, among other things:
-
(1)
-
the
equity interests acquired by the employee benefit plan are publicly offered securitiesi.e., the equity interests are widely held by 100 or
more investors independent of the issuer and each other, are freely transferable and are registered under certain provisions of the federal securities laws;
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-
(2)
-
the
entity is an "operating company,"i.e., it is primarily engaged in the production or sale of a product or service, other than the investment
of capital, either directly or through a majority-owned subsidiary or subsidiaries; or
-
(3)
-
there
is no significant investment by benefit plan investors, which is defined to mean that less than 25% of the value of each class of equity interest is held by
the employee benefit plans referred to above that are subject to ERISA and IRAs and other similar vehicles that are subject to Section 4975 of the Internal Revenue Code.
With
respect to an investment in our common units, we believe that our assets should not be considered "plan assets" under these regulations because it is expected that the investment
will satisfy the requirements in (1) and (2) above and may also satisfy the requirement in (3) above (although we do not monitor the level of investment by benefit plan investors
as required for compliance with (3)). With respect to an investment in our debt securities, our assets should not be considered "plan assets" under these regulations because such securities are not
equity securities or, even if they are considered equity securities under the Department of Labor regulations, it is expected that the investment will satisfy the requirements in (1) above and
may satisfy the requirements in (2) above.
In
light of the serious penalties imposed on persons who engage in prohibited transactions or other violations, plan fiduciaries contemplating a purchase of common units should consult
with their own counsel regarding the consequences under ERISA, the Internal Revenue Code and other Similar Laws. The sale of any common units and/or debt securities by or to any employee benefit plan
is in no respect a representation by us or any of our affiliates or representatives that such an investment meets all relevant legal requirements with respect to investments by such employee benefit
plans generally or any particular employee benefit plan, or that such an investment is appropriate for such employee benefit plans generally or any particular employee benefit plan.
By
purchase or acceptance of the common units and/or the debt securities, each purchaser and subsequent transferee of the common units and/or the debt securities will be deemed to have
represented and warranted that either (i) no portion of the assets used by such purchaser or transferee to acquire and hold the common units and/or the debt securities constitutes assets of any
employee benefit plan or (ii) the purchase and holding (and any conversion, if applicable) of the common units and/or the debt securities by such purchaser or transferee will not constitute a
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or similar violation under any applicable Similar Laws.
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PLAN OF DISTRIBUTION
We may sell the securities from time to time pursuant to underwritten public offerings, negotiated transactions, block trades or a combination
of these methods or through underwriters or dealers, through agents and/or directly to one or more purchasers. The securities may be distributed from time to time in one or more transactions
at:
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-
a fixed price or prices, which may be changed;
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-
market prices prevailing at the time of sale;
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-
prices related to such prevailing market prices; or
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-
negotiated prices.
Each
time that we sell securities covered by this prospectus, we will provide a prospectus supplement or supplements that will describe the method of distribution and set forth the terms
and conditions of the offering of such securities, including the offering price of the securities and the proceeds to us, if applicable.
Offers
to purchase the securities being offered by this prospectus may be solicited directly. Agents may also be designated to solicit offers to purchase the securities from time to
time. Any agent involved in the offer or sale of our securities will be identified in a prospectus supplement.
If
a dealer is utilized in the sale of the securities being offered by this prospectus, the securities will be sold to the dealer, as principal. The dealer may then resell the securities
to the public at varying prices to be determined by the dealer at the time of resale.
If
an underwriter is utilized in the sale of the securities being offered by this prospectus, an underwriting agreement will be executed with the underwriter at the time of sale and the
name of any underwriter will be provided in the prospectus supplement that the underwriter will use to make resales of the securities to the public. In connection with the sale of the securities, we
or the purchasers of securities for whom the underwriter may act as agent, may compensate the underwriter in the form of underwriting discounts or commissions. The underwriter may sell the securities
to or through dealers, and those dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for which they may
act as agent. Unless otherwise indicated in a prospectus supplement, an agent will be acting on a best-efforts basis and a dealer will purchase securities as a principal, and may then resell the
securities at varying prices to be determined by the dealer.
Any
compensation paid to underwriters, dealers or agents in connection with the offering of the securities, and any discounts, concessions or commissions allowed by underwriters to
participating
dealers will be provided in the applicable prospectus supplement. Underwriters, dealers and agents participating in the distribution of the securities may be deemed to be underwriters within the
meaning of the Securities Act, and any discounts and commissions received by them and any profit realized by them on resale of the securities may be deemed to be underwriting discounts and
commissions. We may enter into agreements to indemnify underwriters, dealers and agents against civil liabilities, including liabilities under the Securities Act, or to contribute to payments they may
be required to make in respect thereof and to reimburse those persons for certain expenses.
Any
common units will be listed on the New York Stock Exchange, but any other securities may or may not be listed on a national securities exchange. To facilitate the offering of
securities, certain persons participating in the offering may engage in transactions that stabilize, maintain or otherwise affect the price of the securities. This may include over-allotments or short
sales of the securities, which involve the sale by persons participating in the offering of more securities than were sold to them. In these circumstances, these persons would cover such
over-allotments or short positions by making
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purchases
in the open market or by exercising their over-allotment option, if any. In addition, these persons may stabilize or maintain the price of the securities by bidding for or purchasing
securities in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may be reclaimed if securities sold by them are repurchased in
connection with stabilization transactions. The effect of these transactions may be to stabilize or maintain the market price of the securities at a level above that which might otherwise prevail in
the open market. These transactions may be discontinued at any time.
If
indicated in the applicable prospectus supplement, underwriters or other persons acting as agents may be authorized to solicit offers by institutions or other suitable purchasers to
purchase the securities at the public offering price set forth in the prospectus supplement, pursuant to delayed delivery contracts providing for payment and delivery on the date or dates stated in
the prospectus supplement. These purchasers may include, among others, commercial and savings banks, insurance companies, pension funds, investment companies and educational and charitable
institutions. Delayed delivery contracts will be subject to the condition that the purchase of the securities covered by the delayed delivery contracts will not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which the purchaser is subject. The underwriters and agents will not have any responsibility with respect to the validity or performance of
these contracts.
We
may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act. In addition, we may enter into derivative
transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement so indicates, in
connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third
party may use securities pledged by us
or borrowed from us or others to settle those sales or to close out any related open borrowings of common units, and may use securities received from us in settlement of those derivatives to close out
any related open borrowings of common units. The third party in such sale transactions will be an underwriter and, if not identified in this prospectus, will be named in the applicable prospectus
supplement (or a post-effective amendment). In addition, we may otherwise loan or pledge securities to a financial institution or other third party that in turn may sell the securities short using
this prospectus and an applicable prospectus supplement. Such financial institution or other third party may transfer its economic short position to investors in our securities or in connection with a
concurrent offering of other securities.
The
specific terms of any lock-up provisions in respect of any given offering will be described in the applicable prospectus supplement.
In
compliance with the guidelines of the Financial Industry Regulatory Authority, Inc. ("FINRA") the maximum consideration or discount to be received by any FINRA member or
independent broker dealer may not exceed 8% of the aggregate proceeds of the offering.
The
underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business for which they receive compensation.
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LEGAL MATTERS
Latham & Watkins LLP, Houston, Texas, will pass upon certain legal matters relating to the issuance and sale of the securities
offered hereby on behalf of TransMontaigne Partners L.P. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that we will name in the
applicable prospectus supplement.
EXPERTS
The financial statements incorporated in this prospectus by reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 2015 and the effectiveness of TransMontaigne Partners L.P.'s internal control over financial reporting have been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their reports, which are incorporated herein by reference. Such financial statements have been so incorporated in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
The
financial statements of Battleground Oil Specialty Terminal Company LLC incorporated in this Prospectus by reference to TransMontaigne Partners L.P.'s Annual Report on
Form 10-K for the year ended December 31, 2015 have been so incorporated in reliance on the report (which contains an explanatory paragraph that emphasizes extensive relationships with
the Battleground Oil Specialty Terminal Company LLC's member and other affiliated companies) of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of
said firm as experts in auditing and accounting.
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TRANSMONTAIGNE PARTNERS L.P.
2,500,000 Common Units
Representing Limited Partner Interests
PROSPECTUS SUPPLEMENT
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Transmontaigne Partners L.P. Transmontaigne Partners L.P. Common Units Representing Limited Partner Interests (NYSE:TLP)
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