Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance
Sheet Arrangement of a Registrant.
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On March 26, 2019,
Westlake Chemicals Partner LP (the Partnership) agreed to purchase an additional 4.50% limited partner interest in Westlake Chemical OpCo LP (OpCo) on a fully diluted basis for approximately $201.4 million, which will
result in the Partnership owning an approximately 22.8% limited partner interest in OpCo on a fully diluted basis (such transaction, the OpCo Equity Purchase), pursuant to an Equity Purchase Agreement (the Equity Purchase
Agreement) by and among the Partnership, OpCo and WPT LLC, which is a subsidiary of Westlake Chemical Corporation (Westlake). The Partnership expects to fund the consideration for the OpCo Equity Purchase with the proceeds from the
Private Placement (as described in Item 3.02 of this Current Report on Form
8-K)
and borrowings under its senior unsecured revolving credit agreement with Westlake Chemical Finance Corporation, an affiliate of
Westlake (the MLP Revolver). OpCo intends to use the proceeds from the OpCo Equity Purchase to repay borrowings under its intercompany debt agreements with Westlake.
Each of the Partnership, OpCo, Westlake Chemical Partners GP LLC, which is the general partner of the Partnership (the General
Partner), WPT LLC and Westlake Chemical Finance Corporation is a direct or indirect subsidiary of Westlake. As a result, certain individuals, including certain officers and directors of Westlake and the General Partner, serve as officers
and/or directors of more than one of such other entities. In particular, Messrs. James Chao and Albert Chao serve as officers and directors of Westlake and the General Partner as well as certain of the other entities.
As more fully described in the Certain Relationships and Related Transactions, and Director Independence section of the
Partnerships Annual Report on Form
10-K
for the year ended December 31, 2018, which is incorporated herein by reference, Westlake owns and controls the General Partner and owns through its
wholly-owned subsidiaries 14,122,230 common units representing limited partner interests in the Partnership (Common Units) and the Partnerships incentive distribution rights. In addition, the General Partner owns a non-economic
general partner interest in the Partnership.
The terms of the OpCo Equity Purchase and the Affiliated Entitys (as defined in Item
3.02 of this Current Report on Form
8-K)
participation in the Private Placement were approved by the conflicts committee (the Conflicts Committee) of the board of directors (the Board)
of the General Partner. The Conflicts Committee, which consists entirely of independent directors, engaged an independent financial advisor and independent legal counsel in its review of such transactions.
A full description of the MLP Revolver can be found in the Partnerships Annual Report on Form
10-K
for the year ended December 31, 2018 under Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources, which is
incorporated herein by reference.
Item 3.02.
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Sale of Unregistered Units.
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On March 26, 2019, the Partnership agreed to issue and sell an aggregate of 2,940,818 Common Units in a private placement (the
Private Placement) exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the Securities Act). The purchasers in the Private Placement consist of certain unrelated institutional
investors and an entity for the benefit of certain family members (the Affiliated Entity and, together with the unaffiliated institutional investors, the Investors) of Messrs. Albert Chao and James Chao, each of whom serves
on the Board. The Common Units will be sold to the Investors in the Private Placement at $21.40 per Common Unit and are expected to result in net proceeds to the Partnership of approximately $62.0 million. The description in Item 2.01 of this
Current Report on Form
8-K
with respect to the Conflict Committees approval of the Affiliated Entitys participation in the Private Placement is incorporated herein by reference.
The Partnership also agreed to enter into a Registration Rights Agreement with the Investors in connection with the closing of the Private
Placement, pursuant to which, among other things, the Partnership will give the Investors certain rights to require the Partnership to file and maintain a registration statement with respect to the resale of the Common Units purchased in the Private
Placement.
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