Summary
Enterprise Products Partners L.P. (EPD) announced on February 25, 2020, that Marquard & Bahls AG (M&B) has exercised its Liquidity Option to sell its stake in Oiltanking Holdings Americas, Inc. (OTA) back to EPD. This option stems from EPD's 2014 acquisition of a controlling interest in Oiltanking Partners, L.P., where EPD issued approximately 54.8 million common units to OTA as part of the transaction. The exercise of this option will result in EPD acquiring OTA's capital stock, and importantly, EPD expects to issue approximately 54.8 million newly issued EPD common units to M&B as consideration, rather than cash. This transaction is structured to effectively reacquire the units EPD previously issued to OTA, with the settlement anticipated for March 5, 2020. The primary financial impact will be the exchange of the previously recognized Liquidity Option liability for OTA's deferred income tax liabilities.
Key Highlights
- 1Marquard & Bahls AG (M&B) has exercised its "Liquidity Option" to sell its interest in Oiltanking Holdings Americas, Inc. (OTA) back to EPD.
- 2The exercise is a follow-on to EPD's 2014 acquisition of a controlling interest in Oiltanking Partners, L.P., which involved issuing EPD common units to OTA.
- 3EPD expects to settle the transaction by issuing approximately 54.8 million newly issued EPD common units to M&B, rather than cash.
- 4The settlement is scheduled for March 5, 2020.
- 5Upon settlement, EPD will effectively reacquire the 54.8 million EPD common units previously held by OTA and assume OTA's future income tax obligations related to these units and existing deferred tax liabilities.
- 6The transaction will be accounted for as the purchase of treasury units and the assumption of related deferred income taxes.
- 7The newly issued EPD common units will be considered "restricted securities" and M&B will have rights to request registration statements for resale.