8-KSecurities & Listing

MPLX LP 8-K Report, Unregistered Securities Sale (Apr 3, 2017)

Filed April 3, 2017For Securities:MPLXMPLXP

Summary

MPLX LP (MPLX) filed an 8-K on April 3, 2017, reporting on the issuance of common units and the general partner's commensurate purchase of units to maintain its interest. During March 2017, MPLX issued 35,090 common units upon the vesting of phantom units under its incentive compensation plan. Additionally, 4,151,258 common units were issued under its at-the-market equity offering program. These issuances represent an expansion of MPLX's equity base.

Key Highlights

  • 1MPLX issued 35,090 common units due to the vesting of phantom units from its 2012 Incentive Compensation Plan.
  • 2MPLX issued 4,151,258 common units as part of its at-the-market equity offering program during March 2017.
  • 3MPLX GP LLC purchased 85,436 general partner units for $3,065,857 in cash on March 31, 2017.
  • 4The general partner's purchase was to maintain its 2% general partner interest in MPLX.
  • 5The issuance of general partner units was made in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933.
  • 6The total number of common units issued for phantom unit vesting and at-the-market program is 4,186,348.

Frequently Asked Questions

The issuance of common units, both from phantom unit vesting and the at-the-market program, increases the total number of outstanding units. For investors, this can potentially dilute earnings per unit, though it also indicates the company is utilizing its equity to fund operations or growth.

MPLX GP LLC, the general partner, purchased general partner units to maintain its 2% economic interest in MPLX. As common units were issued, the general partner needed to acquire additional units to keep its proportionate ownership percentage consistent.

The 35,090 units from phantom unit vesting are typically issued to employees or executives. The 4,151,258 units from the at-the-market program are generally sold in the open market to the public over time. The general partner units were purchased directly by MPLX GP LLC and were exempt from registration.

This means that the units were not registered with the SEC because the transaction was deemed to involve a limited number of sophisticated investors or private placements, thus not requiring the full registration process. For the general partner units, this indicates a private transaction between MPLX and its general partner.