What is the primary impact of this GP/IDR Restructuring for MPLX unitholders?

The primary impact for unitholders is the cancellation of Incentive Distribution Rights (IDRs) held by the general partner. IDRs typically entitle the general partner to an increasing share of cash distributions as unitholders reach certain distribution thresholds. Eliminating them aims to better align the interests of MPLX LP and its general partner, Marathon Petroleum Corporation, and could simplify future distribution policies and reduce potential conflicts.

Why is MPLX GP receiving 275 million common units?

The 275 million common units are being issued to MPLX GP as consideration for the cancellation of its Incentive Distribution Rights and the conversion of its 2% general partner interest into a non-economic interest. This is essentially the 'price' MPLX LP is paying to acquire the IDRs and simplify its capital structure.

Will the new common units issued to MPLX GP affect my fourth-quarter 2017 distributions?

MPLX GP has agreed to waive a portion of the fourth-quarter 2017 distributions attributable to the 275 million common units it will receive. This waiver ensures that MPLX GP's total distributions for the fourth quarter will not exceed what it would have received under the prior structure (without the IDR cancellation and GP interest conversion). Therefore, for common unitholders, this specific waiver should mitigate any immediate negative impact on Q4 2017 distributions due to the issuance of these new units.

What are the closing conditions for this restructuring?

The closing is subject to customary closing conditions. Crucially, it is also conditioned on the closing of the contribution to MPLX of MPLX Refining Logistics LLC and MPLX Fuels Distribution LLC, a transaction that was previously reported on November 13, 2017. Both events need to be completed for the GP/IDR Restructuring to take effect.

MPLX 8-K: Material Agreements, Securities & Listing & More

Summary

MPLX LP (MPLX) announced a significant restructuring of its general partner (GP) and incentive distribution rights (IDRs) on December 15, 2017. This strategic move involves cancelling the IDRs held by MPLX GP LLC and converting MPLX GP's 2% general partner interest into a non-economic interest. In exchange for these, MPLX GP will receive 275 million MPLX common units. This restructuring is designed to simplify MPLX's ownership structure and is expected to close on February 1, 2018, subject to customary conditions and the completion of a previously announced contribution of refining and fuels logistics assets. The elimination of IDRs is a crucial development for unitholders as it aims to align incentives between MPLX and its general partner, Marathon Petroleum Corporation (MPC), which indirectly owns MPLX GP. While MPLX GP will receive a substantial number of common units, it has agreed to waive certain fourth-quarter 2017 distributions related to these new units to ensure it receives no more than it would have under the previous structure. This transaction was approved by MPLX GP's conflicts committee and board of directors, with independent advisors engaged to evaluate the terms.

Key Highlights

1MPLX LP is restructuring its General Partner (GP) and Incentive Distribution Rights (IDRs) with its general partner, MPLX GP LLC.
2MPLX GP's IDRs will be cancelled, and its 2% general partner interest will be converted to a non-economic interest.
3In exchange, MPLX GP will receive 275,000,000 MPLX common units.
4The restructuring is expected to close on February 1, 2018, pending customary closing conditions and the closing of a related contribution agreement.
5MPLX GP has agreed to waive a portion of Q4 2017 distributions on the newly issued common units to match prior distribution levels.
6The terms of the agreement were approved by MPLX GP's conflicts committee and board of directors.
7The transaction is structured as an unregistered sale of equity securities under Section 4(a)(2) of the Securities Act of 1933.

MPLX LP 8-K Report, Material Agreement (Dec 19, 2017)

Summary

Key Highlights

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