Equity and Other Investments

3 Months Ended

Mar. 31, 2013

Equity Method Investments And Joint Ventures [Abstract]

Equity and Other Investments

4. Equity and Other Investments

The recently acquired non-controlling equity interests in OCI Co and OCI LP are comprised of a 48.51% general partner interest in OCI LP and 20% of the common stock and 100% of the preferred stock in OCI Co. OCI Co owns a 1% limited partnership interest in OCI LP and has the right to receive a $14.5 million annual priority distribution before distributions are paid to other interests. The 80% common interest in OCI Co is owned by OCI Chemical Corporation and the 50.49% interest in OCI LP is owned by OCI Wyoming Holding Co., a subsidiary of OCI Chemical Corporation. The preferred stock is subject to certain liquidation preferences in the event of any liquidation, dissolution or winding up of OCI Co at $2,776 per share plus any accrued and unpaid preferred dividends. The liquidation value was $64.4 million at March 31, 2013.

OCI LP’s operations consist of the mining of trona ore, which, when refined, becomes soda ash. All soda ash is sold through an affiliated sales agent to various domestic and European customers and to American Natural Soda Ash Corporation for export primarily to Asia and Latin America. All mining and refining activities take place in one facility located in the Green River Basin, Wyoming. OCI Co’s only significant asset is its ownership interest in OCI LP.

The three investments were acquired from Anadarko Holding Company and its subsidiary, Big Island Trona Company for $292.5 million. The acquisition was funded through a $200 million term loan, the issuance of $76.5 million in equity (including a general partner contribution of $1.5 million), and $16 million in cash. The acquisition agreement provides for a net present value of up to $50 million in cumulative additional contingent consideration payable by the Partnership should certain performance criteria be met as defined in the purchase and sale agreement in any of the years 2013, 2014 or 2015.

The Partnership has engaged a valuation specialist to assist in allocating the purchase price to the equity interests acquired as well as to assist in identifying and valuing the assets and liabilities of OCI LP at the date of acquisition, including the land, mine, plant and equipment as well as identifiable intangible assets, if any. Included in preliminary fair value adjustments, based on certain initial estimates, is an increase in the Partnership’s proportionate fair value of property, plant and equipment of $39.8 million. Under the equity method of accounting, this amount is not reflected individually in the accompanying consolidated financial statements but is used to determine periodic charges to amounts reflected as income earned from the equity investments. For the quarter ended March 31, 2013, amortization of purchase adjustments of $0.5 million was recorded by the Partnership. Until the valuations are complete, the remainder of the excess of the purchase price over the estimated fair value of the equity interests acquired has been attributed to the value of the Partnership’s investment in preferred stock of OCI Co and goodwill; neither of which are subject to amortization. The allocation of the purchase price to the acquired equity interests and the underlying assets and liabilities is preliminary and subject to adjustment, which may be material.

The following summarized combined financial information for OCI LP and OCI Co as of March 31, 2013 and the results of their operations for the three-month period then ended were taken from the OCI-prepared unaudited financial statements.

	Three Months Ended March 31, 2013
	(In thousands) (Unaudited)
Net sales	$	78,060
Gross profit	$	20,944
Net income	$	18,349
Income allocation to NRP’s equity interests	$	7,596

	March 31, 2013
	(In thousands) (Unaudited)
Current assets	$	187,875
Property, plant and equipment		194,951
Other assets		44
Total assets	$	382,870
Current liabilities	$	35,963
Long term debt		47,000
Other liabilities		3,606
Capital		296,300
Total liabilities and capital	$	382,870
Net book value of NRP’s equity interests	$	157,447
Excess of NRP’s investment over net book value of NRP’s equity interests	$	141,173