Equity

Partnership Equity

The Partnership’s equity consists of a 0.1% general partner interest and a 99.9% limited partner interest, which consists of common units. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its 0.1% general partner interest. Our general partner is not required to guarantee or pay any of our debts and obligations.

General Partner Contributions

In connection with the issuance of common units for the vesting of restricted units and the warrants that were exercised for common units during the six months ended September 30, 2018, we issued 2,271 notional units to our general partner for less than $0.1 million in order to maintain its 0.1% interest in us.

Equity Issuances

On August 24, 2016, we entered into an equity distribution agreement in connection with an at-the-market program (the “ATM Program”) pursuant to which we may issue and sell up to $200.0 million of common units. We did not issue any common units under the ATM Program during the six months ended September 30, 2018, and approximately $134.7 million remained available for sale under the ATM Program at September 30, 2018.

Our Distributions

The following table summarizes distributions declared on our common units during the last three quarters:



Date Declared	Record Date	Payment Date	Amount Per Unit		Amount Paid/Payable to Limited Partners		Amount Paid/Payable to General Partner
					(in thousands)		(in thousands)
April 24, 2018	May 7, 2018	May 15, 2018	$	0.3900	$	47,374	$	82
July 24, 2018	August 8, 2018	August 14, 2018	$	0.3900	$	47,600	$	82
October 23, 2018	November 8, 2018	November 14, 2018	$	0.3900	$	48,260	$	83

Class A Convertible Preferred Units

On April 21, 2016, we received net proceeds of $235.0 million (net of offering costs of $5.0 million) in connection with the issuance of 19,942,169 Class A Convertible Preferred Units (“Class A Preferred Units”) and 4,375,112 warrants.

We allocated the net proceeds on a relative fair value basis to the Class A Preferred Units, which includes the value of a beneficial conversion feature, and warrants. Accretion for the beneficial conversion feature, recorded as a deemed distribution, was $12.8 million and $4.0 million during the three months ended September 30, 2018 and 2017, respectively, and $21.8 million and $7.2 million during the six months ended September 30, 2018 and 2017, respectively.

The holders of the warrants may exercise one-third of the warrants from and after the first anniversary of the original issue date, another one-third of the warrants from and after the second anniversary and the final one-third of the warrants from and after the third anniversary. The warrants have an exercise price of $0.01 and an eight year term. We repurchased 1,229,575 unvested warrants for a total purchase price of $15.0 million on April 26, 2018. During the six months ended September 30, 2018, 228,797 warrants were exercised for common units and we received proceeds of less than $0.1 million. As of September 30, 2018, we had 1,458,371 warrants outstanding.

We pay a cumulative, quarterly distribution in arrears at an annual rate of 10.75% on the Class A Preferred Units to the extent declared by the board of directors of our general partner. The following table summarizes distributions declared on our Class A Preferred Units during the last three quarters:



		Amount Paid/Payable to Class A
Date Declared	Payment Date	Preferred Unitholders
		(in thousands)
April 24, 2018	May 15, 2018	$	6,449
July 24, 2018	August 14, 2018	$	6,449
October 23, 2018	November 14, 2018	$	6,449

Class B Preferred Units

On June 13, 2017, we issued 8,400,000 of our 9.00% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) representing limited partner interests at a price of $25.00 per unit for net proceeds of $202.7 million (net of the underwriters’ discount of $6.6 million and offering costs of $0.7 million).

The current distribution rate for the Class B Preferred Units is 9.0% per year of the $25.00 liquidation preference per unit (equal to $2.25 per unit per year). The following table summarizes distributions declared on our Class B Preferred Units during the last three quarters:



			Amount Paid to Class B
Date Declared	Record Date	Payment Date	Preferred Unitholders
			(in thousands)
March 19, 2018	April 2, 2018	April 16, 2018	$	4,725
June 19, 2018	July 2, 2018	July 16, 2018	$	4,725
September 12, 2018	October 1, 2018	October 15, 2018	$	4,725

The distribution amount paid on October 15, 2018 is included in accrued expenses and other payables in our unaudited condensed consolidated balance sheet at September 30, 2018.

Equity-Based Incentive Compensation

Our general partner has adopted a long-term incentive plan (“LTIP”), which allows for the issuance of equity-based compensation. Our general partner has granted certain restricted units to employees and directors, which vest in tranches, subject to the continued service of the recipients. The awards may also vest upon a change of control, at the discretion of the board of directors of our general partner. No distributions accrue to or are paid on the restricted units during the vesting period.

The restricted units include both awards that: (i) vest contingent on the continued service of the recipients through the vesting date (the “Service Awards”) and (ii) vest contingent both on the continued service of the recipients through the vesting date and also on the performance of our common units relative to other entities in the Alerian MLP Index (the “Index”) over specified periods of time (the “Performance Awards”).

The following table summarizes the Service Award activity during the six months ended September 30, 2018:



Unvested Service Award units at March 31, 2018	2,278,875
Units granted	1,820,176
Units vested and issued	(2,044,601	)
Units forfeited	(179,500	)
Unvested Service Award units at September 30, 2018	1,874,950

In connection with the vesting of certain restricted units during the six months ended September 30, 2018, we canceled 4,661 of the newly-vested common units in satisfaction of $0.1 million of employee tax liability paid by us. Pursuant to the terms of the LTIP, these canceled units are available for future grants under the LTIP.

The following table summarizes the scheduled vesting of our unvested Service Award units at September 30, 2018:



Fiscal Year Ending March 31,
2019 (six months)		598,925
2020		919,475
2021		355,050
2022		1,500
Total		1,874,950

Service Awards are valued at the closing price as of the grant date less the present value of the expected distribution stream over the vesting period using a risk-free interest rate. We record the expense for each Service Award on a straight-line basis over the requisite period for the entire award (that is, over the requisite service period of the last separately vesting portion of the award), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date value of the award that is vested at that date.

During the three months ended September 30, 2018 and 2017, we recorded compensation expense related to Service Award units of $2.4 million and $3.3 million, respectively. During the six months ended September 30, 2018 and 2017, we recorded compensation expense related to Service Awards units of $5.1 million and $8.6 million, respectively.

Of the restricted units granted and vested during the six months ended September 30, 2018, 1,745,801 units were granted as a bonus for performance during the fiscal year ended March 31, 2018. The total amount of these bonus payments were $20.4 million, of which we had accrued $6.3 million as of March 31, 2018.

The following table summarizes the estimated future expense we expect to record on the unvested Service Award units at September 30, 2018 (in thousands):



Fiscal Year Ending March 31,
2019 (six months)	$	6,396
2020	6,199
2021	1,988
2022	7
Total	$	14,590

During April 2015, our general partner granted Performance Award units to certain employees. The number of Performance Award units that will vest is contingent on the performance of our common units relative to the performance of the other entities in the Index. Performance will be calculated based on the return on our common units (including changes in the market price of the common units and distributions paid during the performance period) relative to the returns on the common units of the other entities in the Index. As of September 30, 2018, performance will be measured over the following periods:



Vesting Date of Tranche		Performance Period for Tranche
July 1, 2019		July 1, 2016 through June 30, 2019
July 1, 2020		July 1, 2017 through June 30, 2020

The following table summarizes the Performance Award activity during the six months ended September 30, 2018:



Unvested Performance Award units at March 31, 2018	917,000
Units forfeited	(415,500	)
Unvested Performance Award units at September 30, 2018	501,500

During the July 1, 2015 through June 30, 2018 performance period, the return on our common units was below the return of the 50th percentile of our peer companies in the Index. As a result, no Performance Award units vested on July 1, 2018 and performance units with the July 1, 2018 vesting date are considered to be forfeited.

The fair value of the Performance Awards is estimated using a Monte Carlo simulation at the grant date. We record the expense for each of the tranches of the Performance Awards on a straight-line basis over the period beginning with the grant date and ending with the vesting date of the tranche. Any Performance Awards that do not become earned Performance Awards will terminate, expire and otherwise be forfeited by the participants. During the three months ended September 30, 2018 and 2017, we recorded compensation expense related to Performance Award units of $0.6 million and $1.3 million, respectively. During the six months ended September 30, 2018 and 2017, we recorded compensation expense related to Performance Awards units of $1.8 million and $3.4 million, respectively.

The following table summarizes the estimated future expense we expect to record on the unvested Performance Award units at September 30, 2018 (in thousands):



Fiscal Year Ending March 31,
2019 (six months)	$	1,565
2020	1,738
2021	345
Total	$	3,648

The LTIP provides that units allocated to satisfy tax withholding obligations are not deemed to reduce availability for awards under the LTIP. Following a review of the LTIP, the Compensation Committee of the board of directors determined that units vested after July 1, 2016 were inadvertently counted as a reduction to the Partnership’s LTIP reserve. Accordingly, after making the adjustments as provided for in the LTIP, as of September 30, 2018, there are approximately 3.1 million units remaining available for issuance under the LTIP.