Equity

6 Months Ended

Sep. 30, 2022

Partnership Equity

The Partnership’s equity consists of a 0.1% GP interest and a 99.9% limited partner interest, which consists of common units. Our GP has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its 0.1% GP interest. Our GP is not required to guarantee or pay any of our debts and obligations. At September 30, 2022, we owned 8.69% of our GP.

Suspension of Common Unit and Preferred Unit Distributions

The board of directors of our GP temporarily suspended all distributions (common unit distributions which began with the quarter ended December 31, 2020 and preferred unit distributions which began with the quarter ended March 31, 2021) in order to deleverage our balance sheet and meet the financial performance ratios set within the Indenture of the 2026 Senior Secured Notes, as discussed further in Note 6.

Class B Preferred Units

As of September 30, 2022, there were 12,585,642 of our Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) outstanding.

On July 1, 2022, the Class B Preferred Units distribution rate changed from a fixed rate of 9.00% to a floating rate of the three-month LIBOR interest rate (2.29% for the quarter ended September 30, 2022) plus a spread of 7.21%. For the quarter ended September 30, 2022, we did not declare or pay distributions to the holders of the Class B Preferred Units, thus the quarterly distribution for September 30, 2022 is $0.5936 and the cumulative distribution since suspension for each Class B Preferred Unit is $3.9686. In addition, the amount of cumulative but unpaid distributions shall continue to accumulate at the then applicable rate until all unpaid distributions have been paid in full. The total amount due as of September 30, 2022 is $53.2 million.

Class C Preferred Units

As of September 30, 2022, there were 1,800,000 of our Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) outstanding.

The current distribution rate for the Class C Preferred Units is 9.625% per year of the $25.00 liquidation preference per unit (equal to $2.41 per unit per year). For the quarter ended September 30, 2022, we did not declare or pay distributions to the holders of the Class C Preferred Units, thus the quarterly distribution for September 30, 2022 is $0.6016 and the cumulative distribution since suspension for each Class C Preferred Unit is $4.2109. In addition, the amount of cumulative but unpaid distributions shall continue to accumulate at the then applicable rate until all unpaid distributions have been paid in full. The total amount due as of September 30, 2022 is $8.1 million.

Class D Preferred Units

As of September 30, 2022, there were 600,000 preferred units (“Class D Preferred Units”) and warrants exercisable to purchase an aggregate of 25,500,000 common units outstanding.

The current distribution rate for the Class D Preferred Units increased on July 1, 2022 from 9.00% to 10.00% per year per unit (equal to $100.00 per every $1,000 in unit value per year), and includes an additional 1.50% rate increase due to us exceeding the adjusted total leverage ratio and due to a Class D distribution payment default, as defined within the amended and restated limited partnership agreement. For the quarter ended September 30, 2022, we did not declare or pay distributions to the holders of the Class D Preferred Units, thus the average quarterly distribution at September 30, 2022 is $29.92 and the average cumulative distribution since suspension for each Class D Preferred unit is $192.50. In addition, the amount of cumulative but unpaid distributions shall continue to accumulate at the then applicable rate until all unpaid distributions have been paid in full. The total amount due as of September 30, 2022 is $124.6 million.

Equity-Based Incentive Compensation

Our GP adopted a long-term incentive plan (“LTIP”), which allowed for the issuance of equity-based compensation. Our GP granted certain restricted units to employees and directors, which vest in tranches, subject to the continued service of

the recipients through the vesting date (the “Service Awards”). The Service Awards may also vest upon a change of control, at the discretion of the board of directors of our GP. No distributions accrue to or are paid on the Service Awards during the vesting period. The LTIP expired on May 10, 2021.

The following table summarizes the Service Award activity during the six months ended September 30, 2022:


	Number of Units	Weighted-Average Grant Date Fair Value Per Unit
Unvested Service Award units at March 31, 2022	2,188,800	$2.15

Units forfeited	(99,000)	$2.15
Unvested Service Award units at September 30, 2022	2,089,800	$2.15

As the LTIP expired on May 10, 2021, we had no common units available for grant for the six months ended September 30, 2022.

As of September 30, 2022, there are 1,393,075 unvested Service Award units which are expected to vest during the fiscal year ending March 31, 2023 and 696,725 unvested Service Award units which are expected to vest during the fiscal year ending March 31, 2024. Also, any current unvested Service Awards that are forfeited or canceled will not be available for future grants.

Service Awards are valued at the average of the high/low sales 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, 2022 and 2021, we recorded compensation expense related to Service Award units of $0.5 million and $1.0 million, respectively. During the six months ended September 30, 2022 and 2021, we recorded compensation expense related to Service Award units of $1.0 million and $2.0 million, respectively.

For the unvested Service Award units at September 30, 2022, we had estimated future expense of $2.0 million which we expect to record during the fiscal year ending March 31, 2023 and $1.2 million which we expect to record during the fiscal year ending March 31, 2024.