Subsequent Events |
3 Months Ended |
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Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events We have evaluated events that have occurred after March 31, 2020 through the issuance of these unaudited consolidated financial statements. Any material subsequent events that occurred during this time have been properly recognized or disclosed in the unaudited consolidated financial statements and accompanying notes. Distribution On April 22, 2020, the Board declared a cash distribution of $0.4600 per limited partner unit for the three months ended March 31, 2020. The distribution will be paid on May 15, 2020 to unitholders of record as of May 5, 2020. Pursuant to the terms of the Partnership Interests Restructuring Agreement (defined below), our general partner or its assignee is entitled to any and all payments with respect to the IDRs that would have been payable to the general partner for the first quarter of 2020, regardless of whether the IDRs were outstanding on the record date for the distribution with respect to such quarter. In addition, the general partner or its assignee agreed to waive in full any and all of the rights, claims and interest in distributions for the first quarter of 2020 that it would otherwise be entitled to receive with respect to the 160,000,000 common units received pursuant to the Partnership Interests Restructuring Agreement. Purchase and Sale Agreement and Partnership Interests Restructuring Agreement On April 1, 2020, we closed the following transactions pursuant to the Purchase and Sale Agreement dated as of February 27, 2020 (the “Purchase and Sale Agreement”) by and among the Partnership, Triton and SPLC, Shell GOM Pipeline Company LLC (“SGOM”), Shell Chemical LP (“Shell Chemical”), and Equilon Enterprises LLC d/b/a Shell Oil Products US (“SOPUS”): i.We acquired 79% of the issued and outstanding membership interests in Mattox Pipeline Company LLC, from SGOM. The acquisition will be accounted for as a transaction between entities under common control on a prospective basis as an asset acquisition. As such, we will record the acquired equity interests at SPLC’s historical carrying value, which will be included in Equity method investments in our unaudited consolidated balance sheet as of June 30, 2020. ii.SOPUS and Shell Chemical transferred to Triton, as a designee of the Partnership, certain logistics assets at the Shell Norco Manufacturing Complex located in Norco, Louisiana, which are comprised of crude, chemicals, intermediate and finished product pipelines, storage tanks, docks, truck and rail racks and supporting infrastructure. Triton also entered into terminaling services agreements with SOPUS and Shell Chemical related to these logistic assets. The purchase of the assets combined with the terminaling services agreements will be accounted for as a failed sale leaseback under ASC Topic 842, Leases. As a result, the transaction will be treated as a financing arrangement in which financing receivables from SOPUS and Shell Chemical will be recognized in a contra-equity account on April 1, 2020. As such, no property, plant and equipment will be recognized. The Partnership will receive annual payments of $151 million which will be recognized as transportation, terminaling and storage services revenue, a reduction of the financing receivables and related interest income. The annual payments are subject to annual Consumer Price Index adjustments. On April 1, 2020, simultaneously with the closing of the transactions described above, we also closed the transactions contemplated by a Partnership Interests Restructuring Agreement with our general partner dated as of February 27, 2020 (the “Partnership Interests Restructuring Agreement”), which included the elimination of all the IDRs and the economic general partner interest in the Partnership and the amendment and restatement of our partnership agreement, effective as of April 1, 2020 (as so amended, the “Second Amended and Restated Partnership Agreement”). As consideration for the transferred assets described in clauses i. and ii. above, and the elimination of the IDRs and the economic general partner interest, our sponsor received 160,000,000 newly issued common units, plus 50,782,904 Series A perpetual convertible preferred units (the “Series A Preferred Units”) which are entitled to receive a quarterly distribution of $0.2363 per unit. Upon the closing of the transaction, the Partnership has 393,289,537 common units outstanding, of which SPLC’s wholly owned subsidiary, Shell Midstream LP Holdings LLC, owns 269,457,304 common units in the Partnership, representing an aggregate 68.5% limited partner interest. The Series A Preferred Units are a new class of security that rank senior to all common units with respect to distribution rights and rights upon liquidation. The Series A Preferred Units have voting rights, distribution rights and certain redemption rights, and are also convertible (at the option of the Partnership and at the option of the holder, in each case under certain circumstances) and are otherwise subject to the terms and conditions as set forth in the Second Amended and Restated Partnership Agreement. Pursuant to the Partnership Interests Restructuring Agreement, the general partner or its assignee, has agreed to waive a portion of the distributions that would otherwise be payable on the common units issued to the sponsor (in part as designee of the general partner) as part of the foregoing transactions in an amount of $20 million per quarter for four consecutive fiscal quarters, to begin with the distribution made with respect to the second quarter of 2020.
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