OCIR IPO Preview Sept 2013

OCI Resources, LP (ticker OCIR) is currently out on its IPO roadshow and looking to raise $100 million by selling 5.0 million common units (before the over-allotment) at a mid-point price of $20 with an indicated mid-point yield of 10.0%. They expect to price the deal Thursday September 12.

OCI Resources, LP is a Delaware limited partnership formed by OCI Holdings to operate the trona ore mining and soda ash production business of OCI Wyoming. OCIR owns a 50.5% controlling general partner interest and a 0.5% limited partner interest in OCI Wyoming, which is one of the largest and lowest cost producers of soda ash in the world, serving a global market from its facility in the Green River Basin of Wyoming. OCIR’s facility has been in operation for more than 50 years.

IMPORTANT: OCIR will provide investors with a K-1 (instead of a 1099-DIV), which makes OCIR appropriate for taxable accounts. Here is the key language from the “Tax Risks to Common Unitholders” section of the Prospectus (page 57) telling you that it does not really belong in an IRA (or any tax advantaged account):

Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them. 

Investments in common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts, or “IRAs”, and non-U.S. persons raises issues unique to them. For example, virtually all of our income allocated to organizations that are exempt from U.S. federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income and will be taxable to them. Distributions to non-U.S. persons will be reduced by withholding taxes, and non-U.S. persons will be required to file federal tax returns and pay tax on their shares of our taxable income. If you are a tax-exempt entity or a non-U.S. person, you should consult your tax advisor before investing in our common units.

Monthly Analytics subscribers, please keep an eye on your inbox next week for analytics on OCIR.

About Philip Trinder

President of MLP Protocol, investor, trader, and proponent of Master Limited Partnerships.
This entry was posted in MLP IPO Review, Roadshow Slides and tagged , , , , , , , , , . Bookmark the permalink.

2 Responses to OCIR IPO Preview Sept 2013

  1. Walter,

    NRP will have a public benchmark valuation for the part of the assets that they own. NRP could over time sell partial ownership pieces to OCIR in order to monetize their ownership, similar in concept to “drop-down” asset sales to MLPs.

    Cheers,
    Phil

  2. Curators52 says:

    Phil:

    How does NRP benefit from this monetization ?

    Walter Kass Cell: 917.941.3400 Fax: 888.870.4755 (apologies for brevity and spelling errors)

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