WNRL IPO Preview Oct 2013

Western Refining Logistics, LP (ticker WNRL) is currently out on its IPO roadshow and looking to raise $250 million by selling 12.5 million common units (before the over-allotment) at a mid-point price of $20 with an indicated mid-point yield of 5.75%. They expect to price the deal Wednesday October 9.

WNRL is a fee-based, growth oriented Delaware limited partnership recently formed
by Western Refining Inc. (WNR) to own, operate, develop, and acquire terminals, storage tanks, pipelines, and other logistics assets. WNRL’s initial assets consist of pipeline and gathering assets and terminalling, transportation, and storage assets in the Southwestern portion of the U.S., including approximately 300 miles of pipelines and approximately 7.9 million barrels of active storage capacity. The assets are integral to the operations of WNR’s refineries located in El Paso, Texas, and near Gallup, New Mexico.

IMPORTANT: WNRL will provide investors with a K-1 (instead of a 1099-DIV), which makes WNRL appropriate for taxable accounts. Here is the key language from the “Tax Risks to Our Common Unitholders” section of the Prospectus (page 54) telling you that it does not really belong in an IRA (or any tax advantaged account):

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

Investment in our units by tax-exempt entities, such as individual retirement accounts (known as “IRAs”) and non-U.S. persons, raises issues unique to them. For example, virtually all of our income allocated to organizations exempt from federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income and will be taxable to them. Allocations and/or distributions to non-U.S. persons will be subject to withholding taxes imposed at the highest effective tax rate applicable to such non-U.S. persons, and each non-U.S. person will be required to file U.S. federal income tax returns and pay tax on their share 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. Please read “Material U.S. Federal Income Tax Consequences—Tax Exempt Organizations and Other Investors.”

Monthly Analytics subscribers, please keep an eye on your inbox for full analytics on WNRL.

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.

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