GLOP IPO Preview May 2014

GasLog Partners, LP (ticker GLOP) is currently out on its IPO roadshow and looking to raise $168 million by selling 8.4 million common units (before the over-allotment) at a mid-point price of $20 with an indicated mid-point yield of 7.5%. They expect to price the deal Tuesday May 6 (this timing has been moved up to one day earlier than originally planned).

GLOP is a growth-oriented limited partnership formed to own, operate and acquire liquefied natural gas, or “LNG,” carriers engaged in LNG transportation under long-term charters (charters of five full years or more). GLOP’s initial fleet of three LNG carriers, which will have charter terms expiring in 2018 and 2019, will be contributed by GasLog Ltd. (ticker GLOG) which will control GLOP through its ownership of its General Partner. GasLog Ltd. was founded and is effectively controlled by its chairman, Peter G. Livanos, whose family’s shipping activities commenced more than 100 years ago.

IMPORTANT: GLOP will provide investors with a 1099-DIV, which makes GLOP appropriate for both taxable and any type of tax advantaged accounts. Yes, you can buy it in your IRA without having to worry about future UBTI issues. Here is the key language from page 20 of the F-1:

U.S. federal income tax considerations

Although we are organized as a partnership, we have elected to be treated as a corporation solely for U.S. federal income tax purposes. Consequently, all or a portion of the distributions you receive from us will constitute dividends for such purposes. The remaining portion of such distributions will be treated first as a non-taxable return of capital to the extent of your tax basis in your common units and, thereafter, as capital gain. We estimate that if you hold the common units that you purchase in this offering through the period ending December 31, 2017, the distributions you receive, on a cumulative basis, that will constitute dividends for U.S. federal income tax purposes will be approximately 70% of the total cash distributions you receive during that period. 

About Philip Trinder

President of MLP Protocol, investor, trader, and proponent of Master Limited Partnerships.
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