Westlake Chemical Partners, LP (ticker WLKP) is currently out on its IPO roadshow and looking to raise $225 million by selling 11.25 million common units (before the over-allotment) at a mid-point price of $20 with an indicated mid-point yield of 5.5%. They expect to price the deal Tuesday July 29.
WLKP is a Delaware limited partnership recently formed by Westlake Chemical Corp. (WLK) to operate, acquire and develop ethylene production facilities and related assets. Westlake is a vertically-integrated, international manufacturer and marketer of basic chemicals, polymers, and fabricated building products. WLKP’s business and operations are conducted through OpCo, a recently-formed partnership between Westlake and WLKP. At the consummation of this offering, WLKP’s assets will consist of a 10% limited partner interest in OpCo as well as the general partner interest in OpCo. Because WLKP owns OpCo’s general partner, it has control over all of OpCo’s assets and operations. OpCo’s assets will be comprised of three ethylene production facilities, which convert primarily ethane into ethylene, with an aggregate annual capacity of approximately 3.4 billion pounds and a 200-mile ethylene pipeline. OpCo will derive substantially all of its revenue from its ethylene production facilities. Ethylene is the world’s most widely used petrochemical in terms of volume and is a key building block used to produce a number of key derivatives, such as polyethylene (“PE”) and polyvinyl chloride (“PVC”), which are used in a wide variety of end markets including packaging, construction and transportation.
- Here is a link to the roadshow video (it will be removed the night the IPO prices): IPO Roadshow Video
- Here is a link to their SEC filings: WLKP SEC Filings
IMPORTANT: WLKP will provide investors with a K-1 (instead of a 1099-DIV), which makes WLKP appropriate for taxable accounts. Here is the key language from page 41 of the Prospectus 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 our common units that may result in adverse tax consequences to them.
Investment in common units by tax-exempt entities, such as employee benefit plans and 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 that are exempt from 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 at the highest applicable effective tax rate, and non-U.S. persons will be required to file U.S. federal 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.