Exhibit (a)(1)(A)
Offer to Purchase for Cash
by
Steel Partners Holdings L.P.
Through Its Wholly Owned Subsidiary
Steel Excel, Inc.
Up to $100 Million in Value of its Common Units
At a Purchase Price not Less than $40.00 nor Greater than $42.00 per Unit
The Offer, Proration Period and Withdrawal Rights will Expire at Midnight (at the end of the Day), Eastern Time,
on May 6, 2022, unless the Offer is Extended
Steel Partners Holdings L.P., a Delaware limited partnership (the “Company”), through its wholly owned subsidiary Steel Excel, Inc., a Delaware corporation (“Steel Excel” and, together with the Company, “we,” “us” or “our”), is offering to purchase for cash (the “Offer”), up to $100 million in value of our common units, no par value, upon the terms and subject to the conditions of this Offer to Purchase and the related Letter of Transmittal. The Offer will commence on April 7, 2022 and terminate at Midnight (at the end of the Day), Eastern Time, on May 6, 2022, or such later date to which the Company may extend the Offer (the “Expiration Date”). Unless otherwise indicated, all references to “units” are to our common units, no par value.
The Offer has been approved by the Board of Directors of the General Partner and the Board of Directors of Steel Excel. Steel Excel will purchase the units accepted for payment using its own funds. WHILE FOR SIMPLICITY WE USE THE TERMS “WE” AND “US” THROUGHOUT THIS DOCUMENT, INCLUDING IN SOME INSTANCES WITH RESPECT TO THE PURCHASE AND PAYMENT FOR SHARES, YOU SHOULD UNDERSTAND THAT STEEL EXCEL WILL BE PAYING FOR AND ACQUIRING THE SHARES THAT ARE TENDERED IN THE OFFER.
On the terms and subject to the conditions of the Offer, we will determine the single per unit price, not less than $40.00 nor greater than $42.00 per unit, net to the seller in cash, less any applicable withholding taxes and without interest, that we will pay for units properly tendered and not properly withdrawn in the Offer, taking into account the total number of units so tendered and the prices specified by the tendering unitholders. We will select the lowest purchase price within the indicated range that will enable us to purchase $100 million in value of units pursuant to the Offer, or such fewer number of units as are properly tendered and not properly withdrawn prior to the Expiration Date, at a price not less than $40.00 nor greater than $42.00 per unit. We refer to the purchase price we select within the range indicated for our units as the “Purchase Price.”
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF UNITS BEING TENDERED AND IS NOT CONDITIONED UPON FINANCING. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN CUSTOMARY CONDITIONS. SEE SECTION 6.
All units that we acquire in the Offer will be acquired at the Purchase Price, regardless of whether the unitholder tendered at a lower price. We will purchase only units properly tendered at prices at or below the applicable Purchase Price and not properly withdrawn prior to the Expiration Date of the Offer. However, because of the “odd lot” priority and proration provisions described in this Offer to Purchase, we may not purchase all of the units tendered even if unitholders tendered at or below the Purchase Price, if the Offer is oversubscribed. We will not purchase units tendered at prices greater than the Purchase Price. Units tendered but not purchased in the Offer will be returned to the tendering unitholders at our expense promptly after the Expiration Date.
Our common units are listed and traded on the New York Stock Exchange (“NYSE”) under the symbol “SPLP.” We publicly announced our intention to commence this Offer on April 7, 2022. On April 6, 2022, the last full trading day before the announcement of the Offer, the reported closing price of the units on the NYSE was $40.54 per unit. Before deciding whether to tender units, unitholders are urged to obtain current market quotations for the units.
A detailed discussion of this Offer is contained in this Offer to Purchase. Unitholders are strongly encouraged to read this entire package of materials, and the publicly filed information about the Company referenced herein, before making a decision regarding this Offer.
THE BOARD OF DIRECTORS OF OUR GENERAL PARTNER AND THE BOARD OF DIRECTORS OF STEEL EXCEL HAVE APPROVED THIS OFFER. HOWEVER, NEITHER THE COMPANY, STEEL EXCEL, OUR GENERAL PARTNER, NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS OR EMPLOYEES, NOR THE INFORMATION AGENT OR DEPOSITARY, MAKES ANY RECOMMENDATION TO YOU AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR UNITS. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO TENDER SOME OR ALL OF YOUR UNITS AND THE PRICE OR PRICES AT WHICH YOU WILL TENDER THEM.
Our and Steel Excel’s respective directors, executive officers and affiliates have advised us that they do not intend to tender any of their units in the Offer.
Neither the Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of this transaction or passed upon the merits or fairness of such transaction or passed upon the adequacy or accuracy of the information contained in this Offer to Purchase. Any representation to the contrary is a criminal offense.
The Depositary for the Offer is:
If delivering by hand or courier: American Stock Transfer & Trust Company, LLC |
For assistance call (877) 248-6417 or (718) 921-8317
Any questions or requests for assistance or for additional copies of this Offer to Purchase, the accompanying Letter of Transmittal or related documents may be directed to the information agent at its telephone numbers and address below. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Tender Offer is:
1407 Broadway
New York, New York 10018
(212) 929-5500
or
Call Toll-Free (800) 322-2885
Email: tenderoffer@mackenziepartners.com
Offer to Purchase dated April 7, 2022
IMPORTANT PROCEDURES
If you wish to tender all or any part of your units, you must do one of the following before the Offer expires at Midnight (at the end of the Day), Eastern Time, on May 6, 2022, or such later date and time to which we may extend the Offer:
● | if you hold unit certificates in your own name, complete and sign the related Letter of Transmittal according to the instructions in the Letter of Transmittal and mail or deliver it, together with any required signature guarantee and any other required documents, including your unit certificates, to American Stock Transfer & Trust Company, LLC, the depositary for the Offer (the “Depositary”); |
● | if you are an institution participating in The Depository Trust Company (“DTC”) and you hold your units through DTC, tender the units according to the procedure for book-entry transfer described in Section 3; or |
● | if your units are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you should contact that nominee and have the nominee tender your units for you. |
If you desire to tender your units but (i) your unit certificates are not immediately available or cannot be delivered to the Depositary by the expiration of the Offer, (ii) you cannot comply with the procedure for book-entry transfer by the expiration of the Offer or (iii) you cannot deliver the other required documents to the Depositary by the expiration of the Offer, you must tender your units according to the guaranteed delivery procedure described in Section 3.
Beneficial owners should be aware that their broker, dealer, commercial bank, trust company or other nominee may establish its own earlier deadline for participation in the Offer. Accordingly, beneficial owners wishing to participate in the Offer should contact their broker, dealer, commercial bank, trust company or other nominee as soon as possible in order to determine the times by which such owner must take action in order to participate in the Offer.
Additional copies of this Offer to Purchase, the Letter of Transmittal and other Offer materials may be obtained from MacKenzie Partners, Inc., the information agent for this Offer (the “Information Agent”), and will be furnished at the Company’s expense. Questions and requests for assistance may be directed to the Information Agent at its address and telephone number set forth on the back cover of this Offer to Purchase. Unitholders may also contact their local broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.
We are not making the Offer to, and will not accept any tendered units from, unitholders in any jurisdiction where it would be illegal to do so. However, we may, at our discretion, take any actions necessary for us to make the Offer to unitholders in any such jurisdiction.
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Table of Contents
Page | ||
SUMMARY TERM SHEET | 1 | |
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS | 5 | |
THE OFFER | 6 | |
1. | GENERAL TERMS OF THE OFFER | 6 |
2. | NUMBER OF UNITS; PRORATION | 6 |
3. | PROCEDURE FOR TENDERING UNITHOLDERS | 8 |
4. | WITHDRAWAL RIGHTS | 12 |
5. | PURCHASE OF UNITS AND PAYMENT OF PURCHASE PRICE | 12 |
6. | CERTAIN CONDITIONS OF THE OFFER | 13 |
7. | INFORMATION CONCERNING THE COMPANY AND PURPOSES OF THE OFFER | 16 |
8. | PRICE RANGE OF UNITS AND UNITHOLDERS | 21 |
9. | SOURCE AND AMOUNT OF FUNDS | 21 |
10. | TRANSACTIONS AND AGREEMENTS CONCERNING UNITS | 22 |
11. | EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS; CONDITIONS | 23 |
12. | U.S. FEDERAL INCOME TAX CONSEQUENCES | 24 |
13. | ADDITIONAL INFORMATION; MISCELLANEOUS | 26 |
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SUMMARY TERM SHEET
We are providing this summary term sheet for your convenience. It highlights the material terms of the proposed Offer, but you should realize that it does not describe all of the details of the Offer to the same extent described in the body of this Offer to Purchase. We urge you to read the entire Offer to Purchase and the related Letter of Transmittal because they contain the full details of the Offer. We have included references to the sections of this document where you will find a more complete discussion. Unless otherwise indicated, references to “units” are to our common units and not to any other securities.
WHO IS MAKING THE OFFER? | The Company, through its wholly owned subsidiary Steel Excel, Inc., with principal executive offices at 590 Madison Avenue, 32nd Floor, New York, New York 10022, telephone (212) 520-2300. | |
WHAT ARE WE OFFERING TO PURCHASE? | We are offering to purchase our common units, no par value. | |
WHAT WILL BE THE PURCHASE PRICE FOR THE UNITS? | We are conducting the Offer through a procedure commonly called a modified “Dutch Auction.” This procedure allows you to select the price per units (in increments of $0.10) within a price range specified by us at which you are willing to sell your units. The price range for the Offer is $40.00 to $42.00 per unit. We will determine the Purchase Price that we will pay per unit promptly after the Expiration Date. The Purchase Price will be the lowest price at which, based on the number of units tendered and the prices specified by the tendering unitholders, we can purchase $100 million in value of units. If fewer units are properly tendered, we will select the lowest price that will allow us to buy all the units that are properly tendered and not properly withdrawn prior to the Expiration Date.
The Purchase Price will not be less than $40.00 nor greater than $42.00 per unit. The closing sale price for the units on the NYSE on April 6, 2022, the last full trading day before the public announcement of the commencement of the Offer, was $40.54. We will pay the same per unit Purchase Price in cash, less any applicable withholding taxes and without interest, for all the units we purchase in the Offer, even if some of the units are tendered at a price below the Purchase Price. See Section 2. Under no circumstances will we pay interest on the Purchase Price, even if there is a delay in making payment.
If you wish to maximize the chance that your units will be purchased in the Offer, you should check the box in the section of the Letter of Transmittal captioned “Units Tendered at Price Determined in the Offer.” If you agree to accept the Purchase Price determined in the Offer, your units will be deemed to be tendered at the minimum price of $40.00 per unit. You should understand that this election could have the effect of decreasing the Purchase Price determined by us, which may result in your units being purchased at the minimum price per unit. See Section 2. | |
WHAT IS THE MARKET PRICE OF OUR SECURITIES? | Our common units are listed and traded on the NYSE under the symbol “SPLP.” On April 6, 2022, the last full trading day before the announcement of the Offer, the reported closing price of the units on the NYSE was $40.54 per unit. See Section 8. | |
HOW MANY UNITS WILL THE COMPANY PURCHASE IN THE OFFER? | We are offering to purchase up to $100 million in value of units or such lesser amount of units as may be properly tendered and not properly withdrawn, on the terms and subject to the conditions of the Offer. As of April 7, 2022, we had issued and outstanding approximately 20,715,251 units. At the maximum Purchase Price of $42.00 per unit, we could purchase 2,380,952 units if the Offer is fully subscribed, which would represent approximately 11.5% of our outstanding units as of April 7, 2022. At the minimum Purchase Price of $40.00 per unit, we could purchase 2,500,000 units if the Offer is fully subscribed, which would represent approximately 12.1% of our outstanding units as of April 7, 2022. Subject to certain limitations and legal requirements, we reserve the right to accept for payment, according to the terms and conditions of the Offer, up to an additional 2% of our outstanding units without extending the Expiration Date. In exercising this right, we may increase the Purchase Price to allow us to purchase all such additional units. The Offer is not conditioned on any minimum number of units being tendered. See Section 2 and Section 6. |
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WHAT WILL HAPPEN IF MORE THAN $100 MILLION IN VALUE OF UNITS ARE TENDERED AT OR BELOW THE PURCHASE PRICE? | If more than $100 million in value of units are properly tendered at or below the Purchase Price and not properly withdrawn prior to the Expiration Date for the Offer, we will purchase units as follows:
● first, from all holders of “odd lots” of less than 100 units who properly tender all of their units at or below the Purchase Price and do not properly withdraw them before the Expiration Date for the Offer; and
● second, from all other unitholders who properly tender units at or below the Purchase Price and do not properly withdraw them before the applicable Expiration Date, on a pro rata basis.
Because of the “odd lot” priority and proration provisions described above, we may not purchase all of the units that you tender even if you tender them at or below the Purchase Price. See Section 2. | |
IF I OWN FEWER THAN 100 UNITS SUBJECT TO THE OFFER AND I TENDER ALL OF MY UNITS, WILL I BE SUBJECT TO PRORATION? | If you beneficially own fewer than 100 units, in the aggregate, and you properly tender all of these units at or below the Purchase Price and do not properly withdraw them prior to the Expiration Date for the Offer and you complete the section entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery, we will purchase all of your units without subjecting them to the proration procedure. See Section 2. | |
WHY ARE THE COMPANY AND STEEL EXCEL MAKING THIS OFFER? | We believe that the repurchase of units is consistent with our long-term goal of maximizing value for our unitholders. The Board of Directors of Steel Partners Holdings GP Inc., our general partner (the “General Partner”), and the Board of Directors of Steel Excel, with the assistance of management and outside advisors, has evaluated our operations, financial condition, capital needs, strategy and expectations for the future and believes that the Offer is a prudent use of certain of our financial resources given our business profile, prospective capital requirements and the current market price of our units. Furthermore, we believe the Offer is an efficient means to provide liquidity to our unitholders, who desire liquidity. The Offer represents the opportunity for us to return cash to unitholders who elect to tender their units, while at the same time increasing non-tendering unitholders’ proportionate interest in us. See Section 7. | |
HOW WILL THE COMPANY PAY FOR THE UNITS? | We will purchase units in the Offer, and pay related fees and expenses, with available cash and borrowings under our Credit Facility (as defined in Section 9). Financing is not a condition to the Offer. See Section 9. |
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WHEN DOES THE OFFER EXPIRE? | The Offer will expire at Midnight (at the end of the Day), Eastern Time, on May 6, 2022, unless we extend it. If a broker, dealer, commercial bank, trust company or other nominee holds your units, it is possible the nominee has established an earlier deadline for you to act to instruct the nominee to accept the Offer on your behalf. We urge you to contact the broker, dealer, commercial bank, trust company or other nominee to find out their deadline. We may choose to extend the Offer for any reason, subject to applicable law. We cannot assure you that we will extend the Offer or indicate the length of any extension we may provide. See Section 11. | |
HOW WILL I BE NOTIFIED IF THE COMPANY EXTENDS, AMENDS OR TERMINATES THE OFFER? | If we decide to extend the Offer, we will issue a press release announcing the extension and the new expiration date by 9:00 A.M., Eastern Time, on the first business day after the previously scheduled Expiration Date. We will announce any amendment to the Offer by making a public announcement of the amendment. We can terminate the Offer under certain circumstances. See Section 11. | |
ARE THERE ANY CONDITIONS TO THE OFFER? | While the Offer is not conditioned upon any minimum number of units being tendered or our receipt of financing, it is subject to customary conditions, such as the absence of court and governmental action prohibiting, challenging or restricting the Offer and the absence of changes in general market conditions or our business that, in our reasonable judgment, are or may be materially adverse to us, as well as other conditions. See Section 6. | |
ONCE TENDERED, MAY I WITHDRAW MY TENDER? | If you tender units pursuant to this Offer, you may withdraw your tender at any time until the Expiration Date. If you wish to withdraw your tender, you must deliver, on a timely basis, a written or facsimile notice of your withdrawal to the Depositary at the address appearing on the back cover page of this Offer to Purchase. Your notice of withdrawal must specify your name, the number of units to be withdrawn and the name of the registered holder of those units. Some additional requirements apply if the unit certificates to be withdrawn have been delivered to the Depositary or if your units have been tendered under the procedure for book-entry transfer set forth in Section 3. | |
WILL THE DIRECTORS, EXECUTIVE OFFICERS AND AFFILIATES OF THE COMPANY OR STEEL EXCEL PARTICIPATE IN THE OFFER? | Our and Steel Excel’s respective directors, executive officers and affiliates have advised us that they do not intend to tender their units in the Offer. See Section 7. | |
DO WE RECOMMEND THAT YOU TENDER YOUR UNITS IN THE OFFER? | The Board of Directors of the General Partner and the Board of Directors of Steel Excel have approved the Offer. However, neither the Company, the General Partner, Steel Excel nor any of their respective directors, officers or employees nor the Information Agent or Depositary make any recommendation to you as to whether to tender or refrain from tendering your units. You must make your own decision as to whether to tender some or all of your units. |
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HOW DO I TENDER MY UNITS PURSUANT TO THE OFFER? | 1) You must properly complete and duly execute the Letter of Transmittal and deliver it with your unit certificate(s) to the Depositary at the address appearing on the back cover page of this document;
2) The Depositary must receive a confirmation of receipt of your units by book-entry transfer and a properly completed and duly executed Letter of Transmittal; or
3) You must comply with the guaranteed delivery procedure.
If your units are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you should contact that nominee and have the nominee tender your units for you. See Section 3. | |
WHEN WILL THE COMPANY PAY FOR THE UNITS I TENDER? | We, through Steel Excel, will pay the applicable Purchase Price to you in cash, less any applicable withholding taxes and without interest, for the units we purchase promptly after the Expiration Date of the Offer and the acceptance of the units for payment; provided, however, that, if proration is required, we do not expect to announce the results of the proration and begin paying for tendered units until up to approximately three business days after the expiration of the Offer. See Section 5. | |
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY UNITS? | Unitholders that choose not to tender their units will own a greater percentage interest in our outstanding units following consummation of the Offer. See Section 8. | |
WILL I HAVE TO PAY BROKERAGE COMMISSIONS IF I TENDER MY UNITS? | If you are a registered unitholder and you tender your units directly to the Depositary, you will not incur any brokerage commissions. If you hold units through a broker, dealer, commercial bank, trust company or other nominee, we recommend that you consult your broker, dealer, commercial bank, trust company or other nominee to determine whether transaction costs are applicable. See Section 3. | |
WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES IF I TENDER MY UNITS? | Generally, if you tender less than all of your units (or less than all of your units are accepted) you should recognize gain (but not loss) only to the extent that the “amount realized” exceeds your adjusted tax basis in all of your units, including units that are not purchased by the Company. If you tender all of your units (and all of your units are accepted), you should recognize gain or loss equal to the difference between your “amount realized” and your adjusted tax basis in the units tendered. The “amount realized” with respect to your units will be equal to the sum of (x) the amount of cash received pursuant to the Offer, and (y) the reduction in the amount of liabilities of the Company properly allocable to you with respect to the units tendered for U.S. federal income tax purposes (as determined under Section 752 of the Internal Revenue Code). We urge you to consult with your own tax advisor as to the particular tax consequences to you of the Offer. | |
WHO CAN RESPOND TO QUESTIONS OR PROVIDE ASSISTANCE REGARDING THE OFFER? | Please direct questions or requests for assistance, or for additional copies of this Offer to Purchase, the Letter of Transmittal or other materials, in writing, to the Information Agent, MacKenzie Partners, Inc., at the address appearing on the back cover of this Offer to Purchase. |
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Offer to Purchase contains certain forward-looking statements that involve risks and uncertainties. All statements other than statements of historical information contained herein are forward-looking statements. These statements may contain projections relating to revenues, earnings, operations, other financial measures, economic conditions, trends and known uncertainties, and may include statements regarding our future performance, strategies and objectives. Representatives of the Company may also make forward-looking statements. Generally, the inclusion of the words “believe,” “expect,” “intend,” “estimate,” “project,” “anticipate,” “will,” “plan,” “seek” and similar expressions identify statements that constitute forward-looking statements.
Our forward-looking statements are not meant as, and should not be considered to be, guarantees of future performance or events. Rather, they reflect management’s review, consideration and analysis of available facts and other information regarding the subject matter of the forward-looking statements, and are applicable only as of the dates of such statements. Any forward-looking statement speaks only as of the date on which the statement is made. The Company undertakes no obligation to update or revise any forward-looking statements, or any other information herein, to reflect events or circumstances that arise after the date hereof.
By their nature, all forward-looking statements involve risks and uncertainties, and actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons.
Please refer to our Annual Report on Form 10-K for the year ended December 31, 2021, including Item 1A, “Risk Factors,” in such report, as well as our other filings with the SEC, for a more detailed discussion of risks and uncertainties. Any forward-looking statement should be read and interpreted together with these other filings. There can be no assurance that the Company has correctly identified and appropriately assessed all factors affecting its business. Additional risks and uncertainties not presently known to the Company or that it currently believes to be immaterial also may adversely affect the Company. Should any risks and uncertainties develop into actual events, these developments could have material adverse effects on the Company’s business, financial condition and results of operations. For these reasons, you are cautioned not to place undue reliance on the Company’s forward-looking statements.
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THE OFFER
1. | GENERAL TERMS OF THE OFFER |
Upon the terms and subject to the conditions set forth in this Offer to Purchase and the Letter of Transmittal, we will purchase $100 million in value of units or such lesser amount of units as may be properly tendered and not properly withdrawn, in accordance with Section 2, before Midnight (at the end of the Day), Eastern Time, on May 6, 2022, the scheduled Expiration Date of the Offer, unless extended, at a Purchase Price not less than $40.00 nor greater than $42.00 per unit, net to the seller in cash, less any applicable withholding taxes and without interest. Unless otherwise indicated, all references to “units” are to our common units, no par value. The Offer will commence on April 7, 2022 and terminate on the Expiration Date, or such later date to which the Company may extend the Offer.
2. | NUMBER OF UNITS; PRORATION |
Number of Units. As of April 7, 2022, we had issued and outstanding approximately 20,715,251 units. At the maximum Purchase Price of $42.00 per unit, we could purchase 2,380,952 units if the Offer is fully subscribed, which would represent approximately 11.5% of our outstanding units as of April 7, 2022. At the minimum Purchase Price of $40.00 per unit, we could purchase 2,500,000 units if the Offer is fully subscribed, which would represent approximately 12.1% of our outstanding units as of April 7, 2022. In accordance with the rules of the SEC, we may, and we expressly reserve the right to, purchase more than $100 million in value of units pursuant to the Offer without amending or extending the Offer, provided that such increase does not result in an increase of our purchase of greater than 2% of our outstanding units without extending the Expiration Date. In the event of an oversubscription of the Offer as described below, units tendered at prices at or below the Purchase Price for the Offer (determined as provided herein) will be subject to proration, except for Odd Lots (as defined below).
If we:
● | increase the price to be paid for the units above $42.00 per unit, or decrease the price to be paid for the units below $40.00 per unit; | |
● | increase the value of units being sought in the Offer (and thereby increase the number of units purchasable in the Offer), and the number of units accepted for payment in the Offer increases by more than 2% of our outstanding units; or | |
● | decrease the value of units being sought in the Offer (and thereby decrease the number of units purchasable in the Offer); and |
in any such case the Offer affected by such increase or decrease is scheduled to expire at any time earlier than the expiration of a period ending on the 10th business day (as defined below) from, and including, the date that notice of any such increase or decrease is first published, sent or given in the manner specified in Section 11, we will extend the affected Offer until the expiration of such period of 10 business days. For the purposes of the Offer, a “business day” means any day other than Saturday, Sunday or a United States federal holiday and consists of the time period from 12:01 A.M. through 12:00 midnight, Eastern Time.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF UNITS BEING TENDERED AND IS NOT CONDITIONED UPON FINANCING. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN CUSTOMARY CONDITIONS. SEE SECTION 6.
Purchase Price. In accordance with Instruction 5 of the Letter of Transmittal, unitholders desiring to tender units must specify the price or prices, not less than $40.00 nor greater than $42.00 per unit, at which they are willing to sell their units to us in the Offer. The lowest price that may be specified for units is $40.00. The prices that may be specified for units increase in increments of $0.10 up to the highest price that may be specified which is $42.00 per unit. A unitholder who desires to tender units at more than one price must complete a separate Letter of Transmittal for each price. Alternatively, unitholders desiring to tender units can choose not to specify a price and, instead, specify that they will sell their units at the Purchase Price (determined as provided herein) we pay for units properly tendered and not properly withdrawn pursuant to the Offer, in which case the unitholder will be deemed to have tendered such units at the minimum price of $40.00 per unit. Choosing the second option will maximize the chance that we will purchase a tendering unitholder’s units, may lower the Purchase Price paid for all purchased units in the Offer and could result in the tendering unitholder receiving a price per unit as low as $40.00. See Section 8 for recent market prices for our units.
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TO TENDER UNITS PROPERLY, UNITHOLDERS MUST SPECIFY THE PRICE THEY ARE WILLING TO ACCEPT FOR THE UNITS THEY TENDER OR, ALTERNATIVELY, SPECIFY THAT THEY WILL SELL THEIR TENDERED UNITS AT THE PURCHASE PRICE FOR SUCH UNITS DETERMINED AS PROVIDED HEREIN. IF YOU SPECIFY MORE THAN ONE PRICE FOR YOUR UNITS IN A SINGLE LETTER OF TRANSMITTAL YOU WILL NOT HAVE VALIDLY TENDERED YOUR UNITS. SEE SECTION 3.
As promptly as practicable following the Expiration Date, we will determine the Purchase Price within the applicable price range that we will pay for units properly tendered and not properly withdrawn, taking into account the number of units tendered and the prices specified by tendering unitholders. We will select the lowest purchase price within the indicated range that will enable us to purchase $100 million in value of units pursuant to the Offer, or such fewer number of units as are properly tendered and not properly withdrawn in the Offer prior to the Expiration Date. In each case, the Purchase Price will be the net amount payable to the seller in cash, less any applicable withholding taxes and without interest. Units properly tendered under the Offer at prices at or below the Purchase Price and not properly withdrawn will be purchased at the Purchase Price, upon the terms and subject to the conditions of the Offer, including the odd lot priority and proration provisions.
We will not purchase units tendered at prices greater than the Purchase Price, nor will we purchase units that we do not accept in the Offer because of “odd lot” priority and proration provisions. We will return to the tendering unitholders units that we do not purchase in the Offer at our expense promptly after the applicable Expiration Date.
Unitholders also can specify the order in which we will purchase units tendered in the Offer in the event that, as a result of the proration provisions or otherwise, we purchase some but not all of the tendered units pursuant to the Offer. In the event a unitholder does not designate the order and fewer than all units are purchased due to proration or otherwise, the Depositary will select the order of units purchased.
Priority of Purchases. Upon the terms and subject to the conditions of the Offer, if more than $100 million in value of units are properly tendered at or below the Purchase Price and not properly withdrawn prior to the Expiration Date for the Offer, we will purchase properly tendered and not properly withdrawn units on the basis set forth below:
● | First, upon the terms and subject to the conditions of the Offer, we will purchase all units tendered by any Odd Lot Holder (as defined below) of units who: |
o | tenders all units beneficially owned by such Odd Lot Holder at a price at or below the Purchase Price (tenders of less than all of the units owned by such Odd Lot Holder will not qualify for this preference); and | |
o | completes the section entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery. |
● | Second, we will purchase all other units properly tendered at prices at or below the Purchase Price and not properly withdrawn on a pro rata basis with appropriate adjustments to avoid purchases of fractional units, as described below. |
As a result of the foregoing priorities applicable to the purchase of units tendered, it is possible that all of the units that a unitholder tenders in the Offer may not be purchased even if they are tendered at prices at or below the Purchase Price.
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Odd Lots. The term “Odd Lots” means, with respect to the units, all units properly tendered prior to the applicable Expiration Date at prices at or below the Purchase Price and not properly withdrawn by any person (a “Odd Lot Holder”) who beneficially owned fewer than 100 units, as the case may be, and so certified in the appropriate place in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery.
To qualify for the Odd Lot preference with respect to the Offer, an Odd Lot Holder must tender all units, as applicable, owned by the Odd Lot Holder in accordance with the procedures described in Section 3. Odd Lots will be accepted for payment before any proration of the purchase of other tendered units. This preference is not available to partial tenders or to beneficial or record holders of an aggregate of 100 or more units, even if these holders have separate accounts or certificates representing fewer than 100 units. By tendering in the Offer, an Odd Lot Holder who holds units in its name and tenders its units directly to the Depositary, would not only avoid the payment of brokerage commissions, but also would avoid any applicable Odd Lot discounts in a sale of the holder’s units. Any Odd Lot Holder wishing to tender all of its units pursuant to the Offer should complete the section entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery.
Proration. Upon the terms and subject to the conditions of the Offer (including the Odd Lot preference discussed above), if more than $100 million in value of units are properly tendered at or below the Purchase Price and not properly withdrawn prior to the Expiration Date, we will purchase such properly tendered and not properly withdrawn units, as the case may be, on a pro rata basis, with appropriate adjustments to avoid purchases of fractional units.
If proration of tendered units is required, we will determine the proration factor for those units promptly after the Expiration Date of the Offer. Proration for each unitholder tendering units will be based on the ratio of the number of units properly tendered and not properly withdrawn by the unitholder at or below the Purchase Price selected by us to the total number of units tendered by all unitholders at or below the Purchase Price selected by us. This ratio will be applied to unitholders tendering units to determine the number of units that will be purchased from each tendering unitholder in the Offer. Because of the difficulty in determining the number of units properly tendered, including units tendered by guaranteed delivery procedures, and not properly withdrawn, and because of the Odd Lot priority described above, we do not expect to be able to announce the final proration factor or commence payment for any units purchased under the Offer until approximately three business days after the Expiration Date for the Offer. The final results of any proration will be announced by press release promptly after the determination thereof.
As described in Section 12 the number of units that we will purchase from a unitholder under the Offer may affect the U.S. federal income tax consequences to that unitholder and, therefore, may be relevant to a unitholder’s decision whether or not to tender units and whether to condition any tender upon our purchase of a stated number of units held by such unitholder.
This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of units as of April 7, 2022 and will be furnished to brokers, dealers, commercial banks and trust companies whose names, or the names of whose nominees, appear on our unitholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing for subsequent transmittal to beneficial owners of units.
3. | PROCEDURE FOR TENDERING UNITHOLDERS |
Proper Tender of Units. For unitholders to properly tender units under the Offer:
● | the Depositary must receive, at the Depositary’s address set forth on the back cover page of this Offer to Purchase, unit certificates (or confirmation of receipt of such units under the procedure for book-entry transfer set forth below), together with a properly completed and duly executed Letter of Transmittal, including any required signature guarantees, or an “agent’s message,” and any other documents required by the Letter of Transmittal, before the Expiration Date, or | |
● | the tendering unitholder must comply with the guaranteed delivery procedure set forth below. |
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If a broker, dealer, commercial bank, trust company or other nominee holds your units, it is likely they have an earlier deadline for you to act to instruct them to accept the Offer on your behalf. We recommend that you contact your broker, dealer, commercial bank, trust company or other nominee to determine their applicable deadline.
We recommend that unitholders who hold units through brokers, dealers, commercial banks, trust companies or other nominees consult the brokers, dealers, commercial banks, trust companies or other nominees to determine whether transaction costs are applicable if they tender units through the brokers, dealers, commercial banks, trust companies or other nominees and not directly to the Depositary.
In accordance with Instruction 5 of the Letter of Transmittal for units, each unitholder desiring to tender units pursuant to the Offer must either (1) check the box in the section of the Letter of Transmittal captioned “Units Tendered at Price Determined in the Offer,” in which case you will be deemed to have tendered your units at the minimum price of $40.00 per unit or (2) check one, and only one, of the boxes corresponding to the price at which units are being tendered in the section of the Letter of Transmittal captioned “Units Tendered at Price Determined by Unitholder.” A tender of units will be proper if one, and only one, of these boxes is checked on the Letter of Transmittal.
If tendering unitholders wish to maximize the chance that we will purchase their units, they should check the box in the section of the Letter of Transmittal captioned “Units Tendered at Price Determined in the Offer.” NOTE THAT SELECTING “UNITS TENDERED AT PRICE DETERMINED IN THE OFFER,” MAY LOWER THE PURCHASE PRICE PAID FOR ALL PURCHASED UNITS IN THE OFFER AND COULD RESULT IN THE TENDERED UNITS BEING PURCHASED AT THE MINIMUM PRICE OF $40.00 PER UNIT. The closing sale price for the units on the NYSE on April 6, 2022, the last full trading day before the public announcement of the commencement of the Offer, was $40.54.
Unitholders also can specify the order in which we will purchase units tendered in the Offer in the event that, as a result of the proration provisions or otherwise, we purchase some but not all of the tendered units pursuant to the Offer. In the event a unitholder does not designate the order and fewer than all units are purchased due to proration or otherwise, the Depositary will select the order of units purchased.
In order to qualify for the preferential treatment available to Odd Lot Holders as set forth above, Odd Lot Holders must tender all of their units and also complete the section titled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery.
A unitholder who desires to tender units at more than one price must complete a separate Letter of Transmittal for each price, provided that a unitholder may not tender the same units (unless properly withdrawn previously in accordance with Section 4) at more than one price. In the event a unitholder has submitted multiple Letters of Transmittal in order to tender units at more than one price, a separate notice of withdrawal must be submitted in accordance with the terms of the Offer with respect to each separate Letter of Transmittal in order for such withdrawals to be effective.
TO TENDER UNITS PROPERLY, UNITHOLDERS MUST CHECK ONE AND ONLY ONE PRICE BOX IN THE APPROPRIATE SECTION OF THE LETTER OF TRANSMITTAL. IF YOU CHECK MORE THAN ONE BOX OR IF YOU FAIL TO CHECK ANY BOX AT ALL YOU WILL NOT HAVE VALIDLY TENDERED YOUR UNITS.
Signature Guarantees. No signature guarantee is required: (1) if the Letter of Transmittal is signed by the registered holder of the units (which term, for purposes of this Section 3, shall include any participant in DTC, referred to as the “book-entry transfer facility,” whose name appears on a security position listing as the owner of the units) tendered therewith and such holder has not completed either the section entitled “Special Delivery Instructions” or the section entitled “Special Payment Instructions” on the Letter of Transmittal; or (2) if units are tendered for the account of a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program or a bank, broker, dealer, credit union, savings association or other entity which is an “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). If a certificate for units is registered in the name of a person other than the person executing a proper Letter of Transmittal, or if payment is to be made to a person other than the registered holder, then the certificate must be endorsed or accompanied by an appropriate stock power, in either case signed exactly as the name of the registered holder appears on the certificate, with the signature guaranteed by an eligible guarantor institution.
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Payment for units tendered and accepted for payment under the Offer will be made only after timely receipt by the Depositary of (1) certificates for such units or a timely confirmation of the book-entry transfer of such units into the Depositary’s account at the book-entry transfer facility as described above, (2) a properly completed and duly executed Letter of Transmittal or a manually signed facsimile thereof, or an agent’s message in the case of a book-entry transfer, and (3) any other documents required by the applicable Letter of Transmittal.
Method of Delivery. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING UNIT CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING UNITHOLDER. IF YOU CHOOSE TO DELIVER REQUIRED DOCUMENTS BY MAIL, WE RECOMMEND THAT YOU USE REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED.
Book-Entry Delivery. The Depositary will establish an account for the units at DTC for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in DTC’s system may make book-entry delivery of units by causing DTC to transfer such units into the Depositary’s account in accordance with DTC’s procedure for such transfer. Even though delivery of units may be effected through book-entry transfer into the Depositary’s account at DTC, a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantee, or an agent’s message in the case of a book-entry transfer, and any other required documentation, must in any case be transmitted to and received by the Depositary at its address set forth on the back cover page of this Offer to Purchase prior to the Expiration Date, or the guaranteed delivery procedures set forth herein must be followed. DELIVERY OF THE LETTER OF TRANSMITTAL (OR OTHER REQUIRED DOCUMENTATION) TO DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term “agent’s message” means a message transmitted by the book-entry transfer facility to, and received by, the Depositary, which states that the book-entry transfer facility has received an express acknowledgment from the participant in the book-entry transfer facility tendering the units that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that we may enforce such agreement against such participant.
Guaranteed Delivery. If a unitholder desires to tender units into the Offer and the unitholder’s unit certificates are not immediately available or the unitholder cannot deliver the unit certificates to the Depositary before the Expiration Date, or the unitholder cannot complete the procedure for book-entry transfer on a timely basis, or if time will not permit all required documents to reach the Depositary before the Expiration Date, the unitholder may nevertheless tender the units, provided that the unitholder satisfies all of the following conditions:
● | the unitholder makes the tender by or through an eligible guarantor institution; | |
● | the Depositary receives by mail, overnight courier or facsimile transmission, before the Expiration Date, a properly completed and duly executed Notice of Guaranteed Delivery, including (where required) a signature guarantee by an eligible guarantor institution in the form set forth in such Notice of Guaranteed Delivery; and | |
● | the Depositary receives the unit certificates, in proper form for transfer, or confirmation of book-entry transfer of the units into the Depositary’s account at the book-entry transfer facility, together with a properly completed and duly executed Letter of Transmittal, or a manually signed facsimile thereof, and including any required signature guarantees, or an agent’s message, and any other documents required by the Letter of Transmittal, within two NYSE trading days after the date of receipt by the Depositary of the Notice of Guaranteed Delivery. |
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Return of Unpurchased Units. If any tendered units are not purchased under the Offer or are properly withdrawn before the applicable Expiration Date, or if less than all units evidenced by a unitholder’s certificates are tendered, certificates for unpurchased units will be returned promptly after the expiration or termination of the Offer or the proper withdrawal of the units, as applicable, or, in the case of units tendered by book-entry transfer at the book-entry transfer facility, the units will be credited to the appropriate account maintained by the tendering unitholder at the book-entry transfer facility, in each case without expense to the unitholder.
Determination of Validity; Rejection of Units; Waiver of Defects; No Obligation to give Notice of Defects. All questions as to the number of units to be accepted, the price that we will pay for the units that we accept and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of units will be determined by us, in our sole discretion, and our determination will be final and binding on all parties (absent manifest error). We reserve the absolute right to reject any or all tenders of any units that we determine are not in proper form or the acceptance for payment of or payment for which we determine may be unlawful. We also reserve the absolute right to waive any of the conditions of the Offer or any defect or irregularity in any tender; provided that we will not waive any condition of the Offer with respect to a tender unless we waive that condition for all tenders made in the Offer. Our interpretation of the terms of the Offer will be final and binding on all parties. No tender of units will be deemed to have been properly made until all defects or irregularities have been cured by the tendering unitholder or waived by us. None of the Company, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any tender or incur any liability for failure to give any such notification.
Tendering Unitholder’s Representation and Warranty; Company Acceptance Constitutes an Agreement. A tender of units under any of the procedures described above will constitute the tendering unitholder’s acceptance of the terms and conditions of the Offer, as well as the tendering unitholder’s representation and warranty to the Company that:
● | the unitholder has a net long position in the units or equivalent securities at least equal to the units tendered within the meaning of Rule 14e-4 of the Exchange Act (“Rule 14e-4”), and | |
● | the tender of units complies with Rule 14e-4. |
It is a violation of Rule 14e-4 for a person, directly or indirectly, to tender units for that person’s own account unless, at the time of tender and at the end of the Offer (including any extensions thereof), the person so tendering:
● | has a net long position equal to or greater than the amount tendered in the units, or has securities immediately convertible into, or exchangeable or exercisable for, the units, and | |
● | will deliver or cause to be delivered the units in accordance with the terms of the Offer. |
Rule 14e-4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. Our acceptance for payment of units tendered under the Offer will constitute a binding agreement between the tendering unitholder and us upon the terms and conditions of the Offer.
Lost or Destroyed Certificates. Unitholders whose unit certificate for part or all of their units has been lost, stolen, misplaced or destroyed may contact American Stock Transfer & Trust Company, LLC, the transfer agent for our units, at (877) 248-6417 or (718) 921-8317, for instructions as to obtaining a replacement unit certificate. That unit certificate will then be required to be submitted together with the Letter of Transmittal in order to receive payment for units that are tendered and accepted for payment. The unitholder may have to post a bond to secure against the risk that the unit certificate may subsequently emerge. We recommend that unitholders whose unit certificate has been lost, stolen, misplaced or destroyed contact American Stock Transfer & Trust Company, LLC immediately in order to permit timely processing of this documentation.
UNITHOLDERS MUST DELIVER UNIT CERTIFICATES, TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL, INCLUDING ANY SIGNATURE GUARANTEES, OR AN AGENT’S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS TO THE DEPOSITARY AND NOT TO THE COMPANY OR THE INFORMATION AGENT. THE COMPANY OR THE INFORMATION AGENT WILL NOT FORWARD ANY SUCH DOCUMENTS TO THE DEPOSITARY, AND DELIVERY TO THE COMPANY OR THE INFORMATION AGENT WILL NOT CONSTITUTE A PROPER TENDER OF UNITS.
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4. | WITHDRAWAL RIGHTS |
Except as this Section 4 otherwise provides, tenders of units are irrevocable. You may withdraw units that you have previously tendered in the Offer according to the procedures described below at any time prior to the Expiration Date for all units. You may also withdraw your previously tendered units at any time after Midnight (at the end of the Day), Eastern Time, on May 6, 2022, the Expiration Date, unless such units have been accepted for payment as provided in the Offer.
For a withdrawal to be effective, the Depositary must receive, prior to the Expiration Date, a written or facsimile transmission notice of withdrawal at the Depositary’s address set forth on the back cover page of this Offer to Purchase. Any such notice of withdrawal must specify the name of the tendering unitholder, the number of units that the unitholder wishes to withdraw and the name of the registered holder of the units. If the unit certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then, before the release of the unit certificates, the serial numbers shown on the unit certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an eligible guarantor institution, unless the units have been tendered for the account of an eligible guarantor institution.
If a unitholder has tendered units under the procedure for book-entry transfer set forth in Section 3, any notice of withdrawal also must specify the name and the number of the account at the book-entry transfer facility to be credited with the withdrawn units and must otherwise comply with the book-entry transfer facility’s procedures.
All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Company, in its sole discretion, which determination shall be final and binding, subject to the judgments of any courts that might provide otherwise. Neither the Company nor any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or incur any liability for failure to give any such notification, subject to the judgment of any court.
Withdrawals may not be rescinded, and any units withdrawn will thereafter be deemed not tendered for purposes of the Offer unless such withdrawn units are validly retendered prior to the Expiration Date by again following one of the procedures described in Section 3.
5. | PURCHASE OF UNITS AND PAYMENT OF PURCHASE PRICE |
Upon the terms and subject to the conditions of the Offer, promptly after the Expiration Date, we will determine the Purchase Price we, through Steel Excel, will pay for the units properly tendered and not properly withdrawn before the Expiration Date of the Offer, taking into account the number of units so tendered and the prices specified by tendering unitholders, and will accept for payment and pay for, and thereby purchase, units properly tendered at prices at or below the Purchase Price so determined and not properly withdrawn prior to such Expiration Date.
For purposes of the Offer, we will be deemed to have accepted for payment, and therefore purchased, units that are properly tendered at prices at or below the Purchase Price that is determined for the units and are not properly withdrawn, subject to the “Odd Lot” priority and proration provisions of the Offer, only when, as and if we give oral or written notice to the Depositary of our acceptance of the units for payment under the Offer.
Upon the terms and subject to the conditions of the Offer, promptly after the Expiration Date we will accept for payment and pay a single per unit Purchase Price not less than $40.00 nor greater than $42.00 per unit in order to purchase $100 million in value of units pursuant to the Offer, subject to increase or decrease as provided in Section 2, if properly tendered and not properly withdrawn, or such fewer number of units as are properly tendered and not properly withdrawn.
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We, through Steel Excel, will pay for units purchased under the Offer by depositing the aggregate Purchase Price for such units with the Depositary, which will act as agent for tendering unitholders for the purpose of receiving payment from us and transmitting payment to the tendering unitholders.
In the event of proration in connection with the Offer, we will determine the proration factor and pay for those tendered units accepted for payment pursuant to such Offer promptly after the Expiration Date; however, we do not expect to be able to announce the final results of any proration and commence payment for units purchased until up to approximately three business days after such Expiration Date. Certificates for all units tendered and not purchased, including all units tendered at prices greater than the Purchase Price and units not purchased due to proration, will be returned to the tendering unitholders, or, in the case of units tendered by book-entry transfer, will be credited to the account maintained with the book-entry transfer facility by the participant therein who so delivered the units, at our expense, promptly after the Expiration Date or termination of the Offer without expense to the tendering unitholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE BE PAID BY THE COMPANY REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. In addition, if certain events occur prior to the Expiration Date for the Offer, we may not be obligated to purchase units under the Offer. See Section 6.
We, through Steel Excel, will pay all transfer taxes, if any, payable on the transfer to us of units purchased under the Offer. If, however, payment of the Purchase Price is to be made to any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of all transfer taxes, if any (whether imposed on the registered holder or the other person), payable on account of the transfer to the person will be deducted from the Purchase Price unless satisfactory evidence of the payment of the transfer taxes, or exemption therefrom, is submitted.
ANY TENDERING UNITHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN AND RETURN TO THE DEPOSITARY THE FORM W-9 INCLUDED WITH EACH LETTER OF TRANSMITTAL (OR OTHERWISE ESTABLISH A VALID EXEMPTION) MAY BE SUBJECT TO FEDERAL INCOME TAX BACKUP WITHHOLDING ON THE GROSS PROCEEDS PAID TO THE UNITHOLDER OR OTHER PAYEE UNDER THE OFFER. SEE SECTION 12.
6. | CERTAIN CONDITIONS OF THE OFFER |
Notwithstanding any other provision of the Offer, the Company will not be required to accept for payment, purchase or pay for any units tendered, and may terminate or amend the Offer or may postpone the acceptance for payment of, or the purchase of and the payment for units tendered, subject to Rule 13e-4(f) under the Exchange Act, if, at any time on or after the date hereof and before the Expiration Date, any of the following events shall have occurred (or shall have been reasonably determined by the Company to have occurred) that, in the Company’s reasonable judgment and regardless of the circumstances giving rise to the event or events, make it inadvisable to proceed with the Offer or with acceptance for payment:
● | there shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency, authority or tribunal or any other person, domestic, foreign or supranational, before any court, authority, agency or tribunal that directly or indirectly: |
o | challenges or seeks to make illegal, or to delay or otherwise directly or indirectly to restrain, prohibit or otherwise affect the making or consummation of the Offer, the acquisition of some or all of the units pursuant to the Offer or otherwise relates in any manner to the Offer; |
o | in our reasonable judgment, could materially and adversely affect our and our subsidiaries’ business, condition (financial or otherwise), income, operations or prospects, taken as a whole, or otherwise materially impair our ability to purchase some or all of the units pursuant to the Offer; |
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o | materially and adversely affect our or our subsidiaries’ or our affiliates’ business, condition (financial or otherwise), income, operations or prospects; |
● | there shall have been any action threatened, instituted, pending or taken, including any settlement, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or the Company or any of its subsidiaries, including any settlement, by any court or any government, authority, agency or tribunal, domestic, foreign or supranational, that, in the Company’s reasonable judgment, would or might, directly or indirectly: |
o | make the acceptance for payment of, or payment for, some or all of the units illegal or otherwise restrict or prohibit completion of the Offer; or |
o | delay or restrict the ability of the Company, or render the Company unable, to accept for payment or pay for some or all of the units; |
● | there shall have occurred: |
o | any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States; |
o | a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, whether or not mandatory; |
o | a material change in United States or any other currency exchange rates or a suspension of or limitation on the markets therefor, in each case which is reasonably likely to have a material adverse effect on the Company or on our ability to complete the Offer; |
o | any commencement of a war, armed hostilities or other national or international calamity, including, but not limited to, any outbreak of a pandemic or contagious disease (including the worsening of the COVID-19 pandemic, including, but not limited to, any significant new precautionary or emergency measures, recommendations or orders taken or issued by any governmental authority or person in response to the COVID-19 pandemic, which could reasonably be expected to materially and adversely affect our or our subsidiaries’ business, properties, assets, liabilities, capitalization, shareholders’ equity, condition (financial or otherwise), operations, results of operations or prospects or otherwise materially impair the contemplated future conduct of our or our subsidiaries’ business or our ability to purchase some or all of the Units in the Offer) or an act of terrorism, shall have occurred directly or indirectly involving the United States on or after April 7, 2022, or any material escalation or worsening, on or after April 7, 2022, of any war, armed hostilities or other national or international calamity, including, but not limited to, any outbreak of a pandemic or contagious disease, that had commenced prior to April 7, 2022, shall have occurred; |
o | any limitation (whether or not mandatory) by any governmental, regulatory or administrative agency or authority on, or any event, or any disruption or adverse change in the financial or capital markets generally or the market for loan syndications in particular, that, in our reasonable judgment, might affect the extension of credit by banks or other lending institutions in the United States; |
o | any change in the general political, market, economic or financial conditions in the United States or abroad that could, in our reasonable judgment, have a material adverse effect on our business, conditions (financial or other), assets, income, operations or prospects or that of any of our subsidiaries or the trading in our common units, or otherwise materially impair in any way the contemplated future conduct of our business or that of any of our subsidiaries; |
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o | in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; |
o | any change (or condition, event or development involving a prospective change) in the business, properties, assets, liabilities, capitalization, unitholders’ equity, financial condition, operations, licenses, results of operations or prospects of us or any of our subsidiaries or affiliates, that, in our reasonable judgment, does or is reasonably likely to have a materially adverse effect on us, our subsidiaries and our affiliates, taken as a whole, or we have become aware of any fact that, in our reasonable judgment, does or is reasonably likely to have a material adverse effect on the value of the units; or |
o | any decline in the market price of the units or the Dow Jones Industrial Average or the Standard and Poor’s Index of 500 Industrial Companies or the New York Stock Exchange or the Nasdaq Composite Index by a material amount (including, without limitation, an amount greater than 10%) from the close of trading on April 7, 2022; |
● | legislation amending the Internal Revenue Code of 1986, as amended, has been passed by either the U.S. House of Representatives or the Senate or any committee thereof, the effect of which, in our reasonable judgment, would be to change the tax consequences of the transaction contemplated by the tender offer in any manner that would adversely affect us or any of our affiliates or unitholders; |
● | a tender offer or exchange offer for any or all of the units (other than this Offer), or any merger, acquisition, business combination or other similar transaction with or involving the Company, or any of its subsidiaries or affiliates, shall have been proposed, announced or made by any person or has been publicly disclosed; or |
● | we learn that: |
o | any entity, “group” (as that term is used in Section 13(d)(3) of the Exchange Act) or person has acquired or proposes to acquire beneficial ownership of more than 5% of our outstanding units, whether through the acquisition of units, the formation of a group, the grant of any option or right, or otherwise (other than as and to the extent disclosed in a Schedule 13D or Schedule 13G filed with the SEC on or before April 7, 2022); |
o | any approval, permit, authorization, favorable review or consent of any governmental entity required to be obtained in connection with the Offer shall not have been obtained on terms satisfactory to us in our reasonable judgment; |
o | any entity, group or person who has filed a Schedule 13D or Schedule 13G with the SEC on or before April 7, 2022, has acquired or proposes to acquire, whether through the acquisition of units, the formation of a group, the grant of any option or right, or otherwise (other than by virtue of the Offer made hereby), beneficial ownership of an additional 2% or more of our outstanding units; |
o | any person, entity or group has filed a Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, reflecting an intent to acquire us or any of our units, or has made a public announcement reflecting an intent to acquire us or any of our subsidiaries or any of our or their respective assets or securities; |
o | any change or changes have occurred or are threatened in our or our subsidiaries’ or affiliates’ business, condition (financial or otherwise), properties, assets, income, operations or prospects that, in our reasonable judgment, has or could have a material adverse effect on us or any of our subsidiaries or affiliates or the benefits of the Offer to us; or |
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o | we determine that the consummation of the Offer and the purchase of the units may (1) cause the units to be held of record by fewer than 300 persons, or (2) cause the units to be delisted from the NYSE or to be eligible for deregistration under the Exchange Act. |
The foregoing conditions are for the sole benefit of the Company and may be waived by the Company, in whole or in part, at any time and from time to time, before the Expiration Date, in its sole discretion. The Company’s failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any of these rights, and each of these rights shall be deemed an ongoing right that may be asserted at any time and from time to time. Any determination or judgment by the Company concerning the events described above will be final and binding on all persons participating in the Offer, subject to such Offer participants disputing such determination in a court of competent jurisdiction.
7. | INFORMATION CONCERNING THE COMPANY AND PURPOSES OF THE OFFER |
Information Concerning the Company and Steel Excel
The Company is a diversified global holding company that owns and operates businesses and has significant interests in various companies, including diversified industrial products, energy, banking, defense, supply chain management and logistics and youth sports. The Company operates through the following segments: Diversified Industrial, Energy, Financial Services, and Corporate and Other. Each of our companies has its own management team with significant experience in their industries. Our subsidiary, Steel Services Ltd. (“Steel Services”), through management services agreements, provides services to us and some of our companies, which include assignment of C-Level management personnel, legal, tax, accounting, treasury, consulting, auditing, administrative, compliance, environmental health and safety, human resources, marketing, investor relations, operating group management and other similar services. We work with our businesses to increase corporate value over the long term for all stakeholders by implementing our unique strategy.
The Company is managed by SP General Services LLC (the “Manager”), pursuant to the terms of an amended and restated management agreement (the “Management Agreement”). From its founding in 1990, the Manager and its affiliates have focused on increasing value for investors in the entities it has managed.
Our wholly owned subsidiary, Steel Partners Holdings GP Inc., or the “General Partner,” is our general partner. The General Partner has a board of directors (the “Board of Directors”). The Board of Directors is currently comprised of eight members, six of whom are elected annually by our unitholders and two of whom are appointed by the Manager. Warren G. Lichtenstein, the Executive Chairman of our Manager, serves as the Executive Chairman of the Board of Directors. Our executive officers are appointed by the Board of Directors and serve until their successors have been duly elected and qualified. There are no family relationships among any of our directors or executive officers.
Steel Excel, Inc. is a wholly owned subsidiary of the Company.
The business address and telephone number of the Company, the General Partner and Steel Excel is 590 Madison Avenue, 32nd Floor, New York, New York 10022, telephone number (212) 520-2300. Our website is www.steelpartners.com. Additional information about our business can be found in our periodic filings with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. See Section 13, “Additional Information; Miscellaneous.”
Purposes of the Offer; Certain Effects of the Offer
Purpose of the Offer. We, through Steel Excel, are making the Offer because we believe that the repurchase of units is consistent with our long-term goal of maximizing unitholder value. Our Board of Directors and the Board of Directors of Steel Excel, with the assistance of management and outside advisors, have evaluated our operations, financial condition, capital needs, strategy and expectations for the future and believes that the Offer is a prudent use of our financial resources given our business profile, prospective capital requirements and the current markets and price of our units.
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We believe that the modified Dutch Auction set forth in this Offer to Purchase represents a mechanism to provide our unitholders who will tender with the opportunity to tender all or a portion of their units and, thereby, receive a return of their investment if they so elect. The Offer provides unitholders (particularly those who, because of the size of their unit holdings, might not be able to sell their units without potential disruption to the applicable unit price) with an opportunity to obtain liquidity with respect to all or a portion of their units, without potential disruption to the applicable unit price and the usual transaction costs associated with market sales. Furthermore, Odd Lot Holders who hold units registered in their names and tender their units directly to the Depositary and whose units are purchased pursuant to the Offer will avoid any applicable Odd Lot discounts that might be payable on sales of their units.
After the completion of the Offer, we expect to have sufficient cash to meet our cash needs for normal operations and anticipated capital expenditures that may arise.
Certain Effects of the Offer. The Offer presents potential risks and disadvantages to us and our continuing unitholders. The Offer will reduce our “public float,” which is the number of units owned by non-affiliate unitholders and available for trading in the securities markets, and is likely to reduce the number of our unitholders. These reductions may result in lower or higher unit prices and/or reduced liquidity in the trading market for our units as well as increased volatility of our unit price after completion of the Offer. Future open market purchases, if authorized, would further reduce our public float.
Unitholders who do not tender their units pursuant to the Offer and unitholders who otherwise retain an equity interest in us as a result of a partial tender of units or a proration will continue to be owners of us. As a result, those unitholders will likely realize a proportionate increase in their relative equity interest in us and, thus, in our future earnings and assets, if any, and will bear the attendant risks associated with owning our equity securities, including risks resulting from our purchase of units and our reduced public float.
Common units that the Company acquires pursuant to the Offer will become authorized but unissued common units and will be available for reissuance by the Company without further unitholder action (except as may be required by applicable law or the rules of the NYSE or any securities exchange on which the units are listed). Subject to applicable state laws and rules of the NYSE, such units could be issued without unitholder approval for, among other things, acquisitions, the raising of additional capital for use in the Company’s business, dividends or in connection with option plans and other incentive plans, or a combination thereof.
We can give no assurance that we will not issue additional units or other equity interests in the future. Unitholders may be able to sell non-tendered units in the future on the NYSE or otherwise, at a net price which may be significantly higher than the purchase price in the offer. We can give no assurance, however, as to the price at which a unitholder may be able to sell his, her or its units in the future, which price may be higher or lower than the purchase price paid by us in the Offer.
The Company may in the future purchase additional units on the open market, in private transactions, through tender offers or otherwise. Any such purchases may be on the same terms as, or on terms that are more or less favorable to unitholders than, the terms of the Offer. However, Rule 13e-4 promulgated under the Exchange Act, generally prohibits the Company and its affiliates from purchasing any units, other than pursuant to the Offer, until at least 10 business days after the expiration or termination of the Offer. Any possible future purchases by the Company will depend on several factors including, without limitation, the ability of the Company to make such purchases with cash or investment balances or under its financing agreements in effect at the time, the market price of the units, the results of the Offer, the Company’s business and financial position and general economic and market conditions.
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Board of Directors Approval
On March 27, 2022 and April 7, 2022, respectively, the Board of Directors of our General Partners and the Board of Directors of Steel Excel approved a tender offer to purchase up to $100 million in value of units and the terms and conditions set forth herein. However, neither the Company, the General Partner, Steel Excel nor any of their respective directors, officers or employees, nor the Depositary or Information Agent, makes any recommendation to you as to whether to tender or refrain from tendering your units. You must make your own decision as to whether to tender some or all of your units.
Beneficial Ownership of Common Units by Directors and Executive Officers
The following table presents certain information regarding the beneficial ownership of our units as of April 7, 2022, by: (a) each person known to us to own beneficially 5% or more of our outstanding units, (b) each director of the General Partner, (c) each “named executive officer” of the General Partner and (d) all directors and executive officers of the General Partner as a group.
The percentage of common units owned is based on 20,715,251 common units outstanding as of April 7, 2022, exclusive of treasury units. To our knowledge, except under community property laws where applicable or as otherwise noted by footnote, the persons and entities named in the table below have sole voting and sole investment power over the units shown as beneficially owned by them. Unless otherwise indicated in the footnotes to the table below, each beneficial owner listed below maintains a mailing address of c/o Steel Partners Holdings L.P., 590 Madison Avenue, 32nd Floor, New York, New York 10022.
The number of units beneficially owned by each unitholder is determined under SEC rules and is not necessarily indicative of beneficial ownership for any other purpose. Under SEC rules, beneficial ownership includes those units over which the unitholder has sole or shared voting or investment power, which includes the power to vote or dispose of or to direct the voting or disposition of such unit. More than one person may be deemed to be a beneficial owner of the same units, and a person may be deemed to be a beneficial owner of units as to which such person has no economic interest.
A person is also deemed to be a beneficial owner of any units which that person has the right to acquire within 60 days of April 7, 2022, including through the exercise of an option or other convertible security or, in the case of an executive officer or director, upon termination of such individual’s service other than for death, disability or involuntary termination. For certain directors or executive officers below, we also include in the number of units beneficially owned restricted units as to which the person may exercise full voting rights, regardless of their vesting timeline. The “Percentage of Units Outstanding” column below treats as outstanding for each director or named executive officer (as well as all the directors and executive officers as a group) all units underlying (i) unvested restricted units as to which the individual director or named executive officers (or the directors and executive officers as a group) may exercise full voting rights as of April 7, 2022, regardless of their vesting timeline, and (ii) unvested restricted units held by that individual director or named executive officer (and for all directors and executive officers as a group), where acquirable within 60 days of April 7, 2022. Other than for the calculation of all directors and executive officers as a group, the “Percentage of Units Outstanding” column does not treat as outstanding for computation purposes LP units underlying equity awards held by other unitholders.
Name of Beneficial Owner | Number of Units(1) | Percentage of Units Outstanding(1)(2) | ||||||
Directors and Named Executive Officers: | ||||||||
Jack L. Howard | 4,145,746 | (3) | 20.0 | % | ||||
Warren G. Lichtenstein | 9,720,340 | (4) | 46.9 | % | ||||
John P. McNiff | 184,990 | (5) | * | |||||
General Richard I. Neal | 65,318 | (6) | * | |||||
Lon Rosen | 21,364 | (7) | * | |||||
James Benenson III | 157,479 | (8) | * | |||||
Eric P. Karros | 38,749 | (9) | * | |||||
Rory H. Tahari | 17,054 | (10) | * | |||||
Gordon A. Walker | 177,346 | (11) | * | |||||
Directors and executive officers as a group (10 persons)(12) | 14,528,386 | 70.2 | % | |||||
5% Unitholders: | ||||||||
Steel Partners, Ltd. | 6,764,428 | (13) | 32.7 | % |
* | Less than 1%. |
(1) | Beneficial ownership is determined in accordance with the rules of the SEC, based on factors including voting and investment power with respect to the units. See the narrative disclosure preceding the table. |
(2) | Absent banking regulatory approval, voting rights are forfeited with respect to all units in excess of 9.9% (other than the General Partner, the Manager or their respective affiliates), and such units may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders (unless otherwise required by law), calculating required votes, determining the presence of a quorum or for other similar purposes. |
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(3) | Consists of the following: (i) 1,719,178 units held directly by Mr. Howard, including units held by an entity that is 100% controlled by him; (ii) 1,551,652 units owned by the II Trust; (iii) 755,938 units owned by the III Trust; (iv) 61,358 units owned by the Article V Trust; (v) 1 units owned by SPH SPV-I LLC (“SPH SPV”); and (vi) 57,306 units owned by EMH Howard, LLC (“EMH”); and (vii) 312.5 shares owned by Mr. Howard’s spouse. Mr. Howard is the trustee of the II Trust, the III Trust and the Article V Trust and the managing member of EMH. Accordingly, Mr. Howard may be deemed to have investment and voting power with respect to the units held by the II Trust, the III Trust, the Article V Trust and EMH. Mr. Howard does not have a pecuniary interest in the units owned by the II Trust, the III Trust or the Article V Trust and disclaims beneficial ownership of the units owned by EMH, except to the extent of his pecuniary interest therein. In addition, Mr. Howard holds directly 241,375 of the Company’s 6.0% Series A preferred units, no par value (“Preferred Units”), and EMH holds 87,649 Preferred Units. The Preferred Units do not have voting rights. |
(4) | Consists of the following: (i) 586,612 units held directly by Mr. Lichtenstein; (ii) 970,000 units owned by WGL Capital LLC (“WGL”), a subsidiary of SPL; (iii) 5,794,428 units owned by SPL; (iv) 540,706 units owned by SPH SPV-I LLC, excluding one LP Unit held by Mr. Howard; and (v) 1,828,594 units held in three grantor retained annuity trusts. Mr. Lichtenstein is the manager of WGL, the Chief Executive Officer and a control person of SPL, the managing member of SPH SPV and the trustee of the grantor retained annuity trusts. Accordingly, Mr. Lichtenstein may be deemed to have investment and voting power with respect to the units owned by WGL, SPL, SPH SPV and the grantor retained annuity trusts. Mr. Lichtenstein disclaims beneficial ownership of the units owned by WGL, SPL, SPH SPV and the grantor retained annuity trusts, except to the extent of his pecuniary interest therein. In addition, Mr. Lichtenstein holds directly 416,948 Preferred Units. |
(5) | Consists of the following: (i) 65,823 units held directly by Mr. McNiff, including unvested restricted units over which Mr. McNiff may exercise full voting rights (see footnote 1); (ii) 45,816 units owned by the John and Evelyn McNiff Trust (the “McNiff Trust”); and (iii) 73,351 units owned by the Evelyn B Olin Irrevocable Trust (the “Olin Trust”). Mr. McNiff is a co-trustee of the McNiff Trust and a co-trustee of the Olin Trust. Accordingly, Mr. McNiff may be deemed to have investment and voting power with respect to the units held by the McNiff Trust and the Olin Trust. Mr. McNiff disclaims beneficial ownership of the units owned by the McNiff Trust and the Olin Trust, except to the extent of his pecuniary interest therein. |
(6) | Consists of the following: (i) 2,890 units beneficially owned by General Neal, including unvested restricted units over which General Neal may exercise full voting rights (see footnote 1); and (ii) 62,428 units owned by a family trust in which General Neal has beneficial ownership. |
(7) | Consists of the following: (i) 2,317 units beneficially owned by Mr. Rosen, including unvested restricted units over which Mr. Rosen may exercise full voting rights (see footnote 1); and (ii) 19,047 units owned by a family trust in which Mr. Rosen has beneficial ownership. |
(8) | Consists of (i) 17,054 units held directly by Mr. Benenson, including unvested restricted units over which Mr. Benenson may exercise full voting rights (see footnote 1) and (ii) 140,425 units held directly by Summa Holdings, Inc. (“Summa”), an entity controlled by Mr. Benenson. Mr. Benenson may be deemed to have investment and voting power with respect to the units held by Summa. Mr. Benenson disclaims beneficial ownership of the units held by Summa, except to the extent of his pecuniary interest therein. |
(9) | Consists of the following: (i) 2,890 Units beneficially owned by Mr. Karros, including unvested restricted units over which Mr. Karros may exercise full voting rights (see footnote 1); and (ii) 35,859 units owned by a family trust in which Mr. Karros has beneficial ownership. |
(10) | Consists of 17,054 Units beneficially owned by Ms. Tahari, including unvested restricted units over which Ms. Tahari may exercise full voting rights (see footnote 1). |
(11) | Consists of (i) 54,800 units held directly by Mr. Walker, including unvested restricted units over which Mr. Walker may exercise full voting rights (see footnote 1); (ii) 100,182 LP units held directly by the Gordon A. Walker Nonexempt Marital Trust; and (iii) 22,364 units held directly by the Gordon A. Walker Jr. Revocable Trust. The Gordon A. Walker Nonexempt Marital Trust also holds directly 50,000 Preferred Units. Mr. Walker has beneficial ownership of the units and Preferred Units held by Gordon A. Walker Nonexempt Marital Trust. |
(12) | Includes units beneficially owned by all directors of the General Partner, all of our named executive officers and our other executive officer, Jason Wong, Chief Financial Officer, as of April 4, 2022. |
(13) | Consists of the following: (i) 5,794,428 units owned by SPL; and (ii) 970,000 units owned by WGL. SPL is the sole member of WGL. Mr. Lichtenstein is the Chief Executive Officer and a control person of SPL and the manager of WGL. Accordingly, Mr. Lichtenstein and SPL may be deemed to have shared investment and voting power with respect to the units owned by SPL and Mr. Lichtenstein, SPL and WGL may be deemed to have shared investment and voting power with respect to the units owned by WGL. Mr. Lichtenstein disclaims beneficial ownership of the units owned by SPL, except to the extent of his pecuniary interest therein, and each of Mr. Lichtenstein and SPL disclaims beneficial ownership of the units owned by WGL, except to the extent of his or its pecuniary interest therein. |
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Our and Steel Excel’s respective directors, executive officers and affiliates have advised us that they do not intend to tender any of their units in the Offer.
Securities Transactions
Based on our records and on information provided to us by our directors, executive officers, General Partner, affiliates and subsidiaries, and Steel Excel, neither we nor any of our or Steel Excel’s respective directors, executive officers, General Partner, affiliates or subsidiaries nor, to the best of our knowledge, any other person controlling the Company or any executive officer or director of any such controlling entity or of our subsidiaries, has effected any transactions involving our common units during the 60 days prior to April 7, 2022.
The following chart sets forth the date, number of common units and price per unit (excluding brokerage commissions) for each transaction in the Company’s securities effected by the Company during the past 60 days. Each of the following transactions represents open-market repurchases of the Company’s common units made pursuant to its unit repurchase plan, as further described in Section 10 hereof.
Date of Transaction | Number of Units | Price Per Unit (excluding brokerage commissions) | ||||||
02/07/2022 | 4,273 | $ | 34.2056 | |||||
02/08/2022 | 1,821 | $ | 34.8444 | |||||
02/09/2022 | 4,273 | $ | 36.6418 | |||||
02/10/2022 | 1,869 | $ | 37.1708 | |||||
02/11/2022 | 798 | $ | 39.0245 | |||||
02/14/2022 | 639 | $ | 38.3195 | |||||
02/15/2022 | 2,895 | $ | 39.3759 | |||||
02/16/2022 | 3,705 | $ | 39.3256 | |||||
02/18/2022 | 4,126 | $ | 39.4891 | |||||
02/22/2022 | 2,855 | $ | 39.2135 | |||||
02/23/2022 | 35,000 | $ | 39.2500 | |||||
02/24/2022 | 3,014 | $ | 39.7286 | |||||
03/01/2022 | 40,500 | $ | 40.0000 |
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8. | PRICE RANGE OF UNITS AND UNITHOLDERS |
Our common units are listed and traded on NYSE under the symbol “SPLP.” The following table sets forth the high and the low closing sales prices of our common units as reported on the NYSE for the periods indicated.
Closing Unit Prices | ||||||||
High | Low | |||||||
Fiscal Year Ending December 31, 2022: | ||||||||
First Quarter | $ | 44.56 | $ | 39.79 | ||||
Second Quarter (through April 6, 2022) | $ | 40.54 | $ | 39.59 | ||||
Fiscal Year Ending December 31, 2021: | ||||||||
First Quarter | $ | 14.11 | $ | 10.35 | ||||
Second Quarter | $ | 30.52 | $ | 13.86 | ||||
Third Quarter | $ | 35.20 | $ | 28.00 | ||||
Fourth Quarter | $ | 42.00 | $ | 28.17 | ||||
Fiscal Year Ending December 31, 2020: | ||||||||
First Quarter | $ | 12.12 | $ | 5.42 | ||||
Second Quarter | $ | 6.54 | $ | 4.45 | ||||
Third Quarter | $ | 7.39 | $ | 4.77 | ||||
Fourth Quarter | $ | 10.97 | $ | 5.34 |
On April 6, 2022, the last full trading day before the announcement of the Offer, the reported closing price of our common units on the NYSE was $40.54 per unit. We recommend that holders obtain current market quotations for the units, among other factors, before deciding whether or not to tender their units.
9. | SOURCE AND AMOUNT OF FUNDS |
The Offer is not subject to any financing condition. Assuming the Offer is fully subscribed, we expect the aggregate purchase price for the units, together with related fees and expenses, to be approximately $100.3 million. We plan to fund any purchase of units pursuant to the Offer, including the related fees and expenses, using available domestic cash and borrowings under our Credit Facility (as defined below). As of April 4, 2022, we had approximately $3.2 million of available domestic cash and approximately $281.8 million available for borrowing under the Credit Facility. The Company has no alternative financing arrangements or plans relating to the Offer other than those described herein.
The Company’s senior credit agreement, as amended and restated (the “Credit Agreement”), includes a revolving credit facility in an aggregate principal amount not to exceed $600 million, which includes a $50 million sub-facility for swing line loans, a $50 million sub-facility for standby letters of credit and a currency sub-limit (available in euros and pounds sterling) equal to the lesser of $75 million and the total amount of the revolving credit commitment (as such term is defined in the Credit Agreement). The Credit Agreement covers substantially all of the Company’s subsidiaries, with the exception of WebBank, and permits the Company and the covered subsidiaries, under certain circumstances, to increase the aggregate principal amount of the revolving credit commitments under the Credit Agreement by $300 million plus additional amounts so long as the Leverage Ratio (as such term is defined in the New Credit Agreement) would not exceed 3.50:1. As of December 31, 2021 borrowings under the Credit Agreement bear interest, at the borrowers’ option, at annual rates of either Base Rate, Secured Overnight Financing Rate (SOFR) Rate or Term Risk-Free Rate (RFR), plus an applicable margin, as set forth in the Credit Agreement. The Credit Agreement also provides for a commitment fee to be paid on unused borrowings. The weighted-average interest rate on the Credit Agreement was 1.44% at December 31, 2021. As of December 31, 2021, letters of credit totaling approximately $9,151,000 had been issued under the Credit Agreement. The primary use of the Company’s letters of credit are to support the performance and financial obligations for environmental matters, insurance programs and real estate leases. The Credit Agreement permits the Company to borrow for the dividends on its preferred units, pension contributions, investments, acquisitions and other general corporate expenses. Based on financial results as of December 31, 2021, the Company’s total availability under the Credit Agreement, which is based upon Consolidated Adjusted EBITDA and certain covenants as described in the Credit Agreement, was approximately $321 million.
On December 29, 2026, the Credit Agreement will expire, and all outstanding amounts will be due and payable. The Credit Agreement is guaranteed by substantially all existing and thereafter acquired assets of the borrowers and the guarantors, as defined in the agreement, and a pledge of all of the issued and outstanding shares of capital stock of each of the borrowers’ and guarantors’ subsidiaries, and is fully guaranteed by the guarantors. The Credit Agreement is subject to certain mandatory prepayment provisions and restrictive and financial covenants, which include a maximum ratio limit on Total Leverage and a minimum ratio limit on Interest Coverage, each as defined. The Company was in compliance with all financial covenants as of December 31, 2021.
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10. | TRANSACTIONS AND AGREEMENTS CONCERNING UNITS |
Agreements and Arrangements Relating to the Company’s Securities
Other than as set forth below, and as set forth in our Certificate of Limited Partnership, as amended, and Fourth Amended and Restated Limited Partnership Agreement, neither we nor, to the best of our knowledge, any of our affiliates, directors or executive officers, is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly, to the tender offer or with respect to any of our securities, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees or loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations.
Depositary and Information Agent. The Company has retained American Stock Transfer & Trust Company, LLC to act as the Depositary and MacKenzie Partners, Inc. to act as the Information Agent in connection with the Offer. The Company will pay the Depositary and the Information Agent reasonable and customary compensation for their services in connection with the Offer, plus reimbursement for out-of-pocket expenses. The Company will indemnify the Depositary and the Information Agent against certain liabilities and expenses in connection with their services, including liabilities under the federal securities laws.
Class B units and Class C units. The holders of our Class B units and Class C units have the same rights as holders of our regular common units, except that net losses are not allocated to a holder of Class B units or Class C units, liquidating distributions made by the Company to such holder may not exceed the amount of its capital account allocable to its Class B units or Class C units, and they may not be sold in the public market until the capital account allocable to a Class B unit or a Class C unit is equal to the capital account allocable a regular common unit and, therefore, such common unit has converted automatically into a regular common unit. We are not purchasing any Class B units or Class C units in this Offer.
Unit Repurchase Program. In November 2021, the Board of Directors of the Company approved the repurchase of up to an additional 1,120,869 of the Company’s common units under the Repurchase Program. During the year ended December 31, 2021, the Company purchased 1,894,297 common units for an aggregate price of approximately $45,039,000 under the Repurchase Program. From January 1, 2022 through March 1, 2022, the Company repurchased 268,623 common units for approximately $10,418,000. Since inception of the Repurchase Program, the Company has purchased 6,520,868 common units for an aggregate purchase price of approximately $109,802,000 and there remain 1,119,002 common units that may yet be purchased under the Repurchase Program.
Preferred Units. The Company’s 6.0% Series A preferred units, no par value (the “SPLP Preferred Units”) entitle the holders to a cumulative quarterly cash or in-kind (or a combination thereof) distribution. The SPLP Preferred Units have no voting rights, except that holders of the preferred units have certain voting rights in limited circumstances relating to the election of directors following the failure to pay six quarterly distributions. As of December 31, 2021, there were 6,422,128 SPLP Preferred Units outstanding.
Dividends/Distributions on Preferred Units. On February 16, 2022, the board of directors of our General Partner declared a regular quarterly cash distribution of $0.375 per unit, payable March 15, 2022, to unitholders of record as of March 1, 2022, on its SPLP Preferred Units.
Management Agreement. The Company is managed by the Manager, pursuant to the terms of the Management Agreement, which receives a fee at an annual rate of 1.5% of total Partners’ capital (“Management Fee”), payable on the first day of each quarter and subject to quarterly adjustment. In addition, the Company may issue to the Manager partnership profits interests in the form of incentive units, which will be classified as Class C common units of the Company, upon the attainment of certain specified performance goals by the Company, which are determined as of the last day of each fiscal year.
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The Management Agreement is automatically renewed each December 31 for successive one-year terms unless otherwise determined at least 60 days prior to each renewal date by a majority of the Company’s independent directors. The Management Fee was approximately $8,559,000 for the year ended December 31, 2021.
The Company will bear (or reimburse the Manager with respect to) all of its reasonable costs and expenses of the managed entities, the Manager, the General Partner or their affiliates, including, but not limited to: legal, tax, accounting, auditing, consulting, administrative, compliance, investor relations costs related to being a public entity rendered for the Company or the General Partner, as well as expenses incurred by the Manager and the General Partner which are reasonably necessary for the performance by the Manager of its duties and functions under the Management Agreement and certain other expenses incurred by managers, officers, employees and agents of the Manager or its affiliates on behalf of the Company. Reimbursable expenses incurred by the Manager in connection with its provision of services under the Management Agreement were approximately $3,733,000 during the year ended December 31, 2021.
Other Agreements and Relationships with Executive Officers, Directors, Controlling Persons and Subsidiaries
SP Corporate Services Agreements. The Company’s subsidiary, Steel Services Ltd (“Steel Services”), through management services agreements with its subsidiaries and portfolio companies, provides services, which include assignment of C-Level management personnel, legal, tax, accounting, treasury, consulting, auditing, administrative, compliance, environmental health and safety, human resources, marketing, investor relations, operating group management and other similar services. In addition to its servicing agreements with the Company and its consolidated subsidiaries, Steel Services has management services agreements with other companies considered to be related parties, including J. Howard Inc., Steel Partners, Ltd. and affiliates, and Steel Connect, Inc. In total, Steel Services currently charges approximately $4,474,000 annually to these companies. All amounts billed under these service agreements are classified as a reduction of selling, general and administrative expenses.
Mutual Securities. Pursuant to the Management Agreement, the Manager is responsible for selecting executing brokers. Securities transactions for us are allocated to brokers on the basis of reliability and best price and execution. The Manager has selected Mutual Securities, Inc. as an introducing broker and may direct a substantial portion of the managed entities’ trades to such firm, among others. An officer of the Manager and SPH GP is affiliated with Mutual Securities, Inc. The commissions paid by us to Mutual Securities, Inc. were not significant in any period.
11. | EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS; CONDITIONS |
We expressly reserve the right, in our sole discretion, at any time and from time to time, and regardless of whether or not any of the events set forth in Section 6 shall have occurred or shall be determined by us to have occurred, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and payment for, units by giving oral or written notice of such extension to the Depositary and making a public announcement of such extension. We also expressly reserve the right, in our sole discretion, to terminate the Offer and not accept for payment or pay for units not theretofore accepted for payment or paid for or, subject to applicable law, to postpone payment for units upon the occurrence of any of the conditions specified in Section 6 hereof by giving oral or written notice of such termination or postponement to the Depositary and making a public announcement of such termination or postponement. Our reservation of the right to delay payment for units which we have accepted for payment is limited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that we pay the consideration offered or return the units tendered promptly after termination or withdrawal of the Offer.
Subject to compliance with applicable law, we further reserve the right, in our sole discretion, and regardless of whether any of the events set forth in Section 6 shall have occurred or shall be deemed by us to have occurred, to amend the Offer in any respect, including, without limitation, by decreasing or increasing the consideration offered in the Offer to holders of units or by decreasing or increasing the value of units that we seek to purchase in this Offer. Amendments to the Offer may be made at any time and from time to time effected by public announcement, such announcement, in the case of an extension, to be issued no later than 9:00 A.M., Eastern Time, on the next business day after the last previously scheduled or announced Expiration Date. Any public announcement made under the Offer will be disseminated promptly to unitholders in a manner reasonably designed to inform unitholders of such change. Without limiting the manner in which we may choose to make a public announcement, except as required by applicable law, we shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release through a national newswire service.
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If we change the terms of the Offer or the information concerning the Offer, we will extend the Offer to the extent required by Rules 13e-4(d)(2), 13e-4(e)(3) and 13e-4(f)(1) promulgated under the Exchange Act. These rules and certain related releases and interpretations of the SEC provide that the minimum period during which an Offer must remain open following material changes in the terms of the Offer or information concerning the Offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information. If the Company (1) increases the price to be paid for the units above $42.00 per unit, decreases the price to be paid for the units below $40.00 per unit, decreases the value of units being sought in the Offer (and thereby decreases the number of units purchasable in the Offer), or increases the value of units being sought in the Offer (and thereby increases the number of units purchasable in the Offer) by more than 2% of our outstanding units, and (2) the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that such notice of an increase or decrease is first published, sent or given to security holders in the manner specified in this Section 11, the Offer will be extended until the expiration of such period of 10 business days.
12. | U.S. FEDERAL INCOME TAX CONSEQUENCES |
The following is a summary of certain U.S. federal income tax consequences of the Offer to unitholders whose units are properly tendered and accepted for payment pursuant to the Offer. Those unitholders who do not participate in the Offer should not have any U.S. federal income tax consequences as a result of the Offer. This discussion addresses only units held as capital assets. This discussion is based upon the United States Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed United States Treasury Regulations promulgated under the Code, published rulings, administrative pronouncements and judicial decisions, all as of the date hereof and any changes to which could affect the tax consequences described in this Offer to Purchase (possibly on a retroactive basis). Except as otherwise specifically addressed, this discussion does not address all aspects of the U.S. federal income tax consequences that may be relevant to particular unitholders because of their personal circumstances, including, without limitation, certain financial institutions, brokers, dealers or traders in securities or commodities, insurance companies, “S” corporations, partnerships (including entities treated as partnerships for U.S. federal incomes tax purposes), expatriates, tax-exempt organizations, tax-qualified retirement plans, persons who are subject to alternative minimum tax, persons who hold units as a position in a “straddle” or as part of a “hedging,” “conversion” or “integrated” transaction, persons who are not United States Unitholders as defined below, or United States Unitholders (as defined below) that have a functional currency other than the United States dollar.
This discussion also does not address tax considerations arising under any state, local or foreign laws, or under U.S. federal estate or gift tax laws. In addition, if a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) is a unitholder, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A unitholder that is a partnership, and partners in such partnership, should consult their own tax advisors regarding the tax consequences of participating in the Offer.
This discussion assumes that the Company is properly classified as a partnership, and not as a corporation under Section 7704 of the Code.
For purposes of this discussion, a “United States Unitholder” is a beneficial owner of units that for U.S. federal income tax purposes is any of the following:
● | a citizen or resident of the United States; |
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● | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any State or the District of Columbia; |
● | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
● | a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons has the authority to control all substantial decisions of the trust, or certain other trusts considered to be “United States persons” for U.S. federal income tax purposes. |
For purposes of this discussion, a “Non-United States Unitholder” is a beneficial owner of units, other than a partnership or other entity treated as a partnership for U.S. federal income tax, who is not a United States Unitholder.
UNITHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
Consequences to a Tendering United States Unitholder
In general, a United States Unitholder who tenders less than all of its units (or less than all of its units are accepted) should be treated as receiving a distribution from the Company. The United States Unitholder should recognize gain (but not loss) only to the extent that the “amount realized” exceeds the United States Unitholder’s adjusted tax basis in all of its units, including units that are not purchased by the Company, as discussed further below. If a United States Unitholder tenders all of its units (and all of its units are accepted), the receipt of the proceeds should be treated as a liquidating distribution, and the United States Unitholder should recognize gain or loss equal to the difference between the United States Unitholder’s “amount realized” and its adjusted tax basis in the units tendered.
The “amount realized” with respect to a United States Unitholder’s units will be equal to the sum of (x) the amount of cash received pursuant to the Offer, and (y) the reduction in the amount of liabilities of the Company properly allocable to the United States Unitholder with respect to the units tendered for U.S. federal income tax purposes (as determined under Section 752 of the Code). The amount of a United States Unitholder’s adjusted tax basis in its units will vary depending upon the United States Unitholder’s particular circumstances. In addition, a tendering United States Unitholder will be allocated a share of the Company’s items of income, gain, loss and deduction for the year of the Offer with respect to the units sold in accordance with the provisions of the Company’s Limited Partnership Agreement concerning transfers of units. Such allocation by the Company to the United States Unitholder for that year could affect the United States Unitholder’s adjusted tax basis in units and, therefore, the amount of such United States Unitholder’s taxable gain or loss upon a sale of units pursuant to the Offer.
For U.S. federal income tax purposes, a United States Unitholder is considered to own a single interest in the Company, having a single adjusted tax basis, without regard to the number of units held or whether the units were purchased at different times. If a United States Unitholder sells less than all of its units, then such United States Unitholder should be treated as recovering a portion of its overall adjusted tax basis in its units, rather than identifying the cost or other tax basis that is specifically attributable to the particular units sold, and the United States Unitholder should be deemed to have one or more holding periods for the transferred units in proportion to its holding period(s) for that United States Unitholder’s overall interest. Any United States Unitholder considering a tender of less than all of its units is encouraged to consult such United States Unitholder’s own tax adviser as to these and other consequences to it of a partial sale.
The gain or loss recognized by a United States Unitholder on a sale of units pursuant to the Offer generally should be treated as a capital gain or loss if the units were held by the United States Unitholder as a capital asset. That capital gain or loss will be treated as long-term capital gain or loss if the tendering United States Unitholder’s holding period for the units exceeds one year. Under current law, long-term capital gains of individuals are generally taxed at a favorable marginal federal income tax rate. The deductibility of capital losses is subject to limitations.
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Backup Withholding
Backup withholding tax will be imposed on the gross proceeds paid to a tendering United States Unitholder unless the United States Unitholder timely provides such United States Unitholder’s taxpayer identification number (employer identification number or social security number) to the Depositary, certifies as to no loss of exemption from backup withholding tax, complies with applicable requirements of the backup withholding rules or is otherwise exempt from backup withholding tax. Therefore, each tendering United States Unitholder should complete and sign the Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding, unless such United States Unitholder otherwise establishes to the satisfaction of the Depositary that such United States Unitholder is not subject to backup withholding tax. Certain United States Unitholders (including, among others, all corporations) are not subject to these backup withholding requirements.
In addition, Non-United States Unitholders are not subject to these backup withholding requirements. In order for a Non-United States Unitholder to qualify as an exempt recipient, that Non-United States Unitholder must submit an IRS Form W-8 or a Substitute Form W-8. Such statements can be obtained from the Depositary. To qualify as an exempt recipient on the basis of foreign status, a unitholder must submit a properly complete Form W-8BEN, Form W-8ECI or other applicable form of the Form W-8 series, signed under penalties of perjury, attesting to that person’s exempt status. A unitholder would use a Form W-8BEN to certify that it: (a) is neither a citizen nor a resident of the United States; (b) has not been and reasonably does not expect to be present in the United States for a period aggregating 183 days or more during the calendar year; and (c) reasonably expects not to be engaged in a trade or business within the United States to which the gain on the sale of the units would be effectively connected; and would use a Form W-8ECI to certify that: (x) it is neither a citizen nor resident of the United States; and (y) the proceeds of the sale of the units is effectively connected with a United States trade or business. A foreign unitholder may also use a Form W-8BEN to certify that it is eligible for benefits under a tax treaty between the United States and such foreign person’s country of residence.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be refunded or credited against the unitholder’s U.S. federal income tax liability if certain required information is furnished to the IRS. Unitholders should consult their own tax advisors regarding application of backup withholding in their particular circumstances and the availability of, and procedure for obtaining, an exemption from backup withholding under current Treasury Regulations.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO YOU OF THE OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
13. | ADDITIONAL INFORMATION; MISCELLANEOUS |
We filed with the SEC a Tender Offer Statement on Schedule TO, of which this Offer is a part. This Offer does not contain all of the information contained in the Schedule TO and the exhibits to the Schedule TO. We recommend that unitholders review the Schedule TO, including the exhibits, and the other materials we have filed with the SEC before making a decision on whether to accept the Offer.
We will assess whether we are permitted to make the Offer in all jurisdictions. If we determine that we are not legally able to make the Offer in a particular jurisdiction, we reserve the right to withdraw the Offer in that particular jurisdiction and we will inform unitholders of this decision. If we withdraw the Offer in a particular jurisdiction, the Offer will not be made to, nor will tenders be accepted from or on behalf of, the holders residing in that jurisdiction.
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Our Board of Directors recognizes that the decision to accept or reject this Offer is an individual one that should be based on a variety of factors and unitholders should consult with personal advisors if holders have questions about their financial or tax situation.
We are subject to the information requirements of the Exchange Act and in accordance therewith we file and furnish reports and other information with the SEC. All reports and other documents we have filed or furnished with the SEC, including the Schedule TO relating to the Offer, or will file or furnish with the SEC in the future, are available free of charge on the Internet website maintained by the SEC at www.sec.gov or by us in the SEC Filings section of the Company’s website, www.steelpartners.com.
The rules of the SEC allow us to “incorporate by reference” information into this Offer to Purchase, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The following documents contain important information about us and we incorporate them herein by reference:
● | our Annual Report on Form 10-K for the year ended December 31, 2021; |
● | our Current Reports on Form 8-K filed with the SEC on January 10, 2022, February 17, 2022 and April 4, 2022. |
Any statement contained in any document incorporated by reference into this Offer to Purchase shall be deemed to be modified or superseded to the extent that an inconsistent statement is made in this Offer to Purchase or any subsequently filed document referenced above. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Offer to Purchase.
Unitholders can obtain any of the documents incorporated by reference in this Offer to Purchase from us or from the SEC’s website at the addresses described above. Documents incorporated by reference are available from us without charge, excluding any exhibits to those documents. Unitholders can obtain documents incorporated by reference in this Offer to Purchase by requesting them in writing or by telephone from us at 590 Madison Avenue, 32nd Floor, New York, New York, 10022, attention Corporate Secretary; telephone: (212) 520-2300. Any unitholder requesting information should be sure to include his or her complete name and address in the request.
Sincerely,
/s/ Warren Lichtenstein
Warren Lichtenstein
Executive Chairman
Steel Partners Holdings L.P.
April 7, 2022
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The Depositary for the Offer is:
If delivering by hand or courier:
American Stock Transfer & Trust Company, LLC Operations Center Attn: Reorganization Department 6201 15th Avenue Brooklyn, New York 11219 |
For assistance call (877) 248-6417 or (718) 921-8317
Please direct any questions or requests for assistance and requests for additional copies of this Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery to the Information Agent at the telephone number and address set forth below. Unitholders also may contact their broker, dealer, commercial bank, trust company or nominee for assistance concerning the Offer.
The Information Agent for the Tender Offer is:
1407 Broadway
New York, New York 10018
(212) 929-5500
or
Call Toll-Free (800) 322-2885
Email: tenderoffer@mackenziepartners.com