EXPLANATORY NOTE
This Form 8-K/A is filed as an amendment to the Current Report on Form 8-K of Westlake Chemical Partners LP, originally filed with the Securities and Exchange Commission on March 27, 2019 (the “Original Filing”). The purpose of this amendment is to correct a clerical error in the amount of the net proceeds expected to be received by the Partnership in the Private Placement (each as defined below) reported in the Original Filing and this amendment does not modify, amend, or update in any way any other item or disclosure in the Original Filing.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
On March 26, 2019, Westlake Chemicals Partner LP (the “Partnership”) agreed to purchase an additional 4.50% limited partner interest in Westlake Chemical OpCo LP (“OpCo”) on a fully diluted basis for approximately $201.4 million, which will result in the Partnership owning an approximately 22.8% limited partner interest in OpCo on a fully diluted basis (such transaction, the “OpCo Equity Purchase”), pursuant to an Equity Purchase Agreement (the “Equity Purchase Agreement”) by and among the Partnership, OpCo and WPT LLC, which is a subsidiary of Westlake Chemical Corporation (“Westlake”). The Partnership expects to fund the consideration for the OpCo Equity Purchase with the proceeds from the Private Placement (as described in Item 3.02 of this Current Report on Form8-K) and borrowings under its senior unsecured revolving credit agreement with Westlake Chemical Finance Corporation, an affiliate of Westlake (the “MLP Revolver”). OpCo intends to use the proceeds from the OpCo Equity Purchase to repay borrowings under its intercompany debt agreements with Westlake.
Each of the Partnership, OpCo, Westlake Chemical Partners GP LLC, which is the general partner of the Partnership (the “General Partner”), WPT LLC and Westlake Chemical Finance Corporation is a direct or indirect subsidiary of Westlake. As a result, certain individuals, including certain officers and directors of Westlake and the General Partner, serve as officers and/or directors of more than one of such other entities. In particular, Messrs. James Chao and Albert Chao serve as officers and directors of Westlake and the General Partner as well as certain of the other entities.
As more fully described in the “Certain Relationships and Related Transactions, and Director Independence” section of the Partnership’s Annual Report on Form10-K for the year ended December 31, 2018, which is incorporated herein by reference, Westlake owns and controls the General Partner and owns through its wholly-owned subsidiaries 14,122,230 common units representing limited partner interests in the Partnership (“Common Units”) and the Partnership’s incentive distribution rights. In addition, the General Partner owns a non-economic general partner interest in the Partnership.
The terms of the OpCo Equity Purchase and the Affiliated Entity’s (as defined in Item 3.02 of this Current Report on Form8-K) participation in the Private Placement were approved by the conflicts committee (the “Conflicts Committee”) of the board of directors (the “Board”) of the General Partner. The Conflicts Committee, which consists entirely of independent directors, engaged an independent financial advisor and independent legal counsel in its review of such transactions.
A full description of the MLP Revolver can be found in the Partnership’s Annual Report on Form10-K for the year ended December 31, 2018 under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources,” which is incorporated herein by reference.
| Item 3.02. | Sale of Unregistered Units. |
On March 26, 2019, the Partnership agreed to issue and sell an aggregate of 2,940,818 Common Units in a private placement (the “Private Placement”) exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The purchasers in the Private Placement consist of certain unrelated institutional investors and an entity for the benefit of certain family members (the “Affiliated Entity” and, together with the unaffiliated institutional investors, the “Investors”) of Messrs. Albert Chao and James Chao, each of whom serves on the Board. The Common Units will be sold to the Investors in the Private Placement at $21.40 per Common Unit and are expected to result in net proceeds to the Partnership of approximately $62.5 million. The description in Item 2.01 of this Current Report on Form8-K with respect to the Conflict Committee’s approval of the Affiliated Entity’s participation in the Private Placement is incorporated herein by reference.
The Partnership also agreed to enter into a Registration Rights Agreement with the Investors in connection with the closing of the Private Placement, pursuant to which, among other things, the Partnership will give the Investors certain rights to require the Partnership to file and maintain a registration statement with respect to the resale of the Common Units purchased in the Private Placement.
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