| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
On April 6, 2022, USD Partners LP (the “Partnership”) and certain of its subsidiaries (together with the Partnership, the “Acquiring Entities”) completed the previously announced acquisition of equity interests in certain subsidiaries of USD Group LLC (“USD Group”) that own 100% of the Hardisty South Terminal (the “Acquisition”). Simultaneously with the closing of the Acquisition, the Partnership and USD Partners GP LLC, the general partner of the Partnership (the “General Partner”), completed (i) the cancellation of the Partnership incentive distribution rights (“IDRs”) held by the General Partner, and (ii) the conversion of the General Partner’s approximate 1.6% economic general partner interest in the Partnership into a non-economic general partner interest in the Partnership (the “GP/IDR Restructuring” and, together with the Acquisition, the “Transactions”).
The Transactions closed pursuant to a Contribution Agreement, dated as of March 27, 2022 (the “Contribution Agreement”), by and among the Acquiring Entities, and USD Group and certain subsidiaries of USD Group (“Contributor Parties”). Subject to the terms and conditions of the Contribution Agreement, simultaneously with the closing of the Transactions, the General Partner amended and restated the Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of October 15, 2014 to reflect the GP/IDR Restructuring (the “Third Amended and Restated Partnership Agreement”). The total consideration for the Transactions was $75 million in cash, plus 5,751,136 newly issued common units representing limited partner interests in the Partnership (the “Common Units”), which were issued to USD Group.
Upon the closing of the Transactions, the Partnership has 33,371,045 Common Units outstanding, of which USD Group owns 17,308,226 Common Units in the Partnership, representing an aggregate 51.9% limited partner interest. The terms of the Transactions, the Contribution Agreement and the Third Amended and Restated Partnership Agreement were approved by the board of directors of the General Partner (the “Board”), based on the approval and recommendation of the conflicts committee of the Board, which consists entirely of independent directors. The conflicts committee engaged an independent financial advisor and legal counsel.
The foregoing description of the Contribution Agreement is qualified in its entirety by reference to the full text of the Contribution Agreement, which was filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on March 29, 2022 and is incorporated herein by reference.
In connection with the closing of the Transactions, the Partnership entered into an amendment to its Amended and Restated Credit Agreement to permit the Partnership to acquire the Netherlands cooperative which is the parent company of the company that owns the Hardisty South Terminal. The foregoing description is not complete and is qualified in its entirety by reference to the full text of the amendment to the Amended and Restated Credit Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The description in Item 2.01 above of the Partnership’s issuance of the Common Units in connection with the Transactions is incorporated into this Item 3.02 by reference, insofar as such information relates to the sale of unregistered equity securities. The sale and issuance of the Partnership’s Common Units in connection with the Transactions are exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
