Partners' Capital | 11. PARTNERS’ CAPITAL A rollforward of the number of common and subordinated limited partner units outstanding is as follows: Common Units- Common Units- Subordinated Units- Public Green Plains Green Plains Total Units issued in connection with IPO, July 1, 2015 11,500,000 4,389,642 15,889,642 31,779,284 Units issued under the LTIP 10,089 - - 10,089 Units, December 31, 2015 11,510,089 4,389,642 15,889,642 31,789,373 Units issued under the LTIP 16,260 - - 16,260 Units forfeited under the LTIP (5,333) - - (5,333) Units, December 31, 2016 11,521,016 4,389,642 15,889,642 31,800,300 The partnership’s subordinated units are not entitled to distributions until the common units have received the minimum quarterly distribution for that quarter plus any arrearages of the minimum quarterly distribution from prior quarters. Subordinated units do not accrue arrearages. The subordination period ends on the first business day after the date the partnership pays distributions of at least $1.60 on each of the outstanding common and subordinated units and the corresponding distribution on the general partner’s 2% general partner interest for three consecutive, four quarter periods ending on or after June 30, 2018, or $2.40 on each of the outstanding common units and subordinated units, and the corresponding distribution on the general partner’s 2% general partner interest and incentive distribution rights for any four-quarter period ending on or after June 30, 2016, provided there are no arrearages of the minimum quarterly distributions from prior quarters at that time. When the subordination period ends, each outstanding subordinated unit will convert into one common unit and the common units will no longer be entitled to arrearages. Issuance of Additional Securities The partnership agreement authorizes the partnership to issue unlimited additional partnership interests on the terms and conditions determined by the general partner without unitholder approval. It is possible the partnership will fund acquisitions through the issuance of additional common units, subordinated units or other partnership interests. Holders of any additional common units are entitled to share equally with existing holders in the partnership’s distributions of available cash. The issuance of additional common units or other partnership interests may dilute the value of the existing holders of common units’ interests. In accordance with Delaware law and the provisions of the partnership agreement, the partnership may also issue additional interests that have rights to distributions or special voting rights the common units do not have, as determined by the general partner. In addition, the partnership agreement does not prohibit the partnership’s subsidiaries to issue equity interests, which may effectively rank senior to the common units. The general partner has the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase common units, subordinated units or other partnership interests from the partnership whenever, and on the same terms that, the partnership issues those interests to persons other than the general partner and its affiliates to maintain the percentage interest of the general partner and its affiliates, including interests represented by common and subordinated units that existed immediately prior to each issuance. The other holders of common units do not have preemptive rights under the partnership agreement to acquire additional common units or other partnership interests. Cash Distribution Policy Quarterly distributions are made within 45 days after the end of each calendar quarter, assuming we have sufficient available cash. Available cash generally means, all cash and cash equivalents on hand at the end of that quarter less cash reserves established by the general partner plus all or any portion of the cash on hand resulting from working capital borrowings made subsequent to the end of that quarter. The general partner is entitled to 2% of all distributions prior to the partnership’s liquidation. The general partner’s 2% general partner interest is reduced if the partnership issues additional partnership interests and the general partner does not contribute a proportionate amount of capital to the partnership to maintain its 2% general partner interest. Before the partnership makes quarterly distributions to subordinated unitholders, the common unitholders are entitled to receive the full minimum quarterly distribution plus any arrearages in distributions from prior quarters. During the subordination period, the partnership makes distributions in the following manner: · first, 98% to the common unitholders, pro rata, and 2% to the general partner, until the partnership distributes an amount equal to the minimum quarterly distribution for that quarter on each outstanding common unit; · second, 98% to the common unitholders, pro rata, and 2% to the general partner, until the partnership distributes an amount equal to any arrearages of the minimum quarterly distribution for any prior quarters during the subordination period on each outstanding common unit; · third, 98% to the subordinated unitholders, pro rata, and 2% to the general partner, until the partnership distributes an amount equal to the minimum quarterly distribution for that quarter on each outstanding subordinated unit; and · thereafter, in the manner described in the table below. The preceding discussion is based on the assumptions that the general partner maintains its 2% general partner interest and the partnership does not issue additional classes of equity securities. The general partner also holds incentive distribution rights that entitles it to receive increasing percentages, up to 48% , of available cash distributed from operating surplus, as defined in the partnership agreement, in excess of $0.46 per unit per quarter. The maximum distribution of 48% does not include any distributions the general partner or its affiliates may receive on its general partner interest, common units or subordinated units. The following table illustrates the percentage allocations of available cash from operating surplus during the subordination period between the unitholders and the general partner, as the holder of the incentive distribution rights, based on the specified target distribution levels: Marginal Percentage Interest in Distribution (1) Total Quarterly Distribution Per Unit - Target Amount Common and Subordinated Unitholders General Partner (as holder of Incentive Distribution Rights) (2) Minimum quarterly distribution $0.40 98.0% 2.0% First target distribution above $0.40 up to $0.46 98.0% 2.0% Second target distribution above $0.46 up to $0.50 85.0% 15.0% Third target distribution above $0.50 up to $0.60 75.0% 25.0% Thereafter above $0.60 50.0% 50.0% (1) Includes percentage interests of the general partner, as the holder of incentive distribution rights, and the unitholders when the partnership distributes available cash from operating surplus up to and including the corresponding amount in the column “Total Quarterly Distribution Per Unit Target Amount.” The percentage interests shown for the unitholders and the general partner for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. (2) The percentage interests for the general partner assume the general partner contributes additional capital necessary to maintain its 2% general partner interest, does not transfer any of its incentive distribution rights and there are no arrearages on common units. The tables below summariz e the 2016 and 2015 quarterly cash distributions: Year Ended December 31, 2016 Declaration Date Record Date Payment Date Quarterly Distribution Fourth quarter January 23, 2017 February 3, 2017 February 14, 2017 $ 0.4300 Third quarter October 20, 2016 November 4, 2016 November 14, 2016 0.4200 Second quarter July 20, 2016 August 5, 2016 August 12, 2016 0.4100 First quarter April 21, 2016 May 6, 2016 May 13, 2016 0.4050 Year Ended December 31, 2015 Declaration Date Record Date Payment Date Quarterly Distribution Fourth quarter January 21, 2016 February 5, 2016 February 12, 2016 $ 0.4025 Third quarter October 22, 2015 November 6, 2015 November 13, 2015 0.4000 The allocation of total cash distributions to the general and limited partners applicable to the period the distributions were earned are as follows (in thousands): Year Ended December 31, 2016 Year Ended December 31, 2015 Cash distributions: General partner $ 1,081 $ 521 Limited partners: Limited partner common units - public 19,176 9,237 Limited partner common units - Green Plains 7,309 3,523 Limited partner subordinated units - Green Plains 26,456 12,751 Total limited partners 52,941 25,511 Total $ 54,022 $ 26,032 |