GREEN PLAINS PARTNERS LP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AND RELATED NOTES THERETO
Introduction
On October 8, 2018, Green Plains Inc. (“GPRE”), the parent of Green Plains Partners LP (the “Partnership”), entered into an asset purchase agreement for the sale of three ethanol plants located in Bluffton, Indiana, Lakota, Iowa, and Riga, Michigan to Valero Renewable Fuels Company, LLC (“Valero”). Correspondingly, the Partnership entered into a separate asset purchase agreement with GPRE to sell the storage assets and assign the rail transportation assets to be disposed of in the sale to Valero for $120.9 million (the “Transaction). The Transaction was previously described in a Current Report of the Partnership on Form 8-K filed with the United States Securities and Exchange Commission on October 10, 2018. On November 15, 2018, the Partnership closed on the sale and received as consideration 8.7 million GPRE units and a portion of the general partner interest equating to 0.2 million hypothetical limited partner units to maintain the general partner’s 2% interest. The Partnership received as additional consideration approximately $2.6 million in cash related to the present value gain on railcars transferred, subject to certain post-closing adjustments.
The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2018, of the Partnership is presented as if the Transaction had occurred on September 30, 2018. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2018, and for the year ended December 31, 2017, are presented as if such events had occurred on January 1, 2017.
The unaudited pro forma condensed consolidated balance sheet and statements of operations included herein are for informational purposes only and are not necessarily indicative of the results that might have occurred had the Transaction taken place on the respective dates assumed. Actual results may differ significantly from those reflected in the unaudited condensed consolidated pro forma financial statements for various reasons, including but not limited to, the differences between the assumptions used to prepare the unaudited pro forma condensed consolidated financial statements and actual results. The pro forma adjustments in the unaudited pro forma condensed consolidated balance sheet and the statements of operations included herein include the use of estimates and assumptions as described in the accompanying notes. The pro forma adjustments are based on information available to the Partnership at the time these unaudited pro forma condensed consolidated financial statements were prepared. The Partnership believes its current estimates provide a reasonable basis of presenting the significant effects of the Transaction.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the the accompanying notes in addition to the following:
•the historical financial statements of the Partnership as of and for the year ended December 31, 2017, and the related notes included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2017;
•the historical unaudited financial statements of the Partnership as of and for the nine months ended September 30, 2018, and the related notes included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018.
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GREEN PLAINS PARTNERS LP |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET |
AS OF SEPTEMBER 30, 2018 |
(in thousands) |
| | | | | | | | | |
| | Green Plains Partners | | Pro Forma Adjustments (Note 2) | | Pro Forma Consolidated |
ASSETS | | | | | | | | | |
Current assets | | | | | | | | | |
Cash and cash equivalents | | $ | 432 | | $ | 2,620 | (b) | $ | 3,052 |
Accounts receivable | | | 732 | | | - | | | 732 |
Accounts receivable from affiliates | | | 17,842 | | | - | | | 17,842 |
Prepaid expenses and other | | | 743 | | | - | | | 743 |
Total current assets | | | 19,749 | | | 2,620 | | | 22,369 |
| | | | | | | | | |
Property and equipment, net | | | 46,156 | | | (4,179) | (a) | | 41,977 |
Goodwill | | | 10,598 | | | - | | | 10,598 |
Investment in equity method investees | | | 3,580 | | | - | | | 3,580 |
Note receivable | | | 8,100 | | | - | | | 8,100 |
Other assets | | | 1,128 | | | - | | | 1,128 |
Total assets | | $ | 89,311 | | $ | (1,559) | | $ | 87,752 |
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LIABILITIES AND PARTNERS' CAPITAL | | | | | | | | | |
Current liabilities | | | | | | | | | |
Accounts payable | | $ | 7,534 | | $ | - | | $ | 7,534 |
Accounts payable to affiliates | | | 4,005 | | | - | | | 4,005 |
Accrued and other liabilities | | | 4,600 | | | - | | | 4,600 |
Asset retirement obligations | | | 676 | | | - | | | 676 |
Unearned revenue | | | 148 | | | - | | | 148 |
Total current liabilities | | | 16,963 | | | - | | | 16,963 |
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Long-term debt | | | 136,012 | | | - | | | 136,012 |
Deferred lease liability | | | 832 | | | - | | | 832 |
Asset retirement obligations | | | 2,904 | | | (427) | (a) | | 2,477 |
Total liabilities | | | 156,711 | | | (427) | | | 156,284 |
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Partners' capital | | | | | | | | | |
Common unitholders - public | | | 114,324 | | | - | | | 114,324 |
Common unitholders - Green Plains | | | (180,729) | | | 117,373 | (b) | | (181,838) |
| | | | | | (118,482) | (c) | | |
General partner interests | | | (995) | | | 2,395 | (b) | | (1,018) |
| | | | | | (2,418) | (c) | | |
Total partners' capital | | $ | (67,400) | | | (1,132) | | | (68,532) |
Total liabilities and partners' capital | | | 89,311 | | $ | (1,559) | | $ | 87,752 |
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GREEN PLAINS PARTNERS LP |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
FOR THE YEAR ENDED DECEMBER 31, 2017 |
(in thousands, except per unit amounts) |
| | | | | | | | | |
| | Green Plains Partners | | Pro Forma Adjustments (Note 2) | | Pro Forma Consolidated |
Revenues | | | | | | | | | |
Affiliate | | $ | 100,808 | | $ | (16,836) | (d) | $ | 83,972 |
Non-affiliate | | | 6,185 | | | - | | | 6,185 |
Total revenues | | | 106,993 | | | (16,836) | | | 90,157 |
Operating expenses | | | | | | | | | |
Operations and maintenance (excluding depreciation and amortization reflected below) | | | 33,501 | | | (3,915) | (d) | | 29,586 |
General and administrative | | | 4,223 | | | (5) | (d) | | 4,218 |
Depreciation and amortization | | | 5,111 | | | (502) | (d) | | 4,609 |
Total operating expenses | | | 42,835 | | | (4,422) | | | 38,413 |
Operating income | | | 64,158 | | | (12,414) | | | 51,744 |
Other income (expense) | | | | | | | | | |
Interest income | | | 81 | | | - | | | 81 |
Interest expense | | | (5,402) | | | - | | | (5,402) |
Other, net | | | 150 | | | - | | | 150 |
Total other expense | | | (5,171) | | | - | | | (5,171) |
Income before income taxes | | | 58,987 | | | (12,414) | | | 46,573 |
Income tax expense | | | (109) | | | - | | | (109) |
Equity investment loss | | | (11) | | | - | | | (11) |
Net income | | $ | 58,867 | | $ | (12,414) | | $ | 46,453 |
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Net income attributable to partners' ownership interests: | | | | | | | | | |
General partner | | $ | 1,177 | | $ | (248) | (d) | $ | 929 |
Limited partners - common unitholders | | | 28,869 | | | (6,088) | (d) | | 22,781 |
Limited partners - subordinated unitholders | | | 28,821 | | | (6,078) | (d) | | 22,743 |
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Earnings per limited partner unit (basic and diluted): | | | | | | | | | |
Common units | | $ | 1.81 | | $ | 0.16 | (d)(e) | $ | 1.97 |
Subordinated units | | $ | 1.81 | | $ | 0.16 | (d)(e) | $ | 1.97 |
Weighted average limited partner units outstanding (basic and diluted): | | | | | | | | | |
Common units | | | 15,916 | | | (4,350) | (e) | | 11,566 |
Subordinated units | | | 15,890 | | | (4,343) | (e) | | 11,547 |
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GREEN PLAINS PARTNERS LP |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 |
(in thousands, except per unit amounts) |
| | | | | | | | | |
| | Green Plains Partners | | Pro Forma Adjustments (Note 2) | | Pro Forma Consolidated |
Revenues | | | | | | | | | |
Affiliate | | $ | 72,949 | | $ | (12,473) | (d) | $ | 60,476 |
Non-affiliate | | | 4,546 | | | - | | | 4,546 |
Total revenues | | | 77,495 | | | (12,473) | | | 65,022 |
Operating expenses | | | | | | | | | |
Operations and maintenance (excluding depreciation and amortization reflected below) | | | 23,586 | | | (2,562) | (d) | | 21,024 |
General and administrative | | | 3,689 | | | (5) | (d) | | 3,684 |
Depreciation and amortization | | | 3,406 | | | (260) | (d) | | 3,146 |
Total operating expenses | | | 30,681 | | | (2,827) | | | 27,854 |
Operating income | | | 46,814 | | | (9,646) | | | 37,168 |
Other income (expense) | | | | | | | | | |
Interest income | | | 61 | | | - | | | 61 |
Interest expense | | | (5,253) | | | - | | | (5,253) |
Other, net | | | 75 | | | - | | | 75 |
Total other expense | | | (5,117) | | | - | | | (5,117) |
Income before income taxes | | | 41,697 | | | (9,646) | | | 32,051 |
Income tax expense | | | (70) | | | - | | | (70) |
Equity investment loss | | | (82) | | | - | | | (82) |
Net income | | $ | 41,545 | | $ | (9,646) | | $ | 31,899 |
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Net income attributable to partners' ownership interests: | | | | | | | | | |
General partner | | $ | 831 | | $ | (193) | (d) | $ | 638 |
Limited partners - common unitholders | | | 24,015 | | | (5,576) | (d) | | 18,439 |
Limited partners - subordinated unitholders | | | 16,699 | | | (3,877) | (d) | | 12,822 |
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Earnings per limited partner unit (basic and diluted): | | | | | | | | | |
Common units | | $ | 1.28 | | $ | 0.07 | (d)(e) | $ | 1.35 |
Subordinated units | | $ | 1.28 | | $ | 0.07 | (d)(e) | $ | 1.35 |
Weighted average limited partner units outstanding (basic and diluted): | | | | | | | | | |
Common units | | | 18,780 | | | (5,131) | (e) | | 13,649 |
Subordinated units | | | 13,038 | | | (3,562) | (e) | | 9,476 |
See “Introduction” for more information regarding the basis of presentation for our unaudited pro forma condensed consolidated financial statements.
Adjustments under the heading “Pro Forma Adjustments” in the accompanying pro forma condensed consolidated financial statements represent the following:
| (a) | | Represents the disposition of the property, plant, and equipment of the Bluffton, Indiana, Lakota, Iowa, and Riga, Michigan plants and the asset retirement obligation assets and liabilities of the rail transportation assets. |
| (b) | | Represents the partners’ capital effect of the net consideration of $117.1 million on the Transaction, as well as the receipt of $2.6 million of cash related to the present value gain on railcars transferred. The allocation to the Green Plains common unitholders and the general partner interest was based on a 98% and 2% ownership interest, respectively. This amount is not presented in the pro forma condensed consolidated statement of operations as it is nonrecurring in nature and will not have a continuing impact on the Partnership. |
| (c) | | Represents the partners’ capital effect to reflect the units received from Green Plains Inc. and subsequently retired. The allocation to the Green Plains common unitholders and the general partner interest was based on a 98% and 2% ownership interest, respectively. |
| (d) | | Represents the adjustments to eliminate revenues and expenses of the Bluffton, Indiana, Lakota, Iowa, and Riga, Michigan storage assets, and the associated rail transportation assets, with rail transportation revenue and expenses allocated based on the percentage of the fleet being disposed. The net income allocations to the general partner and limited partners were based on the ownership interests as of December 31, 2017, and September 30, 2018, respectively. |
| (e) | | Represents adjustments to shares outstanding and earnings per unit as if the Transaction had occurred on January 1, 2017. The share reduction was split between common and subordinated units based on the percentage of total shares as of December 31, 2017, and September 30, 2018, respectively. |
