Terms

Series

9.00% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

Liquidation Preference

$25.00

Coupon Rate

9%

Rate Type

Fixed To Floating

Annual Dividend

$2.25

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

Yes

Callable

Yes

First Call Date

July 1, 2022

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness And Other Liabilities, Senior Securities (Any Equity Securities Expressly Designated As Senior); Pari Passu With: 10.75% Class A Convertible Preferred Units, Any Future Parity Securities Expressly Designated As Such; Senior To: Common Units, Junior Securities (Any Equity Securities Not Expressly Senior To Or On Parity With Class B Preferred Units)

Regulatory (Basel III) Call

No

Tax Classification

Mlp K1

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

7,400,000

Prospectus Summary

NGL Energy Partners LP is offering 7,400,000 units of its 9.00% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units at a $25.00 liquidation preference per unit, listed on the NYSE. The units pay a fixed 9.00% per annum ($2.25/unit annually, $0.5625/unit quarterly) through June 30, 2022, then convert to a floating rate of Three-Month LIBOR plus 721.3 basis points, reset quarterly. The issuer may call the units at $25.00 on or after July 1, 2022. These units are cumulative, meaning any skipped distributions accrue and must be paid in full before any distributions may be made to common unitholders or other junior securities. The Class B Preferred Units sit above NGL's common units in the capital stack but rank junior to all of NGL's existing and future debt — approximately $3.0 billion as of March 31, 2017 — and any liabilities of the partnership. They rank on parity with the existing 10.75% Class A Convertible Preferred Units. As a master limited partnership, NGL has no bank subsidiary structure, but the units are partnership equity interests fully subordinated to senior secured and unsecured creditors. There is no regulatory capital call provision. Upon a Change of Control, the issuer may optionally redeem the units at $25.00, or holders may convert into common units at the lesser of ($25.00 plus accrued distributions) divided by the Common Unit Price or a cap of 3.63636 common units per preferred unit. At the $25.00 offering price, the fixed-period yield is 9.00% per annum, payable quarterly on January 15, April 15, July 15, and October 15, with record dates on the first calendar day of the respective payment month. Critically, distributions are treated as guaranteed payments for use of capital and taxed as ordinary income — not as qualified dividends — making them ineligible for the 15%/20% preferential QDI rate or the corporate dividends-received deduction; holders will receive a Schedule K-1. The dividend stopper prevents any distribution to common or junior unitholders if cumulative Class B distributions are in arrears, providing a layer of income protection, though the partnership's general partner must first declare distributions, and compliance with debt covenants may limit the partnership's ability to make such payments.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Conversion Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If NGL Energy Partners has not paid full cumulative distributions on the Class B Preferred Units and any parity securities through the most recent payment dates, it is blocked from paying any distributions on junior securities (including common units), other than distributions paid in junior securities themselves.

Other Preferreds from NGL Energy Partners LP

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 31 (Weak)