Terms

Series

9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

Liquidation Preference

$25.00

Coupon Rate

9.625%

Rate Type

Fixed To Floating

Annual Dividend

$2.41

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

Yes

Callable

Yes

First Call Date

April 15, 2024

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness, Other Liabilities, Senior Securities (If Any Issued In Future); Pari Passu With: 10.75% Class A Convertible Preferred Units, 9.00% Class B Fixed-To-Floating Rate Cumulative Redeemable Perpetual Preferred Units, Future Parity Securities; Senior To: Common Units, Junior Securities (Any Class Established After Issue Date Not Expressly Made Senior Or Parity)

Regulatory (Basel III) Call

No

Tax Classification

Mlp K1

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

1,600,000

Prospectus Summary

NGL Energy Partners LP is offering 1,600,000 units of its 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units at a liquidation preference of $25.00 per unit. The fixed rate of 9.625% per annum ($2.40625 annually, paid $0.601563 per quarter) applies until April 15, 2024, after which distributions reset quarterly to Three-Month LIBOR plus 738.4 basis points. The first call date is April 15, 2024, at $25.00 plus accrued distributions. These units are cumulative, meaning any missed distributions accrue and must be paid in full before distributions can be made on junior securities, providing holders with a measure of protection against distribution interruptions. The Class C Preferred Units rank senior to NGL's common units and any future junior securities, and on parity with the existing Class A Convertible Preferred Units and Class B Preferred Units. However, they are subordinated to all of NGL's existing and future debt obligations — as of December 31, 2018, the partnership carried approximately $2.2 billion in total long-term indebtedness. As an MLP holding company structure, the preferred units have a direct claim on partnership assets but sit below all creditors. There is no regulatory capital call provision, as NGL is a midstream MLP rather than a bank. Change of Control protection exists in the form of an optional redemption right and, if NGL does not redeem, a holder conversion right into common units (capped at 3.5791 common units per preferred unit). At the $25.00 offering price, the initial yield is 9.625%. Distributions are payable quarterly on January 15, April 15, July 15, and October 15, with record dates set on the first day of each such month. Critically, distributions are treated as guaranteed payments for the use of capital and will be taxable to holders as ordinary income — they do not qualify for the preferential 15%/20% qualified dividend income rate nor the corporate dividends-received deduction; investors will receive a Schedule K-1. Holders will generally not share in partnership depreciation or deductions. The dividend stopper mechanism blocks any distribution on common units or other junior securities if cumulative distributions on the Class C Preferred Units (or any parity securities) are in arrears.

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 C Preferred Units (and any parity securities), it may not pay any distributions on junior securities such as common units.

Other Preferreds from NGL Energy Partners LP

Div Score Breakdown

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