Item 1A. Risk Factors
Item 1A. Risk Factors
There have been no material changes to the Partnership's risk factors since our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 21, 2024, except as follows.
The Merger is subject to conditions, including some conditions that may not be satisfied on a timely basis, if at all. Failure to complete the Merger, or significant delays in completing the Merger, could negatively affect our business and financial results and the trading prices of our common units.
The completion of the Merger is not assured and is subject to certain risks, including the risk that certain conditions of the Merger Agreement, such as required regulatory approvals and the approval of our unitholders, some of which are beyond the parties’ control, are not satisfied or waived, which may prevent, delay or otherwise result in the Merger not occurring. The Merger Agreement contains conditions that, if not satisfied or waived, would result in the Merger not occurring, even though our common unitholders may have voted in favor of the Merger-related proposals presented to them. Failure to complete, or significant delays in completing, the Merger with Martin Resource Management Corporation could negatively affect the price of our common units and may have a material adverse impact on our subsequent financial condition, results of operations and cash flows.
We may be subject to lawsuits regarding the Merger, which could materially adversely affect our operations and financial condition or prevent or delay completion of the Merger.
Our directors and officers may be subject to lawsuits relating to the Merger. While we will evaluate and defend against any actions vigorously, the costs of the defense of such lawsuits and other effects of such litigation could have an adverse effect on our operations and financial condition. Failure to complete, or significant delays in completing, the Merger could negatively affect the price of our common units and may have a material adverse impact on our subsequent financial condition, results of operations and cash flows.
We will be subject to business uncertainties while the Merger is pending, which could adversely affect our business.
Uncertainty about the effect of the Merger on the Partnership, its subsidiaries and the companies that do business with us may have an adverse effect on us. These uncertainties may impair our ability to attract, retain and motivate key personnel and suppliers until the Merger is completed and for a period of time thereafter, and could cause those that transact with us to seek to change their existing business relationships with us.
We may incur substantial transaction-related costs in connection with the Merger.
We and Martin Resource Management Corporation expect to incur nonrecurring transaction-related costs associated with completing the Merger. Nonrecurring transaction costs include, but are not limited to, fees paid to legal, financial and accounting advisors, filing fees, proxy solicitation costs and printing costs.
If the Merger Agreement is terminated, we may, under specified circumstances, be responsible for a termination fee of $2.5 million or the reimbursement of Martin Resource Management Corporation’s expenses in an amount up to $5.0 million .
If the Merger Agreement is terminated, we may, under specified circumstances, be required to pay a termination fee of $2.5 million or make a payment of up to $5.0 million in respect of Martin Resource Management Corporation’s expenses. If such termination fee or reimbursement expenses are payable, the payment of any such amount could have an adverse consequence to the financial condition and operations of the party responsible for such payment.
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The Merger is a taxable transaction and the resulting tax liability of our common unitholders, if any, will depend on each such common unitholder’s particular situation.
The receipt of cash in exchange for common units of the Partnership pursuant to the Merger will be treated as a taxable sale by such common unitholders for U.S. federal income tax purposes. The amount of ordinary income and capital gain or loss recognized by each common unitholder in the Merger will vary depending on each common unitholder’s particular situation, including:
• the amount of cash received by the common unitholder as consideration in the Merger;
• the adjusted tax basis of the common units exchanged by the common unitholder in the Merger;
• the amount of depreciation and amortization deductions previously allocated to the common unitholder; and
• the amount of any suspended passive losses that may be available to the common unitholder in respect of its common units to offset a portion of any income or gain recognized by the common unitholder.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.