NGL Energy Partners LP 10-K

Item 5. Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities Market Information Our common units are listed on the New York Stock Exchange (“NYSE”) under the symbol “NGL.” At May 28, 2021, there were approximately 110 common unitholders of record which does not include unitholders for whom common units may be held in “street name.” Cash Distribution Policy Available Cash Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash (as defined in our partnership agreement) to unitholders as of the record date. Available cash for any quarter generally consists of all cash on hand at the end of that quarter, less the amount of cash reserves established by our general partner, to (i) provide for the proper conduct of our business, (ii) comply with applicable law, any of our debt instruments or other agreements, and (iii) provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters. General Partner Interest Our general partner is entitled to 0.1% of all quarterly distributions that we make prior to our liquidation. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its 0.1% general partner interest. Our general partner’s interest in our distributions may be reduced if we issue additional limited partner units in the future (other than the issuance of common units upon a reset of the IDRs) and our general partner does not contribute a proportionate amount of capital to us to maintain its 0.1% general partner interest. As of March 31, 2021, we owned 8.69% of our general partner. Incentive Distribution Rights The general partner will also receive, in addition to distributions on its 0.1% general partner interest, additional distributions based on the level of distributions to the limited partners. These distributions are referred to as “incentive distributions” or “IDRs.” Our general partner currently holds the IDRs, but may transfer these rights separately from its general partner interest, subject to restrictions in our partnership agreement. The following table illustrates the percentage allocations of available cash from operating surplus between our limited partner unitholders and our general partner based on the specified target distribution levels. The amounts set forth under “Marginal Percentage Interest In Distributions” are the percentage interests of our general partner and our limited partner unitholders in any available cash from operating surplus we distribute up to and including the corresponding amount in the column “Total Quarterly Distribution Per Unit,” until available cash from operating surplus we distribute reaches the next target distribution level, if any. The percentage interests shown for our limited partner unitholders and our general partner for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth below for our general partner include its 0.1% general partner interest, and assume that our general partner has contributed any additional capital necessary to maintain its 0.1% general partner interest and has not transferred its IDRs. Marginal Percentage Interest In Distributions Total Quarterly Distribution Per Unit Limited Partner Unitholders General Partner (1) Minimum quarterly distribution $ 0.337500 99.9 % 0.1 % First target distribution above $ 0.337500 up to $ 0.388125 99.9 % 0.1 % Second target distribution above $ 0.388125 up to $ 0.421875 86.9 % 13.1 % Third target distribution above $ 0.421875 up to $ 0.506250 76.9 % 23.1 % Thereafter above $ 0.506250 51.9 % 48.1 % (1) The maximum distribution of 48.1% does not include distributions that our general partner may receive on common units that it owns. 50 Restrictions on the Payment of Distributions As described in Note 8 to our consolidated financial statements included in this Annual Report, the indenture to the 2026 Senior Secured Notes restricts us from paying distributions until our total leverage ratio (as defined in the indenture) for the most recently ended four full fiscal quarters at the time of the distribution is not greater than 4.75 to 1.00. In addition, quarterly distributions on the Preferred Units must be fully paid for all preceding fiscal quarters before we are permitted to declare or pay any distributions on our common units. As the distributions for all of our Preferred Units are cumulative, we are unable to declare an distribution for our common units unless all accumulated and unpaid distributions have been declared and paid on the Preferred Units. See Note 10 to our consolidated financial statements included in this Annual Report for a discussion of the cumulative distributions for the Preferred Units. Recent Development The board of directors of our general partner decided to temporarily suspend all distributions in order to deleverage our balance sheet until we meet the 4.75 to 1.00 total leverage ratio set forth within the indenture of the 2026 Senior Secured Notes, as discussed further above. This resulted in the suspension of the quarterly common unit distributions, beginning with the quarter ended December 31, 2020, and all preferred unit distributions, beginning with the quarter ending March 31, 2021. Common Unit Repurchase Program The following table summarizes the repurchase of common units during the three months ended March 31, 2021: Period Total Number of Common Units Purchased Average Price Paid Per Common Unit Total Number of Common Units Purchased as Part of Publicly Announced Program Approximate Dollar Value of Common Units that May Yet Be Purchased Under the Program January 1-31, 2021 — $ — — $ 150,000,000 February 1-28, 2021 20,071 $ 2.39 — $ 150,000,000 March 1-31, 2021 — $ — — $ 150,000,000 20,071 — $ 150,000,000 The common units were not repurchased under the publicly announced program, but rather they were surrendered by employees to pay tax withholding in connection with the vesting of restricted common units. As a result, we are including the common units surrendered in the Total Number of Common Units Purchased column. Securities Authorized for Issuance Under Equity Compensation Plans In connection with the completion of our IPO, our general partner adopted the NGL Energy Partners LP Long-Term Incentive Plan. See Part III, Item 12–“Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters–Securities Authorized for Issuance Under Equity Compensation Plan,” which is incorporated by reference into this Item 5. Item 6. Reserved