Item 5. Market for Registrant’s Common Equity
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 June 4, 2024, there were approximately 90 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 GP, 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 GP for any one or more of the next four quarters.
General Partner Interest
Our GP is entitled to 0.1% of all quarterly distributions that we make prior to our liquidation. Our GP has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its 0.1% GP interest. Our GP’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 GP does not contribute a proportionate amount of capital to us to maintain its 0.1% GP interest. As of March 31, 2024, we owned 8.69% of our GP.
Incentive Distribution Rights
The GP will also receive, in addition to distributions on its 0.1% GP interest, additional distributions based on the level of distributions to the limited partners. These distributions are referred to as “incentive distributions” or “IDRs.” Our GP currently holds the IDRs, but may transfer these rights separately from its GP interest.
The following table illustrates the percentage allocations of available cash from operating surplus between our limited partner unitholders and our GP based on the specified target distribution levels. The amounts set forth under “Marginal Percentage Interest In Distributions” are the percentage interests of our GP 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 GP 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 GP include its 0.1% GP interest, and assume that our GP has contributed any additional capital necessary to maintain its 0.1% GP 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 GP may receive on common units that it owns.
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Restrictions on the Payment of Distributions
As described in Note 7 to our consolidated financial statements included in this Annual Report, the ABL Facility, Term Loan B and Indenture contain covenants limiting our ability to pay distributions if we are in default under these agreements. Also, the Term Loan B and Indenture restrict us from paying distributions if our total leverage ratio (as defined within the Indenture and Term Loan B agreement) for the most recently ended four full fiscal quarters at the time of the distribution is greater than 4.75 to 1.00, while the ABL facility restricts the payment of distributions if certain payment conditions (as defined in the ABL Facility) are below certain thresholds. 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.
Securities Authorized for Issuance Under Equity Compensation Plans
In connection with the completion of our initial public offering, our GP 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]