sv3
As filed with the Securities and Exchange Commission on
November 5, 2010
Registration Statement No.
333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
CALUMET SPECIALTY PRODUCTS
PARTNERS, L.P.
CALUMET FINANCE CORP.
(Exact name of registrant as
specified in its charter)
|
|
|
Delaware
|
|
37-1516132
|
Delaware
|
|
41-2249841
|
(State or Other Jurisdiction
of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
2780 Waterfront Pkwy E. Drive
Suite 200
Indianapolis, Indiana 46214
(317) 328-5660
(Address, including zip code,
and telephone number,
including area code, of
registrants principal executive offices)
R. Patrick Murray, II
2780 Waterfront Pkwy E. Drive
Suite 200
Indianapolis, Indiana 46214
(317) 328-5660
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
Copy to:
Gillian A. Hobson
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
(713) 758-2222
Approximate date of commencement of proposed sale to the
public: From time to time after the effective
date of this registration statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following
box. o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box. þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following
box. o
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed to
register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
Large accelerated
filer o
|
|
Accelerated
filer þ
|
|
Non-accelerated
filer o
|
|
Smaller reporting
company o
|
|
|
(Do not check if a smaller
reporting company)
|
CALCULATION OF REGISTRATION FEE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposed Maximum
|
|
|
|
|
|
|
Title of Each Class of
|
|
|
Amount to be
|
|
|
Aggregate Offering
|
|
|
Proposed Maximum
|
|
|
Amount of
|
Securities to be Registered (1)
|
|
|
Registered
|
|
|
Price per Security
|
|
|
Aggregate Offering Price
|
|
|
Registration Fee
|
Common Units
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Securities(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Guarantees of Debt Securities(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
$1,000,000,000(3)(4)(5)
|
|
|
$71,300(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
If any debt securities are issued at an original issue discount,
then the offering price of such debt securities shall be in such
amount as shall result in an aggregate initial offering price
not to exceed $1,000,000,000, less the dollar amount of any
registered securities previously issued hereunder. |
|
(2) |
|
If a series of debt securities is guaranteed, such series will
be guaranteed by all subsidiaries. Pursuant to Rule 457(n),
no separate fee is payable with respect to the guarantees of the
debt securities being registered. |
|
(3) |
|
Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(o). In no event will the aggregate
initial offering price of all securities offered from time to
time pursuant to the prospectus included as a part of this
Registration Statement exceed $1,000,000,000. To the extent
applicable, the aggregate amount of common units registered is
further limited to that which is permissible under
Rule 415(a)(4) under the Securities Act. Any securities
registered hereunder may be sold separately or as units with
other securities registered hereunder. |
|
(4) |
|
There are being registered hereunder a presently indeterminate
number of common units and an indeterminate principal amount of
debt securities. This registration statement also covers an
indeterminate amount of securities as may be issued in exchange
for, or upon conversion or exercise of, as the case may be, the
securities registered hereunder. |
|
(5) |
|
The proposed maximum aggregate offering price for each class of
securities to be registered is not specified pursuant to General
Instruction, II.D. of Form S-3. |
|
(6) |
|
Securities registered under registration statement File
No. 333-1405657 previously filed by certain of the
Registrants on August 23, 2007, having an aggregate
offering price of $591,595,996, remain unsold. In accordance
with Rule 457(p), the registration fee of $18,162
associated with such unsold securities is offset against the
total registration fee due in connection with this registration
statement. |
The following are co-registrants that may guarantee the debt
securities:
Calumet Operating,
LLC
(Exact Name of Registrant As
Specified In Its Charter)
|
|
|
Delaware
|
|
11-3767449
|
(State or Other Jurisdiction
of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
Calumet LP GP, LLC
(Exact Name of Registrant As
Specified In Its Charter)
|
|
|
Delaware
|
|
11-3767452
|
(State or Other Jurisdiction
of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
Calumet Lubricants Co., Limited
Partnership
(Exact Name of Registrant As
Specified In Its Charter)
|
|
|
Indiana
|
|
35-1811116
|
(State or Other Jurisdiction
of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
Calumet Shreveport Lubricants
& Waxes, LLC
(Exact Name of Registrant As
Specified In Its Charter)
|
|
|
Indiana
|
|
20-1717754
|
(State or Other Jurisdiction
of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
Calumet Shreveport Fuels,
LLC
(Exact Name of Registrant As
Specified In Its Charter)
|
|
|
Indiana
|
|
20-1717710
|
(State or Other Jurisdiction
of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
Calumet Sales Company
Incorporated
(Exact Name of Registrant As
Specified In Its Charter)
|
|
|
Delaware
|
|
04-3833543
|
(State or Other Jurisdiction
of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
Calumet Shreveport,
LLC
(Exact Name of Registrant As
Specified In Its Charter)
|
|
|
Indiana
|
|
20-1717330
|
(State or Other Jurisdiction
of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
Calumet Penreco, LLC
(Exact Name of Registrant As
Specified In Its Charter)
|
|
|
Delaware
|
|
26-1547648
|
(State or Other Jurisdiction
of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
The Registrants hereby amend this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrants shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, or until the Registration
Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities, and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
|
PROSPECTUS
SUBJECT TO COMPLETION, dated
November 5, 2010
CALUMET
SPECIALTY PRODUCTS PARTNERS, L.P.
CALUMET FINANCE CORP.
Common Units
Debt Securities
We may offer, from time to time, in one or more series:
|
|
|
|
|
common units representing limited partnership interests in
Calumet Specialty Products Partners, L.P.; and
|
|
|
|
debt securities, which may be either senior debt securities or
subordinated debt securities.
|
Calumet Finance Corp. may act as co-issuer of the debt
securities, and all other direct or indirect subsidiaries of
Calumet Specialty Products Partners, L.P. may guarantee the debt
securities.
The securities we may offer:
|
|
|
|
|
will have a maximum aggregate offering price of $1,000,000,000;
|
|
|
|
will be offered at prices and on terms to be set forth in one or
more accompanying prospectus supplements; and
|
|
|
|
may be offered separately or together, or in separate series.
|
Our common units are traded on the Nasdaq Global Market under
the symbol CLMT. We will provide information in the
prospectus supplement for the trading market, if any, for any
debt securities we may offer.
This prospectus provides you with a general description of the
securities we may offer. Each time we offer to sell securities
we will provide a prospectus supplement that will contain
specific information about those securities and the terms of
that offering. The prospectus supplement also may add, update or
change information contained in this prospectus. This prospectus
may be used to offer and sell securities only if accompanied by
a prospectus supplement. You should read this prospectus and any
prospectus supplement carefully before you invest. You should
also read the documents we refer to in the Where You Can
Find More Information section of this prospectus for
information on us and our financial statements.
Limited partnerships are
inherently different than corporations. You should carefully
consider each of the factors described under Risk
Factors beginning on page 5 of this prospectus before
you make an investment in our securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus
is ,
2010
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
23
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
25
|
|
In making your investment decision, you should rely only on
the information contained or incorporated by reference in this
prospectus or any prospectus supplement. We have not authorized
anyone to provide you with any other information. If anyone
provides you with different or inconsistent information, you
should not rely on it.
You should not assume that the information contained in this
prospectus or any prospectus supplement is accurate as of any
date other than the date on the front cover of those documents.
You should not assume that the information contained in the
documents incorporated by reference in this prospectus or any
prospectus supplement is accurate as of any date other than the
respective dates of those documents. Our business, financial
condition, results of operations and prospects may have changed
since those dates.
ii
GUIDE TO
READING THIS PROSPECTUS
This prospectus is part of a registration statement on
Form S-3
that we filed with the Securities and Exchange Commission, or
SEC, utilizing a shelf registration process or
continuous offering process. Under this shelf registration
process, we may, from time to time, sell up to $1,000,000,000 of
the securities described in this prospectus in one or more
offerings. Each time we offer securities, we will provide you
with this prospectus and a prospectus supplement that will
describe, among other things, the specific amounts and prices of
the securities being offered and the terms of the offering,
including, in the case of debt securities, the specific terms of
the securities.
That prospectus supplement may include additional risk factors
or other special considerations applicable to those securities
and may also add, update, or change information in this
prospectus. If there is any inconsistency between the
information in this prospectus and any prospectus supplement,
you should rely on the information in that prospectus
supplement. Before you invest in our securities, you should
carefully read this prospectus and any prospectus supplement and
the additional information described under the heading
Where You Can Find More Information. To the extent
information in this prospectus is inconsistent with information
contained in any prospectus supplement, you should rely on the
information in the prospectus supplement.
Throughout this prospectus, when we use the terms
we, us, or Calumet, we are
referring either to Calumet Specialty Products Partners, L.P.,
the registrant itself, or to Calumet Specialty Products
Partners, L.P. and its operating subsidiaries collectively, as
the context requires.
We have not authorized any dealer, salesman or other person to
give any information or to make any representation other than
those contained or incorporated by reference in this prospectus
and the accompanying supplement to this prospectus. You must not
rely upon any information or representation not contained or
incorporated by reference in this prospectus or the accompanying
prospectus supplement. This prospectus and the accompanying
prospectus supplement do not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the
registered securities to which they relate, nor do this
prospectus and the accompanying prospectus supplement constitute
an offer to sell or the solicitation of an offer to buy
securities in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such
jurisdiction. You should not assume that the information
contained in this prospectus and the accompanying prospectus
supplement is accurate on any date subsequent to the date set
forth on the front of the document or that any information we
have incorporated by reference is correct on any date subsequent
to the date of the document incorporated by reference, even
though this prospectus and any accompanying prospectus
supplement is delivered or securities are sold on a later date.
WHERE YOU
CAN FIND MORE INFORMATION
We incorporate by reference information into this
prospectus, which means that we disclose important information
to you by referring you to another document filed separately
with the SEC. The information incorporated by reference is
deemed to be part of this prospectus, except for any information
superseded by information contained expressly in this
prospectus, and the information we file later with the SEC will
automatically supersede this information. You should not assume
that the information in this prospectus is current as of any
date other than the date on the front page of this prospectus.
Any information filed by us under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 (the
Exchange Act) after the date of this prospectus, and
that is deemed filed, with the SEC will be
incorporated by reference and automatically update and supersede
this information. We incorporate by reference the documents
listed below:
|
|
|
|
|
Our Annual Report on
Form 10-K
for the year ended December 31, 2009;
|
|
|
|
Our Quarterly Reports on
Form 10-Q
for the periods ended March 31, 2010, June 30, 2010
and September 30, 2010;
|
1
|
|
|
|
|
Our Current Reports on
Form 8-K
(excluding Items 2.02 and 7.01 and related exhibits) filed
on May 5, 2010, July 12, 2010, July 22, 2010,
August 4, 2010, September 3, 2010 and November 3,
2010; and
|
|
|
|
The description of our common units contained in our
registration statement on
Form 8-A
filed on January 18, 2006 (File
No. 000-51734)
and any subsequent amendment thereto filed for the purpose of
updating such description.
|
In addition, all documents filed by us pursuant to the Exchange
Act after the date of the initial registration statement and
prior to the effectiveness of the registration statement, and
that is deemed filed with the SEC, shall be deemed
to be incorporated by reference into this prospectus.
You may request a copy of any document incorporated by reference
in this prospectus and any exhibit specifically incorporated by
reference in those documents, at no cost, by writing or
telephoning us at the following address or phone number:
Calumet
Specialty Products Partners, L.P.
Attention: Jennifer Straumins
2780 Waterfront Pkwy E. Drive
Suite 200
Indianapolis, Indiana 46214
(317) 328-5660
Additionally, you may read and copy any documents filed by us at
the SECs public reference room at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room. Our
filings with the SEC are also available to the public from
commercial document retrieval services and at the SECs web
site at
http://www.sec.gov.
We also make available free of charge on our internet website at
http://www.calumetspecialty.com
our annual reports on
Form 10-K
and our quarterly reports on
Form 10-Q,
and any amendments to those reports, as soon as reasonably
practicable after we electronically file such material with the
SEC. Information contained on our website is not incorporated by
reference into this prospectus and you should not consider
information contained on our website as part of this prospectus.
INFORMATION
REGARDING FORWARD-LOOKING STATEMENTS
Certain statements and information in this prospectus may
constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements can be identified by the use of forward-looking
terminology including may, believe,
expect, anticipate, plan,
intend, foresee, should,
would, could or other similar words.
These forward-looking statements are based on our current
expectations and beliefs concerning future developments and
their potential effect on us. While management believes that
these forward-looking statements are reasonable as and when
made, there can be no assurance that future developments
affecting us will be those that we anticipate. All comments
concerning our expectations for future revenues and operating
results are based on our forecasts for our existing operations
and do not include the potential impact of any future
acquisitions. Our forward-looking statements involve significant
risks and uncertainties (some of which are beyond our control)
and assumptions that could cause actual results to differ
materially from our historical experience and our present
expectations or projections. Important factors that could cause
actual results to differ materially from those in the
forward-looking statements include, but are not limited to,
those summarized below:
|
|
|
|
|
the overall demand for specialty hydrocarbon products, fuels and
other refined products;
|
|
|
|
our ability to produce specialty products and fuels that meet
our customers unique and precise specifications;
|
|
|
|
the impact of fluctuations and rapid increases or decreases in
crude oil and crack spread prices, including the impact on our
liquidity;
|
2
|
|
|
|
|
the results of our hedging and other risk management activities;
|
|
|
|
our ability to comply with financial covenants contained in our
credit agreements;
|
|
|
|
the availability of, and our ability to consummate, acquisition
or combination opportunities;
|
|
|
|
labor relations;
|
|
|
|
our access to capital to fund expansions, acquisitions and our
working capital needs and our ability to obtain debt or equity
financing on satisfactory terms;
|
|
|
|
successful integration and future performance of acquired
assets, businesses or third-party product supply and processing
relationships;
|
|
|
|
environmental liabilities or events that are not covered by an
indemnity, insurance or existing reserves;
|
|
|
|
maintenance of our credit ratings and ability to receive open
credit lines from our suppliers;
|
|
|
|
demand for various grades of crude oil and resulting changes in
pricing conditions;
|
|
|
|
fluctuations in refinery capacity;
|
|
|
|
the effects of competition;
|
|
|
|
continued creditworthiness of, and performance by,
counterparties;
|
|
|
|
the impact of current and future laws, rulings and governmental
regulations, including guidance related to the Dodd-Frank Wall
Street Reform and Consumer Protection Act;
|
|
|
|
shortages or cost increases of power supplies, natural gas,
materials or labor;
|
|
|
|
hurricane or other weather interference with business operations;
|
|
|
|
fluctuations in the debt and equity markets;
|
|
|
|
accidents or other unscheduled shutdowns; and
|
|
|
|
general economic, market or business conditions.
|
Other factors that could cause our actual results to differ from
our projected results are described in our filings with the SEC,
including our Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q
and Current Reports on
Form 8-K.
Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date
hereof. We undertake no obligation to publicly update or revise
any forward-looking statements after the date they are made,
whether as a result of new information, future events or
otherwise.
These factors are not necessarily all of the important factors
that could cause actual results to differ materially from those
expressed in any of our forward-looking statements. Our future
results will depend upon various other risks and uncertainties,
including those described elsewhere in Risk Factors.
Other unknown or unpredictable factors also could have material
adverse effects on our future results. You should not put undue
reliance on any forward-looking statements. All forward-looking
statements attributable to us are qualified in their entirety by
this cautionary statement. We undertake no duty to update our
forward-looking statements.
CALUMET
SPECIALTY PRODUCTS PARTNERS, L.P.
Overview
We are a leading independent producer of high-quality, specialty
hydrocarbon products in North America. We own plants located in
Princeton, Louisiana; Cotton Valley, Louisiana; Shreveport,
Louisiana; Karns City, Pennsylvania and Dickinson, Texas and a
terminal located in Burnham, Illinois. Our business is organized
into two segments: specialty products and fuel products. In our
specialty products segment, we process crude oil and other
feedstocks into a wide variety of customized lubricating oils,
white mineral oils, solvents,
3
petrolatums and waxes. Our specialty products are sold to
domestic and international customers who purchase them primarily
as raw material components for basic industrial, consumer and
automotive goods. In our fuel products segment, we process crude
oil into a variety of fuel and fuel-related products including
gasoline, diesel and jet fuel. In connection with our production
of specialty products and fuel products, we also produce asphalt
and a limited number of other by-products. For the year ended
December 31, 2009 and the nine months ended
September 30, 2010, approximately 81.8% and 91.1%,
respectively, of our gross profit was generated from our
specialty products segment and approximately 18.2% and 8.9%,
respectively, of our gross profit was generated from our fuel
products segment. We continue to focus on the growth of our
specialty products segment. Our acquisition of Penreco on
January 3, 2008 and our entry into sales and processing
agreements with LyondellBasell, effective November 4, 2009,
expanded our specialty products offering and customer base.
Our operating assets and contractual agreements consist of our:
|
|
|
|
|
Princeton Refinery. Our Princeton refinery,
located in northwest Louisiana and acquired in 1990, produces
specialty lubricating oils, including process oils, base oils,
transformer oils and refrigeration oils that are used in a
variety of industrial and automotive applications. The Princeton
refinery has aggregate crude oil throughput capacity of
approximately 10,000 barrels per day (bpd).
|
|
|
|
Cotton Valley Refinery. Our Cotton Valley
refinery, located in northwest Louisiana and acquired in 1995,
produces specialty solvents that are used principally in the
manufacture of paints, cleaners and automotive products. The
Cotton Valley refinery has aggregate crude oil throughput
capacity of approximately 13,500 bpd.
|
|
|
|
Shreveport Refinery. Our Shreveport refinery,
located in northwest Louisiana and acquired in 2001, produces
specialty lubricating oils and waxes, as well as fuel products
such as gasoline, diesel and jet fuel. The Shreveport refinery
has aggregate crude oil throughput capacity of approximately
60,000 bpd.
|
|
|
|
Karns City Facility. Our Karns City facility,
located in western Pennsylvania and acquired in the 2008 Penreco
acquisition, produces white mineral oils, petrolatums, solvents,
gelled hydrocarbons, cable fillers and natural petroleum
sulfonates. The Karns City facility has aggregate feedstock
throughput capacity of approximately 5,500 bpd.
|
|
|
|
Dickinson Facility. Our Dickinson facility,
located in southeastern Texas and acquired in the 2008 Penreco
acquisition, produces white mineral oils, compressor lubricants
and natural petroleum sulfonates. The Dickinson facility
currently has aggregate feedstock throughput capacity of
approximately 1,300 bpd.
|
|
|
|
LyondellBasell Agreements. Effective
November 4, 2009, we entered into agreements with initial
terms of five years (the LyondellBasell Agreements)
with Houston Refining LP, a wholly-owned subsidiary of
LyondellBasell (Houston Refining), to form a
long-term exclusive specialty products affiliation. The initial
term of the LyondellBasell Agreements lasts until
October 31, 2014. After October 31, 2014, the
agreements are automatically extended for additional one-year
terms unless either party provides 24 months notice
of a desire to terminate either the initial term or any renewal
term. Under the terms of the LyondellBasell Agreements,
(i) we are the exclusive purchaser of Houston
Refinings naphthenic lubricating oil production at its
Houston, Texas refinery and are required to purchase a minimum
of approximately 3,000 bpd, and (ii) Houston Refining
will process a minimum of approximately 800 bpd of white
mineral oil for us at its Houston, Texas refinery, which will
supplement the existing white mineral oil production at our
Karns City, Pennsylvania and Dickinson, Texas facilities. We
also have exclusive right to use certain LyondellBasell
registered trademarks and tradenames including Tufflo, Duoprime,
Duotreat, Crystex, Ideal and Aquamarine. The LyondellBasell
Agreements were deemed effective as of November 4, 2009,
upon the approval of LyondellBasells debtor motions before
the U.S. Bankruptcy Court.
|
|
|
|
Distribution and Logistics Assets. We own and
operate a terminal in Burnham, Illinois with a storage capacity
of approximately 150,000 barrels that facilitates the
distribution of product in the Upper Midwest and East Coast
regions of the United States and in Canada. In addition, we
lease
|
4
|
|
|
|
|
approximately 1,750 railcars to receive crude oil or distribute
our products throughout the United States and Canada. We also
have approximately 6.0 million barrels of aggregate storage
capacity at our facilities and leased storage locations.
|
Partnership
Structure and Management
Calumet GP, LLC is our general partner and has sole
responsibility for conducting our business and managing our
operations. Calumet Finance Corp., our wholly-owned subsidiary,
has no material assets or any liabilities other than as a
co-issuer of our debt securities. Its activities are limited to
co-issuing our debt securities and engaging in other activities
incidental thereto.
Calumet Specialty Products Partners, L.P. is a Delaware limited
partnership. Our principal executive office is located at 2780
Waterfront Pkwy E. Drive, Suite 200, Indianapolis, Indiana
46214. Our telephone number is
(317) 328-5660.
Our common units are traded on the Nasdaq Global Market under
the symbol CLMT.
The
Subsidiary Guarantors
One or more of our subsidiaries may fully and unconditionally
guarantee our payment obligations under any series of debt
securities offered by this prospectus. The prospectus supplement
relating to any such series will identify any subsidiary
guarantors. Financial information concerning our subsidiary
guarantors and any non-guarantor subsidiaries will be included
in our consolidated financial statements filed as part of our
periodic reports filed pursuant to the Exchange Act to the
extent required by the rules and regulations of the SEC.
Additional information concerning our subsidiaries and us is
included in reports and other documents incorporated by
reference in this prospectus. Please read Where You Can
Find More Information.
RISK
FACTORS
Our business is subject to uncertainties and risks. Before you
invest in our securities you should carefully consider those
risk factors included in our most recent Annual Report on
Form 10-K,
any Quarterly Reports on
Form 10-Q
and any Current Reports on
Form 8-K,
which are incorporated herein by reference, and those risk
factors that may be included in any applicable prospectus
supplement, together with all of the other information included
in this prospectus, any prospectus supplement and the documents
we incorporate by reference, in evaluating an investment in our
securities. If any of the risks discussed in the foregoing
documents were to occur, our business, financial condition,
results of operations and cash flows could be materially
adversely affected. Please read Information Regarding
Forward-Looking Statements.
USE OF
PROCEEDS
Unless otherwise indicated to the contrary in an accompanying
prospectus supplement, we will use the net proceeds from the
sale of the securities covered by this prospectus for general
partnership purposes, which may include debt repayment, future
acquisitions, capital expenditures and additions to working
capital.
Any specific allocation of the net proceeds of an offering of
securities to a specific purpose will be determined at the time
of the offering and will be described in a prospectus supplement.
RATIO OF
EARNINGS TO FIXED CHARGES
The table below sets forth the Ratio of Earnings to Fixed
Charges for us for each of the periods indicated. On
January 31, 2006, we completed our initial public offering
whereby we became successor to the business of Calumet Lubricant
Co., Limited Partnership. As such, the year ended
December 31, 2005 and a portion of
5
the year ended December 31, 2006 reflect the financial
results of Calumet Lubricants Co., Limited Partnership, our
predecessor.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calumet
|
|
|
|
|
|
|
Lubricants Co.,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited Partnership
|
|
|
Calumet Specialty Products Partners, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ended
|
|
|
|
Year Ended December 31,
|
|
|
September 30,
|
|
|
|
2005
|
|
|
2006(1)
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
12,926
|
|
|
$
|
95,768
|
|
|
$
|
83,375
|
|
|
$
|
44,694
|
|
|
$
|
61,936
|
|
|
$
|
7,586
|
|
Fixed charges less capitalized interest
|
|
|
28,419
|
|
|
|
14,822
|
|
|
|
11,539
|
|
|
|
45,450
|
|
|
|
44,903
|
|
|
|
32,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before fixed charges
|
|
$
|
41,345
|
|
|
$
|
110,590
|
|
|
$
|
94,914
|
|
|
$
|
90,144
|
|
|
$
|
106,839
|
|
|
$
|
40,552
|
|
Fixed charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of capitalized interest
|
|
$
|
22,961
|
|
|
$
|
9,030
|
|
|
$
|
4,717
|
|
|
$
|
33,938
|
|
|
$
|
33,573
|
|
|
$
|
22,505
|
|
Capitalized interest, net of amortization
|
|
|
178
|
|
|
|
1,938
|
|
|
|
4,501
|
|
|
|
6,909
|
|
|
|
575
|
|
|
|
234
|
|
Estimated interest within rental expense
|
|
|
5,458
|
|
|
|
5,792
|
|
|
|
6,822
|
|
|
|
11,512
|
|
|
|
11,330
|
|
|
|
10,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed charges
|
|
$
|
28,597
|
|
|
$
|
16,760
|
|
|
$
|
16,040
|
|
|
$
|
52,359
|
|
|
$
|
45,478
|
|
|
$
|
33,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of earnings to fixed charges
|
|
|
1.45
|
|
|
|
6.60
|
|
|
|
5.92
|
|
|
|
1.72
|
|
|
|
2.35
|
|
|
|
1.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The information presented for the year ended December 31,
2006 contains results of our predecessor for the period of
January 1, 2006 through January 31, 2006. |
For purposes of determining the ratio of earnings to fixed
charges, earnings are defined as pre-tax income from continuing
operations plus the following (a) fixed charges, and
(b) amortization of capitalized interest, less interest
capitalized. Fixed charges consist of interest expensed and
capitalized plus (a) amortized discounts and capitalized
expenses related to indebtedness, and (b) an estimate of
the interest within rental expense.
DESCRIPTION
OF THE COMMON UNITS
The
Units
The common units and the subordinated units represent separate
classes of limited partner interests in us. The holders of our
common and subordinated units are entitled to participate in
partnership distributions and exercise the rights or privileges
available to limited partners under our partnership agreement.
For a description of the relative rights and preferences of
holders of common units and subordinated units in and to
partnership distributions, please read this section and
Our Cash Distribution Policy and Restrictions on
Distributions. For a description of the rights and
privileges of limited partners under our partnership agreement,
including voting rights, please see The Partnership
Agreement.
Our outstanding common units are listed on the Nasdaq Global
Market under the symbol CLMT. Any additional common
units we issue will also be listed on the Nasdaq Global Market.
6
Number of
Units
As of September 30, 2010, we had outstanding 22,213,778
common units and 13,066,000 subordinated units. There is
currently no established public trading market for our
subordinated units.
Subordinated
Units
Our subordinated units are a separate class of limited partner
interests in our partnership, and the rights of holders of
subordinated units to participate in distributions to partners
differ from, and are subordinated to, the rights of the holders
of our common units. During the subordination period, our
subordinated units will not be entitled to receive any
distributions until our common units have received the minimum
quarterly distribution plus any arrearages from prior quarters.
The term of the subordination period is described under
Our Cash Distribution Policy and Restrictions on
Distributions Subordination Period
Transfer
Agent and Registrar
Duties. Mellon Investor Services, LLC serves
as registrar and transfer agent for the common units. We pay all
fees charged by the transfer agent for transfers of common units
except the following that must be paid by unitholders:
|
|
|
|
|
surety bond premiums to replace lost or stolen certificates,
taxes and other governmental charges;
|
|
|
|
special charges for services requested by a common unitholder;
and
|
|
|
|
other similar fees or charges.
|
There is no charge to unitholders for disbursements of our cash
distributions. We will indemnify the transfer agent, its agents
and each of their stockholders, directors, officers and
employees against all claims and losses that may arise out of
acts performed or omitted for its activities in that capacity,
except for any liability due to any gross negligence or
intentional misconduct of the indemnified person or entity.
Transfer
of Common Units
By transfer of common units in accordance with our partnership
agreement, each transferee of common units shall be admitted as
a limited partner with respect to the common units transferred
when such transfer and admission is reflected in our books and
records. Each transferee:
|
|
|
|
|
represents that the transferee has the capacity, power and
authority to become bound by our partnership agreement;
|
|
|
|
automatically agrees to be bound by the terms and conditions of,
and is deemed to have executed, our partnership
agreement; and
|
|
|
|
gives the consents and approvals contained in our partnership
agreement, such as the approval of all transactions and
agreements that we are entering into in connection with our
formation and this offering.
|
A transferee will become a substituted limited partner of our
partnership for the transferred common units automatically upon
the recording of the transfer on our books and records. Our
general partner will cause any transfers to be recorded on our
books and records no less frequently than quarterly.
We may, at our discretion, treat the nominee holder of a common
unit as the absolute owner. In that case, the beneficial
holders rights are limited solely to those that it has
against the nominee holder as a result of any agreement between
the beneficial owner and the nominee holder.
Common units are securities and are transferable according to
the laws governing transfers of securities. In addition to other
rights acquired upon transfer, the transferor gives the
transferee the right to become a substituted limited partner in
our partnership for the transferred common units.
7
Until a common unit has been transferred on our books, we and
the transfer agent may treat the record holder of the unit as
the absolute owner for all purposes, except as otherwise
required by law or stock exchange regulations.
THE
PARTNERSHIP AGREEMENT
The following is a summary of the material provisions of our
partnership agreement. We will provide prospective investors
with a copy of this agreement upon request at no charge.
We summarize the following provisions of our partnership
agreement elsewhere in this prospectus:
|
|
|
|
|
with regard to distributions of available cash, please read
Our Cash Distribution Policy and Restrictions on
Distributions;
|
|
|
|
with regard to the transfer of common units, please read
Description of the Common Units Transfer of
Common Units; and
|
|
|
|
with regard to allocations of taxable income and taxable loss,
please read Material Tax Consequences.
|
Organization
and Duration
We were organized on September 27, 2005 and have a
perpetual existence.
Purpose
Our purpose under the partnership agreement is limited to any
business activities that are approved by our general partner and
that lawfully may be conducted by a limited partnership
organized under Delaware law; provided, that our general partner
shall not cause us to engage, directly or indirectly, in any
business activity that the general partner determines would
cause us to be treated as an association taxable as a
corporation or otherwise taxable as an entity for federal income
tax purposes.
Although our general partner has the ability to cause us, our
operating company or its subsidiaries to engage in activities
other than the refining and marketing of fuel products and
specialty hydrocarbon products, our general partner has no
current plans to do so and may decline to do so free of any
fiduciary duty or obligation whatsoever to us or the limited
partners, including any duty to act in good faith or in the best
interests of us or the limited partners. Our general partner is
authorized in general to perform all acts it determines to be
necessary or appropriate to carry out our purposes and to
conduct our business.
Power of
Attorney
Each limited partner, and each person who acquires a unit from a
unitholder, by accepting the common unit, automatically grants
to our general partner and, if appointed, a liquidator, a power
of attorney to, among other things, execute and file documents
required for our qualification, continuance or dissolution. The
power of attorney also grants our general partner the authority
to amend, and to make consents and waivers under, our
partnership agreement.
Capital
Contributions
Unitholders are not obligated to make additional capital
contributions, except as described below under
Limited Liability.
8
Voting
Rights
The following is a summary of the unitholder vote required for
the matters specified below. Various matters requiring the
approval of a unit majority require:
|
|
|
|
|
during the subordination period, the approval of a majority of
the common units, excluding those common units held by our
general partner and its affiliates, and a majority of the
subordinated units, voting as separate classes; and
|
|
|
|
after the subordination period, the approval of a majority of
the common units.
|
In voting their common and subordinated units, our general
partner and its affiliates will have no fiduciary duty or
obligation whatsoever to us or the limited partners, including
any duty to act in good faith or in the best interests of us and
our limited partners. For any action that is to be approved at a
meeting of unitholders, the holders of a majority of the
outstanding units of the class or classes for which a meeting
has been called represented in person or by proxy will
constitute a quorum unless any action by the unitholders
requires approval by holders of a greater percentage of the
units, in which case the quorum will be the greater percentage.
Please read Meetings; Voting.
|
|
|
Issuance of additional units of equal rank with the common units
during the subordination period |
|
Unit majority, with exceptions described under
Issuance of Additional Securities. |
|
Issuance of units senior to the common units during the
subordination period |
|
Unit majority. |
|
Issuance of units junior to the common units during the
subordination period |
|
No approval right. |
|
Issuance of additional units after the subordination period |
|
No approval right. |
|
Amendment of our partnership agreement |
|
Certain amendments may be made by the general partner without
the approval of the unitholders. Other amendments generally
require the approval of a unit majority. Please read
Amendment of the Partnership Agreement. |
|
Merger of our partnership or the sale of all or substantially
all of our assets |
|
Unit majority in certain circumstances. Please read
Merger, Sale or Other Disposition of
Assets. |
|
Dissolution of our partnership |
|
Unit majority. Please read Termination and
Dissolution. |
|
Continuation of the business of our partnership upon dissolution |
|
Unit majority. Please read Termination and
Dissolution. |
|
Withdrawal of our general partner |
|
Under most circumstances, the approval of a majority of the
common units, excluding common units held by our general partner
and its affiliates, is required for the withdrawal of our
general partner prior to December 31, 2015 in a manner that
would cause a dissolution of our partnership. Please read
Withdrawal or Removal of the General
Partner. |
|
Removal of our general partner |
|
Not less than
662/3%
of the outstanding units, including units held by our general
partner and its affiliates. Please read
Withdrawal or Removal of the General
Partner. |
9
|
|
|
Transfer of the general partner interest |
|
Our general partner may transfer all, but not less than all, of
its general partner interest in us without a vote of our
unitholders to an affiliate or another person in connection with
its merger or consolidation with or into, or sale of all or
substantially all of its assets to, such person. The approval of
a majority of the common units, excluding common units held by
our general partner and its affiliates, is required in other
circumstances for a transfer of the general partner interest to
a third party prior to December 31, 2015. Please read
Transfer of General Partner Interest. |
|
Transfer of incentive distribution rights |
|
Except for transfers to an affiliate or another person as part
of our general partners merger or consolidation, sale of
all or substantially all of its assets or the sale of all of the
ownership interests in such holder, the approval of a majority
of the common units, excluding common units held by the general
partner and its affiliates, is required in most circumstances
for a transfer of the incentive distribution rights to a third
party prior to December 31, 2015. Please read
Transfer of Incentive Distribution
Rights. |
|
Transfer of ownership interests in our general partner |
|
No approval required at any time. Please read
Transfer of Ownership Interests in Our General
Partner. |
Limited
Liability
Assuming that a limited partner does not participate in the
control of our business within the meaning of the Delaware Act
and that he otherwise acts in conformity with the provisions of
the partnership agreement, his liability under the Delaware Act
will be limited, subject to possible exceptions, to the amount
of capital he is obligated to contribute to us for his common
units plus his share of any undistributed profits and assets. If
it were determined, however, that the right, or exercise of the
right, by the limited partners as a group:
|
|
|
|
|
to remove or replace our general partner;
|
|
|
|
to approve some amendments to our partnership agreement; or
|
|
|
|
to take other action under our partnership agreement;
|
constituted participation in the control of our
business for the purposes of the Delaware Act, then the limited
partners could be held personally liable for our obligations
under the laws of Delaware, to the same extent as our general
partner. This liability would extend to persons who transact
business with us who reasonably believe that the limited partner
is a general partner. Neither our partnership agreement nor the
Delaware Act specifically provides for legal recourse against
the general partner if a limited partner were to lose limited
liability through any fault of the general partner. While this
does not mean that a limited partner could not seek legal
recourse, we know of no precedent for this type of a claim in
Delaware case law.
Under the Delaware Act, a limited partnership may not make a
distribution to a partner if, after the distribution, all
liabilities of the limited partnership, other than liabilities
to partners on account of their partnership interests and
liabilities for which the recourse of creditors is limited to
specific property of the partnership, would exceed the fair
value of the assets of the limited partnership. For the purpose
of determining the fair value of the assets of a limited
partnership, the Delaware Act provides that the fair value of
property subject to liability for which recourse of creditors is
limited shall be included in the assets of the limited
partnership only to the extent that the fair value of that
property exceeds the nonrecourse liability. The Delaware Act
provides that a limited partner who receives a distribution and
knew at the time of the distribution that the distribution was
in violation of the Delaware Act shall be liable to the limited
partnership for the amount of the distribution for three years.
Under the Delaware Act, a substituted limited partner of a
limited partnership is liable for the obligations of his
assignor to make contributions to the partnership, except
10
that such person is not obligated for liabilities unknown to him
at the time he became a limited partner and that could not be
ascertained from the partnership agreement.
Our subsidiaries conduct business in 30 states. Maintenance
of our limited liability as a member of our operating company
may require compliance with legal requirements in the
jurisdictions in which our operating company conducts business,
including qualifying our subsidiaries to do business there.
Limitations on the liability of limited partners for the
obligations of a limited partner have not been clearly
established in many jurisdictions. If, by virtue of our
membership interest in our operating company or otherwise, it
were determined that we were conducting business in any state
without compliance with the applicable limited partnership or
limited liability company statute, or that the right or exercise
of the right by the limited partners as a group to remove or
replace the general partner, to approve some amendments to our
partnership agreement, or to take other action under the
partnership agreement constituted participation in the
control of our business for purposes of the statutes of
any relevant jurisdiction, then the limited partners could be
held personally liable for our obligations under the law of that
jurisdiction to the same extent as our general partner under the
circumstances. We will operate in a manner that our general
partner considers reasonable and necessary or appropriate to
preserve the limited liability of the limited partners.
Issuance
of Additional Securities
Our partnership agreement authorizes us to issue an unlimited
number of additional partnership securities for the
consideration and on the terms and conditions determined by our
general partner without the approval of the unitholders. During
the subordination period, however, except as we discuss in the
following paragraph, we may not issue equity securities ranking
senior to the common units or an aggregate of more than
3,485,222 additional common units or units on a parity with the
common units, in each case, without the approval of the holders
of a unit majority.
During the subordination period or thereafter, we may issue an
unlimited number of common units without the approval of the
unitholders as follows:
|
|
|
|
|
upon exercise of the underwriters option to purchase
additional units;
|
|
|
|
upon conversion of the subordinated units;
|
|
|
|
under employee benefits plans;
|
|
|
|
upon conversion of the general partner interest and incentive
distribution rights as a result of a withdrawal or removal of
our general partner;
|
|
|
|
upon conversion of units of equal rank with the common units
into common units or other parity units under certain
circumstances;
|
|
|
|
in the event of a combination or subdivision of common units;
|
|
|
|
in connection with an acquisition or an expansion capital
improvement that increases cash flow from operations per unit on
an estimated pro forma basis;
|
|
|
|
if the proceeds of the issuance are used to repay indebtedness,
the cost of which to service is greater than the distribution
obligations associated with the units issued in connection with
its retirement; or
|
|
|
|
in connection with the redemption of common units or other
equity interests of equal rank with the common units from the
net proceeds of an issuance of common units or parity units, but
only if the redemption price equals the net proceeds per unit,
before expenses, to us.
|
It is possible that we will fund acquisitions through the
issuance of additional common units, subordinated units or other
partnership securities. Holders of any additional common units
we issue will be entitled to share equally with the
then-existing holders of common units in our distributions of
available cash. In addition, the issuance of additional common
units or other partnership securities may dilute the value of
the interests of the then-existing holders of common units in
our net assets.
11
In accordance with Delaware law and the provisions of our
partnership agreement, we may also issue additional partnership
securities that, as determined by our general partner, may have
special voting rights to which the common units are not
entitled. In addition, our partnership agreement does not
prohibit the issuance by our subsidiaries of equity securities,
which may effectively rank senior to the common units.
Upon issuance of additional partnership securities, our general
partner will be entitled, but not required, to make additional
capital contributions to the extent necessary to maintain its 2%
general partner interest in us. The general partners 2%
interest in us will be reduced if we issue additional units in
the future and our general partner does not contribute a
proportionate amount of capital to us to maintain its 2% general
partner interest. Moreover, our general partner will have the
right, which it may from time to time assign in whole or in part
to any of its affiliates, to purchase common units, subordinated
units or other partnership securities whenever, and on the same
terms that, we issue those securities to persons other than our
general partner and its affiliates, to the extent necessary to
maintain the percentage interest of the general partner and its
affiliates, including such interest represented by common units
and subordinated units, that existed immediately prior to each
issuance. Otherwise, under our partnership agreement, the
holders of common units will not have preemptive rights to
acquire additional common units or other partnership securities.
Amendment
of the Partnership Agreement
General. Amendments to our partnership
agreement may be proposed only by or with the consent of our
general partner. However, our general partner will have no duty
or obligation to propose any amendment and may decline to do so
free of any fiduciary duty or obligation whatsoever to us or the
limited partners, including any duty to act in good faith or in
the best interests of us or the limited partners. In order to
adopt a proposed amendment, other than the amendments discussed
below, our general partner is required to seek written approval
of the holders of the number of units required to approve the
amendment or call a meeting of the limited partners to consider
and vote upon the proposed amendment. Except as described below,
an amendment must be approved by a unit majority.
Prohibited Amendments. No amendment may be
made that would:
|
|
|
|
|
enlarge the obligations of any limited partner without its
consent, unless approved by at least a majority of the type or
class of limited partner interests so affected; or
|
|
|
|
enlarge the obligations of, restrict in any way any action by or
rights of, or reduce in any way the amounts distributable,
reimbursable or otherwise payable by us to our general partner
or any of its affiliates without the consent of our general
partner, which consent may be given or withheld at its option.
|
The provision of our partnership agreement preventing the
amendments having the effects described in any of the clauses
above can be amended upon the approval of the holders of at
least 90% of the outstanding units voting together as a single
class (including units owned by our general partner and its
affiliates). Currently, our general partner and its affiliates
own approximately 54.3% of the outstanding units.
No Unitholder Approval. Our general partner
may generally make amendments to our partnership agreement
without the approval of any limited partner or assignee to
reflect:
|
|
|
|
|
a change in our name, the location of our principal place of our
business, our registered agent or our registered office;
|
|
|
|
the admission, substitution, withdrawal or removal of partners
in accordance with our partnership agreement;
|
|
|
|
a change that our general partner determines to be necessary or
appropriate to qualify or continue our qualification as a
limited partnership or a partnership in which the limited
partners have limited liability under the laws of any state or
to ensure that neither we nor the operating company nor any of
its subsidiaries will be treated as an association taxable as a
corporation or otherwise taxed as an entity for federal income
tax purposes;
|
12
|
|
|
|
|
an amendment that is necessary, in the opinion of our counsel,
to prevent us or our general partner or its directors, officers,
agents or trustees from in any manner being subjected to the
provisions of the Investment Company Act of 1940, the Investment
Advisors Act of 1940, or plan asset regulations
adopted under the Employee Retirement Income Security Act of
1974, or ERISA, whether or not substantially similar to plan
asset regulations currently applied or proposed;
|
|
|
|
an amendment that our general partner determines to be necessary
or appropriate for the authorization of additional partnership
securities or rights to acquire partnership securities;
|
|
|
|
any amendment expressly permitted in our partnership agreement
to be made by our general partner acting alone;
|
|
|
|
an amendment effected, necessitated or contemplated by a merger
agreement that has been approved under the terms of our
partnership agreement;
|
|
|
|
any amendment that our general partner determines to be
necessary or appropriate for the formation by us of, or our
investment in, any corporation, partnership or other entity, as
otherwise permitted by our partnership agreement;
|
|
|
|
a change in our fiscal year or taxable year and related changes;
|
|
|
|
mergers with or conveyances to another limited liability entity
that is newly formed and has no assets, liabilities or
operations at the time of the merger or conveyance other than
those it receives by way of the merger or conveyance; or
|
|
|
|
any other amendments substantially similar to any of the matters
described in the bullet points above.
|
In addition, our general partner may make amendments to our
partnership agreement without the approval of any limited
partner or assignee in connection with a merger or consolidation
approved in connection with our partnership agreement, or if our
general partner determines that those amendments:
|
|
|
|
|
do not adversely affect the limited partners (or any particular
class of limited partners) in any material respect;
|
|
|
|
are necessary or appropriate to satisfy any requirements,
conditions or guidelines contained in any opinion, directive,
order, ruling or regulation of any federal or state agency or
judicial authority or contained in any federal or state statute;
|
|
|
|
are necessary or appropriate to facilitate the trading of
limited partner interests or to comply with any rule,
regulation, guideline or requirement of any securities exchange
on which the limited partner interests are or will be listed for
trading;
|
|
|
|
are necessary or appropriate for any action taken by our general
partner relating to splits or combinations of units under the
provisions of our partnership agreement; or
|
|
|
|
are required to effect the intent expressed in this prospectus
or the intent of the provisions of our partnership agreement or
are otherwise contemplated by our partnership agreement.
|
Opinion of Counsel and Unitholder
Approval. Our general partner will not be
required to obtain an opinion of counsel that an amendment will
not result in a loss of limited liability to the limited
partners or result in our being treated as an entity for federal
income tax purposes in connection with any of the amendments
described under No Unitholder Approval.
No other amendments to our partnership agreement will become
effective without the approval of holders of at least 90% of the
outstanding units voting as a single class unless we first
obtain an opinion of counsel to the effect that the amendment
will not affect the limited liability under applicable law of
any of our limited partners.
In addition to the above restrictions, any amendment that would
have a material adverse effect on the rights or preferences of
any type or class of outstanding units in relation to other
classes of units will require the approval of at least a
majority of the type or class of units so affected. Any
amendment that reduces the voting percentage required to take
any action is required to be approved by the affirmative vote of
limited
13
partners whose aggregate outstanding units constitute not less
than the voting requirement sought to be reduced.
Merger,
Sale or Other Disposition of Assets
A merger or consolidation of us requires the prior consent of
our general partner. However, our general partner will have no
duty or obligation to consent to any merger or consolidation and
may decline to do so free of any fiduciary duty or obligation
whatsoever to us or the limited partners, including any duty to
act in good faith or in the best interest of us or the limited
partners.
In addition, our partnership agreement generally prohibits our
general partner without the prior approval of the holders of a
unit majority, from causing us to, among other things, sell,
exchange or otherwise dispose of all or substantially all of our
assets in a single transaction or a series of related
transactions, including by way of merger, consolidation or other
combination, or approving on our behalf the sale, exchange or
other disposition of all or substantially all of the assets of
our subsidiaries. Our general partner may, however, mortgage,
pledge, hypothecate or grant a security interest in all or
substantially all of our assets without that approval. Our
general partner may also sell all or substantially all of our
assets under a foreclosure or other realization upon those
encumbrances without that approval. Finally, our general partner
may consummate any merger without the prior approval of our
unitholders if we are the surviving entity in the transaction,
the transaction would not result in a material amendment to our
partnership agreement, each of our units will be an identical
unit of our partnership following the transaction, and the units
to be issued do not exceed 20% of our outstanding units
immediately prior to the transaction.
If the conditions specified in our partnership agreement are
satisfied, our general partner may convert us or any of our
subsidiaries into a new limited liability entity or merge us or
any of our subsidiaries into, or convey all of our assets to, a
newly formed entity if the sole purpose of that merger or
conveyance is to effect a mere change in our legal form into
another limited liability entity. The unitholders are not
entitled to dissenters rights of appraisal under our
partnership agreement or applicable Delaware law in the event of
a conversion, merger or consolidation, a sale of substantially
all of our assets or any other transaction or event.
Termination
and Dissolution
We will continue as a limited partnership until terminated under
our partnership agreement. We will dissolve upon:
|
|
|
|
|
the election of our general partner to dissolve us, if approved
by the holders of units representing a unit majority;
|
|
|
|
there being no limited partners, unless we are continued without
dissolution in accordance with applicable Delaware law;
|
|
|
|
the entry of a decree of judicial dissolution of our
partnership; or
|
|
|
|
the withdrawal or removal of our general partner or any other
event that results in its ceasing to be our general partner
other than by reason of a transfer of its general partner
interest in accordance with our partnership agreement or
withdrawal or removal following approval and admission of a
successor.
|
Upon a dissolution under the last clause above, the holders of a
unit majority may also elect, within specific time limitations,
to continue our business on the same terms and conditions
described in our partnership agreement by appointing as a
successor general partner an entity approved by the holders of
units representing a unit majority, subject to our receipt of an
opinion of counsel to the effect that:
|
|
|
|
|
the action would not result in the loss of limited liability of
any limited partner; and
|
|
|
|
neither our partnership, our operating company nor any of our
other subsidiaries would be treated as an association taxable as
a corporation or otherwise be taxable as an entity for federal
income tax purposes upon the exercise of that right to continue.
|
14
Liquidation
and Distribution of Proceeds
Upon our dissolution, unless our business is continued as
described above, the liquidator authorized to wind up our
affairs will, acting with all of the powers of our general
partner that are necessary or appropriate to liquidate our
assets and apply the proceeds of the liquidation as provided in
Our Cash Distribution Policy and Restrictions on
Distributions Distributions of Cash Upon
Liquidation. The liquidator may defer liquidation or
distribution of our assets for a reasonable period of time or
distribute assets to partners in kind if it determines that a
sale would be impractical or would cause undue loss to our
partners.
Withdrawal
or Removal of the General Partner
Except as described below, our general partner has agreed not to
withdraw voluntarily as our general partner prior to
December 31, 2015 without obtaining the approval of the
holders of at least a majority of the outstanding common units,
excluding common units held by the general partner and its
affiliates, and furnishing an opinion of counsel regarding
limited liability and tax matters. On or after December 31,
2015, our general partner may withdraw as general partner
without first obtaining approval of any unitholder by giving
90 days written notice, and that withdrawal will not
constitute a violation of our partnership agreement.
Notwithstanding the information above, our general partner may
withdraw without unitholder approval upon 90 days
notice to the limited partners if at least 50% of the
outstanding common units are held or controlled by one person
and its affiliates other than the general partner and its
affiliates. In addition, the partnership agreement permits our
general partner in some instances to sell or otherwise transfer
all of its general partner interest in us without the approval
of the unitholders. Please read Transfer of
General Partner Interest and Transfer of
Incentive Distribution Rights.
Upon withdrawal of our general partner under any circumstances,
other than as a result of a transfer by our general partner of
all or a part of its general partner interest in us, the holders
of a unit majority, voting as separate classes, may select a
successor to that withdrawing general partner. If a successor is
not elected, or is elected but an opinion of counsel regarding
limited liability and tax matters cannot be obtained, we will be
dissolved, wound up and liquidated, unless within a specified
period after that withdrawal, the holders of a unit majority
agree in writing to continue our business and to appoint a
successor general partner. Please read
Termination and Dissolution.
Our general partner may not be removed unless that removal is
approved by the vote of the holders of not less than
66-2/3%
of the outstanding units, voting together as a single class,
including units held by our general partner and its affiliates,
and we receive an opinion of counsel regarding limited liability
and tax matters. Any removal of our general partner is also
subject to the approval of a successor general partner by the
vote of the holders of a majority of the outstanding common
units and subordinated units, voting as separate classes. The
ownership of more than
33-1/3%
of the outstanding units by our general partner and its
affiliates would give them the practical ability to prevent our
general partners removal. Currently, our general partner
and its affiliates own an aggregate of 54.3% of the outstanding
units.
Our partnership agreement also provides that if our general
partner is removed as our general partner under circumstances
where cause does not exist and units held by the general partner
and its affiliates are not voted in favor of that removal:
|
|
|
|
|
the subordination period will end, and all outstanding
subordinated units will immediately convert into common units on
a one-for-one basis;
|
|
|
|
any existing arrearages in payment of the minimum quarterly
distribution on the common units will be extinguished; and
|
|
|
|
our general partner will have the right to convert its general
partner interest and its incentive distribution rights into
common units or to receive cash in exchange for those interests
based on the fair market value of those interests at that time.
|
In the event of removal of a general partner under circumstances
where cause exists or withdrawal of a general partner where that
withdrawal violates our partnership agreement, a successor
general partner will
15
have the option to purchase the general partner interest and
incentive distribution rights of the departing general partner
for a cash payment equal to the fair market value of those
interests. Under all other circumstances where a general partner
withdraws or is removed by the limited partners, the departing
general partner will have the option to require the successor
general partner to purchase the general partner interest of the
departing general partner and its incentive distribution rights
for fair market value. In each case, this fair market value will
be determined by agreement between the departing general partner
and the successor general partner. If no agreement is reached,
an independent investment banking firm or other independent
expert selected by the departing general partner and the
successor general partner will determine the fair market value.
Or, if the departing general partner and the successor general
partner cannot agree upon an expert, then an expert chosen by
agreement of the experts selected by each of them will determine
the fair market value.
If the option described above is not exercised by either the
departing general partner or the successor general partner, the
departing general partners general partner interest and
its incentive distribution rights will automatically convert
into common units equal to the fair market value of those
interests as determined by an investment banking firm or other
independent expert selected in the manner described in the
preceding paragraph.
In addition, we will be required to reimburse the departing
general partner for all amounts due the departing general
partner, including, without limitation, all employee-related
liabilities, including severance liabilities, incurred for the
termination of any employees employed by the departing general
partner or its affiliates for our benefit.
Transfer
of General Partner Interest
Except for transfer by our general partner of all, but not less
than all, of its general partner interest in our partnership to:
|
|
|
|
|
an affiliate of our general partner (other than an individual);
or
|
|
|
|
another entity as part of the merger or consolidation of our
general partner with or into another entity or the transfer by
our general partner of all or substantially all of its assets to
another entity,
|
our general partner may not transfer all or any part of its
general partner interest in our partnership to another person
prior to December 31, 2015 without the approval of the
holders of at least a majority of the outstanding common units,
excluding common units held by our general partner and its
affiliates. As a condition of this transfer, the transferee must
assume, among other things, the rights and duties of our general
partner, agree to be bound by the provisions of our partnership
agreement, and furnish an opinion of counsel regarding limited
liability and tax matters. On or after December 31, 2015,
our general partner interest will be freely transferable.
Our general partner and its affiliates may, at any time,
transfer units to one or more persons, without unitholder
approval, except that they may not transfer subordinated units
to us.
Transfer
of Ownership Interests in Our General Partner
At any time, the members of our general partner may sell or
transfer all or part of their membership interests in our
general partner to an affiliate or third party without the
approval of our unitholders.
Transfer
of Incentive Distribution Rights
Our general partner or its affiliates or a subsequent holder may
transfer its incentive distribution rights to an affiliate of
the holder (other than an individual) or another entity as part
of the merger or consolidation of such holder with or into
another entity, the sale of all of the ownership interest of the
holder or the sale of all or substantially all of its assets to,
that entity without the prior approval of the unitholders. Prior
to December 31, 2015, other transfers of incentive
distribution rights will require the affirmative vote of holders
of a majority of the outstanding common units, excluding common
units held by our general partner and its affiliates. On or
after December 31, 2015, the incentive distribution rights
will be freely transferable.
16
Change of
Management Provisions
Our partnership agreement contains specific provisions that are
intended to discourage a person or group from attempting to
remove Calumet GP, LLC as our general partner or otherwise
change our management. If any person or group other than our
general partner and its affiliates acquires beneficial ownership
of 20% or more of any class of units, that person or group loses
voting rights on all of its units. This loss of voting rights
does not apply to any person or group that acquires the units
from our general partner or its affiliates and any transferees
of that person or group approved by our general partner or to
any person or group who acquires the units with the prior
approval of the board of directors of our general partner.
Our partnership agreement also provides that if our general
partner is removed under circumstances where cause does not
exist and units held by our general partner and its affiliates
are not voted in favor of that removal:
|
|
|
|
|
the subordination period will end and all outstanding
subordinated units will immediately convert into common units on
a one-for-one basis;
|
|
|
|
any existing arrearages in payment of the minimum quarterly
distribution on the common units will be extinguished; and
|
|
|
|
our general partner will have the right to convert its general
partner interest and its incentive distribution rights into
common units or to receive cash in exchange for those interests.
|
Limited
Call Right
If at any time our general partner and its affiliates own more
than 80% of the then-issued and outstanding limited partner
interests of any class, our general partner will have the right,
but not the obligation, which right may be assigned in whole or
in part to any of its affiliates or to us, to acquire all, but
not less than all, of the remaining partnership securities of
the class held by unaffiliated persons as of a record date to be
selected by our general partner, on at least 10 but not more
than 60 days notice. The purchase price in the event of
this purchase is the greater of:
|
|
|
|
|
the highest cash price paid by either of our general partner or
any of its affiliates for any partnership securities of the
class purchased within the 90 days preceding the date on
which our general partner first mails notice of its election to
purchase those partnership securities; and
|
|
|
|
the current market price as of the date three days before the
date the notice is mailed.
|
As a result of our general partners right to purchase
outstanding partnership securities, a holder of partnership
securities may have his partnership securities purchased at an
undesirable time or price. The tax consequences to a unitholder
of the exercise of this call right are the same as a sale by
that unitholder of his common units in the market. Please read
Material Tax Consequences Disposition of
Common Units.
Meetings;
Voting
Except as described below regarding a person or group owning 20%
or more of any class of units then outstanding, unitholders who
are record holders of units on the record date will be entitled
to notice of, and to vote at, meetings of our limited partners
and to act upon matters for which approvals may be solicited.
Our general partner does not anticipate that any meeting of
unitholders will be called in the foreseeable future. Any action
that is required or permitted to be taken by the unitholders may
be taken either at a meeting of the unitholders or without a
meeting if consents in writing describing the action so taken
are signed by holders of the number of units necessary to
authorize or take that action at a meeting. Meetings of the
unitholders may be called by our general partner or by
unitholders owning at least 20% of the outstanding units of the
class for which a meeting is proposed. Unitholders may vote
either in person or by proxy at meetings. The holders of a
majority of the outstanding units of the class or classes for
which a meeting has been called represented in person or by
proxy will constitute a quorum unless any action by the
unitholders
17
requires approval by holders of a greater percentage of the
units, in which case the quorum will be the greater percentage.
Each record holder of a unit has a vote according to his
percentage interest in us, although additional limited partner
interests having special voting rights could be issued. Please
read Issuance of Additional Securities.
However, if at any time any person or group, other than our
general partner and its affiliates, or a direct or subsequently
approved transferee of our general partner or its affiliates,
acquires, in the aggregate, beneficial ownership of 20% or more
of any class of units then outstanding, that person or group
will lose voting rights on all of its units and the units may
not be voted on any matter and will not be considered to be
outstanding when sending notices of a meeting of unitholders,
calculating required votes, determining the presence of a quorum
or for other similar purposes. Common units held in nominee or
street name account will be voted by the broker or other nominee
in accordance with the instruction of the beneficial owner
unless the arrangement between the beneficial owner and his
nominee provides otherwise. Except as our partnership agreement
otherwise provides, subordinated units will vote together with
common units as a single class.
Any notice, demand, request, report or proxy material required
or permitted to be given or made to record holders of common
units under our partnership agreement will be delivered to the
record holder by us or by the transfer agent.
Status as
Limited Partner
Except as described under Limited
Liability, the common units will be fully paid, and
unitholders will not be required to make additional
contributions. By transfer of common units in accordance with
our partnership agreement, each transferee of common units shall
be admitted as a limited partner with respect to the common
units transferred when such transfer and admission is reflected
in our books and records.
Non-Citizen
Transferees
If we are or become subject to federal, state or local laws or
regulations that, in the reasonable determination of our general
partner, create a substantial risk of cancellation or forfeiture
of any property that we have an interest in because of the
nationality, citizenship or other related status of any limited
partner, we may redeem the units held by the limited partner at
their current market price. In order to avoid any cancellation
or forfeiture, our general partner may require each limited
partner to furnish information about his nationality,
citizenship or related status. If a limited partner fails to
furnish information about his nationality, citizenship or other
related status within 30 days after a request for the
information or our general partner determines after receipt of
the information that the limited partner is not an eligible
citizen, the limited partner may be treated as a non-citizen
transferee. A non-citizen transferee is entitled to an interest
equivalent to that of a limited partner for the right to share
in allocations and distributions from us, including liquidating
distributions. A non-citizen transferee does not have the right
to vote his units and may not receive distributions in kind upon
our liquidation.
Indemnification
Under our partnership agreement, in most circumstances, we will
indemnify the following persons, to the fullest extent permitted
by law, from and against all losses, claims, damages or similar
events:
|
|
|
|
|
our general partner;
|
|
|
|
any departing general partner;
|
|
|
|
any person who is or was an affiliate of a general partner or
any departing general partner;
|
|
|
|
any person who is or was a director, officer, member, partner,
fiduciary or trustee of any entity set forth in the preceding
three bullet points;
|
18
|
|
|
|
|
any person who is or was serving as director, officer, member,
partner, fiduciary or trustee of another person at the request
of our general partner or any departing general partner or any
of their affiliates (other than persons acting on a
fee-for-services basis); and
|
|
|
|
any person designated by our general partner.
|
Any indemnification under these provisions will only be out of
our assets. Unless it otherwise agrees, our general partner will
not be personally liable for, or have any obligation to
contribute or loan funds or assets to us to enable us to
effectuate, indemnification. We may purchase insurance against
liabilities asserted against and expenses incurred by persons
for our activities, regardless of whether we would have the
power to indemnify the person against liabilities under our
partnership agreement.
Reimbursement
of Expenses
Our partnership agreement requires us to reimburse our general
partner for all direct and indirect expenses it incurs or
payments it makes on our behalf and all other expenses allocable
to us or otherwise incurred by our general partner in connection
with operating our business. These expenses include salary,
bonus, incentive compensation and other amounts paid to persons
who perform services for us or on our behalf and expenses
allocated to our general partner by its affiliates. The general
partner is entitled to determine in good faith the expenses that
are allocable to us.
Books and
Reports
Our general partner is required to keep appropriate books of our
business at our principal offices. The books will be maintained
for both tax and financial reporting purposes on an accrual
basis. For tax and fiscal reporting purposes, our fiscal year is
the calendar year.
We will furnish or make available to record holders of common
units, within 120 days after the close of each fiscal year,
an annual report containing our audited financial statements and
a report on those financial statements by our independent public
accountants. Except for our fourth quarter, we will also furnish
or make available summary financial information within
90 days after the close of each quarter.
We will furnish each record holder of a unit with information
reasonably required for tax reporting purposes within
90 days after the close of each calendar year. This
information is expected to be furnished in summary form so that
some complex calculations normally required of partners can be
avoided. Our ability to furnish this summary information to
unitholders will depend on the cooperation of unitholders in
supplying us with specific information. Every unitholder will
receive information to assist him in determining his federal and
state tax liability and filing his federal and state income tax
returns, regardless of whether he supplies us with information.
Right to
Inspect Our Books and Records
Our partnership agreement provides that a limited partner can,
for a purpose reasonably related to his interest as a limited
partner, upon reasonable demand stating the purpose of such
demand and at his own expense, have furnished to him:
|
|
|
|
|
a current list of the name and last known address of each
partner;
|
|
|
|
a copy of our tax returns;
|
|
|
|
information as to the amount of cash, and a description and
statement of the agreed value of any other property or services,
contributed or to be contributed by each partner and the date on
which each partner became a partner;
|
|
|
|
copies of our partnership agreement, our certificate of limited
partnership, related amendments and powers of attorney under
which they have been executed;
|
19
|
|
|
|
|
information regarding the status of our business and financial
condition; and
|
|
|
|
any other information regarding our affairs as is just and
reasonable.
|
Our general partner may, and intends to, keep confidential from
the limited partners trade secrets or other information the
disclosure of which our general partner believes in good faith
is not in our best interests or that we are required by law or
by agreements with third parties to keep confidential.
Registration
Rights
Under our partnership agreement, we have agreed to register for
resale under the Securities Act of 1933 (the Securities
Act) and applicable state securities laws any common
units, subordinated units or other partnership securities
proposed to be sold by our general partner or any of its
affiliates or their transferees if an exemption from the
registration requirements is not available. We have also agreed
to include on any registration statement we file any partnership
securities proposed to be sold by our general partner or its
affiliates or their transferees. These registration rights
continue for two years following any withdrawal or removal of
Calumet GP, LLC as our general partner. In connection with any
registration of this kind, we will indemnify each unitholder
participating in the registration and its officers, directors
and controlling persons from and against any liabilities under
the Securities Act or any state securities laws arising from the
registration statement or prospectus. We are obligated to pay
all expenses incidental to the registration, excluding
underwriting discounts and commissions.
OUR CASH
DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS
General
Rationale for Our Cash Distribution
Policy. Our cash distribution policy reflects a
basic judgment that our unitholders will be better served by our
distributing our available cash rather than retaining it.
Because we are not subject to a partnership-level federal income
tax, we have more cash to distribute to you than would be the
case were we subject to partnership level federal income tax.
Our cash distribution policy is consistent with the terms of our
partnership agreement, which requires that we distribute
available cash to our unitholders quarterly. Our determination
of available cash takes into account the need to maintain
certain cash reserves to preserve our distribution levels across
seasonal and cyclical fluctuations in our business. During the
subordination period, the common units have a priority over the
subordinated units for the minimum quarterly distribution and,
during the subordination period, the common units carry
arrearage rights, which are similar to cumulative rights on
preferred stock. If the minimum quarterly distribution is not
paid, we must pay all arrearages in addition to the current
minimum quarterly distribution before distributions are made on
the subordinated units or the incentive distribution rights.
Limitations on Cash Distributions and Our Ability to Change
Our Cash Distribution Policy. There is no
guarantee that unitholders will receive quarterly distributions
from us. Our distribution policy is subject to certain
restrictions and may be changed at any time, including:
|
|
|
|
|
Our distribution policy will be subject to restrictions on
distributions under our new credit facilities. Specifically, our
credit facilities contain consolidated leverage and available
liquidity tests that we must satisfy in order to make
distributions to unitholders. Should we be unable to satisfy
these restrictions under our credit facilities, we would be
prohibited from making cash distributions to you notwithstanding
our stated cash distribution policy.
|
|
|
|
Our board of directors will have the authority to establish
reserves for the prudent conduct of our business or for future
distributions to unitholders, and the establishment of those
reserves could result in a reduction in cash distributions to
you from levels we currently anticipate pursuant to our stated
distribution policy.
|
20
|
|
|
|
|
Even if our cash distribution policy is not modified or revoked,
the amount of distributions we pay under our cash distribution
policy and the decision to make any distribution is determined
by our general partner, taking into consideration the terms of
our partnership agreement.
|
|
|
|
Under
Section 17-607
of the Delaware Act, we may not make a distribution to you if
the distribution would cause our liabilities to exceed the fair
value of our assets.
|
|
|
|
We may lack sufficient cash to pay distributions to our
unitholders due to a number of factors, including increases in
our general and administrative expense, principal and interest
payments on our outstanding debt, tax expenses, working capital
requirements, anticipated cash needs and seasonality.
|
|
|
|
While our partnership agreement requires us to distribute our
available cash, our partnership agreement may be amended. During
the subordination period, with certain exceptions, our
partnership agreement may not be amended without approval of the
nonaffiliated common unitholders, but our partnership agreement
can be amended with the approval of a majority of our
outstanding common units after the subordination period has
ended.
|
Our Cash Distribution Policy May Limit Our Ability to
Grow. Because we intend to distribute the
majority of the cash generated from our business to our
unitholders, our growth may not be as fast as businesses that
reinvest their available cash to expand ongoing operations.
Our Ability to Grow is Dependent on Our Ability to Access
External Expansion Capital. We will distribute
our available cash from operations to our unitholders. As a
result, we expect that we will rely primarily upon external
financing sources, including commercial bank borrowings and the
issuance of debt and equity securities, to fund our acquisitions
and major expansion capital expenditures. As a result, to the
extent we are unable to finance growth externally, our cash
distribution policy will significantly impair our ability to
grow. In addition, to the extent we issue additional units in
connection with any acquisitions or expansion capital
expenditures, the payments of distributions on those additional
units may increase the risk that we will be unable to maintain
or increase our per unit distribution level, which in turn may
reduce the available cash that we have to distribute on each
unit. We are able to issue additional units without the approval
of our unitholders in a number of circumstances. Please read
The Partnership Agreement Issuance of
Additional Securities. The incurrence of additional
commercial borrowings or other debt to finance our growth
strategy would result in increased interest expense, which in
turn may reduce the available cash that we have to distribute to
our unitholders.
Distributions
of Available Cash
General. Within 45 days after the end of
each quarter, we will distribute our available cash to
unitholders of record on the applicable record date.
Definition of Available Cash. Available cash
generally means, for any quarter, all cash on hand at the end of
the quarter:
|
|
|
|
|
less the amount of cash reserves established by our general
partner to:
|
|
|
|
provide for the proper conduct of our business;
|
|
|
|
comply with applicable law, any of our debt instruments or other
agreements; or
|
|
|
|
provide funds for distributions to our unitholders and to our
general partner for any one or more of the next four quarters.
|
|
|
|
plus all cash on hand on the date of determination of available
cash for the quarter resulting from working capital borrowings
made after the end of the quarter for which the determination is
being made. Working capital borrowings are generally borrowings
that will be made under our revolving credit facility and in all
cases are used solely for working capital purposes or to pay
distributions to partners.
|
21
Intent to Distribute the Minimum Quarterly
Distribution. We will distribute to the holders
of common units and subordinated units on a quarterly basis at
least the minimum quarterly distribution of $0.45 per unit, or
$1.80 per year, to the extent we have sufficient cash from our
operations after establishment of cash reserves and payment of
fees and expenses, including payments to our general partner.
However, there is no guarantee that we will pay the minimum
quarterly distribution on the units in any quarter. Even if our
cash distribution policy is not modified or revoked, the amount
of distributions paid under our policy and the decision to make
any distribution is determined by our general partner, taking
into consideration the terms of our partnership agreement. We
are prohibited from making any distributions to unitholders if
it would cause an event of default, or an event of default is
existing, under our credit agreements.
General Partner Interest and Incentive Distribution
Rights. As of the date of this offering, our
general partner is entitled to 2% of all quarterly distributions
since inception that we make prior to our liquidation. This
general partner interest is represented by 719,995 general
partner units. Our general partner has the right, but not the
obligation, to contribute a proportionate amount of capital to
us to maintain its current general partner interest. The general
partners initial 2% interest in these distributions may be
reduced if we issue additional units in the future and our
general partner does not contribute a proportionate amount of
capital to us to maintain its 2% general partner interest. Our
general partner also currently holds incentive distribution
rights that entitle it to receive increasing percentages, up to
a maximum of 50%, of the cash we distribute from operating
surplus (as defined below) in excess of $0.45 per unit. The
maximum distribution of 50% includes distributions paid to our
general partner on its 2% general partner interest, and assumes
that our general partner maintains its general partner interest
at 2%. The maximum distribution of 50% does not include any
distributions that our general partner may receive on units that
it owns. Please read Incentive Distribution
Rights for additional information.
Operating
Surplus and Capital Surplus
General. All cash distributed to unitholders
is characterized as either operating surplus or
capital surplus. Our partnership agreement requires
that we distribute available cash from operating surplus
differently than available cash from capital surplus.
Operating Surplus. Operating surplus generally
consists of:
|
|
|
|
|
our cash balance on the closing date of this offering; plus
|
|
|
|
$10.0 million (as described below); plus
|
|
|
|
all of our cash receipts after the closing of this offering,
excluding cash from (1) borrowings that are not working
capital borrowings, (2) sales of equity and debt securities
and (3) sales or other dispositions of assets outside the
ordinary course of business; plus
|
|
|
|
working capital borrowings made after the end of a quarter but
before the date of determination of operating surplus for the
quarter; less
|
|
|
|
all of our operating expenditures after the closing of this
offering (including the repayment of working capital borrowings,
but not the repayment of other borrowings) and maintenance
capital expenditures; less
|
|
|
|
the amount of cash reserves established by our general partner
for future operating expenditures.
|
Maintenance capital expenditures represent capital expenditures
made to replace partially or fully depreciated assets, to
maintain the existing operating capacity of our assets and to
extend their useful lives, or other capital expenditures that
are incurred in maintaining existing system volumes and related
cash flows. Expansion capital expenditures represent capital
expenditures made to expand the existing operating capacity of
our assets or to expand the operating capacity or revenues of
existing or new assets, whether through construction or
acquisition. Costs for repairs and minor renewals to maintain
facilities in operating condition and that do not extend the
useful life of existing assets are treated as operations and
maintenance expenses as we incur them. Our partnership agreement
provides that our general partner determines how to allocate a
22
capital expenditure for the acquisition or expansion of our
assets between maintenance capital expenditures and expansion
capital expenditures.
Capital Surplus. Capital surplus consists of:
|
|
|
|
|
borrowings other than working capital borrowings;
|
|
|
|
sales of our equity and debt securities; and
|
|
|
|
sales or other dispositions of assets for cash, other than
inventory, accounts receivable and other current assets sold in
the ordinary course of business or as part of normal retirement
or replacement of assets.
|
Characterization of Cash Distributions. We
treat all available cash distributed as coming from operating
surplus until the sum of all available cash distributed since we
began operations equals the operating surplus as of the most
recent date of determination of available cash. We treat any
amount distributed in excess of operating surplus, regardless of
its source, as capital surplus. As reflected above, operating
surplus includes $10.0 million. This amount does not
reflect actual cash on hand that is available for distribution
to our unitholders. Rather, it is a provision that will enable
us, if we choose, to distribute as operating surplus up to this
amount of cash we receive in the future from non-operating
sources, such as asset sales, issuances of securities and
borrowings, that would otherwise be distributed as capital
surplus. We do not anticipate that we will make any
distributions from capital surplus.
Subordination
Period
General. Our partnership agreement provides
that, during the subordination period (which we define below),
the common units have the right to receive distributions of
available cash from operating surplus in an amount equal to the
minimum quarterly distribution of $0.45 per quarter, plus any
arrearages in the payment of the minimum quarterly distribution
on the common units from prior quarters, before any
distributions of available cash from operating surplus may be
made on the subordinated units. These units are deemed
subordinated because for a period of time, referred
to as the subordination period, the subordinated units will not
be entitled to receive any distributions until the common units
have received the minimum quarterly distribution plus any
arrearages from prior quarters. Furthermore, no arrearages will
be paid on the subordinated units. The practical effect of the
existence of the subordinated units is to increase the
likelihood that during the subordination period there will be
available cash to be distributed on the common units. All of the
outstanding subordinated units are owned by affiliates of our
general partner.
Subordination Period. The subordination period
will extend until the first day of any quarter beginning after
December 31, 2010 that each of the following tests are met:
|
|
|
|
|
distributions of available cash from operating surplus on each
of the outstanding common units, subordinated units and general
partner units equaled or exceeded the minimum quarterly
distributions on such common units, subordinated units and
general partner units for each of the three consecutive,
non-overlapping four-quarter periods immediately preceding that
date;
|
|
|
|
the adjusted operating surplus (as defined below)
generated during each of the three consecutive, non-overlapping
four-quarter periods immediately preceding that date equaled or
exceeded the sum of the minimum quarterly distributions on all
of the outstanding common units, subordinated units and general
partner units during those periods on a fully diluted
basis; and
|
|
|
|
there are no arrearages in payment of minimum quarterly
distributions on the common units.
|
Expiration of the Subordination Period. When
the subordination period expires, each outstanding subordinated
unit will convert into one common unit and will then participate
pro rata with the other common units in distributions of
available cash. In addition, if the unitholders remove our
general partner other than for cause and units held by the
general partner and its affiliates are not voted in favor of
such removal:
|
|
|
|
|
the subordination period will end and each subordinated unit
will immediately convert into one common unit;
|
23
|
|
|
|
|
any existing arrearages in payment of the minimum quarterly
distribution on the common units will be extinguished; and
|
|
|
|
the general partner will have the right to convert its general
partner interest and its incentive distribution rights into
common units or to receive cash in exchange for those interests.
|
Adjusted Operating Surplus. Adjusted operating
surplus is intended to reflect the cash generated from
operations during a particular period and therefore excludes net
increases in working capital borrowings and net drawdowns of
reserves of cash generated in prior periods. Adjusted operating
surplus consists of:
|
|
|
|
|
operating surplus generated with respect to that period; less
|
|
|
|
any net increase in working capital borrowings with respect to
that period; less
|
|
|
|
any net decrease in cash reserves for operating expenditures
with respect to that period not relating to an operating
expenditure made with respect to that period; plus
|
|
|
|
any net decrease in working capital borrowings with respect to
that period; plus
|
|
|
|
any net increase in cash reserves for operating expenditures
with respect to that period required by any debt instrument for
the repayment of principal, interest or premium.
|
Distributions
of Available Cash from Operating Surplus During the
Subordination Period
We will make distributions of available cash from operating
surplus for any quarter during the subordination period in the
following manner:
|
|
|
|
|
first, 98% to the common unitholders, pro rata, and 2% to the
general partner, until we distribute for each outstanding common
unit an amount equal to the minimum quarterly distribution for
that quarter;
|
|
|
|
second, 98% to the common unitholders, pro rata, and 2% to the
general partner, until we distribute for each outstanding common
unit an amount equal to any arrearages in payment of the minimum
quarterly distribution on the common units for any prior
quarters during the subordination period;
|
|
|
|
third, 98% to the subordinated unitholders, pro rata, and 2% to
the general partner, until we distribute for each subordinated
unit an amount equal to the minimum quarterly distribution for
that quarter; and
|
|
|
|
thereafter, in the manner described in
Incentive Distribution Rights below.
|
The preceding discussion is based on the assumptions that our
general partner maintains its 2% general partner interest and
that we do not issue additional classes of equity securities.
Distributions
of Available Cash from Operating Surplus After the Subordination
Period
We will make distributions of available cash from operating
surplus for any quarter after the subordination period in the
following manner:
|
|
|
|
|
first, 98% to all unitholders, pro rata, and 2% to the general
partner, until we distribute for each outstanding unit an amount
equal to the minimum quarterly distribution for that
quarter; and
|
|
|
|
thereafter, in the manner described in
Incentive Distribution Rights below.
|
The preceding discussion is based on the assumptions that our
general partner maintains its 2% general partner interest and
that we do not issue additional classes of equity securities.
Incentive
Distribution Rights
Incentive distribution rights represent the right to receive an
increasing percentage of quarterly distributions of available
cash from operating surplus after the minimum quarterly
distribution and the target distribution levels have been
achieved. Our general partner currently holds the incentive
distribution rights, but may transfer these rights separately
from its general partner interest, subject to restrictions in
the partnership agreement.
24
If for any quarter:
|
|
|
|
|
we have distributed available cash from operating surplus to the
common and subordinated unitholders in an amount equal to the
minimum quarterly distribution; and
|
|
|
|
we have distributed available cash from operating surplus on
outstanding common units in an amount necessary to eliminate any
cumulative arrearages in payment of the minimum quarterly
distribution;
|
then, we will distribute any additional available cash from
operating surplus for that quarter among the unitholders and the
general partner in the following manner:
|
|
|
|
|
first, 98% to all unitholders, pro rata, and 2% to the general
partner, until each unitholder receives a total of $0.495 per
unit for that quarter (the first target
distribution);
|
|
|
|
second, 85% to all unitholders, pro rata, and 15% to the general
partner, until each unitholder receives a total of $0.563 per
unit for that quarter (the second target
distribution);
|
|
|
|
third, 75% to all unitholders, pro rata, and 25% to the general
partner, until each unitholder receives a total of $0.675 per
unit for that quarter (the third target
distribution); and
|
|
|
|
thereafter, 50% to all unitholders, pro rata, and 50% to the
general partner.
|
In each case, the amount of the target distribution set forth
above is exclusive of any distributions to common unitholders to
eliminate any cumulative arrearages in payment of the minimum
quarterly distribution. The preceding discussion is based on the
assumptions that our general partner maintains its 2% general
partner interest and that we do not issue additional classes of
equity securities.
Percentage
Allocations of Available Cash from Operating Surplus
The following table illustrates the percentage allocations of
the additional available cash from operating surplus between the
unitholders and our general partner up to the various target
distribution levels. The amounts set forth under Marginal
Percentage Interest in Distributions are the percentage
interests of our general partner and the unitholders in any
available cash from operating surplus we distribute up to and
including the corresponding amount in the column Total
Quarterly Distribution Target Amount, until available cash
from operating surplus we distribute reaches the next target
distribution level, if any. The percentage interests shown for
the unitholders and the 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 2% general partner interest and
assume our general partner has contributed any additional
capital to maintain its 2% general partner interest and has not
transferred its incentive distribution rights.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marginal Percentage Interest
|
|
|
|
Total Quarterly Distribution
|
|
in Distributions
|
|
|
|
Target Amount
|
|
Unitholders
|
|
|
General Partner
|
|
|
Minimum Quarterly Distribution
|
|
$0.45
|
|
|
98
|
%
|
|
|
2
|
%
|
First Target Distribution
|
|
up to $0.495
|
|
|
98
|
%
|
|
|
2
|
%
|
Second Target Distribution
|
|
above $0.495 up to $0.563
|
|
|
85
|
%
|
|
|
15
|
%
|
Third Target Distribution
|
|
above $0.563 up to $0.675
|
|
|
75
|
%
|
|
|
25
|
%
|
Thereafter
|
|
above $0.675
|
|
|
50
|
%
|
|
|
50
|
%
|
Distributions
from Capital Surplus
How Distributions from Capital Surplus Will Be
Made. We will make distributions of available
cash from capital surplus, if any, in the following manner:
|
|
|
|
|
first, 98% to all unitholders, pro rata, and 2% to the general
partner, until we distribute for each common unit that was
issued in this offering, an amount of available cash from
capital surplus equal to the initial public offering price;
|
25
|
|
|
|
|
second, 98% to the common unitholders, pro rata, and 2% to the
general partner, until we distribute for each common unit, an
amount of available cash from capital surplus equal to any
unpaid arrearages in payment of the minimum quarterly
distribution on the common units; and
|
|
|
|
thereafter, we will make all distributions of available cash
from capital surplus as if they were from operating surplus.
|
Effect of a Distribution from Capital
Surplus. Our partnership agreement treats a
distribution of capital surplus as the repayment of the initial
unit price from the initial public offering, which is a return
of capital. The initial public offering price less any
distributions of capital surplus per unit is referred to as the
unrecovered initial unit price. Each time a
distribution of capital surplus is made, the minimum quarterly
distribution and the target distribution levels will be reduced
in the same proportion as the corresponding reduction in the
unrecovered initial unit price. Because distributions of capital
surplus will reduce the minimum quarterly distribution, after
any of these distributions are made, it may be easier for the
general partner to receive incentive distributions and for the
subordinated units to convert into common units. However, any
distribution of capital surplus before the unrecovered initial
unit price is reduced to zero cannot be applied to the payment
of the minimum quarterly distribution or any arrearages.
Once we distribute capital surplus on a unit issued in this
offering in an amount equal to the initial unit price, our
partnership agreement specifies that the minimum quarterly
distribution and the target distribution levels will be reduced
to zero. Our partnership agreement specifies that we then make
all future distributions from operating surplus, with 50% being
paid to the holders of units and 50% to the general partner. The
percentage interests shown for our general partner include its
2% general partner interest and assume the general partner has
not transferred the incentive distribution rights.
Adjustment
to the Minimum Quarterly Distribution and Target Distribution
Levels
In addition to adjusting the minimum quarterly distribution and
target distribution levels to reflect a distribution of capital
surplus, if we combine our units into fewer units or subdivide
our units into a greater number of units, our partnership
agreement specifies that the following items will be
proportionately adjusted:
|
|
|
|
|
the minimum quarterly distribution;
|
|
|
|
target distribution levels;
|
|
|
|
the unrecovered initial unit price;
|
|
|
|
the number of common units issuable during the subordination
period without a unitholder vote; and
|
|
|
|
the number of common units into which a subordinated unit is
convertible.
|
For example, if a two-for-one split of the common units should
occur, the minimum quarterly distribution, the target
distribution levels and the unrecovered initial unit price would
each be reduced to 50% of its initial level, the number of
common units issuable during the subordination period without
unitholder vote would double and each subordinated unit would be
convertible into two common units. Our partnership agreement
provides that we not make any adjustment by reason of the
issuance of additional units for cash or property.
In addition, if legislation is enacted or if existing law is
modified or interpreted by a governmental taxing authority, so
that we become taxable as a corporation or otherwise subject to
taxation as an entity for federal, state or local income tax
purposes, our partnership agreement specifies that the minimum
quarterly distribution and the target distribution levels for
each quarter will be reduced by multiplying each distribution
level by a fraction, the numerator of which is available cash
for that quarter and the denominator of which is the sum of
available cash for that quarter plus the general partners
estimate of our aggregate liability for the quarter for such
income taxes payable by reason of such legislation or
interpretation. To the extent that the actual tax liability
differs from the estimated tax liability for any quarter, the
difference will be accounted for in subsequent quarters.
26
Distributions
of Cash Upon Liquidation
General. If we dissolve in accordance with the
partnership agreement, we will sell or otherwise dispose of our
assets in a process called liquidation. We will first apply the
proceeds of liquidation to the payment of our creditors. We will
distribute any remaining proceeds to the unitholders and the
general partner, in accordance with their capital account
balances, as adjusted to reflect any gain or loss upon the sale
or other disposition of our assets in liquidation.
The allocations of gain and loss upon liquidation are intended,
to the extent possible, to entitle the holders of outstanding
common units to a preference over the holders of outstanding
subordinated units upon our liquidation, to the extent required
to permit common unitholders to receive their unrecovered
initial unit price plus the minimum quarterly distribution for
the quarter during which liquidation occurs plus any unpaid
arrearages in payment of the minimum quarterly distribution on
the common units. However, there may not be sufficient gain upon
our liquidation to enable the holders of common units to fully
recover all of these amounts, even though there may be cash
available for distribution to the holders of subordinated units.
Any further net gain recognized upon liquidation will be
allocated in a manner that takes into account the incentive
distribution rights of the general partner.
Manner of Adjustments for Gain. The manner of
the adjustment for gain is set forth in the partnership
agreement. If our liquidation occurs before the end of the
subordination period, we will allocate any gain to the partners
in the following manner:
|
|
|
|
|
first, to the general partner and the holders of units who have
negative balances in their capital accounts to the extent of and
in proportion to those negative balances;
|
|
|
|
second, 98% to the common unitholders, pro rata, and 2% to the
general partner, until the capital account for each common unit
is equal to the sum of: (1) the unrecovered initial unit
price; (2) the amount of the minimum quarterly distribution
for the quarter during which our liquidation occurs; and
(3) any unpaid arrearages in payment of the minimum
quarterly distribution;
|
|
|
|
third, 98% to the subordinated unitholders, pro rata, and 2% to
the general partner until the capital account for each
subordinated unit is equal to the sum of: (1) the
unrecovered initial unit price; and (2) the amount of the
minimum quarterly distribution for the quarter during which our
liquidation occurs;
|
|
|
|
fourth, 98% to all unitholders, pro rata, and 2% to the general
partner, until we allocate under this paragraph an amount per
unit equal to: (1) the sum of the excess of the first
target distribution per unit over the minimum quarterly
distribution per unit for each quarter of our existence; less
(2) the cumulative amount per unit of any distributions of
available cash from operating surplus in excess of the minimum
quarterly distribution per unit that we distributed 98% to the
unitholders, pro rata, and 2% to the general partner, for each
quarter of our existence;
|
|
|
|
fifth, 85% to all unitholders, pro rata, and 15% to the general
partner, until we allocate under this paragraph an amount per
unit equal to: (1) the sum of the excess of the second
target distribution per unit over the first target distribution
per unit for each quarter of our existence; less (2) the
cumulative amount per unit of any distributions of available
cash from operating surplus in excess of the first target
distribution per unit that we distributed 85% to the
unitholders, pro rata, and 15% to the general partner for each
quarter of our existence;
|
|
|
|
sixth, 75% to all unitholders, pro rata, and 25% to the general
partner, until we allocate under this paragraph an amount per
unit equal to: (1) the sum of the excess of the third
target distribution per unit over the second target distribution
per unit for each quarter of our existence; less (2) the
cumulative amount per unit of any distributions of available
cash from operating surplus in excess of the second target
distribution per unit that we distributed 75% to the
unitholders, pro rata, and 25% to the general partner for each
quarter of our existence; and
|
|
|
|
thereafter, 50% to all unitholders, pro rata, and 50% to the
general partner.
|
27
The percentage interests set forth above for our general partner
include its 2% general partner interest and assume the general
partner has not transferred the incentive distribution rights.
If the liquidation occurs after the end of the subordination
period, the distinction between common units and subordinated
units will disappear, so that clause (3) of the second
bullet point above and all of the third bullet point above will
no longer be applicable.
Manner of Adjustments for Losses. If our
liquidation occurs before the end of the subordination period,
we will generally allocate any loss to the general partner and
the unitholders in the following manner:
|
|
|
|
|
first, 98% to holders of subordinated units in proportion to the
positive balances in their capital accounts and 2% to the
general partner, until the capital accounts of the subordinated
unitholders have been reduced to zero;
|
|
|
|
second, 98% to the holders of common units in proportion to the
positive balances in their capital accounts and 2% to the
general partner, until the capital accounts of the common
unitholders have been reduced to zero; and
|
|
|
|
thereafter, 100% to the general partner.
|
If the liquidation occurs after the end of the subordination
period, the distinction between common units and subordinated
units will disappear, so that all of the first bullet point
above will no longer be applicable.
Adjustments to Capital Accounts. Our
partnership agreement requires that we make adjustments to
capital accounts upon the issuance of additional units. In this
regard, our partnership agreement specifies that we allocate any
unrealized and, for tax purposes, unrecognized gain or loss
resulting from the adjustments to the unitholders and the
general partner in the same manner as we allocate gain or loss
upon liquidation. In the event that we make positive adjustments
to the capital accounts upon the issuance of additional units,
our partnership agreement requires that we allocate any later
negative adjustments to the capital accounts resulting from the
issuance of additional units or upon our liquidation in a manner
which results, to the extent possible, in the general
partners capital account balances equaling the amount
which they would have been if no earlier positive adjustments to
the capital accounts had been made.
DESCRIPTION
OF DEBT SECURITIES
General
The debt securities will be:
|
|
|
|
|
our direct general obligations;
|
|
|
|
either senior debt securities or subordinated debt
securities; and
|
|
|
|
issued under separate indentures among us and a trustee.
|
Calumet Specialty Products Partners, L.P. may issue debt
securities in one or more series, and Calumet Finance Corp. may
be a co-issuer of one or more series of debt securities. Calumet
Finance Corp. was incorporated under the laws of the State of
Delaware in August 2007, is wholly-owned by Calumet Specialty
Products Partners, L.P., and has no material assets or
liabilities other than as a co-issuer of debt securities. Its
activities will be limited to co-issuing debt securities and
engaging in other activities incidental thereto. When used in
this section Description of Debt Securities, the
terms we, us, our and
issuers refer jointly to Calumet Specialty Products
Partners, L.P. and Calumet Finance Corp., and the terms
Calumet Specialty Products Partners, L.P. and
Calumet Finance refer strictly to Calumet Specialty
Products Partners, L.P. and Calumet Finance Corp., respectively.
If we offer senior debt securities, we will issue them under a
senior indenture. If we issue subordinated debt securities, we
will issue them under a subordinated indenture. The trustee
under each indenture (the Trustee) will be named in
the applicable prospectus supplement. A form of each indenture
is filed as an exhibit to the registration statement of which
this prospectus is a part. We have not restated either indenture
in
28
its entirety in this description. You should read the relevant
indenture because it, and not this description, controls your
rights as holders of the debt securities. Capitalized terms used
in the summary have the meanings specified in the indentures.
Specific
Terms of Each Series of Debt Securities in the Prospectus
Supplement
A prospectus supplement and a supplemental indenture or
authorizing resolutions relating to any series of debt
securities being offered will include specific terms relating to
the offering. These terms will include some or all of the
following:
|
|
|
|
|
whether Calumet Finance will be a co-issuer of the debt
securities;
|
|
|
|
the guarantors of the debt securities, if any;
|
|
|
|
whether the debt securities are senior or subordinated debt
securities;
|
|
|
|
the title of the debt securities;
|
|
|
|
the total principal amount of the debt securities;
|
|
|
|
the assets, if any, that are pledged as security for the payment
of the debt securities;
|
|
|
|
whether we will issue the debt securities in individual
certificates to each holder in registered form, or in the form
of temporary or permanent global securities held by a depository
on behalf of holders;
|
|
|
|
the prices at which we will issue the debt securities;
|
|
|
|
the portion of the principal amount that will be payable if the
maturity of the debt securities is accelerated;
|
|
|
|
the currency or currency unit in which the debt securities will
be payable, if not U.S. dollars;
|
|
|
|
the dates on which the principal of the debt securities will be
payable;
|
|
|
|
the interest rate that the debt securities will bear and the
interest payment dates for the debt securities;
|
|
|
|
any conversion or exchange provisions;
|
|
|
|
any optional redemption provisions;
|
|
|
|
any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the debt securities;
|
|
|
|
any changes to or additional events of default or
covenants; and
|
|
|
|
any other terms of the debt securities.
|
We may offer and sell debt securities, including original issue
discount debt securities, at a substantial discount below their
principal amount. The prospectus supplement will describe
special U.S. federal income tax and any other
considerations applicable to those securities. In addition, the
prospectus supplement may describe certain special
U.S. federal income tax or other considerations applicable
to any debt securities that are denominated in a currency other
than U.S. dollars.
Guarantees
If specified in the prospectus supplement respecting a series of
debt securities, the subsidiaries of Calumet Specialty Products
Partners, L.P. specified in the prospectus supplement will
unconditionally guarantee to each holder and the Trustee, on a
joint and several basis, the full and prompt payment of
principal of, premium, if any, and interest on the debt
securities of that series when and as the same become due and
payable, whether at fixed maturity, upon redemption or
repurchase, by declaration of acceleration or otherwise. If a
series of debt securities is guaranteed, such series will be
guaranteed by all subsidiaries. The prospectus supplement will
describe any limitation on the maximum amount of any particular
guarantee and the conditions under which guarantees may be
released.
29
The guarantees will be general obligations of the guarantors.
Guarantees of subordinated debt securities will be subordinated
to the Senior Indebtedness of the guarantors on the same basis
as the subordinated debt securities are subordinated to the
Senior Indebtedness of Calumet Specialty Products Partners, L.P.
Consolidation,
Merger or Asset Sale
Each indenture will, in general, allow us to consolidate or
merge with or into another domestic entity. It will also allow
each issuer to sell, lease, transfer or otherwise dispose of all
or substantially all of its assets to another domestic entity.
If this happens, the remaining or acquiring entity must assume
all of the issuers responsibilities and liabilities under
the indenture including the payment of all amounts due on the
debt securities and performance of the issuers covenants
in the indenture.
However, each indenture will impose certain requirements with
respect to any consolidation or merger with or into an entity,
or any sale, lease, transfer or other disposition of all or
substantially all of an issuers assets, including:
|
|
|
|
|
the remaining or acquiring entity must be organized under the
laws of the United States, any state or the District of
Columbia; provided that Calumet Finance may not merge,
amalgamate or consolidate with or into another entity other than
a corporation satisfying such requirement for so long as Calumet
Specialty Products Partners, L.P. is not a corporation;
|
|
|
|
the remaining or acquiring entity must assume the issuers
obligations under the indenture; and
|
|
|
|
immediately after giving effect to the transaction, no Default
or Event of Default (as defined under Events
of Default and Remedies below) may exist.
|
The remaining or acquiring entity will be substituted for the
issuer in the indenture with the same effect as if it had been
an original party to the indenture, and, except in the case of a
lease of all or substantially all of its assets, the issuer will
be relieved from any further obligations under the indenture.
No
Protection in the Event of a Change of Control
Unless otherwise set forth in the prospectus supplement, the
debt securities will not contain any provisions that protect the
holders of the debt securities in the event of a change of
control of us or in the event of a highly leveraged transaction,
whether or not such transaction results in a change of control
of us.
Modification
of Indentures
We may supplement or amend an indenture if the holders of a
majority in aggregate principal amount of the outstanding debt
securities of all series issued under the indenture affected by
the supplement or amendment consent to it. Further, the holders
of a majority in aggregate principal amount of the outstanding
debt securities of any series may waive past defaults under the
indenture and compliance by us with our covenants with respect
to the debt securities of that series only. Those holders may
not, however, waive any default in any payment on any debt
security of that series or compliance with a provision that
cannot be supplemented or amended without the consent of each
holder affected. Without the consent of each outstanding debt
security affected, no modification of the indenture or waiver
may:
|
|
|
|
|
reduce the principal amount of debt securities whose holders
must consent to an amendment, supplement or waiver;
|
|
|
|
reduce the principal of or change the fixed maturity of any debt
security;
|
|
|
|
reduce or waive the premium payable upon redemption or alter or
waive the provisions with respect to the redemption of the debt
securities (except as may be permitted in the case of a
particular series of debt securities);
|
|
|
|
reduce the rate of or change the time for payment of interest on
any debt security;
|
30
|
|
|
|
|
waive a Default or an Event of Default in the payment of
principal of or premium, if any, or interest on the debt
securities (except a rescission of acceleration of the debt
securities by the holders of at least a majority in aggregate
principal amount of the debt securities and a waiver of the
payment default that resulted from such acceleration);
|
|
|
|
except as otherwise permitted under the indenture, release any
security that may have been granted with respect to the debt
securities;
|
|
|
|
make any debt security payable in currency other than that
stated in the debt securities;
|
|
|
|
in the case of any subordinated debt security, make any change
in the subordination provisions that adversely affects the
rights of any holder under those provisions;
|
|
|
|
make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of holders of debt
securities to receive payments of principal of or premium, if
any, or interest on the debt securities;
|
|
|
|
waive a redemption payment with respect to any debt security
(except as may be permitted in the case of a particular series
of debt securities);
|
|
|
|
except as otherwise permitted in the indenture, release any
guarantor from its obligations under its guarantee or the
indenture or change any guarantee in any manner that would
adversely affect the rights of holders; or
|
|
|
|
make any change in the preceding amendment, supplement and
waiver provisions (except to increase any percentage set forth
therein).
|
We may supplement or amend an indenture without the consent of
any holders of the debt securities in certain circumstances,
including:
|
|
|
|
|
to establish the form of terms of any series of debt securities;
|
|
|
|
to cure any ambiguity, defect or inconsistency;
|
|
|
|
to provide for uncertificated notes in addition to or in place
of certified notes;
|
|
|
|
to provide for the assumption of an issuers or
guarantors obligations to holders of debt securities in
the case of a merger or consolidation or disposition of all or
substantially all of such issuers or guarantors
assets;
|
|
|
|
in the case of any subordinated debt security, to make any
change in the subordination provisions that limits or terminates
the benefits applicable to any holder of Senior Indebtedness of
Calumet Specialty Products Partners, L.P.;
|
|
|
|
to add or release guarantors pursuant to the terms of the
indenture;
|
|
|
|
to make any changes that would provide any additional rights or
benefits to the holders of debt securities or that do not, taken
as a whole, adversely affect the rights under the indenture of
any holder of debt securities;
|
|
|
|
to comply with requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the
Trust Indenture Act;
|
|
|
|
to evidence or provide for the acceptance of appointment under
the indenture of a successor Trustee;
|
|
|
|
to add any additional Events of Default; or
|
|
|
|
to secure the debt securities
and/or the
guarantees.
|
31
Events of
Default and Remedies
Event of Default, when used in an indenture,
will mean any of the following with respect to the debt
securities of any series:
|
|
|
|
|
failure to pay when due the principal of or any premium on any
debt security of that series;
|
|
|
|
failure to pay, within 30 days of the due date, interest on
any debt security of that series;
|
|
|
|
failure to pay when due any sinking fund payment with respect to
any debt securities of that series;
|
|
|
|
failure on the part of the issuers to comply with the covenant
described under Consolidation, Merger or Asset
Sale;
|
|
|
|
failure to perform any other covenant in the indenture that
continues for 60 days after written notice is given to the
issuers;
|
|
|
|
certain events of bankruptcy, insolvency or reorganization of an
issuer; or
|
|
|
|
any other Event of Default provided under the terms of the debt
securities of that series.
|
An Event of Default for a particular series of debt securities
will not necessarily constitute an Event of Default for any
other series of debt securities issued under an indenture. The
Trustee may withhold notice to the holders of debt securities of
any default (except in the payment of principal, premium, if
any, or interest) if it considers such withholding of notice to
be in the best interests of the holders.
If an Event of Default described in the sixth bullet point above
occurs, the entire principal of, premium, if any, and accrued
interest on, all debt securities then outstanding will be due
and payable immediately, without any declaration or other act on
the part of the Trustee or any holders. If any other Event of
Default for any series of debt securities occurs and continues,
the Trustee or the holders of at least 25% in aggregate
principal amount of the debt securities of the series may
declare the entire principal of, and accrued interest on, all
the debt securities of that series to be due and payable
immediately. If this happens, subject to certain conditions, the
holders of a majority in the aggregate principal amount of the
debt securities of that series can rescind the declaration.
Other than its duties in case of a default, a Trustee is not
obligated to exercise any of its rights or powers under either
indenture at the request, order or direction of any holders,
unless the holders offer the Trustee reasonable security or
indemnity. If they provide this reasonable security or
indemnification, the holders of a majority in aggregate
principal amount of any series of debt securities may direct the
time, method and place of conducting any proceeding or any
remedy available to the Trustee, or exercising any power
conferred upon the Trustee, for that series of debt securities.
No Limit
on Amount of Debt Securities
Neither indenture will limit the amount of debt securities that
we may issue, unless we indicate otherwise in a prospectus
supplement. Each indenture will allow us to issue debt
securities of any series up to the aggregate principal amount
that we authorize.
Registration
of Notes
We will issue debt securities of a series only in registered
form, without coupons, unless otherwise indicated in the
prospectus supplement.
Minimum
Denominations
Unless the prospectus supplement states otherwise, the debt
securities will be issued only in principal amounts of $1,000
each or integral multiples of $1,000.
32
No
Personal Liability
None of the past, present or future partners, incorporators,
managers, members, directors, officers, employees, unitholders
or stockholders of either issuer, the general partner of Calumet
Specialty Products Partners, L.P. or any guarantor will have any
liability for the obligations of the issuers or any guarantors
under either indenture or the debt securities or for any claim
based on such obligations or their creation. Each holder of debt
securities by accepting a debt security waives and releases all
such liability. The waiver and release are part of the
consideration for the issuance of the debt securities. The
waiver may not be effective under federal securities laws,
however, and it is the view of the SEC that such a waiver is
against public policy.
Payment
and Transfer
The Trustee will initially act as paying agent and registrar
under each indenture. The issuers may change the paying agent or
registrar without prior notice to the holders of debt
securities, and the issuers or any of their subsidiaries may act
as paying agent or registrar.
If a holder of debt securities has given wire transfer
instructions to the issuers, the issuers will make all payments
on the debt securities in accordance with those instructions.
All other payments on the debt securities will be made at the
corporate trust office of the Trustee, unless the issuers elect
to make interest payments by check mailed to the holders at
their addresses set forth in the debt security register.
The Trustee and any paying agent will repay to us upon request
any funds held by them for payments on the debt securities that
remain unclaimed for two years after the date upon which that
payment has become due. After payment to us, holders entitled to
the money must look to us for payment as general creditors.
Exchange,
Registration and Transfer
Debt securities of any series will be exchangeable for other
debt securities of the same series, the same total principal
amount and the same terms but in different authorized
denominations in accordance with the indenture.
Holders may present debt securities for exchange or registration
of transfer at the office of the registrar. The registrar will
effect the transfer or exchange when it is satisfied with the
documents of title and identity of the person making the
request. We will not charge a service charge for any
registration of transfer or exchange of the debt securities. We
may, however, require the payment of any tax or other
governmental charge payable for that registration.
We will not be required:
|
|
|
|
|
to issue, register the transfer of, or exchange debt securities
of a series either during a period beginning 15 business days
prior to the selection of debt securities of that series for
redemption and ending on the close of business on the day of
mailing of the relevant notice of redemption or repurchase, or
between a record date and the next succeeding interest payment
date; or
|
|
|
|
to register the transfer of or exchange any debt security called
for redemption or repurchase, except the unredeemed portion of
any debt security we are redeeming or repurchasing in part.
|
Provisions
Relating only to the Senior Debt Securities
The senior debt securities will rank equally in right of payment
with all of our other unsubordinated debt. The senior debt
securities will be effectively subordinated, however, to all of
our secured debt to the extent of the value of the collateral
for that debt. We will disclose the amount of our secured debt
in the prospectus supplement.
33
Provisions
Relating only to the Subordinated Debt Securities
Subordinated
Debt Securities Subordinated to Senior
Indebtedness
The subordinated debt securities will rank junior in right of
payment to all of the Senior Indebtedness of Calumet Specialty
Products Partners, L.P. Senior Indebtedness will be
defined in a supplemental indenture or authorizing resolutions
respecting any issuance of a series of subordinated debt
securities, and the definition will be set forth in the
prospectus supplement.
Payment
Blockages
The subordinated indenture will provide that no payment of
principal, interest and any premium on the subordinated debt
securities may be made in the event:
|
|
|
|
|
we or our property is involved in any voluntary or involuntary
liquidation or bankruptcy;
|
|
|
|
we fail to pay the principal, interest, any premium or any other
amounts on any Senior Indebtedness of Calumet Specialty Products
Partners, L.P. within any applicable grace period or the
maturity of such Senior Indebtedness is accelerated following
any other default, subject to certain limited exceptions set
forth in the subordinated indenture; or
|
|
|
|
any other default on any Senior Indebtedness of Calumet
Specialty Products Partners, L.P. occurs that permits immediate
acceleration of its maturity, in which case a payment blockage
on the subordinated debt securities will be imposed for a
maximum of 179 days at any one time.
|
No
Limitation on Amount of Senior Debt
The subordinated indenture will not limit the amount of Senior
Indebtedness that Calumet Specialty Products Partners, L.P. may
incur, unless otherwise indicated in the prospectus supplement.
Book
Entry, Delivery and Form
The debt securities of a particular series may be issued in
whole or in part in the form of one or more global certificates
that will be deposited with the Trustee as custodian for The
Depository Trust Company, New York, New York
(DTC) This means that we will not issue certificates
to each holder. Instead, one or more global debt securities will
be issued to DTC, who will keep a computerized record of its
participants (for example, your broker) whose clients have
purchased the debt securities. The participant will then keep a
record of its clients who purchased the debt securities. Unless
it is exchanged in whole or in part for a certificated debt
security, a global debt security may not be transferred, except
that DTC, its nominees and their successors may transfer a
global debt security as a whole to one another.
Beneficial interests in global debt securities will be shown on,
and transfers of global debt securities will be made only
through, records maintained by DTC and its participants.
DTC has provided us the following information: DTC is a limited
purpose trust company organized under the New York Banking Law,
a banking organization within the meaning of the New
York Banking Law, a member of the United States Federal Reserve
System, a clearing corporation within the meaning of
the New York Uniform Commercial Code and a clearing
agency registered under the provisions of Section 17A
of the Exchange Act. DTC holds securities that its participants
(Direct Participants) deposit with DTC. DTC also
records the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited
securities through computerized records for Direct
Participants accounts. This eliminates the need to
exchange certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations.
DTCs book- entry system is also used by other
organizations such as securities brokers and dealers, banks,
trust companies and clearing corporations that work through a
Direct Participant. The rules that apply to DTC and its
participants are on file with the SEC.
34
DTC is a wholly-owned subsidiary of The Depository
Trust & Clearing Corporation (DTCC). DTCC
is the holding company for DTC, National Securities Clearing
Corporation and Fixed Income Clearing Corporation, all of which
are registered clearing agencies. DTCC is owned by the users of
its regulated subsidiaries.
We will wire all payments on the global debt securities to
DTCs nominee. We and the Trustee will treat DTCs
nominee as the owner of the global debt securities for all
purposes. Accordingly, we, the Trustee and any paying agent will
have no direct responsibility or liability to pay amounts due on
the global debt securities to owners of beneficial interests in
the global debt securities.
It is DTCs current practice, upon receipt of any payment
on the global debt securities, to credit Direct
Participants accounts on the payment date according to
their respective holdings of beneficial interests in the global
debt securities as shown on DTCs records. In addition, it
is DTCs current practice to assign any consenting or
voting rights to Direct Participants whose accounts are credited
with debt securities on a record date, by using an omnibus
proxy. Payments by participants to owners of beneficial
interests in the global debt securities, and voting by
participants, will be governed by the customary practices
between the participants and owners of beneficial interests, as
is the case with debt securities held for the account of
customers registered in street name. However,
payments will be the responsibility of the participants and not
of DTC, the Trustee or us.
Debt securities represented by a global debt security will be
exchangeable for certificated debt securities with the same
terms in authorized denominations only if:
|
|
|
|
|
DTC notifies us that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered
under applicable law and in either event a successor depositary
is not appointed by us within 90 days; or
|
|
|
|
an Event of Default occurs and DTC notifies the Trustee of its
decision to exchange the global debt security for certificated
debt securities.
|
Satisfaction
and Discharge; Defeasance
Each indenture will be discharged and will cease to be of
further effect as to all outstanding debt securities of any
series issued thereunder, when:
(a) either:
(1) all outstanding debt securities of that series that
have been authenticated (except lost, stolen or destroyed debt
securities that have been replaced or paid and debt securities
for whose payment money has theretofore been deposited in trust
and thereafter repaid to us) have been delivered to the Trustee
for cancellation; or
(2) all outstanding debt securities of that series that
have not been delivered to the Trustee for cancellation have
become due and payable by reason of the giving of a notice of
redemption or otherwise or will become due and payable at their
stated maturity within one year or are to be called for
redemption within one year under arrangements satisfactory to
the Trustee and in any case we have irrevocably deposited or
caused to be irrevocably deposited with the Trustee as trust
funds in trust cash in U.S. dollars, non-callable
U.S. Government Obligations or a combination thereof, in
such amounts as will be sufficient, without consideration of any
reinvestment of interest, to pay and discharge the entire
indebtedness of such debt securities not delivered to the
Trustee for cancellation, for principal, premium, if any, and
accrued interest to the date of such deposit (in the case of
debt securities that have been due and payable) or the stated
maturity or redemption date;
(b) we have paid or caused to be paid all other sums
payable by us under the indenture; and
(c) we have delivered an officers certificate and an
opinion of counsel to the Trustee stating that all conditions
precedent to satisfaction and discharge have been satisfied.
The debt securities of a particular series will be subject to
legal or covenant defeasance to the extent, and upon the terms
and conditions, set forth in the prospectus supplement.
35
Governing
Law
Each indenture and all of the debt securities will be governed
by the laws of the State of New York.
The
Trustee
We will enter into the indentures with a Trustee that is
qualified to act under the Trust Indenture Act of 1939, as
amended, and with any other trustees chosen by us and appointed
in a supplemental indenture for a particular series of debt
securities. We may maintain a banking relationship in the
ordinary course of business with our trustee and one or more of
its affiliates.
Resignation
or Removal of Trustee
If the Trustee has or acquires a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee must either
eliminate its conflicting interest or resign, to the extent and
in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and the applicable indenture. Any
resignation will require the appointment of a successor trustee
under the applicable indenture in accordance with the terms and
conditions of such indenture.
The Trustee may resign or be removed by us with respect to one
or more series of debt securities and a successor Trustee may be
appointed to act with respect to any such series. The holders of
a majority in aggregate principal amount of the debt securities
of any series may remove the Trustee with respect to the debt
securities of such series.
Limitations
on Trustee if it is Our Creditor
Each indenture will contain certain limitations on the right of
the Trustee, in the event that it becomes a creditor of an
issuer or a guarantor, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of
any such claim as security or otherwise.
Annual
Trustee Report to Holders of Debt Securities
The Trustee is required to submit an annual report to the
holders of the debt securities regarding, among other things,
the Trustees eligibility to serve as such, the priority of
the Trustees claims regarding certain advances made by it,
and any action taken by the Trustee materially affecting the
debt securities.
Certificates
and Opinions to be Furnished to Trustee
Each indenture will provide that, in addition to other
certificates or opinions that may be specifically required by
other provisions of the indenture, every application by us for
action by the Trustee shall be accompanied by a certificate of
certain of our officers and an opinion of counsel (who may be
our counsel) stating that, in the opinion of the signers, all
conditions precedent to such action have been complied with by
us.
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES
This section is a summary of the material U.S. federal
income tax consequences that may be relevant to prospective
unitholders. To the extent this section discusses
U.S. federal income taxes, that discussion is based upon
current provisions of the Internal Revenue Code of 1986, as
amended (the Internal Revenue Code), existing and
proposed Treasury regulations thereunder (the Treasury
Regulations), and current administrative rulings and court
decisions, all of which are subject to change. Changes in these
authorities may cause the U.S. federal income tax
consequences to a prospective unitholder to vary substantially
from the consequences described below. Unless the context
otherwise requires, references in this section to we
or us are references to Calumet and our subsidiaries.
This section does not address all U.S. federal income tax
matters that affect us or our unitholders. Furthermore, this
section focuses on unitholders who are individual citizens or
residents of the United States
36
(as determined for U.S. federal income tax purposes), whose
functional currency is the U.S. dollar and who hold units
as a capital asset (generally, property that is held as an
investment). This section has only limited applicability to
corporations, partnerships (and entities treated as partnerships
for U.S. federal income tax purposes), estates, trusts,
non-resident aliens or other unitholders subject to specialized
tax treatment, such as tax-exempt institutions,
non-U.S. persons,
individual retirement accounts, employee benefit plans, real
estate investment trusts or mutual funds. Accordingly, we
encourage each unitholder to consult, and depend on, such
unitholders own tax advisor in analyzing the
U.S. federal, state, local and
non-U.S. tax
consequences particular to that unitholder resulting from their
ownership or disposition of its units.
We are relying on opinions and advice of Vinson &
Elkins L.L.P. with respect to the matters described herein. An
opinion of counsel represents only that counsels best
legal judgment and does not bind the Internal Revenue Service
(the IRS) or the courts. Accordingly, the opinions
and statements made herein may not be sustained by a court if
contested by the IRS. Any contest by the IRS of the matters
described herein may materially and adversely impact the market
for our units and the prices at which such units trade. In
addition, the costs of any contest with the IRS, including
legal, accounting and related fees, will result in a reduction
in cash available for distribution to our unitholders and our
general partner and thus will be borne indirectly by our
unitholders and our general partner. Furthermore, our tax
treatment, or the tax treatment of an investment in us, may be
significantly modified by future legislative or administrative
changes or court decisions. Any modifications may or may not be
retroactively applied.
All statements of law and legal conclusions, but not any
statements of fact, contained in this section, except as
described below or otherwise noted, are the opinion of
Vinson & Elkins L.L.P. and are based on the accuracy
of representations made by us to them for this purpose. For the
reasons described below, Vinson & Elkins L.L.P. has
not rendered an opinion with respect to the following specific
U.S. federal income tax issues: (1) the treatment of a
unitholder whose units are loaned to a short seller to cover a
short sale of units (please read Tax
Consequences of Unit Ownership Treatment of Short
Sales); (2) whether our monthly convention for
allocating taxable income and losses is permitted by existing
Treasury Regulations (please read Disposition
of Units Allocations Between Transferors and
Transferees); and (3) whether our method for taking
into account Section 743 adjustments is sustainable in
certain cases (please read Tax Consequences of Unit
Ownership Section 754 Election and
Uniformity of Units).
Taxation
of Calumet
Partnership Status. We expect to be treated as
a partnership for U.S. federal income tax purposes and,
therefore, generally will not be liable for U.S. federal
income taxes. Instead, as described in detail below, each of our
unitholders will be required to take into account its respective
share of our items of income, gain, loss and deduction in
computing its U.S. federal income tax liability as if the
unitholder had earned such income directly, even if no cash
distributions are made to the unitholder. Distributions by us to
a unitholder generally do not give rise to income or gain
taxable to a partner, unless the amount of cash distributed to
the partners exceeds the partners adjusted
U.S. federal income tax basis in its partnership interest.
Section 7704 of the Internal Revenue Code provides that
publicly traded partnerships will, as a general rule, be treated
as corporations for U.S. federal income tax purposes. Under
a Qualifying Income Exception however, if 90% or
more of the partnerships gross income for every taxable
year consists of qualifying income, the partnership
may continue to be treated as a partnership for
U.S. federal income tax purposes. Qualifying income
includes income and gains derived from the refining,
transportation, storage, processing and marketing of crude oil,
natural gas and products thereof. Other types of qualifying
income include interest (other than from a financial business),
dividends, gains from the sale of real property and gains from
the sale or other disposition of capital assets held for the
production of income that constitutes qualifying income. We
estimate that less than 4% of our current gross income is not
qualifying income; however, this estimate could change from time
to time.
Based upon factual representations made by us and our general
partner regarding the composition of our income and the other
representations set forth below, Vinson & Elkins
L.L.P. is of the opinion that we will be classified as a
partnership for federal income tax purposes for the current
year. In rendering its opinion,
37
Vinson & Elkins L.L.P. has relied on factual
representations made by us and our general partner. The
representations made by us and our general partner upon which
Vinson & Elkins L.L.P. has relied include, without
limitation:
(a) Neither we nor any of our partnership or limited
liability company subsidiaries has elected to be treated as a
corporation for U.S. federal income tax purposes;
(b) For each taxable year since the year of our initial
public offering, more than 90% of our gross income has been
income of a character that Vinson & Elkins L.L.P. has
opined is qualifying income within the meaning of
Section 7704(d) of the Internal Revenue Code; and
(c) Each hedging transaction that we treat as resulting in
qualifying income has been appropriately identified as a hedging
transaction pursuant to applicable Treasury Regulations, and has
been associated with crude oil, natural gas, or products thereof
that are held or to be held by us in activities that
Vinson & Elkins L.L.P. has opined result in qualifying
income.
We believe that these representations are true and expect that
these representations will be true in the future.
If we fail to meet the Qualifying Income Exception, other than a
failure that is determined by the IRS to be inadvertent and that
is cured within a reasonable time after discovery (in which case
the IRS may also require us to make adjustments with respect to
our unitholders or pay other amounts), we will be treated as if
we have transferred all of our assets, subject to liabilities,
to a newly formed corporation, on the first day of the year in
which we fail to meet the Qualifying Income Exception, in return
for stock in that corporation and then distributed that stock to
our unitholders in liquidation of their interests in us. This
deemed contribution and liquidation should not result in the
recognition of taxable income by our unitholders or us so long
as we, at that time, do not have liabilities in excess of the
tax basis of our assets. Thereafter, we would be treated as an
association taxable as a corporation for U.S. federal
income tax purposes.
If we were treated as an association taxable as a corporation
for U.S. federal income tax purposes in any taxable year,
either as a result of a failure to meet the Qualifying Income
Exception or otherwise, our items of income, gain, loss and
deduction would be taken into account by us in determining the
amount of our liability for U.S. federal income tax, rather
than being passed through to the unitholders. In addition, any
distribution made to a unitholder would be treated as taxable
dividend income to the extent of our current or accumulated
earnings and profits, or, in the absence of earnings and
profits, a nontaxable return of capital to the extent of the
unitholders tax basis in our units, or taxable capital
gain, after the unitholders tax basis in our units is
reduced to zero. Accordingly, our taxation as a corporation
would result in a material reduction in our cash distributions
to unitholders and thus would likely result in a substantial
reduction of the value of our units.
The remainder of this discussion assumes that we will be
classified as a partnership for U.S. federal income tax
purposes.
Tax
Consequences of Unit Ownership
Limited Partner Status. Unitholders who are
admitted as limited partners of Calumet, as well as unitholders
whose units are held in street name or by a nominee and who have
the right to direct the nominee in the exercise of all
substantive rights attendant to the ownership of units, will be
treated as tax partners of Calumet for U.S. federal income
tax purposes. For a discussion related to the risks of losing
partner status as a result of short sales, please read
Tax Consequences of Unit Ownership
Treatment of Short Sales. Unitholders who are not treated
as partners in us as described above are urged to consult their
own tax advisors with respect to the tax consequences applicable
to them under the circumstances.
Flow-Through of Taxable Income. Subject to the
discussion below under
Entity-Level Collections of Unitholder
Taxes with respect to payments we may be required to make
on behalf of our unitholders, and aside from any taxes paid by
our corporate operating subsidiary, we do not pay any
U.S. federal income tax. For U.S. federal income tax
purposes, each unitholder will be required to report on its
income tax return its share of our income, gains, losses and
deductions for our taxable year or years ending with or within
its
38
taxable year. Consequently, we may allocate income to a
unitholder even if that unitholder has not received a cash
distribution.
Treatment of Distributions. Distributions made
by us to a unitholder generally will not be taxable to the
unitholder for U.S. federal income tax purposes. Cash
distributions made by us to a unitholder in an amount in excess
of the unitholders tax basis in its units, however,
generally will result in the unitholder recognizing gain taxable
in the manner described under Disposition of
Units below.
Any reduction in a unitholders share of our
nonrecourse liabilities (or liabilities for which no
partner bears the economic risk of loss) will be treated as a
distribution by us of cash to that unitholder. A decrease in a
unitholders percentage interest in us because of our
issuance of additional units will decrease the unitholders
share of our nonrecourse liabilities and thus will result in a
corresponding deemed distribution of cash to the unitholder. For
purposes of the foregoing, a unitholders share of our
nonrecourse liabilities generally will be based upon that
unitholders share of the unrealized appreciation (or
depreciation) in our assets, to the extent thereof, with any
additional amount allocated based on the unitholders share
of our profits. Please read Disposition of Units.
A non-pro rata distribution of money or property, including a
non-pro rata distribution deemed to result from a decrease in a
unitholders share of our non-recourse liabilities, may
result in ordinary income to a unitholder, regardless of that
unitholders tax basis in its units, if the distribution
reduces the unitholders share of our unrealized
receivables, including depreciation recapture,
and/or
substantially appreciated inventory items, both as
defined in Section 751 of the Internal Revenue Code, and
collectively, Section 751 Assets. To that
extent, a unitholder will be treated as having received its
proportionate share of the Section 751 Assets and then
having exchanged those assets with us in return for an allocable
portion of the distribution made to such unitholder. This latter
deemed exchange generally will result in the unitholders
realization of ordinary income. That income will equal the
excess of (1) the non-pro rata portion of that distribution
over (2) the unitholders tax basis (generally zero)
for the share of Section 751 Assets deemed relinquished in
the exchange.
Basis of Units. A unitholders
U.S. federal income tax basis in its units initially will
be the amount it paid for those units plus its share of our
liabilities at the time of purchase. That basis generally will
be (i) increased by the unitholders share of our
income and by any increases in such unitholders share of
our nonrecourse liabilities, and (ii) decreased, but not
below zero, by distributions to it, by its share of our losses,
by any decreases in its share of our nonrecourse liabilities and
by its share of our expenditures that are not deductible in
computing taxable income and are not required to be capitalized.
Limitations on Deductibility of Losses. The
deduction by a unitholder of that unitholders share of our
losses will be limited to the lesser of (i) the tax basis
such unitholder has in its units, and (ii) in the case of a
unitholder who is an individual, estate, trust or corporation
(if more than 50% of the corporations stock is owned
directly or indirectly by or for five or fewer individuals or a
specific type of tax exempt organization) the amount for which
the unitholder is considered to be at risk with
respect to our activities. A unitholder subject to these
limitations must recapture losses deducted in previous years to
the extent that distributions cause the unitholders at
risk amount to be less than zero at the end of any taxable year.
Losses disallowed to a unitholder or recaptured as a result of
these limitations will carry forward and will be allowable as a
deduction in a later year to the extent that the
unitholders tax basis or at risk amount, whichever is the
limiting factor, is subsequently increased. Upon the taxable
disposition of a unit, any gain recognized by a unitholder can
be offset by losses that were previously suspended by the at
risk limitation but may not be offset by losses suspended by the
basis limitation. Any loss previously suspended by the at risk
limitation in excess of that gain could no longer be used.
In general, a unitholder will be at risk to the extent of its
U.S. federal income tax basis in its units, excluding any
portion of that basis attributable to the unitholders
share of our liabilities, reduced by (1) any portion of
that basis representing amounts otherwise protected against loss
because of a guarantee, stop loss agreement or other similar
arrangement and (2) any amount of money the unitholder
borrows to acquire or hold its units, if the lender of those
borrowed funds owns an interest in us, is related to another
unitholder or can look only to the units for repayment. A
unitholders at risk amount will increase or decrease as
the tax
39
basis of the unitholders units increases or decreases,
other than as a result of increases or decreases in the
unitholders share of our liabilities.
In addition to the basis and at risk limitations on the
deductibility of losses, passive activity loss limitations
generally apply to limit the deductibility of losses incurred by
individuals, estates, trusts and some closely held corporations
and personal service corporations from passive
activities, which are generally defined as trade or
business activities in which the taxpayer does not materially
participate. The passive loss limitations are applied separately
with respect to each publicly-traded partnership. Consequently,
any passive losses we generate will be available to offset only
our passive income generated in the future and will not be
available to offset income from other passive activities or
investments, including its investments or a unitholders
investments in other publicly-traded partnerships, or a
unitholders salary or active business income. Passive
losses that are not deductible because they exceed a
unitholders share of income we generate may be deducted in
full when it disposes of its entire investment in us in a fully
taxable transaction with an unrelated party. The passive
activity loss rules are applied after other applicable
limitations on deductions, including the at risk rules and the
basis limitation.
Limitations on Interest Deductions. The
deductibility of a non-corporate taxpayers
investment interest expense is generally limited to
the amount of that taxpayers net investment
income. Investment interest expense includes:
|
|
|
|
|
interest on indebtedness properly allocable to property held for
investment;
|
|
|
|
our interest expense attributed to portfolio income; and
|
|
|
|
the portion of interest expense incurred to purchase or carry an
interest in a passive activity to the extent attributable to
portfolio income.
|
The computation of a unitholders investment interest
expense will take into account interest on any margin account
borrowing or other loan incurred to purchase or carry a unit.
Net investment income includes gross income from property held
for investment and amounts treated as portfolio income under the
passive loss rules, less deductible expenses, other than
interest, directly connected with the production of investment
income, but generally does not include gains attributable to the
disposition of property held for investment or qualified
dividend income. The IRS has indicated that net passive income
earned by a publicly-traded partnership will be treated as
investment income to its unitholders for purposes of the
investment interest expense limitation. In addition, the
unitholders share of our portfolio income will be treated
as investment income.
Entity-Level Collections of Unitholder
Taxes. If we are required or elect under
applicable law to pay any U.S. federal, state, local or
non-U.S. tax
on behalf of any unitholder or our general partner or any former
unitholder, we are authorized to pay those taxes from our funds
and treat the payment as a distribution of cash to the
unitholder on whose behalf the payment was made. If the payment
is made on behalf of a unitholder whose identity cannot be
determined, we are authorized to treat the payment as a
distribution to all current unitholders. We are authorized to
amend our limited partnership agreement in the manner necessary
to maintain uniformity of intrinsic tax characteristics of units
and to adjust later distributions, so that after giving effect
to these distributions, the priority and characterization of
distributions otherwise applicable under our limited partnership
agreement is maintained as nearly as is practicable. Payments by
us as described above could give rise to an overpayment of tax
on behalf of an individual unitholder in which event the
unitholder may be entitled to claim a refund of the overpayment
amount. Unitholders are urged to consult their tax advisors to
determine the consequences to them of any tax payment we make on
their behalf.
Allocation of Income, Gain, Loss and
Deduction. In general, if we have a net profit,
our items of income, gain, loss and deduction will be allocated
among the general partner and our unitholders in accordance with
their percentage interests in us. At any time that distributions
are made to the common units and not to the subordinated units,
or that incentive distributions are made to the general partner,
gross income will be allocated to the recipients to the extent
of such distributions. If we have a net loss, our items of
income, gain, loss and deduction will be allocated first among
the general partner and our unitholders in accordance with
40
their percentage interests in us to the extent of their positive
capital accounts and thereafter to our general partner.
Specified items of our income, gain, loss and deduction will be
allocated under Section 704(c) of the Internal Revenue Code
to account for (i) any difference between the
U.S. federal income tax basis and fair market value of our
assets at the time of an offering and (ii) any difference
between the U.S. federal income tax basis and fair market
value of any property contributed to us that exists at the time
of such contribution, with any such difference referred to in
this discussion as a Book-Tax Disparity. In
addition, items of recapture income will be specially allocated
to the extent possible to the unitholder who was allocated the
deduction giving rise to that recapture income in order to
minimize the recognition of ordinary income by other unitholders.
An allocation of items of our income, gain, loss or deduction,
generally will be given effect for federal income tax purposes
in determining a unitholders share of an item of income,
gain, loss or deduction only if the allocation has
substantial economic effect as determined under
Treasury Regulations promulgated under the Code. In any other
case, a unitholders share of an item will be determined on
the basis of its interest in us, which will be determined by
taking into account all the facts and circumstances, including:
|
|
|
|
|
its relative contributions to us;
|
|
|
|
the interests of all the partners in profits and losses;
|
|
|
|
the interest of all the partners in cash flow; and
|
|
|
|
the rights of all the partners to distributions of capital upon
liquidation.
|
Vinson & Elkins L.L.P. is of the opinion that, with
the exception of the issues described in
Section 754 Election and
Disposition of Units Allocations
Between Transferors and Transferees, allocations under our
amended and restated partnership agreement will be given effect
for federal income tax purposes in determining a
unitholders share of an item of income, gain, loss or
deduction.
Treatment of Short Sales. A unitholder whose
units are loaned to a short seller to cover a short
sale of units may be considered as having disposed of those
units. If so, such unitholder would no longer be treated for tax
purposes as a partner with respect to those units during the
period of the loan and may recognize gain or loss from the
disposition. As a result, during this period:
|
|
|
|
|
any of our income, gain, loss or deduction with respect to those
units would not be reportable by the unitholder;
|
|
|
|
any cash distributions received by the unitholder as to those
units would be fully taxable; and
|
|
|
|
all of these distributions may be subject to tax as ordinary
income.
|
Vinson & Elkins L.L.P. has not rendered an opinion
regarding the tax treatment of a unitholder whose units are
loaned to a short seller to cover a short sale of our units.
Unitholders desiring to assure their status as partners and
avoid the risk of gain recognition from a loan to a short seller
are urged to modify any applicable brokerage account agreements
to prohibit their brokers from borrowing and lending their
units. The IRS has announced that it is studying issues relating
to the tax treatment of short sales of partnership interests.
Please read Disposition of Units
Recognition of Gain or Loss.
Alternative Minimum Tax. Each unitholder will
be required to take into account the unitholders
distributive share of any items of our income, gain, loss or
deduction for purposes of the U.S. federal alternative
minimum tax. The current minimum tax rate for non-corporate
taxpayers is 26% on the first $175,000 of alternative minimum
taxable income in excess of the exemption amount and 28% on any
additional alternative minimum taxable income. Prospective
unitholders are urged to consult with their tax advisors with
respect to the impact of an investment in our units on their
liability for the alternative minimum tax.
Tax Rates. Under current law, the highest
marginal U.S. federal income tax rate applicable to
ordinary income of individuals is 35% and the highest marginal
U.S. federal income tax rate applicable to long-term
41
capital gains (generally, gains from the sale or exchange of
certain investment assets held for more than one year) of
individuals is 15%. However, absent new legislation extending
the current rates, beginning January 1, 2011, the highest
marginal U.S. federal income tax rate applicable to
ordinary income and long-term capital gains of individuals will
increase to 39.6% and 20%, respectively. These rates are subject
to change by new legislation at any time.
The recently enacted Health Care and Education Reconciliation
Act of 2010 and the Patient Protection and Affordable Care Act
of 2010, is scheduled to impose a 3.8% Medicare tax on certain
investment income earned by individuals, estates, and trusts for
taxable years beginning after December 31, 2012. For these
purposes, investment income generally includes a
unitholders allocable share of our income and gain
realized by a unitholder from a sale of units. In the case of an
individual, the tax will be imposed on the lesser of
(i) the unitholders net investment income from all
investments, or (ii) the amount by which the
unitholders modified adjusted gross income exceeds
$250,000 (if the unitholder is married and filing jointly or a
surviving spouse) or $200,000 (if the unitholder is unmarried).
In the case of an estate or trust, the tax will be imposed on
the lesser of (i) undistributed net investment income, or
(ii) the excess adjusted gross income over the dollar
amount at which the highest income tax bracket applicable to an
estate or trust begins.
Section 754 Election. We have made the
election permitted by Section 754 of the Internal Revenue
Code. This election generally permits us to adjust the
U.S. federal income tax bases in our assets as to a
specific unit purchase under Section 743(b) of the Internal
Revenue Code to reflect its purchase price. The
Section 743(b) adjustment separately applies to a purchaser
of units from another unitholder based upon the values and bases
of our assets at the time of the transfer to the transferee. The
Section 743(b) adjustment does not apply to a person who
purchases units directly from us. For purposes of this
discussion, a unitholders basis in our assets will be
considered to have two components: (1) its share of the tax
basis in our assets as to all unitholders (common
basis) and (2) its Section 743(b) adjustment to
that tax basis.
Under Treasury Regulations, a Section 743(b) adjustment
attributable to property depreciable under Section 168 of
the Internal Revenue Code, such as our refinery assets, may be
amortizable over the remaining cost recovery period for such
property, while a Section 743(b) adjustment attributable to
properties subject to depreciation under Section 167 of the
Internal Revenue Code, must be amortized straight-line or using
the 150% declining balance method. As a result, if we owned any
assets subject to depreciation under Section 167 of the
Internal Revenue Code, the amortization rates could give rise to
differences in the taxation of unitholders purchasing units from
us and unitholders purchasing from other unitholders. Moreover,
if we elect a method other than the remedial method with respect
to a goodwill property, Treasury
Regulation Section 1.197-2(g)(3)
generally requires that the Section 743(b) adjustment
attributable to an amortizable Section 197 intangible,
which includes goodwill properties, should be treated as a
newly-acquired asset placed in service in the month when the
purchaser acquires the common unit. Under our amended and
restated partnership agreement, we are authorized to take a
position to preserve the uniformity of units even if that
position is not consistent with these and any other Treasury
Regulations. Please read Uniformity of
Units. Consistent with this authority, we intend to treat
properties depreciable under Section 167 in the same manner
as properties depreciable under Section 168 for this
purpose. Moreover, if we elect a method other than the remedial
method with respect to a goodwill property, we will treat the
Section 743(b) adjustment with respect to such goodwill as
being
non-amortizable.
These positions are consistent with the methods employed by
other publicly traded partnerships but are inconsistent with the
existing Treasury Regulations and Vinson & Elkins
L.L.P. has not opined on the validity of this approach.
The IRS may challenge our position with respect to depreciating
or amortizing the Section 743(b) adjustment we take to
preserve the uniformity of units. Because a unitholders
tax basis for its units is reduced by its share of our items of
deduction or loss, any position we take that understates
deductions will overstate a unitholders basis in its
units, and may cause the unitholder to understate gain or
overstate loss on any sale of such units. Please read
Disposition of Units Recognition
of Gain or Loss. If a challenge to such treatment were
sustained, the gain from the sale of units may be increased
without the benefit of additional deductions.
42
A Section 754 election is advantageous if the
transferees tax basis in its units is higher than its
share of the aggregate tax basis of our assets attributable to
such units immediately prior to the transfer. In that case, as a
result of the election, the transferee would have, among other
items, a greater amount of depreciation deductions and its share
of any gain or loss on a sale of our assets would be less.
Conversely, a Section 754 election is disadvantageous if
the transferees tax basis in its units is lower than its
share of the aggregate tax basis of our assets. Thus, the fair
market value of units may be affected either favorably or
unfavorably by the election. A tax bases adjustment is required
regardless of whether a Section 754 election is made in the
case of a transfer of an interest in us if we have a substantial
built-in loss immediately after the transfer or if we distribute
property and have a substantial tax basis reduction. Generally a
built-in loss or a tax basis reduction is substantial if it
exceeds $250,000.
The calculations involved in the Section 754 election are
complex and will be made on the basis of assumptions as to the
value of our assets and other matters. The IRS could seek to
reallocate some or all of any Section 743(b) adjustment we
allocated to our assets subject to depreciation to goodwill or
nondepreciable assets. Goodwill, as an intangible asset, is
generally nonamortizable or amortizable over a longer period of
time or under a less accelerated method than our tangible
assets. We cannot assure any unitholder that the determinations
we make will not be successfully challenged by the IRS or that
the resulting deductions will not be reduced or disallowed
altogether. Should the IRS require a different tax basis
adjustment to be made, and should, in our opinion, the expense
of compliance exceed the benefit of the election, we may seek
permission from the IRS to revoke our Section 754 election.
If permission is granted, a subsequent purchaser of units may be
allocated more income than it would have been allocated had the
election not been revoked.
Tax
Treatment of Operations
Accounting Method and Taxable Year. We will
use the year ending December 31 as our taxable year and the
accrual method of accounting for U.S. federal income tax
purposes. Each unitholder will be required to include in income
its share of our income, gain, loss and deduction for its
taxable year ending within or with its taxable year. In
addition, a unitholder who has a taxable year ending on a date
other than December 31 and who disposes of all of its units
following the close of our taxable year but before the close of
its taxable year must include its share of our income, gain,
loss and deduction in income for its taxable year, with the
result that it will be required to include in income for its
taxable year its share of more than one year of our income,
gain, loss and deduction. Please read
Disposition of Units Allocations
Between Transferors and Transferees.
Tax Basis, Depreciation and Amortization. The
tax basis of our assets will be used for purposes of computing
depreciation and cost recovery deductions and, ultimately, gain
or loss on the disposition of these assets. The federal income
tax burden associated with the difference between the fair
market value of our assets and their tax basis immediately prior
to an offering will be borne by our partners holding interests
in us prior to this offering. Please read Tax
Consequences of Unit Ownership Allocation of Income,
Gain, Loss and Deduction. We may not be entitled to any
amortization deductions with respect to certain goodwill or
other intangible properties conveyed to us or held by us at the
time of any future offering. Please read
Uniformity of Units.
If we dispose of depreciable property by sale, foreclosure or
otherwise, all or a portion of any gain, determined by reference
to the amount of depreciation previously deducted and the nature
of the property, may be subject to the recapture rules and taxed
as ordinary income rather than capital gain. Similarly, a
unitholder who has taken cost recovery or depreciation
deductions with respect to property we own will likely be
required to recapture some or all of those deductions as
ordinary income upon a sale of its interest in us. Please read
Tax Consequences of Unit Ownership
Allocation of Income, Gain, Loss and Deduction and
Disposition of Units Recognition
of Gain or Loss.
The costs we incurred in offering and selling our units (called
syndication expenses) must be capitalized and cannot
be deducted currently, ratably or upon our termination. While
there are uncertainties regarding the classification of costs as
organization expenses, which may be amortized by us, and as
syndication expenses,
43
which may not be amortized by us, the underwriting discounts and
commissions we incur will be treated as syndication expenses.
Valuation and Tax Basis of Our Properties. The
federal income tax consequences of the ownership and disposition
of units will depend in part on our estimates of the relative
fair market values and the initial U.S. federal income tax
bases of our assets. Although we may from time to time consult
with professional appraisers regarding valuation matters, we
will make many of the relative fair market value estimates
ourselves. These estimates and determinations of basis are
subject to challenge and will not be binding on the IRS or the
courts. If the estimates of fair market value or basis are later
found to be incorrect, the character and amount of items of
income, gain, loss or deduction previously reported by
unitholders could change, and unitholders could be required to
adjust their tax liability for prior years and incur interest
and penalties with respect to those adjustments.
Disposition
of Units
Recognition of Gain or Loss. A unitholder will
be required to recognize gain or loss on a sale of units equal
to the difference between the unitholders amount realized
and tax basis for the units sold. A unitholders amount
realized will equal the sum of the cash or the fair market value
of other property it receives plus its share of our liabilities.
Because the amount realized includes a unitholders share
of our liabilities, the gain recognized on the sale of units
could result in a tax liability in excess of any cash received
from the sale. For example, distributions from us in excess of
cumulative net taxable income allocated to a unitholder results
in a decrease in the unitholders U.S. federal income
tax basis in that unit will result in the unitholder recognizing
taxable income upon the sale of its units for its original cost.
Except as noted below, gain or loss recognized by a unitholder
on the sale or exchange of a unit held for more than one year
generally will be taxable as long-term capital gain or loss.
Long term capital gain generally is subject to be taxed at a
maximum U.S. federal income tax rate of 15% through
December 31, 2010 and 20% thereafter (absent new
legislation extending or adjusting the current rate).
Gain or loss recognized on the disposition of units will be
separately computed and taxed as ordinary income or loss under
Section 751 of the Internal Revenue Code to the extent
attributable to assets giving rise to depreciation recapture or
other unrealized receivables or inventory
items that we own. The term unrealized
receivables includes potential recapture items, including
depreciation recapture. Ordinary income attributable to
unrealized receivables, inventory items and depreciation
recapture may exceed net taxable gain realized on the sale of a
unit and may be recognized even if there is a net taxable loss
realized on the sale of a unit. Thus, a unitholder may recognize
both ordinary income and a capital loss upon a sale of units.
Net capital loss may offset capital gains and no more than
$3,000 of ordinary income, in the case of individuals, and may
only be used to offset capital gain in the case of corporations.
The IRS has ruled that a partner who acquires interests in a
partnership in separate transactions must combine those
interests and maintain a single adjusted tax basis for all those
interests. Upon a sale or other disposition of less than all of
those interests, a portion of that tax basis must be allocated
to the interests sold using an equitable
apportionment method, which generally means that the tax
basis allocated to the interest sold equals an amount that bears
the same relation to the partners tax basis in its entire
interest in the partnership as the value of the interest sold
bears to the value of the partners entire interest in the
partnership. Treasury Regulations under Section 1223 of the
Internal Revenue Code allow a selling unitholder who can
identify units transferred with an ascertainable holding period
to elect to use the actual holding period of the units
transferred. Thus, according to the ruling discussed above, a
unitholder will be unable to select high or low basis units to
sell as would be the case with corporate stock, but, according
to the Treasury Regulations, it may designate specific units
sold for purposes of determining the holding period of units
transferred. A unitholder electing to use the actual holding
period of units transferred must consistently use that
identification method for all subsequent sales or exchanges of
our units. A unitholder considering the purchase of additional
units or a sale of units purchased in separate transactions is
urged to consult its tax advisor as to the possible consequences
of this ruling and application of the Treasury Regulations.
44
Specific provisions of the Internal Revenue Code affect the
taxation of some financial products and securities, including
partnership interests, by treating a taxpayer as having sold an
appreciated partnership interest, one in which gain
would be recognized if it were sold, assigned or terminated at
its fair market value, if the taxpayer or related persons
enter(s) into:
|
|
|
|
|
a short sale;
|
|
|
|
an offsetting notional principal contract; or
|
|
|
|
a futures or forward contract with respect to the partnership
interest or substantially identical property.
|
Moreover, if a taxpayer has previously entered into a short
sale, an offsetting notional principal contract or a futures or
forward contract with respect to the partnership interest, the
taxpayer will be treated as having sold that position if the
taxpayer or a related person then acquires the partnership
interest or substantially identical property. The Secretary of
the Treasury is also authorized to issue regulations that treat
a taxpayer that enters into transactions or positions that have
substantially the same effect as the preceding transactions as
having constructively sold the financial position.
Allocations Between Transferors and
Transferees. In general, our taxable income or
loss will be determined annually, will be prorated on a monthly
basis and will be subsequently apportioned among the unitholders
in proportion to the number of units owned by each of them as of
the opening of the applicable exchange on the first business day
of the month (the Allocation Date). However, gain or
loss realized on a sale or other disposition of our assets other
than in the ordinary course of business will be allocated among
the unitholders on the Allocation Date in the month in which
that gain or loss is recognized. As a result, a unitholder
transferring units may be allocated income, gain, loss and
deduction realized after the date of transfer.
Although simplifying conventions are contemplated by the
Internal Revenue Code and most publicly-traded partnerships use
similar simplifying conventions, the use of this method may not
be permitted under existing Treasury Regulations. Recently,
however, the Department of the Treasury and the IRS issued
proposed Treasury Regulations that provide a safe harbor
pursuant to which a publicly-traded partnership may use a
similar monthly simplifying convention to allocate tax items
among transferor and transferee unitholders, although such tax
items must be prorated on a daily basis. Nonetheless, the
proposed regulations do not specifically authorize the use of
the proration method we have adopted. Existing publicly-traded
partnerships are entitled to rely on those proposed Treasury
Regulations; however, they are not binding on the IRS and are
subject to change until the final Treasury Regulations are
issued. Accordingly, Vinson & Elkins L.L.P. is unable
to opine on the validity of this method of allocating income and
deductions between transferee and transferor unitholders. If
this method is not allowed under the Treasury Regulations, or
only applies to transfers of less than all of the
unitholders interest, our taxable income or losses might
be reallocated among the unitholders. We are authorized to
revise our method of allocation between transferee and
transferor unitholders, as well as among unitholders whose
interests vary during a taxable year, to conform to a method
permitted under future Treasury Regulations.
A unitholder who disposes of units prior to the record date set
for a cash distribution for that quarter will be allocated items
of our income, gain, loss and deductions attributable to the
month of disposition but will not be entitled to receive a cash
distribution for that period.
Notification Requirements. A unitholder who
sells any of its units is generally required to notify us in
writing of that sale within 30 days after the sale (or, if
earlier, January 15 of the year following the sale). A purchaser
of units who purchases units from another unitholder is also
generally required to notify us in writing of that purchase
within 30 days after the purchase. Upon receiving such
notifications, we are required to notify the IRS of that
transaction and to furnish specified information to the
transferor and transferee. Failure to notify us of a transfer of
units may, in some cases, lead to the imposition of penalties.
However, these reporting requirements do not apply to a sale by
an individual who is a citizen of the United States and who
effects the sale or exchange through a broker who will satisfy
such requirements.
45
Constructive Termination. We will be
considered to have terminated our tax partnership for
U.S. federal income tax purposes upon the sale or exchange
of interests in us that, in the aggregate, constitute 50% or
more of the total interests in our capital and profits within a
twelve-month period. For purposes of measuring whether the 50%
has been met, multiple sales of the same unit are counted only
once. A constructive termination results in the closing of our
taxable year for all unitholders. In the case of a unitholder
reporting on a taxable year other than a fiscal year ending
December 31, the closing of our taxable year may result in
more than twelve months of our taxable income or loss being
includable in such unitholders taxable income for the year
of termination. A constructive termination occurring on a date
other than December 31 will result in us filing two tax returns
for one fiscal year and the cost of the preparation of these
returns will be borne by all unitholders. However, pursuant to
an IRS relief procedure for publicly traded partnerships that
have publicly terminated, the IRS may allow, among other things,
that we provide a single
Schedule K-1
for the tax year in which a termination occurs. We would be
required to make new tax elections after a termination,
including a new election under Section 754 of the Internal
Revenue Code, and a termination would result in a deferral of
our deductions for depreciation. A termination could also result
in penalties if we were unable to determine that the termination
had occurred. Moreover, a termination might either accelerate
the application of, or subject us to, any tax legislation
enacted before the termination.
Uniformity
of Units
Because we cannot match transferors and transferees of units and
because of other reasons, we must maintain uniformity of the
economic and tax characteristics of the units to a purchaser of
these units. In the absence of uniformity, we may be unable to
completely comply with a number of federal income tax
requirements, both statutory and regulatory. A lack of
uniformity could result from a literal application of Treasury
Regulation Section 1.167(c)-1(a)(6),
which is not anticipated to apply to a material portion of our
assets, and Treasury
Regulation Section 1.197-2(g)(3).
Any non-uniformity could have a negative impact on the value of
the units. Please read Tax Consequences of
Unit Ownership Section 754 Election.
Our Limited partnership agreement permits our general partner to
take positions in filing our tax returns that preserve the
uniformity of our units even under circumstances like those
described above. These positions may include reducing for some
unitholders the depreciation, amortization or loss deductions to
which they would otherwise be entitled or reporting a slower
amortization of Section 743(b) adjustments for some
unitholders than that to which they would otherwise be entitled.
Vinson & Elkins L.L.P. is unable to opine as to
validity of such filing positions. A unitholders basis in
units is reduced by its or her share of our deductions (whether
or not such deductions were claimed on an individual income tax
return) so that any position that we take that understates
deductions will overstate the unitholders basis in its
units, and may cause the unitholder to understate gain or
overstate loss on any sale of such units. Please read
Disposition of Units Recognition
of Gain or Loss above and Tax
Consequences of Unit Ownership Section 754
Election above. The IRS may challenge one or more of any
positions we take to preserve the uniformity of units. If such a
challenge were sustained, the uniformity of units might be
affected, and, under some circumstances, the gain from the sale
of units might be increased without the benefit of additional
deductions.
Tax-Exempt
Organizations and Other Investors
Ownership of units by employee benefit plans, other tax-exempt
organizations, non-resident aliens,
non-U.S. corporations
and other
non-U.S. persons
raises issues unique to those investors and, as described below,
may have substantially adverse tax consequences to them.
Prospective unitholders who are tax-exempt entities or
non-U.S. persons
should consult their tax advisor before investing in our units.
Employee benefit plans and most other organizations exempt from
federal income tax, including individual retirement accounts and
other retirement plans, are subject to federal income tax on
unrelated business taxable income. Virtually all of our income
allocated to a unitholder that is a tax-exempt organization will
be unrelated business taxable income and will be taxable to them.
Non-resident aliens and foreign corporations, trusts or estates
that own units will be considered to be engaged in business in
the United States because of the ownership of units. As a
consequence, they will be
46
required to file federal tax returns to report their share of
our income, gain, loss or deduction and pay federal income tax
at regular rates on their share of our net income or gain.
Moreover, under rules applicable to publicly traded
partnerships, distributions to
non-U.S. unitholders
are subject to withholding at the highest applicable effective
tax rate. Each
non-U.S. unitholder
must obtain a taxpayer identification number from the IRS and
submit that number to our transfer agent on a
Form W-8BEN
or applicable substitute form in order to obtain credit for
these withholding taxes. A change in applicable law may require
us to change these procedures.
In addition, because a foreign corporation that owns units will
be treated as engaged in a United States trade or business, that
corporation may be subject to the United States branch profits
tax at a rate of 30%, in addition to regular federal income tax,
on its share of our income and gain, as adjusted for changes in
the foreign corporations U.S. net equity,
which is effectively connected with the conduct of a United
States trade or business. That tax may be reduced or eliminated
by an income tax treaty between the United States and the
country in which the foreign corporate unitholder is a
qualified resident. In addition, this type of
unitholder is subject to special information reporting
requirements under Section 6038C of the Internal Revenue
Code.
A foreign unitholder who sells or otherwise disposes of a unit
will be subject to U.S. federal income tax on gain realized
from the sale or disposition of that unit to the extent the gain
is effectively connected with a U.S. trade or business of
the foreign unitholder. Under a ruling published by the IRS,
interpreting the scope of effectively connected
income, a foreign unitholder would be considered to be
engaged in a trade or business in the U.S. by virtue of the
U.S. activities of the partnership, and part or all of that
unitholders gain would be effectively connected with that
unitholders indirect U.S. trade or business.
Moreover, under the Foreign Investment in Real Property Tax Act,
a foreign unitholder generally will be subject to
U.S. federal income tax upon the sale or disposition of a
unit if (i) it owned (directly or constructively applying
certain attribution rules) more than 5% of our units at any time
during the five-year period ending on the date of such
disposition and (ii) 50% or more of the fair market value
of all of our assets consisted of U.S. real property
interests at any time during the shorter of the period during
which such unitholder held the units or the
5-year
period ending on the date of disposition. Currently, more than
50% of our assets consist of U.S. real property interests
and we do not expect that to change in the foreseeable future.
Therefore, foreign unitholders may be subject to federal income
tax on gain from the sale or disposition of their units.
Administrative
Matters
Information Returns and Audit Procedures. We
intend to furnish to each unitholder, within 90 days after
the close of each taxable year, specific tax information,
including a
Schedule K-1,
which describes its share of our income, gain, loss and
deduction for our preceding taxable year. In preparing this
information, which will not be reviewed by counsel, we will take
various accounting and reporting positions, some of which have
been mentioned earlier, to determine each unitholders
share of income, gain, loss and deduction. We cannot assure our
unitholders that those positions will yield a result that
conforms to the requirements of the Internal Revenue Code,
Treasury Regulations or administrative interpretations of the
IRS. Neither we, nor Vinson & Elkins L.L.P. can assure
prospective unitholders that the IRS will not successfully
contend in court that those positions are impermissible. Any
challenge by the IRS could negatively affect the value of the
units.
The IRS may audit our federal income tax information returns.
Adjustments resulting from an IRS audit may require each
unitholder to adjust a prior years tax liability, and
possibly may result in an audit of its own return. Any audit of
a unitholders return could result in adjustments not
related to our returns as well as those related to its returns.
Partnerships generally are treated as separate entities for
purposes of U.S. federal income tax audits, judicial review
of administrative adjustments by the IRS and tax settlement
proceedings. The tax treatment of partnership items of income,
gain, loss and deduction are determined in a partnership
proceeding rather than in separate proceedings with the
partners. The Internal Revenue Code requires that one partner be
designated as the Tax Matters Partner for these
purposes. Our partnership agreement designates our general
partner as our Tax Matters Partner.
47
The Tax Matters Partner will make some elections on our behalf
and on behalf of unitholders. In addition, the Tax Matters
Partner can extend the statute of limitations for assessment of
tax deficiencies against unitholders for items in our returns.
The Tax Matters Partner may bind a unitholder with less than a
1% profits interest in us to a settlement with the IRS unless
that unitholder elects, by filing a statement with the IRS, not
to give that authority to the Tax Matters Partner. The Tax
Matters Partner may seek judicial review, by which all the
unitholders are bound, of a final partnership administrative
adjustment and, if the Tax Matters Partner fails to seek
judicial review, judicial review may be sought by any unitholder
having at least a 1% interest in profits or by any group of
unitholders having in the aggregate at least a 5% interest in
profits. However, only one action for judicial review will go
forward, and each unitholder with an interest in the outcome may
participate in that action.
A unitholder must file a statement with the IRS identifying the
treatment of any item on its federal income tax return that is
not consistent with the treatment of the item on our return.
Intentional or negligent disregard of this consistency
requirement may subject a unitholder to substantial penalties.
Nominee Reporting. Persons who hold an
interest in us as a nominee for another person are required to
furnish to us:
(1) the name, address and taxpayer identification number of
the beneficial owner and the nominee;
(2) a statement regarding whether the beneficial owner is:
(a) a person that is not a U.S. person;
(b) a
non-U.S. government,
an international organization or any wholly owned agency or
instrumentality of either of the foregoing; or
(c) a tax-exempt entity;
(3) the amount and description of units held, acquired or
transferred for the beneficial owner; and
(4) specific information including the dates of
acquisitions and transfers, means of acquisitions and transfers,
and acquisition cost for purchases, as well as the amount of net
proceeds from sales.
Brokers and financial institutions are required to furnish
additional information, including whether they are
U.S. persons and specific information on units they
acquire, hold or transfer for their own account. A penalty of
$50 per failure, up to a maximum of $100,000 per calendar year,
is imposed by the Internal Revenue Code for failure to report
that information to us. The nominee is required to supply the
beneficial owner of the units with the information furnished to
us.
Accuracy-Related Penalties. An additional tax
equal to 20% of the amount of any portion of an underpayment of
tax that is attributable to one or more specified causes,
including negligence or disregard of rules or regulations,
substantial understatements of income tax and substantial
valuation misstatements, is imposed by the Internal Revenue
Code. No penalty will be imposed, however, for any portion of an
underpayment if it is shown that there was a reasonable cause
for the underpayment of that portion and that the taxpayer acted
in good faith regarding the underpayment of that portion.
For individuals, a substantial understatement of income tax in
any taxable year exists if the amount of the understatement
exceeds the greater of 10% of the tax required to be shown on
the return for the taxable year or $5,000. The amount of any
understatement subject to penalty generally is reduced if any
portion is attributable to a position adopted on the return:
(1) for which there is, or was, substantial
authority; or
(2) as to which there is a reasonable basis and the
relevant facts of that position are disclosed on the return.
If any item of income, gain, loss or deduction included in the
distributive shares of unitholders might result in that kind of
an understatement of income for which no
substantial authority exists, we must disclose the
relevant facts on its return. In addition, we will make a
reasonable effort to furnish sufficient
48
information for unitholders to make adequate disclosure on their
returns and to take other actions as may be appropriate to
permit unitholders to avoid liability for this penalty. More
stringent rules apply to tax shelters, which we do
not believe includes us, or any of our investments, plans or
arrangements.
A substantial valuation misstatement exists if (a) the
value of any property, or the tax basis of any property, claimed
on a tax return is 150% or more of the amount determined to be
the correct amount of the valuation or tax basis, (b) the
price for any property or services (or for the use of property)
claimed on any such return with respect to any transaction
between persons described in Internal Revenue Code
Section 482 is 200% or more (or 50% or less) of the amount
determined under Section 482 to be the correct amount of
such price, or (c) the net Internal Revenue Code
Section 482 transfer price adjustment for the taxable year
exceeds the lesser of $5 million or 10% of the
taxpayers gross receipts. No penalty is imposed unless the
portion of the underpayment attributable to a substantial
valuation misstatement exceeds $5,000 ($10,000 for a corporation
other than an S Corporation or a personal holding company).
The penalty is increased to 40% in the event of a gross
valuation misstatement. We do not anticipate making any
valuation misstatements.
Reportable Transactions. If we were to engage
in a reportable transaction, we (and possibly our
unitholders and others) would be required to make a detailed
disclosure of the transaction to the IRS. A transaction may be a
reportable transaction based upon any of several factors,
including the fact that it is a type of tax avoidance
transaction publicly identified by the IRS as a listed
transaction or that it produces certain kinds of losses
for partnerships, individuals, S corporations, and trusts
in excess of $2 million in any single tax year, or
$4 million in any combination of six successive tax years.
Our participation in a reportable transaction could increase the
likelihood that our federal income tax information return (and
possibly our unitholders tax return) would be audited by
the IRS. Please read Administrative
Matters Information Returns and Audit
Procedures.
Moreover, if we were to participate in a reportable transaction
with a significant purpose to avoid or evade tax, or in any
listed transaction, our unitholders may be subject to the
following provisions of the American Jobs Creation Act of 2004:
|
|
|
|
|
accuracy-related penalties with a broader scope, significantly
narrower exceptions, and potentially greater amounts than
described above at Accuracy-Related
Penalties;
|
|
|
|
for those persons otherwise entitled to deduct interest on
federal tax deficiencies, nondeductibility of interest on any
resulting tax liability; and
|
|
|
|
in the case of a listed transaction, an extended statute of
limitations.
|
We do not expect to engage in any reportable
transactions.
State,
Local and Other Tax Considerations
In addition to U.S. federal income taxes, unitholders will
be subject to other taxes, including state and local income
taxes, unincorporated business taxes, and estate, inheritance or
intangibles taxes that may be imposed by the various
jurisdictions in which we conduct business or owns property or
in which the unitholder is a resident. We currently conduct
business or own property in several states, most of which impose
personal income taxes on individuals. Most of these states also
impose an income tax on corporations and other entities.
Moreover, we may also own property or do business in other
states in the future that impose income or similar taxes on
nonresident individuals. Although an analysis of those various
taxes is not presented here, each prospective unitholder should
consider their potential impact on its investment in us. A
unitholder may be required to file state income tax returns and
to pay state income taxes in any state in which we do business
or own property, and such unitholder may be subject to penalties
for failure to comply with those requirements. In some states,
tax losses may not produce a tax benefit in the year incurred
and also may not be available to offset income in subsequent
taxable years. Some of the states may require us, or we may
elect, to withhold a percentage of income from amounts to be
distributed to a unitholder who is not a resident of the state.
Withholding, the amount of which may be greater or less than a
particular unitholders income tax liability to the state,
generally does not relieve a nonresident unitholder from the
obligation to file an income tax return. Amounts withheld may be
treated as if distributed to unitholders for purposes of
determining the amounts
49
distributed by us. Please read Tax
Consequences of Unit Ownership
Entity-Level Collections of Unitholder Taxes. Based
on current law and our estimate of our future operations, we
anticipate that any amounts required to be withheld will not be
material.
It is the responsibility of each unitholder to investigate the
legal and tax consequences, under the laws of pertinent states
and localities, of its investment in us. Vinson &
Elkins L.L.P. has not rendered an opinion on the state, local,
or
non-U.S. tax
consequences of an investment in us. We strongly recommend that
each prospective unitholder consult, and depend on, its own tax
counsel or other advisor with regard to those matters. It is the
responsibility of each unitholder to file all tax returns that
may be required of it.
TAX
CONSEQUENCES OF OWNERSHIP OF DEBT SECURITIES
A description of the material federal income tax consequences of
the acquisition, ownership and disposition of debt securities
will be set forth on the prospectus supplement relating to the
offering of debt securities.
INVESTMENT
IN CALUMET SPECIALTY PARTNERS, L.P. BY EMPLOYEE BENEFIT
PLANS
The following is a summary of certain considerations associated
with the purchase of our common units or debt securities by
employee benefit plans that are subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended
(ERISA), individual retirement accounts and other
plans and arrangements that are subject to Section 4975 of
the Internal Revenue Code of 1986, as amended, or any successor
thereto (the Code) or provisions under any federal,
state, local,
non-U.S. or
other laws or regulations that are similar to such provisions of
ERISA or the Code (collectively, Similar Laws), and
entities whose underlying assets are considered to include
plan assets of any such plan, account or arrangement
(each, a Plan).
This summary is based on the provisions of ERISA and the Code
(and related regulations and administrative and judicial
interpretations) as of the date of this prospectus. This summary
does not purport to be complete and future legislation, court
decisions, administrative regulations, rulings or administrative
pronouncements could significantly modify the requirements
summarized below. Any of these changes may be retroactive and
may thereby apply to transactions entered into prior to the date
of their enactment or release.
General
Fiduciary Matters
ERISA imposes certain duties on persons who are fiduciaries of a
Plan subject to Title I of ERISA or of a Plan subject to
Section 4975 of the Code (each, a Benefit Plan)
and both ERISA and the Code prohibit certain transactions
involving the assets of a Benefit Plan and its fiduciaries or
other interested parties. Under ERISA and the Code, any person
who exercises any discretionary authority or control over the
administration of such a Benefit Plan or the management or
disposition of the assets of such a Benefit Plan, or who renders
investment advice for a fee or other compensation to such a
Benefit Plan, is generally considered to be a fiduciary of the
Benefit Plan.
In considering an investment of a portion of the assets of any
Plan in our common units or debt securities, a fiduciary should
consult with its counsel in order to determine whether the
investment is in accordance with the documents and instruments
governing the Plan and the applicable provisions of ERISA, the
Code or any Similar Law. In addition, a fiduciary of a Plan
should consult with its counsel in order to determine if the
investment satisfies the fiduciarys duties to the Plan
including, without limitation, the prudence, diversification,
delegation of control and prohibited transaction provisions of
ERISA, the Code and any other applicable Similar Laws.
Prohibited
Transaction Issues
Section 406 of ERISA and Section 4975 of the Code
prohibit Benefit Plans from engaging in specified transactions
involving plan assets with persons or entities who are
parties in interest, within the meaning of ERISA, or
disqualified persons, within the meaning of
Section 4975 of the Code, unless an exemption is
50
available. A party in interest or disqualified person who
engaged in a nonexempt prohibited transaction may be subject to
excise taxes and other penalties and liabilities under ERISA and
the Code. In addition, the fiduciary of the Benefit Plan that
engaged in such a nonexempt prohibited transaction may be
subject to penalties and liabilities under ERISA and the Code.
The acquisition
and/or
holding of our common units or debt securities by a Benefit Plan
with respect to which we, a guarantor of our debt securities, an
underwriter of our common units or an initial purchaser of our
debt securities, each as applicable, are considered a party in
interest or disqualified person may constitute or result in a
direct or indirect prohibited transaction under Section 406
of ERISA
and/or
Section 4975 of the Code, unless the investment is acquired
and is held in accordance with an applicable statutory, class or
individual prohibited transaction exemption.
Because of the foregoing, our common units and debt securities
should not be purchased or held by any person investing
plan assets of any Plan, unless such purchase and
holding (and the exchange of notes for exchange notes) are
entitled to exemption relief from the prohibited transaction
provisions of ERISA and the Code and are otherwise permissible
under all applicable Similar Laws.
Representation
Accordingly, by acceptance of our common units or debt
securities, or any interest therein, each purchaser and
subsequent transferee will be deemed to have represented and
warranted that either (i) no portion of the assets used by
such purchaser or transferee to acquire or hold our common units
or debt securities constitutes assets of any Plan or
(ii) the acquisition and holding of our common units or
debt securities by such purchaser or transferee are entitled to
exemptive relief from the prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of the Code and
are otherwise permissible under all applicable Similar Laws.
The foregoing discussion is general in nature and is not
intended to be all-inclusive. Due to the complexity of these
rules and the penalties that may be imposed upon persons
involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries or other persons
considering acquiring and holding our common units or debt
securities on behalf of, or with the assets of, any Plan,
consult with their counsel regarding the potential applicability
of ERISA, Section 4975 of the Code and any Similar Laws to
such investments and whether an exemption would be applicable to
the purchase and holding of our common units or debt securities.
This foregoing discussion was written in connection with the
registration of our common units and debt securities, and it
cannot be used by any person for the purpose of avoiding
penalties that may be asserted against the person under the
Code. Prospective purchasers of our common units or debt
securities should consult their own tax advisors with respect to
the application of the U.S. federal income tax laws to
their particular situations.
PLAN OF
DISTRIBUTION
We may sell securities described in this prospectus and any
accompanying prospectus supplement in and outside the United
States (1) through underwriters, brokers or dealers;
(2) directly to purchasers, including our affiliates and
unitholders; (3) through agents, (4) at prevailing
market prices by us directly or through a designated agent,
including sales made directly or through the facilities of The
Nasdaq Global Market or any other securities exchange or
quotation or trading service on which such securities may be
listed, quoted or traded at the time of sale or (5) through
a combination of any of these methods.
We will prepare a prospectus supplement for each offering that
will disclose the terms of the offering, including the name or
names of any underwriters, dealers or agents, the purchase price
of the securities and the proceeds to us from the sale, any
underwriting discounts and other items constituting compensation
to underwriters, dealers or agents.
We will fix a price or prices of our securities at:
|
|
|
|
|
market prices prevailing at the time of any sale under this
registration statement;
|
|
|
|
prices related to market prices; or
|
51
We may change the price of the securities offered from time to
time.
If we use underwriters or dealers in the sale, they will acquire
the securities for their own account and they may resell these
securities from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The
securities may be offered to the public either through
underwriting syndicates represented by one or more managing
underwriters or directly by one or more of such firms. Unless
otherwise disclosed in the prospectus supplement, the
obligations of the underwriters to purchase securities will be
subject to certain conditions precedent, and the underwriters
will be obligated to purchase all of the securities offered by
the prospectus supplement if any are purchased. Any initial
public offering price and any discounts or concessions allowed
or reallowed or paid to dealers may be changed from time to time.
If a prospectus supplement so indicates, the underwriters may,
pursuant to Regulation M under the Exchange Act, engage in
transactions, including stabilization bids or the imposition of
penalty bids, that may have the effect of stabilizing or
maintaining the market price of the securities at a level above
that which might otherwise prevail in the open market.
We may sell the securities directly or through agents designated
by us from time to time. We will name any agent involved in the
offering and sale of the securities for which this prospectus is
delivered, and disclose any commissions payable by us to the
agent or the method by which the commissions can be determined,
in the prospectus supplement. Unless otherwise indicated in the
prospectus supplement, any agent will be acting on a best
efforts basis for the period of its appointment.
We may agree to indemnify underwriters, dealers and agents who
participate in the distribution of securities against certain
liabilities to which they may become subject in connection with
the sale of the securities, including liabilities arising under
the Securities Act.
Certain of the underwriters and their affiliates may be
customers of, may engage in transactions with and may perform
services for us or our affiliates in the ordinary course of
business.
A prospectus and accompanying prospectus supplement in
electronic form may be made available on the web sites
maintained by the underwriters. The underwriters may agree to
allocate a number of securities for sale to their online
brokerage account holders. Such allocations of securities for
internet distributions will be made on the same basis as other
allocations. In addition, securities may be sold by the
underwriters to securities dealers who resell securities to
online brokerage account holders.
LEGAL
MATTERS
Vinson & Elkins L.L.P. will pass upon the validity of
the securities offered in this registration statement.
Vinson & Elkins L.L.P. will also render an opinion on
the material federal income tax consequences regarding the
securities. The validity of certain guarantees with respect to
the debt securities offered by this prospectus will be passed
upon for us by Barnes & Thornburg LLP. If certain
legal matters in connection with an offering of the securities
made by this prospectus and a related prospectus supplement are
passed on by counsel for the underwriters of such offering, that
counsel will be named in the applicable prospectus supplement
related to that offering.
EXPERTS
Ernst & Young LLP, an independent registered public
accounting firm, has audited the consolidated financial
statements of Calumet Specialty Products Partners, L.P. and the
consolidated balance sheet of Calumet GP, LLC included in our
Annual Report on
Form 10-K
for the year ended December 31, 2009, and the effectiveness
of Calumet Specialty Products Partners, L.P.s internal
control over financial reporting as of December 31, 2009,
as set forth in their reports, which are incorporated by
reference in this prospectus and elsewhere in this registration
statement. Our consolidated financial statements and our
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2009
are incorporated by reference in reliance on Ernst &
Young LLPs reports, given on their authority as experts in
accounting and auditing.
52
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
Item 14.
|
Other
Expenses of Issuance and Distribution.
|
Set forth below are the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities registered
hereby. With the exception of the Securities and Exchange
Commission registration fee, the amounts set forth below are
estimates. We will pay all expenses (other than underwriting
discounts and commissions) incurred by the offering unitholders.
|
|
|
|
|
|
|
|
|
Securities and Exchange Commission registration fee*
|
|
|
|
|
|
$
|
53,138
|
|
Legal fees and expenses
|
|
|
|
|
|
|
**
|
|
Accounting fees and expenses
|
|
|
|
|
|
|
**
|
|
Printing expenses
|
|
|
|
|
|
|
**
|
|
Miscellaneous
|
|
|
|
|
|
|
**
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
$
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Pursuant to Rule 457(p), $18,162 in fees from a prior
registration statement were used to offset the registration fee
associated with this filing. |
|
** |
|
These fees are calculated based on the number of issuances and
amount of securities to be offered and, accordingly, cannot be
estimated at this time. |
|
|
Item 15.
|
Indemnification
of Directors and Officers.
|
Calumet
Specialty Products Partners, L.P.
Section 17-108
of the Delaware Revised Limited Partnership Act empowers a
Delaware limited partnership to indemnify and hold harmless any
partner or other person from and against all claims and demands
whatsoever. The partnership agreement of Calumet Specialty
Products Partners, L.P. provides that, in most circumstances, we
will indemnify the following persons, to the fullest extent
permitted by law, from and against all losses, claims, damages
or similar events:
|
|
|
|
|
our general partners;
|
|
|
|
any departing general partner;
|
|
|
|
any person who is or was an affiliate of our general partners or
any departing general partner;
|
|
|
|
any person who is or was a member, partner, officer, director
employee, agent or trustee of our general partners or any
departing general partner or any affiliate of our general
partners or any departing general partner; or
|
|
|
|
any person who is or was serving at the request of our general
partners or any departing general partners or any affiliate of a
general partner or any departing general partner as an officer,
director, employee, member, partner, agent or trustee of another
person.
|
Any indemnification under these provisions will only be out of
our assets. Our general partners will not be personally liable
for, or have any obligation to contribute or loan funds or
assets to us to enable us to effectuate, indemnification. We may
purchase insurance against liabilities asserted against and
expenses incurred by persons for our activities, regardless of
whether we would have the power to indemnify the person against
liabilities under the partnership agreement.
II-1
Calumet
GP, LLC
Section 18-108
of the Delaware Limited Liability Company Act provides that,
subject to such standards and restrictions, if any, as are set
forth in its limited liability company agreement, a Delaware
limited liability company may, and has the power to, indemnify
and hold harmless any member or manager or other person from and
against any and all claims and demands whatsoever. The limited
liability company agreement of our general partner, Calumet GP,
LLC, provides that, in most circumstances, our general partner
will indemnify the following persons, to the fullest extent
permitted by law, from and against all losses, claims, damages
or similar events:
|
|
|
|
|
any person who is or was an affiliate of our general partner;
|
|
|
|
any person who is or was an officer, director, fiduciary or
trustee of our general partner or any affiliate of our general
partner; or
|
|
|
|
any person who is or was serving at the request of the board of
our general partners as an officer, director, member, partner,
fiduciary or trustee of another person.
|
Our general partner may purchase and maintain insurance on
behalf of the indemnified persons, to the extent and in such
amounts as our general partner determines to be reasonable,
against any liability that may be asserted against or expenses
that may be incurred by the indemnified persons in connection
with the activities of the general partner or the indemnified
persons. Our general partner may also enter into indemnity
contracts with the indemnified persons. We will reimburse our
general partner for all expenses allocable to us or otherwise
incurred by our general partner in connection with operating our
business.
Calumet
Finance Corp.
Section 145(a) of the General Corporation Law of the State
of Delaware (the DGCL), inter alia, provides that a
corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such
action, suit or proceeding if the person acted in good faith and
in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe the persons conduct was unlawful.
Section 145(b) of the DGCL provides that a corporation may
indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is
or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys fees)
actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit if the
person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper. To the
extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145 of the
DGCL, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including
attorneys fees) actually and reasonably incurred by such
person in connection therewith.
II-2
Any indemnification under subsections (a) and (b) of
Section 145 of the DGCL (unless ordered by a court) shall
be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard
of conduct set forth in subsections (a) and (b) of
Section 145. Such determination shall be made, with respect
to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who
are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) by a committee of such directors
designated by majority vote of such directors, even though less
than a quorum, or (3) if there are no such directors, or if
such directors so direct, by independent legal counsel in a
written opinion, or (4) by the stockholders. Expenses
(including attorneys fees) incurred by an officer or
director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it
shall ultimately be determined that such person is not entitled
to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys fees) incurred
by former directors and officers or other employees and agents
may be so paid upon such terms and conditions, if any, as the
corporation deems appropriate. The indemnification and
advancement of expenses provided by, or granted pursuant to,
Section 145 shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to
action in such persons official capacity and as to action
in another capacity while holding such office.
Section 145 of the DGCL also empowers a corporation to
purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such person
and incurred by such person in any such capacity, or arising out
of such persons status as such, whether or not the
corporation would have the power to indemnify such person
against such liability under Section 145.
The certificate of incorporation and bylaws of Calumet Finance
Corp. provide for the indemnification of directors and officers
of and such directors and officers who serve at the request of
the company as directors, officers, employees or agents of any
other enterprise against certain liabilities under certain
circumstances.
Directors
and Officers Liability Insurance
We carry directors and officers liability insurance
designed to insure our officers and directors and those of our
subsidiaries against certain liabilities incurred by them in the
performance of their duties, and also providing for
reimbursement in certain cases to us and our subsidiaries for
sums paid to directors and officers as indemnification for
similar liability.
Underwriting
Agreements
Any underwriting agreement entered into in connection with the
sale of the securities offered pursuant to this registration
statement will provide for indemnification of officers and
directors of the general partner, including liabilities under
the Securities Act.
The following documents are filed as exhibits to this
registration:
|
|
|
|
|
Exhibit Number
|
|
Description
|
|
|
*1
|
.1
|
|
Form of Underwriting Agreement.
|
|
**4
|
.1
|
|
Form of Senior Indenture for Senior Debt Securities.
|
|
**4
|
.2
|
|
Form of Subordinated Indenture for Subordinated Debt Securities.
|
|
*4
|
.3
|
|
Form of Senior Debt Securities.
|
|
*4
|
.4
|
|
Form of Subordinated Debt Securities.
|
II-3
|
|
|
|
|
Exhibit Number
|
|
Description
|
|
|
4
|
.5
|
|
Certificate of Limited Partnership of Calumet Specialty Products
Partners, L.P. (incorporated by reference to Exhibit 3.1 to
the Registrants Registration Statement on
Form S-1
filed with the Commission on October 7, 2005 (File
No. 333-128880)).
|
|
4
|
.6
|
|
Amended and Restated Limited Partnership Agreement of Calumet
Specialty Products Partners, L.P. (incorporated by reference to
Exhibit 3.1 to the Registrants Current Report on
Form 8-K
filed with the Commission on February 13, 2006 (File
No. 000-51734)).
|
|
4
|
.7
|
|
Certificate of Formation of Calumet GP, LLC (incorporated by
reference to Exhibit 3.3 to the Registrants
Registration Statement on
Form S-1
filed with the Commission on October 7, 2005 (File
No. 333-128880)).
|
|
4
|
.8
|
|
Amended and Restated Limited Liability Company Agreement of
Calumet GP, LLC (incorporated by reference to Exhibit 3.2
to the Registrants Current Report on
Form 8-K
filed with the Commission on February 13, 2006 (File
No. 000-51734)).
|
|
4
|
.9
|
|
Amendment No. 1 to the First Amended and Restated Agreement
of Limited Partnership of Calumet Specialty Products Partners,
L.P. (incorporated by reference to Exhibit 3.1 to the
Current Report on
Form 8-K
filed with the Commission on July 11, 2006 (File No
000-51734)).
|
|
4
|
.10
|
|
Amendment No. 2 to First Amended and Restated Agreement of
Limited Partnership of Calumet Specialty Products Partners, L.P.
(incorporated by reference to Exhibit 3.1 to the Current
Report on
Form 8-K
filed with the Commission on April 18, 2008 (File No
000-51734)).
|
|
4
|
.11
|
|
Specimen Unit Certificate representing common units
(incorporated by reference to Exhibit 3.7 to the
Registrants Quarterly Report on
Form 10-Q
filed with the Commission on November 4, 2010 (File No
000-51734)).
|
|
**5
|
.1
|
|
Opinion of Vinson & Elkins L.L.P. as to the legality
of the securities being registered.
|
|
**5
|
.2
|
|
Opinion of Barnes & Thornburg LLP as to the legality
of the securities being registered.
|
|
**8
|
.1
|
|
Opinion of Vinson & Elkins L.L.P. as to tax matters.
|
|
**12
|
.1
|
|
Ratios of earnings to fixed charges.
|
|
**23
|
.1
|
|
Consent of Ernst & Young LLP.
|
|
**23
|
.2
|
|
Consent of Vinson & Elkins L.L.P. (contained in
Exhibits 5.1 and 8.1).
|
|
**24
|
.1
|
|
Power of Attorney (included on signature page of this
registration statement).
|
|
***25
|
.1
|
|
Statement of Eligibility and Qualification of the Trustee under
the Senior Indenture under the Trust Indenture Act of 1939,
as amended, on
Form T-1.
|
|
***25
|
.2
|
|
Statement of Eligibility and Qualification of the Trustee under
the Subordinated Indenture under the Trust Indenture Act of
1939, as amended, on
Form T-1.
|
|
|
|
* |
|
To be filed as an Exhibit to a Current Report on
Form 8-K
or in a post-effective amendment to this registration statement |
|
** |
|
Filed herewith |
|
*** |
|
To be filed under subsection (a) of Section 310 of the
Trust Indenture Act of 1939, as amended |
Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration
II-4
statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
a prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the Calculation of Registration Fee
table in the effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii)
above do not apply if the registration statement is on
Form S-3
and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with
or furnished to the SEC by the registrants pursuant to
Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in the registration statement, or
is contained in a form of prospectus filed pursuant to
Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under
the Securities Act to any purchaser:
(A) Each prospectus filed by the registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering made
pursuant to Rule 415(a)(1)(i), (vii), or (x) for the
purpose of providing the information required by
section 10(a) of the Securities Act shall be deemed to be
part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however, that no statement
made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such
effective date, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such effective date.
(5) That, for the purpose of determining liability of any
registrant under the Securities Act to any purchaser in the
initial distribution of the securities, each undersigned
registrant undertakes that in a primary offering of securities
of such registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or
sold to
II-5
such purchaser by means of any of the following communications,
such registrant will be a seller to the purchaser and will be
considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of any
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of any undersigned registrant or used
or referred to by any undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
any undersigned registrant or its securities provided by or on
behalf of such registrant; and
(iv) Any other communication that is an offer in the
offering made by any undersigned registrant to the purchaser.
The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each
filing of the registrants annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit
plans annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of any registrant pursuant to the foregoing
provisions, or otherwise, such registrant has been advised that
in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
Each undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus or any prospectus supplement filed as part of this
registration statement in reliance on Rule 430A and
contained in a form of prospectus or prospectus supplement filed
by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Each undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of
the trustee under each of its indentures to act under
subsection (a) of Section 310 of the
Trust Indenture Act of 1939, as amended (the
Act) in accordance with the rules and regulations
prescribed by the SEC under section 305(b)(2) of the Act.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act, as amended,
Calumet Specialty Products Partners, L.P. that it has reasonable
grounds to believe that it meets all of the requirements for
filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
city of Indianapolis, in the state of Indiana, on
November 5, 2010.
Calumet Specialty Products Partners, L.P.
its General Partner
Name: F. William Grube
|
|
|
|
Title:
|
President, Chief Executive
|
Officer and Director of Calumet GP, LLC
(Principal Executive Officer)
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints R.
Patrick Murray, II and Jennifer G. Straumins, and each of
them, with full power to act without the other, his true and
lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities (until revoked in writing)
to sign any and all amendments (including post-effective
amendments) to the Registration Statement and any additional
registration statement pursuant to Rule 462(b) of the
Securities Act, and to file the same, together with all exhibits
thereto and all other documents in connection therewith, with
the Commission, and any national exchange or self regulatory
agency, to sign any and all applications, registration
statements, notices and other documents necessary or advisable
to comply with applicable state securities laws, and to file the
same, together with all other documents in connection therewith,
with the appropriate state securities authorities, granting unto
said attorneys-in-fact and agents, or any of them or their or
his substitutes or substitute, full power and authority to do
and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as such
director or officer might or could do and perform in person,
hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them or their or his substitutes or
substitute, may lawfully do or cause be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement on
Form S-3
has been signed below by the following persons in the capacities
indicated on the 5th day of November, 2010.
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
/s/ F.
WILLIAM GRUBE
F.
William Grube
|
|
President, Chief Executive Officer and
Director of Calumet GP, LLC
(Principal Executive Officer)
|
|
|
|
/s/ R.
PATRICK MURRAY, II
R.
Patrick Murray, II
|
|
Vice President, Chief Financial Officer and
Secretary of Calumet GP, LLC
(Principal Accounting and Financial Officer)
|
|
|
|
/s/ JENNIFER
G. STRAUMINS
Jennifer
G. Straumins
|
|
Executive Vice President and Chief Operating Officer of
Calumet GP, LLC
|
II-7
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
/s/ FRED
M. FEHSENFELD, JR.
Fred
M. Fehsenfeld, Jr.
|
|
Director and Chairman of the Board of
Calumet GP, LLC
|
|
|
|
/s/ JAMES
S. CARTER
James
S. Carter
|
|
Director of Calumet GP, LLC
|
|
|
|
/s/ WILLIAM
S. FEHSENFELD
William
S. Fehsenfeld
|
|
Director of Calumet GP, LLC
|
|
|
|
/s/ ROBERT
E. FUNK
Robert
E. Funk
|
|
Director of Calumet GP, LLC
|
|
|
|
/s/ NICHOLAS
J. RUTIGLIANO
Nicholas
J. Rutigliano
|
|
Director of Calumet GP, LLC
|
|
|
|
/s/ GEORGE
C. MORRIS III
George
C. Morris III
|
|
Director of Calumet GP, LLC
|
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Calumet Finance Corp. certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Indianapolis, State of Indiana, on November 5, 2010.
Calumet Finance Corp.
Name: F. William Grube
|
|
|
|
Title:
|
Chief Executive Officer and President
|
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints R.
Patrick Murray, II and Jennifer G. Straumins, and each of
them, with full power to act without the other, his true and
lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities (until revoked in writing)
to sign any and all amendments (including post-effective
amendments) to the Registration Statement and any additional
registration statement pursuant to Rule 462(b) of the
Securities Act, and to file the same, together with all exhibits
thereto and all other documents in connection therewith, with
the Commission, and any national exchange or self regulatory
agency, to sign any and all applications, registration
statements, notices and other documents necessary or advisable
to comply with applicable state securities laws, and to file the
same, together with all other documents in connection therewith,
with the appropriate state securities authorities, granting unto
said attorneys-in-fact and agents, or any of them or their or
his substitutes or substitute, full power and authority to do
and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as such
director or officer might or could do and perform in person,
hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them or their or his substitutes or
substitute, may lawfully do or cause be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement on
Form S-3
has been signed below by the following persons in the capacities
indicated on the 5th day of November, 2010.
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
/s/ F.
WILLIAM GRUBE
F.
William Grube
|
|
Chief Executive Officer and President
(Principal Executive Officer)
|
|
|
|
/s/ R.
PATRICK MURRAY, II
R.
Patrick Murray, II
|
|
Vice President, Chief Financial Officer, Treasurer and Secretary
(Principal Accounting and Financial Officer)
|
|
|
|
/s/ JENNIFER
G. STRAUMINS
Jennifer
G. Straumins
|
|
Executive Vice President and Chief Operating Officer
|
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Calumet Sales Company Incorporated certifies that it
has reasonable grounds to believe that it meets all of the
requirements for filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Indianapolis, State of Indiana, on November 5, 2010.
Calumet Sales Company Incorporated
Name: F. William Grube
|
|
|
|
Title:
|
Chief Executive Officer and President
|
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints R.
Patrick Murray, II and Jennifer G. Straumins, and each of
them, with full power to act without the other, his true and
lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities (until revoked in writing)
to sign any and all amendments (including post-effective
amendments) to the Registration Statement and any additional
registration statement pursuant to Rule 462(b) of the
Securities Act, and to file the same, together with all exhibits
thereto and all other documents in connection therewith, with
the Commission, and any national exchange or self regulatory
agency, to sign any and all applications, registration
statements, notices and other documents necessary or advisable
to comply with applicable state securities laws, and to file the
same, together with all other documents in connection therewith,
with the appropriate state securities authorities, granting unto
said attorneys-in-fact and agents, or any of them or their or
his substitutes or substitute, full power and authority to do
and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as such
director or officer might or could do and perform in person,
hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them or their or his substitutes or
substitute, may lawfully do or cause be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement on
Form S-3
has been signed below by the following persons in the capacities
indicated on the 5th day of November, 2010.
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
/s/ F.
WILLIAM GRUBE
F.
William Grube
|
|
President, Chief Executive Officer and Director of Calumet GP,
LLC
(Principal Executive Officer)
|
|
|
|
/s/ R.
PATRICK MURRAY, II
R.
Patrick Murray, II
|
|
Vice President, Chief Financial Officer, Treasurer and Secretary
(Principal Accounting and Financial Officer)
|
|
|
|
/s/ JENNIFER
G. STRAUMINS
Jennifer
G. Straumins
|
|
Executive Vice President and Chief Operating Officer
|
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, each undersigned registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Indianapolis, State of Indiana, on November 5, 2010.
Calumet Operating, LLC
Calumet LP GP, LLC
Calumet Lubricants Co., Limited Partnership
Calumet Shreveport, LLC
Calumet Shreveport Fuels, LLC
Calumet Shreveport Lubricants & Waxes, LLC
Calumet Penreco, LLC
Name: F. William Grube
|
|
|
|
Title:
|
President, Chief Executive
|
Officer and Director of Calumet GP, LLC
(Principal Executive Officer)
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints R.
Patrick Murray, II and Jennifer G. Straumins, and each of
them, with full power to act without the other, his true and
lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities (until revoked in writing)
to sign any and all amendments (including post-effective
amendments) to the Registration Statement and any additional
registration statement pursuant to Rule 462(b) of the
Securities Act, and to file the same, together with all exhibits
thereto and all other documents in connection therewith, with
the Commission, and any national exchange or self regulatory
agency, to sign any and all applications, registration
statements, notices and other documents necessary or advisable
to comply with applicable state securities laws, and to file the
same, together with all other documents in connection therewith,
with the appropriate state securities authorities, granting unto
said attorneys-in-fact and agents, or any of them or their or
his substitutes or substitute, full power and authority to do
and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as such
director or officer might or could do and perform in person,
hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them or their or his substitutes or
substitute, may lawfully do or cause be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement on
Form S-3
has been signed below by the following persons in the capacities
indicated on the 5th day of November, 2010.
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
/s/ F.
WILLIAM GRUBE
F.
William Grube
|
|
President, Chief Executive Officer and
Director of Calumet GP, LLC
(Principal Executive Officer)
|
|
|
|
/s/ R.
PATRICK MURRAY, II
R.
Patrick Murray, II
|
|
Vice President, Chief Financial Officer and Secretary of Calumet
GP, LLC
(Principal Accounting and Financial Officer)
|
II-11
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
|
/s/ JENNIFER
G. STRAUMINS
Jennifer
G. Straumins
|
|
Executive Vice President and Chief Operating Officer of Calumet
GP, LLC
|
|
|
|
/s/ FRED
M. FEHSENFELD, JR.
Fred
M. Fehsenfeld, Jr.
|
|
Director and Chairman of the Board of Calumet GP, LLC
|
|
|
|
/s/ JAMES
S. CARTER
James
S. Carter
|
|
Director of Calumet GP, LLC
|
|
|
|
/s/ WILLIAM
S. FEHSENFELD
William
S. Fehsenfeld
|
|
Director of Calumet GP, LLC
|
|
|
|
/s/ ROBERT
E. FUNK
Robert
E. Funk
|
|
Director of Calumet GP, LLC
|
|
|
|
/s/ NICHOLAS
J. RUTIGLIANO
Nicholas
J. Rutigliano
|
|
Director of Calumet GP, LLC
|
|
|
|
/s/ GEORGE
C. MORRIS III
George
C. Morris III
|
|
Director of Calumet GP, LLC
|
II-12
INDEX TO
EXHIBITS
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
*1
|
.1
|
|
Form of Underwriting Agreement.
|
|
**4
|
.1
|
|
Form of Senior Indenture for Senior Debt Securities.
|
|
**4
|
.2
|
|
Form of Subordinated Indenture for Subordinated Debt Securities.
|
|
*4
|
.3
|
|
Form of Senior Debt Securities.
|
|
*4
|
.4
|
|
Form of Subordinated Debt Securities.
|
|
4
|
.5
|
|
Certificate of Limited Partnership of Calumet Specialty Products
Partners, L.P. (incorporated by reference to Exhibit 3.1 to
the Registrants Registration Statement on
Form S-1
filed with the Commission on October 7, 2005 (File
No. 333-128880)).
|
|
4
|
.6
|
|
Amended and Restated Limited Partnership Agreement of Calumet
Specialty Products Partners, L.P. (incorporated by reference to
Exhibit 3.1 to the Registrants Current Report on
Form 8-K
filed with the Commission on February 13, 2006 (File
No. 000-51734)).
|
|
4
|
.7
|
|
Certificate of Formation of Calumet GP, LLC (incorporated by
reference to Exhibit 3.3 to the Registrants
Registration Statement on
Form S-1
filed with the Commission on October 7, 2005 (File
No. 333-128880)).
|
|
4
|
.8
|
|
Amended and Restated Limited Liability Company Agreement of
Calumet GP, LLC (incorporated by reference to Exhibit 3.2
to the Registrants Current Report on
Form 8-K
filed with the Commission on February 13, 2006 (File
No. 000-51734)).
|
|
4
|
.9
|
|
Amendment No. 1 to the First Amended and Restated Agreement
of Limited Partnership of Calumet Specialty Products Partners,
L.P. (incorporated by reference to Exhibit 3.1 to the
Current Report on
Form 8-K
filed with the Commission on July 11, 2006 (File No
000-51734)).
|
|
4
|
.10
|
|
Amendment No. 2 to First Amended and Restated Agreement of
Limited Partnership of Calumet Specialty Products Partners, L.P.
(incorporated by reference to Exhibit 3.1 to the Current
Report on
Form 8-K
filed with the Commission on April 18, 2008 (File No
000-51734)).
|
|
4
|
.11
|
|
Specimen Unit Certificate representing common units
(incorporated by reference to Exhibit 3.7 to the
Registrants Quarterly Report on
Form 10-Q
filed with the Commission on November 4, 2010 (File No
000-51734)).
|
|
**5
|
.1
|
|
Opinion of Vinson & Elkins L.L.P. as to the legality
of the securities being registered.
|
|
**5
|
.2
|
|
Opinion of Barnes & Thornburg LLP as to the legality
of the securities being registered.
|
|
**8
|
.1
|
|
Opinion of Vinson & Elkins L.L.P. as to tax matters.
|
|
**12
|
.1
|
|
Ratios of earnings to fixed charges.
|
|
**23
|
.1
|
|
Consent of Ernst & Young LLP.
|
|
**23
|
.2
|
|
Consent of Vinson & Elkins L.L.P. (contained in
Exhibits 5.1 and 8.1).
|
|
**24
|
.1
|
|
Power of Attorney (included on signature page of this
registration statement).
|
|
***25
|
.1
|
|
Statement of Eligibility and Qualification of the Trustee under
the Senior Indenture under the Trust Indenture Act of 1939,
as amended, on
Form T-1.
|
|
***25
|
.2
|
|
Statement of Eligibility and Qualification of the Trustee under
the Subordinated Indenture under the Trust Indenture Act of
1939, as amended, on
Form T-1
|
|
|
|
* |
|
To be filed as an Exhibit to a Current Report on
Form 8-K
or in a post-effective amendment to this registration statement |
|
** |
|
Filed herewith |
|
*** |
|
To be filed under subsection (a) of Section 310 of the
Trust Indenture Act of 1939, as amended |
II-13