OCI NV, Amsterdam, said on June 4 that its affiliate, OCIP Holding II LLC, has commenced a tender offer to purchase all publicly held common units of OCI Partners LP (OCIP), Nederland, Texas, not currently owned by OCI NV for $11.00 per common unit in cash. OCIP owns an ammonia (331,000 mt/y) and methanol (912,500 mt/y) complex in Beaumont, Texas. The offer represents a 10.0 percent premium over OCIP’s closing price on June 1, 2018, a 16.4 percent premium over OCIP’s 90 trading day volume-weighted average unit price, and a 5.3 percent premium over OCIP’s two-year high unit price.
OCI currently owns approximately 88.25 percent of the issued and outstanding OCIP common units. The tender offer will expire on July 2, 2018, unless the offer is extended in accordance with its terms.
OCIP confirmed the unsolicited offer and said it would take it under advisement.
In December 2017, OCI increased its stake in OCIP to 88.25 percent from approximately 79.88 percent by buying 7.3 million common units for $61 million, or $8.40 per unit (GM Jan. 5, p. 24).
In December 2016, OCI announced plans to acquire 100 percent of OCIP (GM Dec. 9, 2016) in a stock exchange deal valuing OCIP shares at $7.80. However, that plan was later pulled after OCIP’s Conflicts Committee declined the offer (GM April 21, 2017).
OCI believes that the newly-announced transaction is attractive for minority investors of OCIP to address concerns over the low trading liquidity of the units and the attractiveness of Master Limited Partnerships (MLPs) as an asset class, particularly in light of the latest change in federal income tax law. It said for OCI NV shareholders, the proposed transaction allows for simplification of the group’s corporate structure, including the elimination of public listing costs.
After the completion of the tender offer, OCI currently intends to purchase all of the outstanding common units not tendered pursuant to the tender offer (other than any common units already owned by OCI or its affiliates) pursuant to the OCIP limited partnership agreement. However, OCI said it may change its intent, and there can be no assurance that OCI will consummate the buyout.