Partners' Capital, Mezzanine Capital and Distributions

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Partners' Capital, Mezzanine Capital and Distributions

Partners’ Capital, Mezzanine Capital and Distributions

At June 30, 2019, our outstanding common units consisted of 122,539,221 Class A units and 39,997 Class B units.

Distributions

We paid or will pay the following distributions to our common unitholders in 2018 and 2019:

Distribution For	Date Paid		Per Unit Amount		Total Amount
2018
1st Quarter	May 15, 2018		$	0.5200	$	63,741
2nd Quarter	August 14, 2018		$	0.5300	$	64,967
3rd Quarter	November 14, 2018		$	0.5400	$	66,193
4th Quarter	February 14, 2019		$	0.5500	$	67,419
2019
1st Quarter	May 15, 2019		$	0.5500	$	67,419
2nd Quarter	August 14, 2019	(1)	$	0.5500	$	67,419

(1) This distribution was declared on July 9, 2019 and will be paid to unitholders of record as of July 31, 2019.

Class A Convertible Preferred Units

On September 1, 2017, we sold $750 million of our Class A Convertible Preferred units (our "preferred units") in a private placement, comprised of 22,249,494 units for a cash purchase price per unit of $33.71 (subject to certain adjustments, the “Issue Price”) to two initial purchasers. Our general partner executed an amendment to our partnership agreement in connection therewith, which, among other things, authorized and established the rights and preferences of our preferred units. Our preferred units are a new class of security that ranks senior to all of our currently outstanding classes or series of limited partner interests with respect to distribution and/or liquidation rights. Holders of our preferred units vote on an as-converted basis with holders of our common units and have certain class voting rights, including with respect to any amendment to the partnership agreement that would adversely affect the rights, preferences or privileges, or otherwise modify the terms, of those preferred units.    

Accounting for the Class A Convertible Preferred Units

Our preferred units are considered redeemable securities under GAAP due to the existence of redemption provisions upon a deemed liquidation event that is outside our control. Therefore, we present them as temporary equity in the mezzanine section of the Consolidated Balance Sheet. Because our preferred units are not currently redeemable and we do not have plans or expect any events that constitute a change of control in our partnership agreement, we present our preferred units at their initial carrying amount. However, we would be required to adjust that carrying amount if it becomes probable that we would be required to redeem our preferred units.

Initial and Subsequent Measurement

We initially recognized our preferred units at their issuance date fair value, net of issuance costs. We will not be required to adjust the carrying amount of our preferred units until it becomes probable that they would become redeemable. Once redemption becomes probable, we would adjust the carrying amount of our preferred units to the redemption value over a period of time comprising the date the feature first becomes probable and the date the units can first be redeemed.

Preferred unit distributions are recognized on the date in which they are declared. Paid-in-kind ("PIK") distributions were declared and issued as follows:

Distribution For	Date Issued	Number of Units	Total Amount
2018
1st Quarter	May 15, 2018	500,976	$	16,888
2nd Quarter	August 14, 2018	511,934	$	17,527
3rd Quarter	November 14, 2018	523,132	$	17,635
4th Quarter	February 14, 2019	534,576	$	18,021
2019
1st Quarter	May 15, 2019	364,180	$	12,277

Net Income Attributable to Genesis Energy, L.P. is reduced by preferred unit distributions in the form of PIK and cash that accumulated during the period. For the three and six months ended June 30, 2019, net income attributable to common unitholders was reduced by $18.7 million and $37.1 million, respectively. In the first quarter of 2019, we declared a PIK for a portion of the quarterly distribution attributable to the first two months of the first quarter of 2019 (as defined below), resulting in the issuance of 364,180 preferred units. For the portion of the quarterly distribution attributable to the final month of the first quarter of 2019, we paid a cash distribution of $0.2458 for each preferred unit. This total quarterly distribution to the preferred unitholders equates to a quarterly distribution of $0.7374 per preferred unit (or $2.9496 on an annualized basis). With respect to our preferred units related to the second quarter of 2019, we declared a cash distribution of $0.7374 per preferred unit (or $2.9496 on an annualized basis), that will be payable on August 14, 2019 to preferred unitholders of record at the close of business on July 31, 2019.

We paid or will pay the following cash distributions to our preferred unitholders in 2019:

Distribution For	Date Paid	Per Unit Amount		Total Amount
2019
1st Quarter	May 15, 2019	$	0.2458	$	6,138
2nd Quarter	August 14, 2019	$	0.7374	$	18,684

The following table shows the change in our mezzanine and preferred units balances from December 31, 2018 to June 30, 2019:

	Class A Convertible Preferred Units
	Units		$
Balance as of December 31, 2018	24,438,022		$	761,466
Distributions paid-in-kind	898,756		30,298
Allocation of Distributions paid in-kind to Preferred Distribution Rate Reset Election (Note 16)	—		(1,649		)
Balance as of June 30, 2019	$	25,336,778	$	790,115