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Certain Provisions of the Partnership Agreement
6 Months Ended
Jun. 30, 2012
Partners' Capital Notes [Abstract]  
Certain Provisions of Partnership Agreement

(4) Certain Provisions of the Partnership Agreement

  • Partnership Distributions       

Unless restricted by the terms of the Partnership's credit facility and/or the indentures governing the Partnership's 2022 Notes and the Partnership's 8 7/8% senior unsecured notes due 2018 (“2018 Notes” and, together with the 2022 Notes, “all senior unsecured notes”), the Partnership must make distributions of 100.0% of available cash, as defined in the partnership agreement, within 45 days following the end of each quarter. Distributions will generally be made 98.0% to the common unitholders and 2.0% to the general partner, subject to the payment of incentive distributions as described below to the extent that certain target levels of cash distributions are achieved.

Under the quarterly incentive distribution provisions, generally the Partnership's general partner is entitled to 13.0% of amounts the Partnership distributes in excess of $0.25 per unit, 23.0% of the amounts the Partnership distributes in excess of $0.3125 per unit and 48.0% of amounts the Partnership distributes in excess of $0.375 per unit. Incentive distributions totaling $1.1 million and $2.1 million were earned by the Company for the three and six months ended June 30, 2012, respectively.

The Partnership's first quarter 2012 distribution on its common and preferred units of $0.33 per unit was paid on May 15, 2012. The Partnership's second quarter 2012 distribution on its common and preferred units of $0.33 per unit will be paid on August 14, 2012.

(b) Issuance of Partnership Equity

On May 15, 2012, the Partnership issued 10,200,000 common units representing limited partner interests in the Partnership at a public offering price of $16.28 per unit for net proceeds of $158.0 million. The net proceeds from the common units offering were used for general partnership purposes.

The Company reflects changes in its ownership interest in the Partnership as equity transactions. The carrying amount of the non-controlling interest is adjusted to reflect the change in the Company's ownership interest in the Partnership. Any difference between the fair value of the consideration received and the amount by which the non-controlling interest is adjusted is recognized in additional paid-in capital. The Company's book carrying amount per Partnership unit was below the price per unit received by the Partnership for its May 2012 sale of common units resulting in a change in equity of $12.3 million. The change was recorded as an increase in additional paid in capital and a reduction in non-controlling interest during the period ended June 30, 2012. The Company also reduced its deferred tax liability in the amount of $5.1 million relating to the difference between its book and tax investment in the Partnership with the offset to additional paid-in-capital.