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Certain Provisions of the ENLK Partnership Agreement
 6 Months Ended
Jun. 30, 2023
Partners' Capital [Abstract]  
Certain Provisions of the ENLK Partnership Agreement
(8) Certain Provisions of the ENLK Partnership Agreement

a.Series B Preferred Units

As of June 30, 2023 and December 31, 2022, there were 54,303,780 and 54,168,359 Series B Preferred Units issued and outstanding, respectively.

Redemption

In January 2022, we redeemed 3,333,334 Series B Preferred Units for total consideration of $50.5 million plus accrued distributions. In addition, upon such redemption, a corresponding number of ENLC Class C Common Units were automatically cancelled. The redemption price represented 101% of the preferred units’ par value. In connection with the Series B Preferred Unit redemption, we agreed with the holders of the Series B Preferred Units to pay cash in lieu of making a quarterly distribution in-kind of additional Series B Preferred Units (the “PIK Distribution”) through the distribution declared for the fourth quarter of 2022. Beginning with the quarterly distribution declared for the first quarter of 2023, we have resumed paying the PIK distribution.

Distributions

Income is allocated to the Series B Preferred Units in an amount equal to the quarterly distribution with respect to the period earned. A summary of the distribution activity relating to the Series B Preferred Units during the six months ended June 30, 2023 and 2022 is provided below:
Declaration periodPIK DistributionCash distribution (in millions)Date paid/payable
2023
Fourth Quarter of 2022— $17.3 February 13, 2023
First Quarter of 2023135,421 $15.2 May 12, 2023
Second Quarter of 2023135,759 $15.3 August 11, 2023
2022
Fourth Quarter of 2021— $19.2 February 11, 2022 (1)
First Quarter of 2022— $17.5 May 13, 2022 (2)
Second Quarter of 2022— $17.3 August 12, 2022
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(1)In December 2021 and January 2022, we paid $0.9 million and $1.0 million, respectively, of accrued distributions related to the fourth quarter of 2021 on redeemed Series B Preferred Units. The remaining distribution of $17.3 million related to the fourth quarter of 2021 was paid on February 11, 2022.
(2)In January 2022, we paid $0.3 million of accrued distributions related to the first quarter of 2022 on redeemed Series B Preferred Units. The remaining distribution of $17.2 million related to the first quarter of 2022 was paid on May 13, 2022.

Series B Preferred Units Taxable Income

For tax purposes, holders of Series B Preferred Units are allocated items of gross income from ENLK in respect of each Series B Preferred Unit until the cumulative amount of gross income so allocated equals the cumulative amount of distributions made in respect of such Series B Preferred Unit, but not in excess of such Series B Preferred Unit’s pro rata share of the net income of ENLK for the allocation year (the “Allocation Cap”). As of June 30, 2023, due to the application of the Allocation Cap, the cumulative amount of distributions made in respect of each Series B Preferred Unit exceeded the cumulative amount of gross income allocated to each Series B Preferred Unit by $6.26 per Series B Preferred Unit (the “Catch-Up Taxable Income Allocation”). As a result, holders of Series B Preferred Units will ultimately be allocated taxable income during future periods equal to the Catch-Up Taxable Income Allocation plus the amount of distributions received in respect of Series B Preferred Units, if ENLK generates positive net income.
b.Series C Preferred Units

As of June 30, 2023 and December 31, 2022, there were 376,500 and 381,000 Series C Preferred Units issued and outstanding, respectively.

Repurchase

In February 2023, we repurchased 4,500 Series C Preferred Units for total consideration of $3.9 million. The repurchase price represented 87% of the preferred units’ par value.

Distributions

Income is allocated to the Series C Preferred Units in an amount equal to the earned distribution for the respective reporting period. A summary of the distribution activity relating to the Series C Preferred Units during the six months ended June 30, 2023 and 2022 is provided below:
Declaration period (1)Distribution rate (2)Cash distribution (in millions)Date paid/payable
2023
December 15, 2022 – March 14, 20238.846 %$8.4 March 15, 2023
March 15, 2023 – June 14, 20239.051 %$8.7 June 15, 2023
June 15, 2023 – September 14, 20239.618 %$9.3 September 15, 2023
2022
December 15, 2021 – June 14, 20226.000 %$12.0 June 15, 2022
June 15, 2022 – December 14, 20226.000 %$12.0 December 15, 2022
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(1)Distributions on the Series C Preferred Units accrued and were cumulative from the date of original issue and payable semi-annually in arrears on the 15th day of June and December of each year through and including December 15, 2022 and, thereafter, accrue quarterly in arrears on the 15th day of March, June, September, and December of each year, in each case, if and when declared by the General Partner out of legally available funds for such purpose.
(2)The initial distribution rate for the Series C Preferred Units from the date of original issue through December 14, 2022 was 6.0% per year. Starting on December 15, 2022, distributions on the Series C Preferred Units accumulate for each distribution period at a percentage of the $1,000 liquidation preference per unit equal to the floating rate of the three-month LIBOR plus a spread of 4.11%. Beginning with the interest period starting on September 15, 2023, distributions on the Series C Preferred Units will accumulate at a forward-looking term rate based on SOFR (“Term SOFR”), plus a Term SOFR spread adjustment of 0.26161%, plus a spread of 4.11%.