(Deficit) Equity

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

(Deficit) Equity

(Deficit) Equity

General Partner and IDR Restructuring

Prior to April 1, 2020, our capital accounts were comprised of a 2% general partner interest and 98% limited partner interests. On April 1, 2020, in connection with the April 2020 Transaction, we closed on the transactions contemplated by the Partnership Interests Restructuring Agreement, pursuant to which we eliminated all of the IDRs and converted the 2% economic general partner interest in the Partnership into a non-economic general partner interest. As a result, 4,761,012 general partner units and the IDRs were canceled and are no longer outstanding, and therefore, no longer participate in distributions of cash from the Partnership. Because the transaction was among entities under common control, our general partner’s negative equity balance of $4 billion at April 1, 2020 was transferred to SPLC’s equity accounts, allocated between its holdings of common units and preferred units, based on the relative fair value of the common units and preferred units issued as consideration in the April 2020 Transaction.

Shelf Registrations

We have a universal shelf registration statement on Form S-3 on file with the SEC under which we, as a well-known seasoned issuer, have the ability to issue and sell an indeterminate amount of common units and partnership securities representing limited partner units.

Units Outstanding

The changes in the number of units outstanding from December 31, 2019 through December 31, 2021 are as follows:

 

(in units)	SPLC Preferred	Public Common	SPLC Common	General Partner
Balance as of December 31, 2019	—	123,832,233	109,457,304	4,761,012
April 2020 Acquisition	50,782,904	—	160,000,000	(4,761,012)
Balance as of December 31, 2020	50,782,904	123,832,233	269,457,304	—
2021 activities	—	—	—	—
Balance as of December 31, 2021	50,782,904	123,832,233	269,457,304	—

Common units

The common units represent limited partner interests in us. The holders of common units, both public and SPLC, are entitled to participate in partnership distributions and have limited rights of ownership as provided for under the Second Amended and Restated Partnership Agreement.

As of both December 31, 2021 and 2020, we had 393,289,537 common units outstanding, of which 123,832,233 were publicly owned. SPLC owned 269,457,304 common units representing an aggregate 68.5% limited partner interest in us.

Series A Preferred Units

As of both December 31, 2021 and 2020, we had 50,782,904 preferred units outstanding. On April 1, 2020, as partial consideration for the April 2020 Transaction, we issued 50,782,904 Series A Preferred Units to SPLC at a price of $23.63 per preferred unit. The Series A Preferred Units rank senior to all common units with respect to distribution rights and rights upon liquidation. The Series A Preferred Units have voting rights, distribution rights and certain redemption rights, and are also convertible (at the option of the Partnership and at the option of the holder, in each case under certain circumstances) and are otherwise subject to the terms and conditions as set forth in the Second Amended and Restated Partnership Agreement. We classified the Series A Preferred Units as permanent equity since they are not redeemable for cash or other assets 1) at a fixed or determinable price on a fixed or determinable date; 2) at the option of the holder; or 3) upon the occurrence of an event that is not solely within the control of the issuer.

Conversion

At the option of Series A Preferred Unitholders. Beginning with the earlier of (1) January 1, 2022 and (2) immediately prior to the liquidation of the Partnership, the Series A Preferred Units are convertible by the preferred unitholders, at the preferred unitholders’ option, into common units on a one-for-one basis, adjusted to give effect to any accrued and unpaid distributions on the applicable preferred units.

At the option of the Partnership. The Partnership shall have the right to convert the Series A Preferred Units on a one-for-one basis, adjusted to give effect to any accrued and unpaid distributions on the applicable Series A Preferred Units, into common units at any time from and after January 1, 2023, if the closing price of the common units is greater than $33.082 per unit (140% of the Series A Preferred Unit Issue Price (as defined in the Second Amended and Restated Partnership Agreement)) for at least 20 trading days (whether or not consecutive) in a period of 30 consecutive trading days, including the last trading day of such 30 trading day period, ending on and including the trading day immediately preceding the date on which the Partnership sends notice to the holders of Series A Preferred Units of its election to convert such Series A Preferred Units. The conversion rate for the Series A Preferred Units shall be the quotient of (a) the sum of (i) $23.63, plus (ii) any unpaid cash distributions on the applicable Series A Preferred Units, divided by (b) $23.63.

Voting

The Series A Preferred Units are entitled to vote on an as-converted basis with the common units and have certain other class voting rights with respect to any amendment to the Second Amended and Restated Partnership Agreement. In the event of any liquidation of the Partnership, the Series A Preferred Units are entitled to receive, out of the assets of the Partnership available for distribution to the partners or any assignees, prior and in preference to any distribution of any assets of any junior securities, the value in each holder’s capital account in respect of such Series A Preferred Units.

Change of Control

Upon the occurrence of certain events involving a change of control in which more than 90% of the consideration payable to the holders of the common units is payable in cash, the Series A Preferred Units will automatically convert into common units at the then-applicable conversion rate. Upon the occurrence of certain other events involving a change of control, the holders of the Series A Preferred Units may elect, among other potential elections, to convert the Series A Preferred Units to common units at the then-applicable conversion rate.

Special Distribution

Each Series A Preferred Unit has the right to share in any special distributions by the Partnership of cash, securities or other property pro rata with the common units or any other securities, on an as-converted basis, provided that special distributions shall not include regular quarterly distributions paid in the normal course of business on the common units.

Distributions to our Unitholders

In connection with the April 2020 Transaction, commencing with the quarter ending June 30, 2020, the holders of the Series A Preferred Units are entitled to cumulative quarterly distributions at a rate of $0.2363 per Series A Preferred Unit, payable quarterly in arrears no later than 60 days after the end of the applicable quarter. The Partnership will not be entitled to pay any distributions on any junior securities, including any of the common units, prior to paying the quarterly distribution payable to the Series A Preferred Units, including any previously accrued and unpaid distributions. For the year ended December 31, 2021, the aggregate and per unit amounts of cumulative preferred distributions paid were $48 million and $0.9452, respectively. For the year ended December 31, 2020, the aggregate and per unit amounts of cumulative preferred distributions paid were $36 million and $0.7089, respectively.

Under the Second Amended and Restated Partnership Agreement, our general partner or its assignee has agreed to waive a portion of the distributions that would otherwise be payable on the common units issued to SPLC as part of the April 2020 Transaction, in an amount of $20 million per quarter for four consecutive fiscal quarters, beginning with the distribution made with respect to the second quarter of 2020 and ending with the distribution made with respect to the first quarter of 2021. See Note 4 — Related Party Transactions for terms of the Second Amended and Restated Partnership Agreement.

Under the Second Amendment, our general partner elected to waive $50 million of distributions with respect to the IDRs in 2019 to be used for future investment by the Partnership. See Note 4 — Related Party Transactions for terms of the Second Amendment.

The following table details the distributions declared and/or paid for the periods presented:

 

Date Paid or to be Paid	Three Months Ended	Public Common		SPLC Preferred		SPLC Common		General Partner						Distributions per Limited Partner Unit
								IDRs		2%		Total
		(in millions, except per unit amounts)
February 14, 2019	December 31, 2018	$	49	$	—	$	40	$	37	$	3	$	129	$	0.40000
May 15, 2019	March 31, 2019 (1)	51		—		42		23		3		119		0.41500
August 14, 2019	June 30, 2019 (1)	53		—		47		28		3		131		0.43000
November 14, 2019	September 30, 2019 (1)	56		—		48		33		3		140		0.44500
February 14, 2020	December 31, 2019	57		—		50		52		3		162		0.46000
May 15, 2020	March 31, 2020	57		—		50		52 (3)		3 (4)		162		0.46000
August 14, 2020	June 30, 2020 (2)	57		12		104		—		—		173		0.46000
November 13, 2020	September 30, 2020 (2)	57		12		104		—		—		173		0.46000
February 12, 2021	December 31, 2020 (2)	57		12		104		—		—		173		0.46000
May 14, 2021	March 31, 2021(2)	57		12		104		—		—		173		0.46000
August 13, 2021	June 30, 2021	37		12		81		—		—		130		0.30000
November 12, 2021	September 30, 2021	37		12		81		—		—		130		0.30000
February 11, 2022	December 31, 2021 (5)	37		12		81		—		—		130		0.30000

(1) Includes the impact of waived distributions to the holders of IDRs with respect to the Second Amendment as described above.

(2) Includes the impact of waived distributions to SPLC with respect to the April 2020 Transaction as described above.

(3) This amount represents the Final IDR Payment (as defined in the Partnership Interests Restructuring Agreement) to which our general partner (or its assignee) was entitled pursuant to the Partnership Interests Restructuring Agreement. Also pursuant to the Partnership Interests Restructuring Agreement, our general partner agreed (on its own behalf and on behalf of its assignees) to waive any distributions that it would otherwise be entitled to receive with respect to the newly-issued 160 million common units that it received in the April 2020 Transaction for the quarter in which it receives the Final IDR Payment. Our general partner is not entitled to any further payments with respect to the IDRs, as they were cancelled as a part of the April 2020 Transaction.

(4) This amount represents the final distribution payment on the 2% economic general partner interest. Our general partner is not entitled to any further payments with respect to the economic general partner interest, as it was converted into a non-economic general partner interest as a part of the April 2020 Transaction.

(5) See Note 16 — Subsequent Event(s) for additional information.

Distributions to Noncontrolling Interests

Beginning with the third quarter of 2021, there is no distribution to SPLC for its noncontrolling interest in Zydeco as a result of the May 2021 Transaction. Refer to Note 3 — Acquisitions and Other Transactions for additional information. Distributions to SPLC for its noncontrolling interest in Zydeco were less than $1 million in 2021, and were $5 million and $4 million in 2020 and 2019, respectively.

Distributions to GEL for its noncontrolling interest in Odyssey were $11 million, $11 million and $13 million in 2021, 2020 and 2019, respectively.

See Note 4 — Related Party Transactions for additional details.