HOUSTON--(BUSINESS WIRE)--Westlake Chemical Corporation (“Westlake”) (NYSE: WLK) and Westlake Chemical Partners LP (the “Partnership”) (NYSE: WLKP) today announced that the board of directors of Westlake Chemical Partners GP LLC, the general partner of the Partnership, and Westlake approved an amendment (the “Amendment”) to the Partnership’s partnership agreement, pursuant to which the target distribution thresholds above which the Partnership’s incentive distribution rights (IDRs) held by Westlake are entitled to receive the corresponding portion of distributions paid by the Partnership, have been increased as follows:
|First Target Distribution||$1.2938||100%||0%|
|Second Target Distribution||$1.4063||85%||15%|
|Third Target Distribution||$1.6875||75%||25%|
The Amendment was adopted in an effort to further strengthen the underlying value of the Partnership, improve its cost of capital, and enhance its long-term distribution growth prospects. The Amendment is immediately accretive to the Partnership’s cash flow per unit and coverage.
With or without IDRs, we expect over time Westlake will continue to receive the same cash flows from Westlake Chemical OpCo LP and the Partnership. The Amendment supports accretive drop-down transactions from Westlake to the Partnership and supports Westlake’s MLP strategy by continuing to keep the Partnership’s cost of capital competitive.
“We are pleased to announce Westlake’s ongoing support of the Partnership through the adoption of the Amendment. By resetting the IDR distribution tiers, Westlake is relieving the Partnership of the IDR cash flows for an extended period which improves the Partnership’s cost of capital and supports its ability to continue to make distributions in-line with its historical growth rates,” said Westlake’s President and Chief Executive Officer Albert Chao. “Whereas to Westlake, the reset enhances the Partnership as a source of advantaged equity capital to grow Westlake’s business, thus the reset of the IDR distribution tiers directly benefits both the Partnership and Westlake.”
The Amendment became effective on July 27, 2018, and will apply to all distributions starting with any distribution with respect to the second quarter of 2018.
The statements in this release and the related teleconference relating to matters that are not historical facts, such as distribution growth, our ability to complete drop-down and other acquisitions or accretive investments and the potential benefits to Westlake and the Partnership, are forward-looking statements. These forward-looking statements are subject to significant risks and uncertainties. Actual results could differ materially, based on factors including, but not limited to, operating difficulties; the volume of ethylene that we are able to sell; the price at which we are able to sell ethylene; changes in the price and availability of feedstocks; changes in prevailing economic conditions; actions of Westlake Chemical Corporation; actions of third parties; inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change; environmental hazards; changes in laws and regulations (or the interpretation thereof); inability to acquire or maintain necessary permits; inability to obtain necessary production equipment or replacement parts; technical difficulties or failures; labor disputes; difficulty collecting receivables; inability of our customers to take delivery; fires, explosions or other industrial accidents; our ability to borrow funds and access capital markets; and other risk factors. For more detailed information about the factors that could cause actual results to differ materially, please refer to the Partnership's Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the Securities and Exchange Commission in March 2018.
Westlake and the Partnership will host a conference call at 1:00 p.m. Eastern Time (12:00 p.m. Central Time) on Monday, July 30, 2018, to discuss the Amendment. Presentation slides will also be available on Westlake’s and the Partnership’s websites.
To access the conference call, dial (855) 760-8160, or (704) 288-0624 for international callers, approximately 10 minutes prior to the scheduled start time and reference passcode 6068415.
The conference call will also be available via webcast at https://edge.media-server.com/m6/p/7fe2uibu and the press release and presentation slides can be obtained via Westlake’s website at https://www.westlake.com/investor-relations and the Partnership’s website at http://investors.wlkpartners.com/CorporateProfile.
This call will be available for replay beginning at 3:00 p.m. Eastern Time and may be accessed until 11:59 p.m. Eastern Time on August 6, 2018. The replay can be accessed by calling the following numbers: domestic callers should dial (855) 859-2056 and international callers may access the replay at (404) 537-3406. The access code at both numbers is 6068415.
About Westlake Chemical Corporation
Westlake Chemical Corporation is an international manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston. The company's range of products includes: ethylene, polyethylene, styrene, propylene, chlor-alkali and derivative products, PVC suspension and specialty resins, PVC compounds, and PVC building products including siding, pipe, fittings and specialty components, windows, fence, deck and film. For more information, visit the company's Web site at www.westlake.com.
About Westlake Chemical Partners
Westlake Chemical Partners is a limited partnership formed by Westlake Chemical Corporation to operate, acquire and develop facilities for the processing of natural gas liquids as well as other qualifying activities. Headquartered in Houston, the Partnership owns a 18.3% interest in Westlake Chemical OpCo LP. Westlake Chemical OpCo LP’s assets include three facilities in Calvert City, Kentucky, and Lake Charles, Louisiana which process ethane and propane into ethylene, and an ethylene pipeline. For more information about Westlake Chemical Partners LP, please visit http://www.wlkpartners.com/.