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Section 1: 8-K (FORM 8-K)

Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Earliest Event Reported: September 26, 2017

 

 

WESTLAKE CHEMICAL PARTNERS LP

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36567   32-0436529

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

2801 Post Oak Boulevard, Suite 600

Houston, Texas 77056

(Address of principal executive offices)

Registrant’s telephone number, including area code (713) 585-2900

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 7.01 Regulation FD Disclosure.

On September 26, 2017, Westlake Chemical Partners LP (the “Partnership”) issued a press release announcing the signing of the Equity Purchase Agreement (as defined below). A copy of the press release is furnished with this Current Report as Exhibit 99.1. Further, on September 26, 2017, the Partnership issued a press release announcing its commencement of a public offering of its common units representing limited partner interests in the Partnership and an investor presentation related to such offering. A copy of such press release and investor presentation are furnished with this Current Report as Exhibits 99.2 and 99.3, respectively.

The information furnished pursuant to this Current Report, including Exhibits 99.1, 99.2 and 99.3, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any filing by the Partnership under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless specifically identified as being incorporated therein.

 

Item 8.01 Other Events.

Equity Purchase Agreement

On September 26, 2017, the Partnership entered into an equity purchase agreement (the “Equity Purchase Agreement”) with Westlake Chemical OpCo LP (“OpCo”) and a subsidiary of Westlake Chemical Corporation (“Westlake”), whereby the Partnership agreed to purchase an additional 5.0% limited partner interest in OpCo for approximately $229.2 million (the “OpCo Equity Purchase”), which the Partnership expects to partially fund using the net proceeds from the Partnership’s offering of common units and borrowings under the Partnership’s revolving credit facility. OpCo expects to use the proceeds from the OpCo Equity Purchase to repay borrowings under its intercompany debt agreements with Westlake. The OpCo Equity Purchase is conditioned upon the successful completion of the Partnership’s offering of common units and is expected to close on or about September 29, 2017.

The terms of the OpCo Equity Purchase were approved by the board of directors of the Partnership’s general partner and by the conflicts committee of the board of directors of the Partnership’s general partner, which consists entirely of independent directors. The conflicts committee engaged an independent financial advisor and independent legal counsel in its review of the OpCo Equity Purchase.

The foregoing description of the Equity Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Equity Purchase Agreement, which is attached hereto as Exhibit 2.1 and incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits:

 

Exhibit

No.

  

Document

  2.1    Equity Purchase Agreement by and among Westlake Chemical Partners LP, Westlake Chemical OpCo LP and WPT LLC, dated as of September 26, 2017.
99.1    Press release, dated September 26, 2017, issued by Westlake Chemical Partners LP.
99.2    Press release, dated September 26, 2017, issued by Westlake Chemical Partners LP.
99.3    Investor Presentation dated September 26, 2017.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: September 26, 2017    
    WESTLAKE CHEMICAL PARTNERS LP
    By: Westlake Chemical Partners GP LLC, its general partner
    By:  

/s/ Albert Chao

      Albert Chao
      President and Chief Executive Officer

 

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Section 2: EX-2.1 (EX-2.1)

EX-2.1

Exhibit 2.1

EQUITY PURCHASE AGREEMENT

BY AND AMONG

WESTLAKE CHEMICAL PARTNERS LP

WESTLAKE CHEMICAL OPCO LP

AND

WPT LLC

DATED AS OF SEPTEMBER 26, 2017


EQUITY PURCHASE AGREEMENT

This Equity Purchase Agreement (this “Agreement”) is entered into and dated as of September 26, 2017 (the “Execution Date”), by and among Westlake Chemical Partners LP, a Delaware limited partnership (the “Partnership”), Westlake Chemical OpCo LP, a Delaware limited partnership (“OpCo”), and WPT LLC, a Delaware limited liability company (“Westlake”). Each of the above named entities may be referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, the Partnership owns a 13.2764% limited partner interest in OpCo and a 100% membership interest in Westlake Chemical OpCo GP LLC, a Delaware limited liability company (“OpCo GP”), the general partner of OpCo;

WHEREAS, the Partnership and OpCo desire for OpCo to issue to the Partnership an additional 5.0% limited partner interest in OpCo on a fully diluted basis after giving effect to such issuance (the “New Interest”), resulting in the Partnership holding an aggregate 18.2764% limited partner interest in OpCo on a fully diluted basis after giving effect to such issuance and, in exchange, for OpCo to receive $229,206,842 (the “Consideration”) (such transaction, the “Purchase Transaction”);

WHEREAS, OpCo has not declared or paid a distribution with respect to the quarter ending September 30, 2017, and the Partnership will be entitled to receive distributions from OpCo pursuant to the OpCo LPA (as defined below) based on such increased limited partner interest in OpCo following the Closing (as defined below);

WHEREAS, Westlake believes it is in its best interest to enter into this Agreement with the Partnership and OpCo;

WHEREAS, as a condition and inducement to the willingness of the Partnership to enter into this Agreement, the Partnership has required that Westlake enter into this Agreement and make certain representations and warranties, and Westlake desires to enter into this Agreement and make the following representations and warranties to induce the Partnership to enter into this Agreement; and

WHEREAS, the Conflicts Committee (as defined below) has (i) received an opinion of Jefferies LLC (“Jefferies”), the financial advisor to the Conflicts Committee, that the Consideration paid by the Partnership in exchange for the New Interest is fair to the Partnership from a financial point of view, (ii) found this Agreement and the transactions contemplated hereby, including the Purchase Transaction, to be in the best interest of the Partnership and its unaffiliated common unitholders and (iii) approved this Agreement and the transactions contemplated hereby.

 

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NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS

The following defined terms will have the meaning given below:

Agreement” has the meaning provided such term in the Preamble above.

Affiliate” means, as to any specified entity, any other entity that, directly or indirectly through one or more intermediaries or otherwise, controls, is controlled by or is under common control with the specified entity. For purposes of this definition, “control” of an entity means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such entity, whether by contract or otherwise. Notwithstanding anything herein to the contrary, for the purposes of this Agreement, the Partnership and its subsidiaries (including OpCo) shall not be deemed to be “Affiliates” of Westlake and Westlake’s other Affiliates and the Partnership and OpCo shall not be deemed to be “Affiliates” of each other.

Asserted Liability” has the meaning set forth in Section 6.5(a).

Business Days” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the U.S. or the State of Texas shall not be regarded as a Business Day.

Claim” means any demand, claim, action, investigation or Proceeding.

Claims Notice” has the meaning set forth in Section 6.5(a).

Closing” has the meaning set forth in Section 2.2(a).

Closing Date” has the meaning set forth in Section 2.2(a).

Conflicts Committee” has the meaning provided such term in the First Amended and Restated Agreement of Limited Partnership of the Partnership dated as of August 4, 2014.

Consideration” has the meaning set forth in the Recitals of this Agreement.

Contract” means any legally binding agreement, commitment, lease, license or contract.

Cross Receipt” means a cross receipt acknowledging the receipt by the Parties of the documents and deliverables required to be delivered pursuant to Section 2.2 of this Agreement.

Effective Date” means July 1, 2017.

Equity Financing” has the meaning set forth in Section 4.3.

Execution Date” has the meaning set forth in the Recitals of this Agreement.

Fundamental Representations” has the meaning set forth in Section 6.1.

 

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Governmental Authority” means any federal, state, municipal, local or similar governmental authority, regulatory or administrative agency, court or arbitral body.

Jefferies” has the meaning set forth in the Recitals of this Agreement.

Law” means any applicable law, rule, regulation, ordinance, order, judgment or decree of a Governmental Authority.

Lien” means, with respect to any property or asset, any mortgage, pledge, charge, security interest or other encumbrance of any kind in respect of such property or asset.

Loss” means any and all judgments, losses, liabilities, amounts paid in settlement, damages, fines, penalties, deficiencies, expenses (including interest, court costs, reasonable fees of attorneys, accountants and other experts or other reasonable expenses of litigation or other Proceedings or of any Claim, default or assessment); provided, however, that any claim for Loss under the indemnities in Article VI (a) shall be reduced by any payment (including payments on account of insurance) actually received from a third party or otherwise actually recovered from third parties and (b) shall be net of any associated net benefits actually realized and arising in connection with such Loss, including any associated net tax benefits described in Section 6.7.

New Interest” has the meaning set forth in the Recitals of this Agreement.

OpCo” has the meaning set forth in the Preamble above.

OpCo LPA” means the Amended and Restated Agreement of Limited Partnership of OpCo dated as of August 4, 2014.

OpCo GP” has the meaning set forth in the Recitals of this Agreement.

OpCo Warranty Breach” has the meaning set forth in Section 6.2(a).

Organizational Documents” means any charter, certificate of incorporation, certificate of formation, articles of association, bylaws, partnership agreement, operating agreement or similar formation or governing documents and instruments.

Party” or “Parties” has the meaning provided such term in the Preamble above.

Partnership” has the meaning provided such term in the Preamble above.

Partnership Warranty Breach” has the meaning provided such term in Section 6.3(a).

Person” means any natural person, corporation, general partnership, limited partnership, limited liability company, unlimited liability corporation, proprietorship, other business organization, trust, union, association or Governmental Authority.

Proceeding” means any complaint, lawsuit, action, suit or other proceeding at Law or in equity or order or ruling, in each case by or before any Governmental Authority or arbitral tribunal.

 

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Purchase Transaction” has the meaning set forth in the Recitals of this Agreement.

Qualifying Claim” has the meaning set forth in Section 6.4(a).

Transaction Documents” means this Agreement and such other agreements, documents or instruments as are reasonably required to be delivered by the Partnership or OpCo at or prior to the date hereof pursuant to this Agreement or otherwise reasonably required hereby or contemplated in connection herewith.

Warranty Breach” means any Partnership Warranty Breach, OpCo Warranty Breach or Westlake Warranty Breach.

Westlake” has the meaning provided such term in the Preamble above.

Westlake Warranty Breach” has the meaning set forth in Section 6.2(b).

ARTICLE II

PURCHASE

Section 2.1    The Purchase Transaction. At the Closing, OpCo shall issue to the Partnership, and the Partnership shall accept from OpCo, effective as of the Effective Date, the New Interest, free and clear of any Liens other than transfer restrictions imposed thereon by securities Laws or the OpCo LPA, and in exchange for the issuance of the New Interest by OpCo, the Partnership shall pay on the Closing Date to OpCo the Consideration.

Section 2.2    The Closing.

(a)    The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Vinson & Elkins L.L.P., 1001 Fannin, Suite 2500, Houston, Texas 77002, commencing at 10:00 a.m. (Houston, Texas time) on the third (3rd) Business Day following the date hereof (the “Closing Date”), on which all conditions to the obligations of the Parties to consummate the transactions contemplated hereby shall have been satisfied or waived (other than conditions that will be satisfied by actions the Parties shall take at the Closing itself), or such other date as the Parties may mutually determine.

(b)    At the Closing, the Partnership will deliver the following documents and deliverables:

(i)    the Consideration by wire transfer of immediately available funds to an account specified by OpCo;

(ii)    a counterpart of the Cross Receipt, duly executed by the Partnership; and

(iii)    the certificate contemplated by Section 5.2(d); and

(iv)    such other certificates, instruments of conveyance and documents as may be reasonably requested by a Party prior to the Closing Date to carry out the intent and purposes of this Agreement.

 

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(c)    At the Closing, OpCo will deliver the following documents and deliverables:

(i)    a counterpart of the Cross Receipt, duly executed by OpCo;

(ii)    a copy of the consent from each of the limited partners of OpCo authorizing the issuance of the New Interest effective as of the Effective Date;

(iii)    the certificate contemplated by Section 5.1(e); and

(iv)    such other certificates, instruments of conveyance and documents as may be reasonably requested by a Party prior to the Closing Date to carry out the intent and purposes of this Agreement.

(d)    At the Closing, Westlake will deliver the following documents and deliverables:

(i)    the certificates contemplated by Section 5.1(f) and Section 5.2(e); and

(ii)    such other certificates, instruments of conveyance and documents as may be reasonably requested by a Party prior to the Closing Date to carry out the intent and purposes of this Agreement.

ARTICLE III

REPRESENTATION AND WARRANTIES

Section 3.1    Representations and Warranties Relating to the Partnership

The Partnership hereby represents and warrants as follows:

(a)    Organization. It is a limited partnership duly organized, validly existing and in good standing under the Laws of the State of Delaware.

(b)    Authorization; Enforceability. It has all requisite limited partnership power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is or will be a party, to consummate the Purchase Transaction contemplated hereby and thereby and to perform all obligations to be performed by it hereunder and thereunder. The execution and delivery of this Agreement and the other Transaction Documents to which it is or will be a party and the consummation of the Purchase Transaction have been duly and validly authorized and approved by all requisite limited partnership action, on its part, and no other partnership proceeding on its part is necessary to authorize this Agreement, the other Transaction Documents to which it is or will be a party, or the transactions contemplated hereby and thereby. This Agreement and the other Transaction Documents to which it is as of the date hereof, or will be a party on the Closing Date, is or will be, as applicable, duly and validly executed and delivered by it, and this Agreement and the other Transaction Documents to which it is as of the date hereof, or will be a party on the Closing Date, is or will, as applicable, constitute the valid and binding obligations of it, enforceable against it in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

 

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(c)    No Conflict. The execution, delivery and performance of this Agreement and the other Transaction Documents to which it is or will be a party by it and the consummation of the transactions contemplated hereby and thereby by it do not and shall not:

(i)    violate any Law applicable to the Partnership or any filing with, consent, approval or authorization of, or notice to, any Person or Governmental Authority;

(ii)    violate the Organizational Documents of the Partnership; or

(iii)    in such a way that it would have a material adverse effect on the Partnership (A) breach, or result in the termination of, any Contract to which the Partnership is a party, (B) result in the creation of any Lien upon any of the properties or assets of the Partnership or (C) constitute an event which, after notice or lapse of time or both, would result in any such breach, termination or creation of a Lien.

(d)    No Litigation. There is no suit, action, Claim, arbitration, administrative or legal or other proceeding or governmental investigation pending or, to the Partnership’s knowledge, threatened against the Partnership that would prevent or delay the consummation of the transactions contemplated by this Agreement or the ownership of the New Interest by the Partnership following the Closing Date.

(e)    Brokers. Except for the fees and expenses of Jefferies incurred in connection with the Purchase Transaction, which will be paid by the Partnership, neither the Partnership nor any of its Affiliates has incurred any liability, contingent or otherwise, for any brokerage fee, commission or financial advisory fee in connection with the transactions contemplated by this Agreement for which OpCo or Westlake or any of their respective Affiliates will be liable.

(f)    Disclaimer of Warranties. Except as expressly set forth in this Section 3.1, the Partnership makes no representations or warranties whatsoever and disclaims all liability and responsibility for any other representation, warranty, statement or information made or communicated (orally or in writing), including, without limitation, any opinion, information or advice that may have been provided by any officer, shareholder, director, employee, agent or consultant of the Partnership, or its Affiliates.

Section 3.2    Representations and Warranties Relating to OpCo

OpCo hereby represents and warrants as follows:

(a)    Organization. It is a limited partnership duly organized, validly existing and in good standing under the Laws of the State of Delaware. It is duly licensed or qualified in each jurisdiction in which the ownership or operation of its assets or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified would not reasonably be expected to have a material adverse effect on OpCo.

(b)    Authorization; Enforceability. It has all requisite limited partnership power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is or will be a party, to consummate the Purchase Transaction and to perform all obligations to be performed by it hereunder and thereunder. The execution and delivery of this Agreement and the

 

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other Transaction Documents to which it is or will be a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized and approved by all requisite limited partnership action, on its part, and no other partnership proceeding on its part is necessary to authorize this Agreement, the other Transaction Documents to which it is or will be a party, or the transactions contemplated hereby and thereby. This Agreement and the other Transaction Documents to which it is as of the date hereof, or will be a party on the Closing Date, is or will be, as applicable, duly and validly executed and delivered by it, and this Agreement and the other Transaction Documents to which it is as of the date hereof, or will be a party on the Closing Date, is or will, as applicable, constitute the valid and binding obligations of it, enforceable against it in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

(c)    Capitalization.

(i)    As of the date of this Agreement but prior to giving effect to the Purchase Transaction, there are no outstanding equity interests in OpCo other than the interests listed on Schedule I of the OpCo LPA. All of the outstanding partnership interests in OpCo are duly authorized, validly issued, fully paid (to the extent required by the OpCo LPA) and nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware Revised Uniform Limited Partnership Act), and were issued free of preemptive rights in compliance with applicable Laws.

(ii)    Upon receipt of the deliverables on the Closing Date pursuant to Section 2.2 of this Agreement, as of the Effective Date, the New Interest will be duly authorized, validly issued, fully paid and nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware Revised Uniform Limited Partnership Act) and will not have been issued in violation of any purchase option, call option, right of first refusal, preemptive right or other similar right.

(iii)    Upon the consummation of the transactions contemplated by this Agreement, the Partnership will acquire good and valid title to the New Interest, free and clear of any Liens other than transfer restrictions imposed thereon by securities Laws or arising under the OpCo LPA.

(iv)    There are no voting agreements, proxies or other similar agreements or understandings with respect to the New Interest.

(v)    There are no outstanding options, warrants, rights or other securities convertible into or exchangeable or exercisable for partner interests of OpCo issued or granted by OpCo, any other commitments or agreements to which OpCo is a party providing for the issuance by it of additional partner interests or the repurchase or redemption by it of partner interests, and there are no agreements of any kind which may obligate OpCo to issue, purchase, redeem or otherwise acquire any of its partnership interests, except as are provided in the OpCo LPA.

 

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(d)    No Conflict. The execution, delivery and performance of this Agreement and the other Transaction Documents to which it is or will be a party by it and the consummation of the transactions contemplated hereby and thereby do not and shall not:

(i)    violate any Law applicable to OpCo or any filing with, consent, approval or authorization of, or notice to, any Person or Governmental Authority;

(ii)    violate the Organizational Documents of OpCo; or

(iii)    in such a way that it would have a material adverse effect on OpCo (A) breach, or result in the termination of, any Contract to which OpCo is a party, (B) result in the creation of any Lien upon any of the properties or assets of OpCo or (C) constitute an event which, after notice or lapse of time or both, would result in any such breach, termination or creation of a Lien.

(e)    No Litigation. There is no suit, action, Claim, arbitration, administrative or legal or other proceeding or governmental investigation pending or, to OpCo’s knowledge, threatened against OpCo affecting the ownership of the New Interest or that would prevent or delay the consummation of the transactions contemplated by this Agreement.

(f)    Brokers. Neither OpCo nor any of its Affiliates has incurred any liability, contingent or otherwise, for any brokerage fee, commission or financial advisory fee in connection with the transactions contemplated by this Agreement for which the Partnership or Westlake or any of their respective Affiliates will be liable.

(g)    Information. The projections and budgets provided to the Conflicts Committee (including those provided to Jefferies in its capacity as financial advisor to the Conflicts Committee) as part of the Conflicts Committee’s review in connection with this Agreement have a reasonable basis and are consistent with OpCo’s current expectations. The other financial and operational information provided to Jefferies as part of its review of the proposed transaction for the Conflicts Committee is derived from and is consistent with OpCo’s books and records. To the best of OpCo’s knowledge, OpCo has not intentionally withheld disclosure from the Conflicts Committee of any fact that would have a material adverse effect upon OpCo or the New Interest.

(h)    Disclaimer of Warranties. Except as expressly set forth in this Section 3.2, OpCo makes no representations or warranties whatsoever and disclaims all liability and responsibility for any other representation, warranty, statement or information made or communicated (orally or in writing), including, without limitation, any opinion, information or advice that may have been provided by any officer, shareholder, director, employee, agent or consultant of OpCo, or its Affiliates.

Section 3.3    Representations and Warranties Relating to Westlake

Westlake hereby represents and warrants as follows:

(a)    Organization. It is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware.

 

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(b)    Authorization; Enforceability. It has all requisite limited liability company power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is or will be a party, to consummate the Purchase Transaction and to perform all obligations to be performed by it hereunder and thereunder. The execution and delivery of this Agreement and the other Transaction Documents to which it is or will be a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized and approved by all requisite limited liability company action, on its part, and no other company proceeding on its part is necessary to authorize this Agreement, the other Transaction Documents to which it is or will be a party, or the transactions contemplated hereby and thereby. This Agreement and the other Transaction Documents to which it is as of the date hereof, or will be a party on the Closing Date, is or will be, as applicable, duly and validly executed and delivered by it, and this Agreement and the other Transaction Documents to which it is as of the date hereof, or will be a party on the Closing Date, is or will, as applicable, constitute the valid and binding obligations of it, enforceable against it in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

(c)    No Conflict. The execution, delivery and performance of this Agreement and the other Transaction Documents to which it is or will be a party by it and the consummation of the transactions contemplated hereby and thereby do not and shall not:

(i)    violate any Law applicable to Westlake or any filing with, consent, approval or authorization of, or notice to, any Person or Governmental Authority;

(ii)    violate the Organizational Documents of Westlake; or

(iii)    in such a way that it would have a material adverse effect on Westlake (A) breach, or result in the termination of, any Contract to which Westlake is a party, (B) result in the creation of any Lien upon any of the properties or assets of Westlake or (C) constitute an event which, after notice or lapse of time or both, would result in any such breach, termination or creation of a Lien.

(d)    Organization of OpCo. OpCo is a Delaware limited partnership formed on May 6, 2014. To the knowledge of Westlake, OpCo is duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to conduct business in each jurisdiction where the nature of its business or the ownership of its properties requires it to be qualified. The Partnership is not in breach or default under the terms of the OpCo LPA.

(e)    No Litigation. There is no suit, action, Claim, arbitration, administrative or legal or other proceeding or governmental investigation pending or, to Westlake’s knowledge, threatened against Westlake affecting the ownership of the New Interest or that would prevent or delay the consummation of the transactions contemplated by this Agreement.

(f)    Brokers. Neither Westlake nor any of its Affiliates has incurred any liability, contingent or otherwise, for any brokerage fee, commission or financial advisory fee in connection with the transactions contemplated by this Agreement for which the Partnership or OpCo or any of their respective Affiliates will be liable.

 

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(g)    Disclaimer of Warranties. Except as expressly set forth in this Section 3.3, Westlake makes no representations or warranties whatsoever and disclaims all liability and responsibility for any other representation, warranty, statement or information made or communicated (orally or in writing), including, without limitation, any opinion, information or advice that may have been provided by any officer, shareholder, director, employee, agent or consultant of Westlake, or its Affiliates.

ARTICLE IV

COVENANTS

Section 4.1    Conduct of Business. From the date of this Agreement through the Closing, except: (a) as contemplated by this Agreement, including Section 4.3 hereof, or (2) as consented to by Westlake in writing, the Partnership shall cause OpCo not to:

(a)    amend its Organizational Documents;

(b)    liquidate, dissolve, recapitalize or otherwise wind up its business;

(c)    sell, assign, transfer, lease or otherwise dispose of any material assets other than in the ordinary course of business;

(d)    adopt any profit sharing, compensation, savings, insurance, pension, retirement or other benefit plan or hire any employees;

(e)    terminate or close any facility, business or operation of OpCo except in the ordinary course of business;

(f)    settle or compromise any Proceeding;

(g)    take any action that would cause the representations and warranties related to OpCo to cease to be true and correct in all material respects; or

(h)    agree, whether in writing or otherwise, to do any of the foregoing.

Section 4.2    Third Party Approvals

(a)    The Partnership shall (and shall cause OpCo to) use reasonable efforts to obtain all material consents and approvals of third parties that the Partnership or OpCo are required to obtain in order to consummate the transactions contemplated hereby.

(b)    Westlake shall (and shall cause its Affiliates (other than the Partnership and OpCo) to) use reasonable efforts to obtain all material consents and approvals of third parties that Westlake or any of its Affiliates (other than the Partnership and OpCo) are required to obtain in order to consummate the transactions contemplated hereby.

 

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Section 4.3    Financing. Prior to Closing, the Partnership shall take reasonable steps to obtain not less than $75.0 million of gross proceeds in an underwritten public offering of common units representing limited partner interests in the Partnership, which proceeds shall be used to fund all or a portion of the Consideration, the ultimate consummation of which shall be in the Partnership’s sole discretion (the “Equity Financing”).

ARTICLE V

CONDITIONS TO OBLIGATIONS

Section 5.1    Conditions to the Partnership’s Obligations. The obligation of the Partnership to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions, any one or more of which may be waived in writing by the Partnership (with the approval of the Conflicts Committee):

(a)    all necessary filings with and consents, approvals, licenses, permits, and orders of any Governmental Authority required by Law for the consummation of the transactions contemplated in this Agreement shall have been made and obtained (or any applicable waiting period shall have expired), other than those that do not or would not reasonably be expected, in the aggregate, to have a material adverse effect on OpCo or the Partnership;

(b)    (i) the Fundamental Representations of OpCo set forth in Section 3.2(a), Section 3.2(b), Section 3.2(c), and Section 3.2(d)(i) and (ii) shall be true and correct in all respects as of the date of this Agreement and as of the Closing, as if made at and as of that time (other than such representations and warranties that expressly address matters only as of a certain date, which need only be true as of such certain date) and (ii) all other representations and warranties of OpCo contained in this Agreement shall be true and correct in all material respects (disregarding all qualifications as to materiality and material adverse effect and qualifications of similar import contained therein) as of the date of this Agreement and as of the Closing, as if made at and as of that time (other than such representations and warranties that expressly address matters only as of a certain date, which need only be true as of such certain date);

(c)    (i) the Fundamental Representations of Westlake set forth in Section 3.3(a) and Section 3.3(b) shall be true and correct in all respects as of the date of this Agreement and as of the Closing, as if made at and as of that time (other than such representations and warranties that expressly address matters only as of a certain date, which need only be true as of such certain date) and (ii) all other representations and warranties of Westlake contained in this Agreement shall be true and correct in all material respects (disregarding all qualifications as to materiality and material adverse effect and qualifications of similar import contained therein) as of the date of this Agreement and as of the Closing, as if made at and as of that time (other than such representations and warranties that expressly address matters only as of a certain date, which need only be true as of such certain date);

(d)    (i) OpCo shall have performed or complied in all material respects with all of the covenants and agreements required by this Agreement to be performed or complied with by it at or before the Closing and (ii) Westlake shall have performed or complied in all material respects with all of the covenants and agreements required by this Agreement to be performed or complied with by it at or before the Closing;

 

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(e)    OpCo shall have delivered a certificate dated the Closing Date, certifying that the conditions specified in Section 5.1(b) and Section 5.1(d)(i) have been fulfilled;

(f)    Westlake shall have delivered a certificate dated the Closing Date, certifying that the conditions specified in Section 5.1(c) and Section 5.1(d)(ii) have been fulfilled;

(g)    no statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction, judgment or other order shall have been enacted, entered, promulgated, enforced or issued by any Governmental Authority, or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect, and no investigation, action or proceeding before a Governmental Authority shall have been instituted or threatened challenging or seeking to restrain or prohibit the transactions contemplated hereby;

(h)    OpCo and Westlake shall have delivered or caused to be delivered the Closing deliverables set forth in Section 2.2(c) and Section 2.2(d); and

(i)    the Partnership shall have consummated the Equity Financing.

Section 5.2    Conditions to OpCo’s Obligations. The obligations of OpCo to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions, any one or more of which may be waived in writing by OpCo and Westlake:

(a)    all necessary filings with and consents, approvals, permits, and orders of any Governmental Authority required by Law for the consummation of the transactions contemplated in this Agreement shall have been made and obtained (or any applicable waiting period shall have expired), other than those that would not reasonably be expected, in the aggregate, to have a material adverse effect on OpCo or the Partnership;

(b)    (i) the Fundamental Representations of the Partnership set forth in Section 3.1(a) and Section 3.1(b) shall be true and correct in all respects as of the date of this Agreement and as of the Closing, as if made at and as of that time (other than such representations and warranties that expressly address matters only as of a certain date, which need only be true as of such certain date) and (ii) all other representations and warranties of the Partnership contained in this Agreement shall be true and correct in all material respects (disregarding all qualifications as to materiality and material adverse effect and qualifications of similar import contained therein) as of the date of this Agreement and as of the Closing, as if made at and as of that time (other than such representations and warranties that expressly address matters only as of a certain date, which need only be true as of such certain date);

(c)    The Partnership shall have performed or complied in all material respects with all of the covenants and agreements required by this Agreement to be performed or complied with by the Partnership on or before the Closing;

(d)    the Partnership shall have delivered a certificate, dated the Closing Date, certifying that the conditions specified in Section 5.2(b) and Section 5.2(c) have been fulfilled;

 

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(e)    (i) the conditions specified in Section 5.1(c) and Section 5.1(d)(ii) have been fulfilled and (ii) Westlake shall have delivered a certificate dated the Closing Date, certifying that the conditions specified in Section 5.1(c) and Section 5.1(d)(ii) have been fulfilled;

(f)    no statute, rule, regulation, executive order, decree, temporary restraining order, preliminary or permanent injunction, judgment or other order shall have been enacted, entered, promulgated, enforced or issued by any Governmental Authority, or other legal restraint or prohibition preventing the consummation of the transactions contemplated hereby shall be in effect, and no investigation, action or proceeding before a court or any other governmental agency or body shall have been instituted or threatened challenging or seeking to restrain or prohibit the consummation of the transactions contemplated by this Agreement; and

(g)    the Partnership shall have delivered or caused to be delivered the Closing deliverables set forth in Section 2.2(b).

ARTICLE VI

LIMITATIONS ON LIABILITY AND WAIVER

Section 6.1    Survival of Representations, Warranties and Agreements. The representations and warranties of the Partnership, OpCo and Westlake set forth in this Agreement and the right of an indemnified Person to assert any claim for indemnification related thereto pursuant to this Article VI shall survive the Closing Date until the first anniversary of the Closing Date, after which date no Claims for indemnification may be asserted, regardless of when such right arose; provided that the representations and warranties set forth in (a) Section 3.1(a), Section 3.1(b), Section 3.2(a), Section 3.2(b), Section 3.2(c), Section 3.2(d)(i) and (ii), Section 3.2(g), Section 3.3(a) and Section 3.3(b) (the “Fundamental Representations”) shall survive the Closing Date indefinitely, and (b) Section 3.1(e), Section 3.2(f) and Section 3.3(f) shall survive the Closing Date until 30 days following the expiration of the applicable statute of limitations, including any extension thereof, with respect to the particular matter that is the subject matter thereof. The covenants and agreements of the Parties contained in this Agreement shall survive the Closing Date in accordance with their terms; provided that the right of any Party to make a claim for breach of any covenant of a Party that is to be performed or satisfied at or before the Closing Date shall survive until the first anniversary of the Closing Date.

Section 6.2    Indemnification of the Partnership by Westlake. Subject to the limitations on recourse and recovery set forth in this Article VI, from and after the Closing Date, Westlake will indemnify, defend, and hold harmless the Partnership and its Affiliates from and against any and all Losses imposed upon or incurred after the Closing Date in connection with, arising out of or resulting from:

(a)    the inaccuracy or breach of any representation or warranty made by OpCo in Section 3.2 (each such inaccuracy or breach, an “OpCo Warranty Breach”);

(b)    the inaccuracy or breach of any representation or warranty made by Westlake in Section 3.3 (each such inaccuracy or breach, a “Westlake Warranty Breach”); and

(c)    any nonfulfillment or breach by OpCo or Westlake of any covenant or agreement made by OpCo or Westlake under this Agreement;

 

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provided that for the purposes of determining Losses under subsections (a) and (b) above and determining whether or not any OpCo Warranty Breach or Westlake Warranty Breach has occurred, any qualification or exception contained therein relating to materiality (including material adverse effect) shall be disregarded.

Section 6.3    Indemnification of Westlake by the Partnership. Subject to the limitations on recourse and recovery set forth in this Article VI, from and after the Closing Date, the Partnership will indemnify, defend, and hold harmless Westlake and its Affiliates from and against any and all Losses imposed upon or incurred after the Closing Date in connection with, arising out of or resulting from:

(a)    the inaccuracy or breach of any representation or warranty made by the Partnership in Section 3.1 (each such inaccuracy or breach, a “Partnership Warranty Breach”); and

(b)    any nonfulfillment or breach by the Partnership of any covenant or agreement made by the Partnership under this Agreement;

provided that for the purposes of determining Losses under subsection (a) above and determining whether or not any Partnership Warranty Breach has occurred, any qualification or exception contained therein relating to materiality (including material adverse effect) shall be disregarded.

Section 6.4    Limitations.

(a)    No indemnified Person shall be entitled to any indemnification for any Claim relating to any Warranty Breach that is subject to indemnification under Section 6.2(a), Section 6.2(b) or 6.3(a) for any individual Claim in which the Losses attributable thereto are less than $50,000 (any Claim exceeding such threshold being referred to herein as a “Qualifying Claim”).

(b)    There shall be no obligation under this Agreement to indemnify any indemnified Person for Losses pursuant to Section 6.2(a), Section 6.2(b) or Section 6.3(a) until the aggregate amount of all indemnifiable Losses suffered by such indemnified Person in respect of Qualifying Claims exceeds an amount equal to $2,292,068 and then only to the extent of such excess, subject to the other limitations on recovery and recourse set forth in this Agreement.

(c)    The aggregate liability for Westlake under Section 6.2(a) and Section 6.2(b) and the Partnership under Section 6.3 will be limited to $34,381,026.

(d)    No indemnifying Person shall be liable for any Losses that are subject to indemnification under Section 6.2 or Section 6.3 unless a written demand for indemnification under this Agreement is delivered by the indemnified Person to the indemnifying Person with respect thereto prior to 5:00 P.M. on the final date pursuant to Section 6.1, to assert a Claim for indemnification on the basis asserted in such written demand. Notwithstanding the foregoing, any Claim for indemnification under this Agreement that is brought prior to such time will survive until such matter is resolved.

 

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(e)    Notwithstanding anything contained to the contrary contained herein, the limitations set forth in this Section 6.4 shall not apply to damages arising out of or related to any breach of any Fundamental Representation.

(f)    Notwithstanding anything to the contrary contained in this Agreement, under no circumstances shall any Party be entitled to double recovery under this Agreement.

Section 6.5    Claims Procedure.

(a)    Promptly after receipt by any indemnified Person of notice of the commencement or assertion of any Claim or Proceeding by a third party or circumstances which, with the lapse of time, such indemnified Person believes is likely to give rise to a Claim or Proceeding by a third party or of facts causing any indemnified Person to believe it has a Claim for breach hereunder (an “Asserted Liability”), such indemnified Person shall give prompt written notice thereof (the “Claims Notice”) to the relevant indemnifying Person, provided that in any event, such indemnified Person shall give the Claims Notice to the indemnifying Person no later than 30 days after becoming aware of such Asserted Liability. So long as the Claims Notice is given within the applicable survival period set forth in Section 6.1, the failure to so notify the indemnifying Person shall not relieve the indemnifying Person of its obligations or liability hereunder, except to the extent such failure shall have actually prejudiced the indemnifying Person. The Claims Notice shall describe the Asserted Liability in reasonable detail, and shall indicate the amount (estimated, if necessary) of the Loss that has been or may be suffered. The indemnified Person and the indemnifying Person agree to keep each other reasonably appraised of any additional information concerning any Asserted Liability.

(b)    As to an Asserted Liability arising from a third-party action, the indemnifying Person shall be, subject to the limitations set forth in this Section 6.5, entitled to assume control of and appoint lead counsel for such defense only for so long as it conducts such defense with reasonable diligence. The indemnifying Person shall keep the indemnified Persons advised of the status of such third-party action and the defense thereof on a reasonably current basis and shall consider in good faith the recommendations made by the indemnified Persons with respect thereto. If the indemnifying Person assumes the control of the defense of any third-party action in accordance with the provisions of this Section 6.5, the indemnified Person shall be entitled to participate in the defense of any such third-party action and to employ, at its expense, separate counsel of its choice for such purpose, it being understood, however, that the indemnifying Person shall continue to control such defense; provided that notwithstanding the foregoing, the indemnifying Person shall pay the reasonable costs and expenses of such defense (including reasonable attorneys’ fees and expenses) of the indemnified Persons if (x) the indemnified Person’s outside counsel shall have reasonably concluded and advised in writing (with a copy to the indemnifying Person) that there are defenses available to such indemnified Person that are different from or additional to those available to the indemnifying Person, or (y) the indemnified Person’s outside counsel shall have advised in writing (with a copy to the indemnifying Person) the indemnified Person that there is a conflict of interest that would make it inappropriate under applicable standards of professional conduct to have common counsel for the indemnifying Person and the indemnified Person. Notwithstanding the foregoing, (i) the indemnifying Person shall obtain the prior written consent of the indemnified Person before entering into any settlement, compromise, admission or acknowledgement of the validity of such Asserted

 

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Liability if the settlement requires an admission of guilt or wrongdoing on the party of the indemnified Person, subjects the indemnified Person to criminal liability or does not unconditionally release the indemnified Person from all liabilities and obligations with respect to such Asserted Liability or the settlement imposes injunctive or other equitable relief against, or any continuing obligation or payment requirement on, the indemnified Person and (ii) the indemnified Person shall be entitled to participate, at its own cost and expense, in the defense of such Asserted Liability and to employ separate counsel of its choice for such purpose.

(c)    Each Party shall cooperate in the defense or prosecution of any Asserted Liability arising from a third-party action and shall furnish or cause to be furnished such records, information and testimony (subject to any applicable confidentiality agreement), and attend such conferences, discovery proceedings, hearings, trials or appeals as may be reasonably requested in connection therewith.

Section 6.6     Sole Remedy. Other than for instances of actual fraud, the Parties hereby agree that from and after the Execution Date no Party shall have any liability, and neither Party nor any of their respective Affiliates shall make any Claim, for any Loss or any other matter, under, relating to or arising out of this Agreement (including breach of representation, warranty, covenant or agreement) or any other Contract or other matter delivered pursuant hereto, or the transactions contemplated hereby, whether based on contract, tort, strict liability, other Laws or otherwise, except for a claim for indemnification pursuant to this Article VI.

Section 6.7     Determination of Amount of Damages; Mitigation. The Losses giving rise to any indemnification obligation hereunder shall be limited to the Losses suffered by the indemnified Person and shall be reduced by any insurance proceeds or other payment or monetary recoupment received or that are realized or retained (including the amount of any tax benefits, net of any tax detriments, actually realized or retained) by the indemnified Person as a result of the events giving rise to the claim for indemnification. Any indemnified Person that becomes aware of Losses for which it intends to seek indemnification hereunder shall use commercially reasonable efforts to collect any amounts to which it may be entitled under insurance policies or from third parties (pursuant to indemnification agreements or otherwise) and shall use commercially reasonable efforts to mitigate such Losses; provided that the indemnified Person shall promptly notify (a) Westlake if such indemnified Person is the Partnership or (b) the Partnership if such indemnified Person is Westlake, in each case, of any efforts to mitigate. If any net tax benefit, third-party recovery or insurance recovery is realized after having previously received a Claim for indemnification proceeds hereunder, such Party shall promptly tender to the respective Party an amount equal to such tax benefit, third-party recovery or insurance recovery.

ARTICLE VII

MISCELLANEOUS

Section 7.1    Notices.

(a)    Unless this Agreement specifically requires otherwise, any notice, demand or request provided for in this Agreement, or served, given or made in connection with it, shall be in writing and shall be deemed properly served, given or made if delivered in person or sent by

 

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electronic delivery (including facsimile or delivery of a document in Portable Document Format), by registered or certified mail, postage prepaid or by a nationally recognized overnight courier service that provides a receipt of delivery, in each case, to the Parties at the addresses specified below:

If to the Partnership, to:

Westlake Chemical Partners LP

2801 Post Oak Boulevard, Suite 600

Houston, Texas 77056

Attn: L. Benjamin Ederington

Vice President, General Counsel and Secretary

Facsimile No.: 713-629-6239

With a copy to:

Westlake Chemical Partners GP LLC Conflicts Committee

2801 Post Oak Boulevard, Suite 600

Houston, Texas 77056

Attn: L. Benjamin Ederington

Vice President, General Counsel and Secretary

Facsimile No.: 713-629-6239

If to OpCo, to:

Westlake Chemical OpCo LP

2801 Post Oak Boulevard, Suite 600

Houston, Texas 77056

Attn: L. Benjamin Ederington

Vice President, General Counsel and Secretary

Facsimile No.: 713-629-6239

If to Westlake, to:

WPT LLC

2801 Post Oak Boulevard, Suite 600

Houston, Texas 77056

Attn: L. Benjamin Ederington

Vice President, General Counsel and Secretary of Westlake Chemical Investments, Inc.

Facsimile No.: 713-960-8761

(b)    Notice given by personal delivery, mail or overnight courier pursuant to this Section 7.1 shall be effective upon physical receipt. Notice given by facsimile or other electronic transmission pursuant to this Section 7.1 shall be effective as of the date of confirmed delivery if delivered before 5:00 P.M. Central Time on any Business Day at the place of receipt or the next succeeding Business Day if confirmed delivery is after 5:00 P.M. Central Time on any Business Day or during any non-Business Day at the place of receipt.

 

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Section 7.2    Expenses. Except as otherwise expressly provided in this Agreement each Party shall pay all costs and expenses it has incurred or will incur in anticipation of, relating to and in connection with the negotiation and execution of this Agreement and consummation of the transactions contemplated hereby.

Section 7.3    Further Assurances. In connection with this Agreement and all transactions contemplated by this Agreement, each Party agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

Section 7.4    Successors and Assigns. Neither Party may assign or otherwise transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the other Party, and any purported transfer in violation hereof shall be null and void. This Agreement shall be binding upon, and inure to the benefit of, permitted successors and assigns.

Section 7.5    No Third Party Rights. The provisions of this Agreement are enforceable solely by the Parties, and no third party (including any limited partner of the Partnership, except for Westlake) shall have the right, separate and apart from the Parties, to enforce any provision of this Agreement or to compel any Party to comply with the terms of this Agreement.

Section 7.6    Severability. If any provision of this Agreement shall be finally determined to be unenforceable, illegal or unlawful, such provision shall, so long as the economic and legal substance of the transactions contemplated hereby is not affected in any materially adverse manner as to any Party, be deemed severed from this Agreement and the remainder of this Agreement shall remain in full force and effect.

Section 7.7    Entire Agreement. This Agreement constitutes the entire agreement of the Parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein.

Section 7.8    Amendment or Modification. This Agreement may be amended or modified from time to time only by the written agreement of all the Parties. Each such instrument shall be reduced to writing and shall be designated on its face an “Amendment” or an “Addendum” to this Agreement.

Section 7.9    Construction. All Article and Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. All references herein to Articles and Sections shall, unless the context requires a different construction, be deemed to be references to the Articles and Sections of this Agreement. The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, and not to any particular provision of this Agreement. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word “including” following any general

 

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statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation,” “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter.

Section 7.10    Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if the Parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.

Section 7.11    Applicable Law and Jurisdiction. This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state. Each of the Parties hereby agrees: (i) to submit to the exclusive jurisdiction of any state or federal court sitting in Houston, Texas in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (ii) that all claims in respect of any such action or proceeding may be heard and determined in any such court, (iii) that such Party will not bring any action or proceeding arising out of or relating to this Agreement in any other court, and (iv) that such Party waives any defense of inconvenient forum to the maintenance of any such action or proceeding, and waives any bond, surety or other security that might be required of any other Party with respect to any such action or proceeding.

[Signature page follows.]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of the date first written above.

 

WESTLAKE CHEMICAL PARTNERS LP
By:   Westlake Chemical Partners GP LLC, its general partner
By:  

/s/ Albert Chao

  Name:   Albert Chao
  Title:   President and Chief Executive Officer
WESTLAKE CHEMICAL OPCO LP
By:   Westlake Chemical OpCo GP LLC, its general partner
By:  

/s/ M. Steven Bender

  Name:   M. Steven Bender
  Title:  

Senior Vice President, Chief

Financial Officer and Treasurer

WPT LLC
By:   Westlake Chemical Investments, Inc., its manager
By:  

/s/ L. Benjamin Ederington

  Name:   L. Benjamin Ederington
  Title:  

Vice President, General Counsel

and Secretary

 

Signature Page

Equity Purchase Agreement

(Back To Top)

Section 3: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

LOGO

For Further Information Contact:

Contact – 713.585.2900

Media Relations – L. Benjamin Ederington

Investor Relations – Steve Bender

Westlake Chemical Partners LP Acquires Additional Interest in Westlake Chemical OpCo

Houston, TX, September 26, 2017 - Westlake Chemical Partners LP (NYSE: WLKP) (the “Partnership”) today announced that it has agreed to acquire an additional 5.0% limited partner interest in Westlake Chemical OpCo LP (“OpCo”) for approximately $229.2 million. The transaction, which is expected to close in connection with the concurrently announced equity offering by the Partnership, is expected to be immediately accretive to the Partnership’s MLP distributable cash flow.

Consideration for the acquisition is expected to be funded with borrowings under the Partnership’s revolving credit agreement (the “MLP Revolver”) and proceeds from the concurrently announced equity offering by the Partnership. This transaction will increase the Partnership’s limited partner interest in OpCo from approximately 13.3% to approximately 18.3% and will represent the second purchase of additional interests in OpCo by the Partnership since its initial public offering. OpCo’s assets are comprised of three ethylene production facilities, which primarily convert ethane into ethylene and have an aggregate annual capacity of approximately 3.7 billion pounds, and a 200-mile ethylene pipeline. OpCo sells approximately 95% of its ethylene production to Westlake Chemical Corporation under a long-term supply agreement, which provides for a stable $0.10 margin per pound. OpCo intends to use the proceeds it receives in connection with this transaction to repay borrowings under its intercompany debt agreements with Westlake Chemical Corporation.

“This transaction demonstrates the sustainability of our strategy to achieve annualized low-double-digit growth in distributions,” said the Partnership’s President and Chief Executive Officer, Albert Chao. “OpCo is unique in the MLP universe given the long-term and stable nature of its key contracts and the structure of its business. The acquisition of this additional interest in OpCo, which provides a high-quality, stable, fee-based earnings stream, represents just one of a number of levers we can use to grow our distributions over time. In addition to purchasing increased interests in OpCo, the Partnership can pursue organic growth opportunities such as capacity expansions in OpCo’s ethylene production facilities and acquisitions of other qualified assets from third parties.”

The terms of the acquisition were approved by a Conflicts Committee, which is comprised entirely of independent directors of the board of directors of Westlake Chemical Partners GP LLC, the general partner of the Partnership. This committee was advised by Jefferies LLC as to financial matters and Akin Gump Strauss Hauer & Feld LLP as to legal matters.


Westlake Chemical Corporation’s legal counsel was Vinson & Elkins LLP.

The statements in this release that are not historical facts, but forward-looking statements, including the impact of the described acquisition on the Partnership’s cash available for distribution, availability of funds and the expectation of long-term distribution growth, could be adversely affected by, among other things, 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 or other 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 for the projections contained herein, please refer to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016.

Westlake Chemical Partners LP

Westlake Chemical Partners is a limited partnership formed by Westlake Chemical Corporation to operate, acquire and develop ethylene production facilities and other qualified assets. Headquartered in Houston, Texas, the Partnership, following the closing of the acquisition described above, is expected to own an approximately 18.3% limited partner interest in Westlake Chemical OpCo LP. Westlake Chemical OpCo LP’s assets consist of three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana and an ethylene pipeline.

 

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(Back To Top)

Section 4: EX-99.2 (EX-99.2)

EX-99.2

Exhibit 99.2

 

LOGO

For Further Information Contact:

Contact – 713.585.2900

Media Relations – L. Benjamin Ederington

Investor Relations – Steve Bender

Westlake Chemical Partners LP Announces Offering of Common Units

Houston, TX, September 26, 2017 - Westlake Chemical Partners LP (NYSE: WLKP) (the “Partnership”) announced the commencement of an underwritten public offering of 4,500,000 common units representing limited partner interests in the Partnership. In connection with the offering, the Partnership intends to grant the underwriter a 30-day option to purchase up to an additional 675,000 common units.

The Partnership intends to use the net proceeds from this offering, along with borrowings under its revolving credit facility, to fund its obligations under the concurrently announced acquisition of an additional limited partner interest in Westlake Chemical OpCo LP (“OpCo”), which will increase the Partnership’s limited partner interest in OpCo by 5.0% to approximately 18.3% (the “OpCo Equity Purchase”). Pending the use of proceeds for such purpose, or if the OpCo Purchase is not consummated for any reason, the Partnership intends to use the net proceeds from this offering for general partnership purposes. OpCo intends to use the proceeds it receives from the OpCo Equity Purchase to repay borrowings under its intercompany debt agreements with Westlake Chemical Corporation.

The common units are being offered and will be sold pursuant to an effective shelf registration statement that was previously filed with the Securities and Exchange Commission (“SEC”). This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such states. The offering is being made only by means of a prospectus and related prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

UBS Investment Bank, Citigroup, Barclays and BofA Merrill Lynch are acting as joint book-running managers for the offering. A copy of the preliminary prospectus supplement and accompanying base prospectus relating to the offering may be obtained for free by visiting EDGAR on the SEC website at www.sec.gov or by sending a request to:

 

UBS Securities LLC

1285 Avenue of the Americas

New York, NY 10019

Attention: Prospectus Dept.

Telephone: (888) 827-7275

 

Citigroup Global Markets Inc.

c/o Broadridge Financial Solutions

1155 Long Island Avenue

Edgewood, NY 11717

Telephone: (800) 831-9146


The statements in this release that are not historical facts, but forward-looking statements, including the consummation of the described acquisition and offering, could be adversely affected by to a variety of known and unknown risks, uncertainties and other factors that are difficult to predict and many of which are beyond management’s control. The Partnership’s expectations may or may not be realized or may be based upon assumptions or judgments that prove to be incorrect. For more detailed information about the factors that could cause actual results to differ materially for the projections contained herein, please refer to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016.

Westlake Chemical Partners LP

Westlake Chemical Partners is a limited partnership formed by Westlake Chemical Corporation to operate, acquire and develop ethylene production facilities and other qualified assets. Headquartered in Houston, Texas, the Partnership, following the closing of the acquisition described above, is expected to own an approximately 18.3% interest in Westlake Chemical OpCo LP. Westlake Chemical OpCo LP’s assets consist of three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana and an ethylene pipeline.

(Back To Top)

Section 5: EX-99.3 (EX-99.3)

EX-99.3

Slide 1

Investor Presentation September 2017 Westlake Chemical Partners LP Exhibit 99.3


Slide 2

Notices and Disclaimers This presentation contains certain forward-looking statements, including statements with respect to future growth, potential levers for distributable cash flow, growth for Westlake Chemical Partners and the timing and results of a scheduled debottleneck of ethylene cracking unit. Actual results may differ materially depending on factors such as general economic and business conditions; the cyclical nature of the chemical industry; the availability, cost and volatility of raw materials and energy; uncertainties associated with the United States, Europe and worldwide economies, including those due to political tensions in the Middle East, Ukraine and elsewhere; current and potential governmental regulatory actions in the United States and Europe and regulatory actions and political unrest in other countries; industry production capacity and operating rates; the supply/demand balance for our products; competitive products and pricing pressures; instability in the credit and financial markets; access to capital markets; terrorist acts; operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks); changes in laws or regulations; technological developments; our ability to implement our business strategies; creditworthiness of our customers; the results of potential negotiations between Westlake Chemical Corporation and Westlake Chemical Partners and other factors described in our reports filed with the Securities and Exchange Commission. Many of these factors are beyond our ability to control or predict. Any of these factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements. Every forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements. The acquisition by Westlake Chemical Partners of an additional limited partner interest in Westlake Chemical OpCo has received Westlake Chemical Partners board and conflicts committee approval, but has not closed and remains subject to customary closing conditions. Non-GAAP Financial Measures This presentation makes reference to certain “non-GAAP” financial measures, such as MLP distributable cash flow and EBITDA, as defined in Regulation G of the U.S. Securities Exchange Act of 1934, as amended. We report our financial results in accordance with U.S. generally accepted accounting principles ("GAAP"), but believe that certain non-GAAP financial measures, such as MLP distributable cash flow and EBITDA, provide useful supplemental information to investors regarding the underlying business trends and performance of our ongoing operations and are useful for period-over-period comparisons of such operations. These non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP. A reconciliation of MLP distributable cash flow and EBITDA to net income and net cash provided by operating activities can be found in the financial schedules at the end of this presentation. We define distributable cash flow as net income plus depreciation and amortization, less contributions from turnaround reserves and maintenance capital expenditures. We define MLP distributable cash flow as distributable cash flow less distributable cash flow attributable to Westlake Chemical Corporation's noncontrolling interest in OpCo and distributions attributable to incentive distribution rights holder. MLP distributable cash flow does not reflect changes in working capital balances. We define EBITDA as net income before interest expense, income taxes, depreciation and amortization. Because MLP distributable cash flow and EBITDA may be defined differently by other companies in our industry, our definition of MLP distributable cash flow and EBITDA may not be comparable to similarly titled measures of other companies. Notice to Recipients We have filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates (File No. 333-216617). Before you invest, you should read the prospectus in that registration statement and other documents we have filed with the SEC for more complete information about us and this offering. You may get these documents for free by visiting EDGAR on the SEC Website at www.sec.gov. Alternatively, we, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by contacting UBS Securities LLC, 1285 Avenue of the Americas, New York, New York 10019, Attention: Prospectus Dept., Telephone: (888) 827-7275. This presentation shall not be deemed an offer to sell or a solicitation of an offer to buy our securities in any jurisdiction in which such offer or solicitation is not permitted. The securities will be offered by means of a prospectus supplement and accompanying prospectus and only to such persons and in such jurisdictions as is permitted under applicable law. Available Information and Risk Factors We file annual, quarterly and current reports and other information with SEC. Our SEC filings are available to the public over the internet at our website, www.wlkpartners.com, and at the SEC’s website www.sec.gov. Our filings with the SEC contain important information which anyone considering the purchase of our limited partnership units should read. Our business faces many risks. We have described in our SEC filings some of the more material risks we face. There may be additional risks that we do not yet know or that we do not currently perceive to be material that may also impact our business. Each of the risks and uncertainties described in our SEC filings could lead to events or circumstances that may have a material adverse effect on our business, financial condition, results of operations or cash flows, including our ability to make distributions to our unitholders. Our common units are listed on the New York Stock Exchange under the trading symbol “WLKP.”


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Drop Down Overview and Rationale Westlake Chemical Partners LP is acquiring an additional 5.0% fully diluted interest in OpCo Purchase price of $229 million representing a multiple of approximately 10.5x on a trailing twelve months basis Transaction will be funded through equity offering as well as drawdown on intercompany revolver Still have over 81% of drop down inventory 18.3% Support Distribution Growth Drop down to support low double digit annual distribution growth targets in place since IPO in 2014 Increase in Stable Cash Flow to WLKP Drop down to drive an immediate increase in stable fee-based cash flows available to WLKP owing to the Ethylene Sales Agreement Ethylene Sales Agreement designed to provide stable margin on 95% of production, with 5% sold to third parties at market prices, which are currently higher Immediately Accretive Transaction The acquisition of the additional limited partner interest in OpCo is expected to be ~20% accretive to Westlake Partners' MLP distributable cash flow per unit Transaction Rationale Note: EBITDA and MLP distributable cash flow per unit represent non-GAAP financial measures; see appendix for reconciliation


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Westlake Chemical Partners has Performed Strongly Since IPO Westlake Chemical Partners LP has executed on its growth strategy, even during the IRS' regulatory proceeding and amidst the backdrop of challenging MLP markets (12.0% distribution per unit CAGR since IPO) With the final IRS regulations published in January 2017, uncertainty around WLKP's activities constituting qualifying income has been resolved First drop was executed in May 2015 at 11.0x EV/EBITDA This is our second drop down and first equity offering post-IPO Stable, fee-based cash flow model has resulted in strong performance despite the volatile commodity price backdrop 46% price outperformance relative to AMZ since IPO MLP distributable cash flow provided coverage of 1.11x the declared distributions for the second quarter of 2017 Fully consolidated leverage (pro forma for the dropdown) remains at approximately 1.0x Debt/TTM EBITDA as of June 30, 2017 Distribution per unit CAGR of 12.0% Note: Distribution per unit CAGR calculated based on distribution per unit growth from Q3 2014 ($0.275/unit) to Q2 2017 ($0.365/unit); Market data priced as of 9/21/2017


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Stable and Predictable Cash Flows Ethylene Sales Agreement designed to provide stable 10 cents per pound margin on 95% of ethylene volumes, with 5% sold to third parties at market prices Strategic Relationship with Westlake Fosters Operational Alignment Completed expansions, plus a multi-year drop down inventory of high-quality, well-maintained assets, will drive WLKP’s growth Westlake Chemical’s joint venture with Lotte Chemical to build a new 2.2 billion pound ethylene cracker is expected to be eligible to be contributed to the MLP in 2019 Strategically Located Assets with Long History of Reliable Operations Reliable, efficient assets located near ample feedstock supply with high historical utilization and operating rates exceeding North American industry average (according to IHS Markit estimates) Positive Industry Fundamentals Shale gas plays are providing low cost ethane. IHS Markit forecasts continued advantaged feedstock to benefit North American ethane-based ethylene crackers Key Investment Highlights The partnership, through its contract structure, provides a predictable and stable level of cash flows. The strategies for growth are aligned with the partnership’s parent company, Westlake Chemical Corporation ("WLK"). 1 2 3 4


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Overview Initial term through December 31, 2026 with an automatic annual renewal mechanism thereafter unless terminated by either party Requires WLK to purchase 95% of OpCo’s planned ethylene volume each year, with a maximum commitment of 3.8 billion pounds per year If OpCo’s actual volume is in excess of planned ethylene volume, WLK will have the option to purchase up to 95% of the excess Remaining 5% of ethylene will be sold to third parties at market prices Key Pricing Terms WLK’s purchase price of ethylene under the Ethylene Sales Agreement will be calculated on a per pound basis and includes: Actual price paid by OpCo for the feedstock and natural gas to process each pound of NGL into ethylene; plus Estimated operating costs (“Opex”) (including selling, general and administrative expenses) for the year and a 5-year average of future expected maintenance capital expenditures and other turnaround expenditures; less Proceeds received by OpCo from the sale of co-products associated with the processing of NGLs purchased by WLK; plus $0.10 per pound margin Price = Feedstock Cost + Opex + Maintenance & Turnaround Reserves – Co-Product Credits + $0.10 margin Key Investment Highlights Stable and Predictable Cash Flows Pricing Formula Designed to Provide Stable Fee-Based Cash Flows Ethylene Sales Agreement provides OpCo with stable cash flows on 95% of ethylene volumes OpCo unit margins designed to remain stable in all ethylene / polyethylene ("PE") margin environments OpCo margin Source: IHS Market, Company


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Westlake Chemical Corp (WLK) 100% ownership Key Investment Highlights Strategic Relationship with Westlake Fosters Operational Alignment Polyethylene Styrene Olefins Vinyls Westlake Chemical Partners LP (WLKP) 18.3% PF ownership 81.7% PF ownership Chlorine + EDC + VCM + PVC + Building Products Ethane based, cost-advantaged ethylene is the key feedstock to all WLK products WLK integrates its cost-advantaged ethylene with its downstream advantaged product mix, benefitting margins WLK depends on OpCo for its ethane based, cost-advantaged ethylene feedstock Public Investors Investors 55.3% PF ownership 44.7% PF ownership Westlake Chemical OpCo LP (OpCo) Ethylene Long term take or pay contract Key: WLK products: Note: Ownership percentages are pro forma for OpCo Equity Purchase and associated equity offering


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Lake Charles Olefins Two ethane-based processing facilities at Westlake’s Lake Charles, Louisiana complex Combined capacity of 3 billion pounds of ethylene per year Primarily consumed by Westlake in the production of chemicals including PE and PVC One ethane-based processing facility located in Calvert City, Kentucky, with a capacity of 730 million pounds of ethylene per year Primarily consumed by Westlake in the production of chemicals including PVC A 200-mile common carrier ethylene pipeline that runs from Mont Belvieu, Texas to the Longview, Texas chemical complex, which includes Westlake’s Longview PE production facility Calvert City Olefins Longview Pipeline Plant Location Annual Capacity (MMlbs) Feedstock Primary Use of Ethylene Lake Charles, LA Petro 1 1,500 ethane PE and PVC Lake Charles, LA Petro 2 1,490 ethane, ethane/propane mix, propane, butane or naphtha PE and PVC Calvert City, KY 730 ethane or propane PVC Key Investment Highlights Strategically Located Assets Ethylene Facility PE PVC Feedstock Hub WLK Off-take Facilities Eagle Ford Rockies Bakken Calvert City, KY Permian Lake Charles, LA Geismar, LA Marcellus / Utica Mont Belvieu, TX Longview, TX


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Key Investment Highlights Positive Industry Fundamentals Well positioned to take advantage of ethane and other NGLs: The shale oil & gas revolution has triggered an increase in infrastructure build over the last several years The continuing NGLs flowing from these basins will drive further pipeline and infrastructure expansion through 2018 and beyond Westlake ethylene plants are fully capable to use ethane and have some NGL flexibility Lake Charles ethylene plants are able to access ethane in basins and shale plays from Eagle Ford, Permian, Rockies, Marcellus and Utica Calvert City ethylene plant is now receiving ethane from the Marcellus and Utica basins Source: IHS Markit Westlake’s North American Ethylene Feedslate Capability 100% Ethane Capable Ethane Non-Ethane Feed World Ethylene Westlake 2016 Global Ethylene Volume by Feedstock 65% of the world’s ethylene is derived from higher priced naphtha-based feedstocks ROW Ethane 10% US Ethane 12% US Mixed NGLs and Naphtha 6% Middle East Mixed NGLs and Naphtha 6% ROW Naphtha 53% Middle East Ethane 13%


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Generate Stable, Fee-Based Cash Flow Ethylene Sales Agreement is designed to provide stable margin on 95% of ethylene produced, with 5% sold to third parties at market prices Focus on Operational Excellence Maximize the throughput of our processing facilities while providing safe, reliable and efficient operations Increase our Ownership of OpCo Increase our ownership interest in OpCo over time either by purchasing additional primary interests from OpCo or by purchasing outstanding interests in OpCo from WLK Purchased 2.7% of OpCo for $135 million in May 2015 Proposed 5.0% of OpCo for $229 million in September 2017, with substantial drop down capacity remaining Pursue Growth Opportunities Through Acquisitions Pursue acquisitions of complementary assets from third parties or WLK WLK is participating in a joint venture with Lotte Chemical to build a new 2.2 billion pound ethylene cracker Pursue Organic Growth Opportunities Enhance the profitability of OpCo’s existing assets by pursuing growth opportunities including capacity expansion projects Expanded Petro1 by approximately 250MM pounds of ethylene in 2016 Expanded Calvert City by approximately 100MM pounds of ethylene in 2017 Expand Margin Negotiate higher ethylene margin Westlake Chemical Partners LP Business Strategies For Stable Growth of Cash Flows


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Appendix


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Reconciliation of EBITDA to Net Income (000's of dollars) Q2 2017 Q1 2017 Q4 2016 Q3 2016 Net cash provided by operating activities $ 113,208 149,078 110,356 (7,907) Changes in operating assets and liabilities and other $ (26,630) (62,958) (16,820) 83,835 Deferred income tax expense $ (108) (92) 45 (69) Net income $ 86,470 86,028 93,581 75,859 Add: Depreciation and amortization $ 27,299 30,150 30,738 26,290 Interest expense $ 5,942 5,460 5,226 4,947 Provision for income taxes $ 297 303 145 194 EBITDA $ 120,008 121,941 129,690 107,290 Note: The above reconciliation is of EBTIDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.


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Reconciliation of MLP Distributable Cash Flow to Net Income (000's of dollars) Q2 2017 Q1 2017 Q4 2016 Q3 2016 Net cash provided by operating activities $ 113,208 149,078 110,356 (7,907) Changes in operating assets and liabilities and other $ (26,630) (62,958) (16,820) 83,835 Deferred income tax expense $ (108) (92) 45 (69) Net income $ 86,470 86,028 93,581 75,859 Add: Depreciation and amortization $ 27,299 30,150 30,738 26,290 Less: Contribution to turnaround reserves $ (7,624) (7,239) (6,051) (17,625) Maintenance capital expenditures $ (9,764) (8,490) (16,744) (21,747) Incentive distribution rights $ (323) (231) (142) (91) Distributable cash flow attributable to noncontrolling interest in OpCo $ (85,091) (88,771) (89,620) (55,853) MLP distributable cash flow $ 10,967 11,447 11,762 6,833 Limited partner units—public $ 4,722 4,591 4,463 4,338 Limited partner units—Westlake $ 5,155 5,012 4,872 4,735 Total Limited Partner distributions declared $ 9,877 9,603 9,335 9,073 Coverage ratio 1.11x 1.19x 1.26x 0.75x Note: The above reconciliation is of MLP distributable cash flow to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

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