Magellan Midstream Partners, L.P. (NYSE: MMP) and Magellan Midstream Holdings, L.P. (NYSE: MGG) recently announced that a majority of the ownership of each partnership has approved the proposed capital structure simplification and related matters.
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At separate special unitholder meetings, approximately 52% of MMP, or 35 million MMP units, and 59% of MGG, or 37 million MGG units, voted in favor of the simplification and related matters. In both meetings, at least 97% of the votes submitted were in favor of the simplification. "Unitholder approval of the simplification is an important event in Magellan's history that sets the stage for capturing additional growth opportunities for our partnership," said Don Wellendorf, president and chief executive officer. "As a result of the unitholder votes, Magellan Midstream will become the only investment-grade master limited partnership with no incentive distribution rights, which we believe will help facilitate our future growth." As a result of the simplification, Magellan Midstream will have just one publicly traded partnership, MMP, going forward. The simplification is expected to provide a larger float, or average numbers of units traded daily, for investors. Because the incentive distribution rights are eliminated as part of the simplification, the partnership's cost of equity capital will be reduced, allowing the partnership to be more competitive for future growth opportunities. In addition, the simplification preserves MMP's strong balance sheet and liquidity because the simplification is accomplished entirely with MMP equity. As previously announced, MGG common units will discontinue trading on the New York Stock Exchange at the close of business today. The simplification is expected to close on Sept. 30, 2009, resulting in MGG investors receiving 0.6325 MMP units for each MGG unit held on that date. Cash will be paid to MGG unitholders in lieu of fractional units that would have resulted from the simplification. MMP's management team will continue in their respective roles. Additionally, three independent members of the board of directors of MGG's general partner, Walter Arnheim, Robert Croyle and James Kempner, will join the board of directors of MMP's general partner. More details of the simplification can be found in the joint proxy statement/prospectus dated July 21, 2009, which was previously mailed to MMP and MGG unitholders and can be found at magellanlp.com.
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