Calumet Specialty Products Partners, L.P. Completes Conversion to a C-Corporation
Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) announced the completion of its conversion from a master partnership (MLP) to a C-, now named Calumet, Inc.
Unitholders approved the change on July 9, 2024, and each of the 80,388,555 common units was exchanged for one share of the new common stock. Additionally, New Calumet issued 5,500,000 new shares and 2,000,000 warrants to buy shares at $20 each.
The new common stock will begin trading on Nasdaq on July 11, 2024, retaining the ticker symbol 'CLMT'.
This transition is expected to broaden Calumet's shareholder base by allowing institutional investors and passive indices, who previously could not invest in MLPs, to participate.
- Completed conversion from MLP to C-
- Broader potential shareholder base due to structure change.
- 5,500,000 new shares issued.
- 2,000,000 warrants issued at $20 per share.
- Stock will commence trading on Nasdaq on July 11, 2024.
- Elimination of 1,640,583 GP units.
The conversion of Calumet Specialty Products Partners from a Master Limited Partnership (MLP) to a C-Corporation is a significant development for investors. A C-Corporation structure is more attractive to institutional investors and passive indices that typically avoid MLPs due to regulatory constraints and tax implications. By converting, Calumet broadens its potential investor base, increasing liquidity and potentially reducing capital costs.
For retail investors, this shift can result in more stable growth prospects as institutional investments often provide stability due to their long-term investment horizons. Additionally, being listed as a C-Corp on Nasdaq could lead to inclusion in indices, driving further demand for the stock. This move may align Calumet with peers that have similar structures, potentially making financial comparisons easier and more transparent.
However, investors should also consider potential downsides. C-Corporations are subject to double taxation—corporate income is taxed and shareholders also pay taxes on dividends. This could impact the net returns for shareholders compared to an MLP structure where the tax burden is typically lower. Furthermore, while the broader investor base is a positive, it will take time for the market to fully digest this change and short-term volatility is possible.
The strategic move by Calumet to convert to a C-Corporation suggests a calculated effort to appeal to a broader spectrum of investors. Given that passive indices alone often hold around 20% to 30% of C-Corporations in the industry, this transition opens a significant pool of capital that was previously untapped. This could lead to increased demand for Calumet's stock, potentially driving up the share price over time.
Moreover, C-Corporations are generally perceived as more stable entities with better governance structures, which might enhance investor confidence. This could be particularly beneficial for Calumet as it navigates its focus on specialty products and renewable businesses. The alignment with market norms and investor expectations could position Calumet favorably against competitors, securing a stronger foothold in the market.
On the other hand, the issuance of 5.5 million new shares and 2 million warrants could dilute existing shareholders' equity in the short term. Investors need to weigh this dilution against the potential for increased share price and dividend stability in the long run. Understanding the balance between immediate impacts and future benefits will be important for making informed investment decisions.
Common Stock of Calumet, Inc. to Commence Trading on Nasdaq on Thursday, July 11
The 80,388,555 common units of the Partnership that were outstanding immediately before the Conversion were each exchanged for one share of common stock, par value
"The completion of the conversion to a C-Corporation is a major strategic milestone in the Calumet transformation," said Todd Borgmann, CEO. "This conversion is expected to meaningfully increase Calumet's shareholder base as many institutional investors and passive indices who were not able to invest in MLPs can now participate in Calumet at an exciting and pivotal time. Passive indices alone typically own
About Calumet
Calumet manufactures, formulates, and markets a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. Calumet is headquartered in
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Certain statements and information in this press release may constitute "forward-looking statements." The words "will," "may," "intend," "believe," "expect," "outlook," "forecast," "anticipate," "estimate," "continue," "plan," "should," "could," "would," or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. The statements discussed in this press release that are not purely historical data are forward-looking statements, including, but not limited to, statements regarding the expected future growth of the reorganized company, and plans and objectives of management for future operations. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause our actual results to differ materially from our historical experience and our present expectations. For additional information regarding known material risks, uncertainties and other factors that can affect future results, please see our filings with the Securities and Exchange Commission, including our latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
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SOURCE Calumet Specialty Products Partners, L.P.
FAQ
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