LP IPO Spin-Off: K-Sea GP Holdings LP (KSP)

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K-Sea GP Holdings LP has filed to come public via an initial public offering this morning. It has filed to sell up to $100 million in LP units for filing purposes, although that number may change as it is a nominal amount for filing purposes.  The new LP will trade on the New York Stock Exchange and the proposed stock ticker has not yet been set.  Joint book runners are listed as Lehman Brothers and Citigroup.

This is a Delaware limited partnership that was just formed in December 2007, and its cash generating assets consist solely of partnership interests in K-Sea Transportation Partners L.P. (NYSE: KSP).  KSP provides marine transportation, distribution and logistics services for refined petroleum products that operates a fleet of 73 tank barges, 1 tanker and 59 tugboats serving oil companies, oil traders and refiners with about 4.3 million barrels of capacity.

At KSP’s current annualized cash distribution rate of $2.96 per common unit, or $0.74 per common unit per quarter, aggregate annual cash distributions to this news LP on the interests in KSP will be approximately $15.5 million, which represents some 35% of the total cash distributed by KSP.   That entitles the new LP to receive increasing percentages of its incremental cash distributed in excess of $0.55 per KSP limited partner unit in any quarter.

Jon C. Ogg
March 5, 2008