On February 12, 2019, the board of directors of WCC directed the management of WCC to pursue a tender offer to purchase all of the outstanding Common Units not owned by WCC (the “Tender Offer”). WCC estimates that the total amount of cash required to complete the Tender Offer will be approximately $212,800, which consists of the cost to acquire all outstanding Common Units at the offer price of $0.01 per Common Unit should all unitholders tender their Common Units, and 30% of all transaction fees and expenses associated with the Tender Offer (pursuant to an agreement with WMLP to share all expenses related to the Tender Offer, with WCC being responsible for 30% of such expenses and WMLP being responsible for 70%). The Tender Offer is not conditioned upon any financing arrangements or contingencies.
Item 4. Purpose of Transaction
Item 4 of the Schedule 13D is hereby amended and supplemented with the following:
On October 9, 2018, WCC and certain of its affiliates, including WMLP, filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code.
As part of the Chapter 11 cases commended by WCC and WMLP, each of WCC, WMLP and their respective secured lender groups negotiated over a period of time regarding a comprehensive resolution of intercompany matters. As part of that comprehensive resolution, WCC agreed to make the Offer to holders of the Common Units.
On February 13, 2019, WCC commenced the Tender Offer. The primary purpose of the Tender Offer is to allow holders of Common Units to avoid or reduce potential allocations of taxable income and loss, including potentially substantial cancellation of debt income (“CODI”) within the meaning Section 61(a)(12) of the Internal Revenue Code of 1986, as amended (the “Code”), that could result from the resolution of WMLP’s bankruptcy process. Because WMLP is treated as a partnership for U.S. federal income tax purposes, all items of income, gain, loss, deduction and credit of WMLP are treated as items of income, gain, loss, deduction and credit allocated directly to WMLP’s unitholders and reported on such unitholders’ separate returns. As a result, holders of Common Units generally benefit from owning Common Units when there is income and profits at WMLP because such income and profits are not taxed at a corporate level and all of WMLP’s deductions are allocated directly to holders of Common Units, potentially offsetting any allocation of income. However, under distressed economic and business circumstances, and particularly in the case of a bankruptcy proceeding, holders of Common Units may be exposed to disadvantageous tax consequences through the ownership of Common Units in connection with the resolution of WMLP’s bankruptcy process.
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