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Partners' Capital, Mezzanine Equity and Distributions | 12 Months Ended
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Dec. 31, 2021
Equity [Abstract] |
Partners' Capital, Mezzanine Equity and Distributions | Partners’ Capital, Mezzanine Equity and Distributions At December 31, 2021, our outstanding equity consisted of 122,539,221 Class A common units and 39,997 Class B common units. The Class A units are traditional common units in us. The Class B units are identical to the Class A units and, accordingly, have voting and distribution rights equivalent to those of the Class A units, and, in addition, the Class B units have the right to elect all of our board of directors and are convertible into Class A units under certain circumstances, subject to certain exceptions. At December 31, 2021, we had 25,336,778 Class A Convertible Preferred Units outstanding, which are discussed below in further detail. Distributions Generally, we will distribute 100% of our available cash (as defined by our partnership agreement) within 45 days after the end of each quarter to common unitholders of record. Available cash generally means, for each fiscal quarter, all cash on hand at the end of the quarter: •less the amount of cash reserves that our general partner determines in its reasonable discretion is necessary or appropriate to: •provide for the proper conduct of our business; •comply with applicable law, any of our debt instruments, or other agreements; or •provide funds for distributions to our common and preferred unitholders for any one or more of the next four quarters; •plus all cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings. Working capital borrowings are generally borrowings that are made under our senior secured credit facility and in all cases are used solely for working capital purposes or to pay distributions to partners. We paid the following cash distributions to common unitholders:
Distribution For |  | Date Paid |  | Per Unit Amount |  | Total Amount
2019 |  |  |  |  |  |
1 st Quarter |  | May 15, 2019 |  | $ | 0.5500 |  |  | $ | 67,419 |
2 nd Quarter |  | August 14, 2019 |  | $ | 0.5500 |  |  | $ | 67,419 |
3 rd Quarter |  | November 14, 2019 |  | $ | 0.5500 |  |  | $ | 67,419 |
4 th Quarter |  | February 14, 2020 |  | $ | 0.5500 |  |  | $ | 67,419 |
2020 |  |  |  |  |  |
1 st Quarter |  | May 15, 2020 |  | $ | 0.1500 |  |  | $ | 18,387 |
2 nd Quarter |  | August 14, 2020 |  | $ | 0.1500 |  |  | $ | 18,387 |
3 rd Quarter |  | November 13, 2020 |  | $ | 0.1500 |  |  | $ | 18,387 |
4 th Quarter |  | February 12, 2021 |  | $ | 0.1500 |  |  | $ | 18,387 |
2021 |  |  |  |  |  |
1 st Quarter |  | May 14, 2021 |  | $ | 0.1500 |  |  | $ | 18,387 |
2 nd Quarter |  | August 13, 2021 |  | $ | 0.1500 |  |  | $ | 18,387 |
3 rd Quarter |  | November 12, 2021 |  | $ | 0.1500 |  |  | $ | 18,387 |
4 th Quarter |  | February 14, 2022 |  | $ | 0.1500 |  |  | $ | 18,387 |
Equity Issuances and Contributions Our partnership agreement authorizes our general partner to cause us to issue additional limited partner interests and other equity securities, the proceeds from which could be used to provide additional funds for acquisitions or other needs. We did not issue any common units during the periods presented. Class A Convertible Preferred Units On September 1, 2017, we sold $750 million of Class A Convertible Preferred Units (our “Class A Convertible Preferred Units”) in a private placement, comprised of 22,249,494 units for a cash purchase price per unit of $33.71 (subject to certain adjustments, the “Issue Price”) to two initial purchasers. Our general partner executed an amendment to our partnership agreement in connection therewith, which, among other things, authorized and established the rights and preferences of our Class A Convertible Preferred Units. Our Class A Convertible Preferred Units rank senior to all of our currently outstanding classes or series of limited partner interests with respect to distribution and/or liquidation rights. Holders of our Class A Convertible Preferred Units vote on an as-converted basis with holders of our common units and have certain class voting rights, including with respect to any amendment to the partnership agreement that would adversely affect the rights, preferences or privileges, or otherwise modify the terms, of those Class A Convertible Preferred Units. Each of our Class A Convertible Preferred Units accumulate quarterly distribution amounts in arrears at an annual rate of 8.75% (or $2.9496), yielding a quarterly rate of 2.1875% (or $0.7374), subject to certain adjustments. We elected to pay all distributions from inception through March 1, 2019 with additional Class A Convertible Preferred Units. For the quarter ended March 31, 2019, we paid a portion of our distribution in cash, and a portion in Class A Convertible Preferred Units. For each quarter ending after March 1, 2019, we paid all distribution amounts in respect of our Class A Convertible Preferred Units in cash. From time to time after September 1, 2020, we will have the right to cause the conversion of all or a portion of outstanding Class A Convertible Preferred Units into our common units, subject to certain conditions; provided, however, that we will not be permitted to convert more than 7,416,498 of our Class A Convertible Preferred Units in any consecutive twelve-month period. At any time after September 1, 2020, if we have fewer than 592,768 of our Class A Convertible Preferred Units outstanding, we will have the right to convert each outstanding Class A Convertible Preferred Unit into our common units at a conversion rate equal to the greater of (i) the then-applicable conversion rate and (ii) the quotient of (a) the Issue Price and (b) 95% of the volume-weighted average price of our common units for the 30-trading day period ending prior to the date that we notify the holders of our outstanding Class A Convertible Preferred Units of such conversion. Upon certain events involving certain changes of control in which more than 90% of the consideration payable to the holders of our common units is payable in cash, our Class A Convertible Preferred Units will automatically convert into common units at a conversion ratio equal to the greater of (a) the then applicable conversion rate and (b) the quotient of (i) the product of (A) the sum of (1) the Issue Price and (2) any accrued and accumulated but unpaid distributions on our Class A Convertible Preferred Units, and (B) a premium factor (ranging from 115% to 101% depending on when such transaction occurs) plus a prorated portion of unpaid partial distributions, and (ii) the volume weighted average price of the common units for the 30 trading days prior to the execution of definitive documentation relating to such change of control. In connection with other change of control events that do not meet the 90% cash consideration threshold described above, each holder of our Class A Convertible Preferred Units may elect to (a) convert all of its Class A Convertible Preferred Units into our common units at the then applicable conversion rate, (b) if we are not the surviving entity (or if we are the surviving entity, but our common units will cease to be listed), require us to use commercially reasonable efforts to cause the surviving entity in any such transaction to issue a substantially equivalent security (or if we are unable to cause such substantially equivalent securities to be issued, to convert its Class A Convertible Preferred Units into common units in accordance with clause (a) above or exchanged in accordance with clause (d) below or convert at a specified conversion rate), (c) if we are the surviving entity, continue to hold our Class A Convertible Preferred Units or (d) require us to exchange our Class A Convertible Preferred Units for cash or, if we so elect, our common units valued at 95% of the volume-weighted average price of our common units for the 30 consecutive trading days ending on the fifth trading day immediately preceding the closing date of such change of control, at a price per unit equal to the sum of (i) the product of (x) 101% and (y) the Issue Price plus (ii) accrued and accumulated but unpaid distributions and (iii) a prorated portion of unpaid partial distributions. For a period of 30 days following (i) September 1, 2022 and (ii) each subsequent anniversary thereof, the holders of our Class A Convertible Preferred Units may make a one-time election to reset the quarterly distribution amount (a “Rate Reset Election”) to a cash amount per preferred unit equal to the amount that would be payable per quarter if a preferred unit accrued interest on the Issue Price at an annualized rate equal to three-month LIBOR plus 750 basis points; provided, however, that such reset rate shall be equal to 10.75% if (i) such alternative rate is higher than the LIBOR-based rate and (ii) the then market price for our common units is then less than 110% of the Issue Price. To become effective, the Rate Reset Election requires approval of holders of at least a majority of our then outstanding Class A Convertible Preferred Units and such majority must include each of our initial purchasers (or any affiliate to whom they have transferred their Class A Convertible Preferred Units) if such initial purchaser (including its affiliates) holds at least 25% of the then outstanding Class A Convertible Preferred Units. Upon the occurrence of a Rate Reset Election, we may redeem our Class A Convertible Preferred Units for cash, in whole or in part (subject to certain minimum value limitations) for an amount per preferred unit equal to such preferred unit’s liquidation value (equal to the Issue Price plus any accrued and accumulated but unpaid distributions, plus a prorated portion of certain unpaid partial distributions in respect of the immediately preceding quarter and the current quarter) multiplied by (i) 110%, prior to September 1, 2024, and (ii) 105% thereafter. Each holder of our Class A Convertible Preferred Units may elect to convert all or any portion of its Class A Convertible Preferred Units into common units initially on a one-for-one basis (subject to customary adjustments and an adjustment for accrued and accumulated but unpaid distributions and limitations) at any time after September 1, 2019 (or earlier upon a change of control, liquidation, dissolution or winding up), provided that any conversion is for at least $50 million or such lesser amount if such conversion relates to all of a holder’s remaining Class A Convertible Preferred Units or has otherwise been approved by us. If we fail to pay in full any preferred unit distribution amount after March 1, 2019 in respect of any two quarters, whether or not consecutive, then until we pay such distributions in full, we will not be permitted to (a) declare or make any distributions (subject to a limited exceptions for pro rata distributions on our Class A Convertible Preferred Units and parity securities), redemptions or repurchases of any of our limited partner interests that rank junior to or pari passu with our Class A Convertible Preferred Units with respect to rights upon distribution and/or liquidation (including our common units), or (b) issue any such junior or parity securities. If we fail to pay in full any preferred unit distribution after March 1, 2019 in respect of any two quarters, whether or not consecutive, then the preferred unit distribution amount will be reset to a cash amount per preferred unit equal to the amount that would be payable per quarter if a preferred unit accrued interest on the Issue Price at an annualized rate equal to the then-current annualized distribution rate plus 200 basis points until such default is cured. In addition to their right to veto a Rate Reset Election under certain circumstances, we have granted each initial purchaser (including its applicable affiliate transferees) certain rights, including (i) the right to appoint an observer, who shall have the right to attend our board meetings for so long as an initial purchaser (including its affiliates) owns at least $200 million of our Class A Convertible Preferred Units; (ii) the right to purchase up to 50% of any parity securities on substantially the same terms offered to other purchasers for so long as an initial purchaser (including its affiliates) owns at least 11,124,747 of our Class A Convertible Preferred Units, and (iii) the right to appoint two directors to our general partner’s board of directors if (and so long as) we fail to pay in full any three quarterly distribution amounts, whether or not consecutive, attributable to any quarter ending after March 1, 2019. The Rate Reset Election of these Class A Convertible Preferred Units represents an embedded derivative that must be bifurcated from the related host contract and recorded at fair value on our Consolidated Balance Sheets. See further information in Note 18. The Class A Convertible Preferred Units themselves are classified as mezzanine capital on our Consolidated Balance Sheets. Accounting for the Class A Convertible Preferred Units Our Class A Convertible Preferred Units are considered redeemable securities under GAAP due to the existence of redemption provisions upon a deemed liquidation event which is outside of our control. Therefore, we present them as temporary equity in the mezzanine section of the Consolidated Balance Sheets. The Class A Convertible Preferred Units have been recorded at their issuance date fair value, net of issuance costs. Because our Class A Convertible Preferred Units are not currently redeemable and we do not have plans or expect any events which constitute a change of control in our partnership agreement, we present our Class A Convertible Preferred Units at their initial carrying amount. However, we would be required to adjust that carrying amount if it becomes probable that we would be required to redeem our Class A Convertible Preferred Units. Preferred unit distributions are recognized on the date in which they are declared. paid-in-kind distributions were declared and issued as follows:
Distribution Declared |  | Date Issued |  | Number of Units |  | Total Amount
2019 |  |  |  |  |  |
January 2019 |  | February 14, 2019 |  | 534,576 |  |  | $ | 18,021 |
April 2019 |  | May 15, 2019 |  | 364,180 |  |  | $ | 12,277 |
We paid the following cash distributions to our Class A Convertible Preferred unitholders:
Distribution For |  | Date Paid |  | Per Unit Amount |  | Total Amount
2019 |  |  |  |  |  |
1 st Quarter |  | May 15, 2019 |  | $ | 0.2458 |  |  | $ | 6,138 |
2 nd Quarter |  | August 14, 2019 |  | $ | 0.7374 |  |  | $ | 18,684 |
3 rd Quarter |  | November 14, 2019 |  | $ | 0.7374 |  |  | $ | 18,684 |
4 th Quarter |  | February 14, 2020 |  | $ | 0.7374 |  |  | $ | 18,684 |
2020 |  |  |  |  |  |
1 st Quarter |  | May 15, 2020 |  | $ | 0.7374 |  |  | $ | 18,684 |
2 nd Quarter |  | August 14, 2020 |  | $ | 0.7374 |  |  | $ | 18,684 |
3 rd Quarter |  | November 13, 2020 |  | $ | 0.7374 |  |  | $ | 18,684 |
4 th Quarter |  | February 12, 2021 |  | $ | 0.7374 |  |  | $ | 18,684 |
2021 |  |  |  |  |  |
1 st Quarter |  | May 14, 2021 |  | $ | 0.7374 |  |  | $ | 18,684 |
2 nd Quarter |  | August 13, 2021 |  | $ | 0.7374 |  |  | $ | 18,684 |
3 rd Quarter |  | November 12, 2021 |  | $ | 0.7374 |  |  | $ | 18,684 |
4 th Quarter |  | February 14, 2022 |  | $ | 0.7374 |  |  | $ | 18,684 |
There were 25,336,778 Class A Convertible Preferred Units outstanding as of December 31, 2021. All quarterly distributions subsequent to the first quarter of 2019 have been paid in cash and as such there have been no changes to the number of Class A Convertible Preferred Units outstanding since May 15, 2019. Net income (loss) attributable to Genesis Energy, L.P. is reduced by Class A Convertible Preferred Unit distributions that accumulated during the period. Net income (loss) attributable to Genesis Energy, L.P. was reduced by $74.7 million, $74.7 million, and $74.5 million for the years ended December 31, 2021, 2020 and 2019, respectively, as a result of distributions that accumulated during the period. Redeemable Noncontrolling Interests On September 23, 2019, we, through a subsidiary, Genesis Alkali Holdings Company, LLC (“Alkali Holdings”), the entity that holds our trona and trona-based exploring, mining, processing, producing, marketing, and selling business, including its Granger facility near Green River, Wyoming, entered into an amended and restated Limited Liability Company Agreement of Alkali Holdings (the “LLC Agreement”) and a Securities Purchase Agreement (the “Securities Purchase Agreement”) whereby certain investment fund entities affiliated with Blackstone Alternative Credit Advisors LP, formerly known as “GSO Capital Partners LP” (collectively, “BXC”) purchased $55,000,000 of preferred units (or 55,000 preferred units) and committed to purchase, during a three-year commitment period, up to a total of $350,000,000 of preferred units (or 350,000 preferred units) in Alkali Holdings. Alkali Holdings will use the net proceeds from the preferred units to fund a portion of the anticipated cost of the Granger Optimization Project. On April 14, 2020, we entered into an amendment to our agreements with BXC to, among other things, extend the construction timeline of the Granger Optimization Project by one year, which we currently anticipate completing in the second half of 2023. In consideration for the amendment, we issued 1,750 Alkali Holdings preferred units to BXC, which was accounted for as issuance costs. As part of the amendment, the commitment period was increased to four years, and the total commitment of BXC was increased to, subject to compliance with the covenants contained in the agreements with BXC, up to $351,750,000 preferred units (or 351,750 preferred units) in Alkali Holdings. As of December 31, 2021, there are 246,394 Alkali Holdings preferred units outstanding. BXC has the right to a quarterly distribution equal to 10% per annum on the liquidation preference of each preferred unit. The liquidation preference is defined as one thousand dollars per preferred unit, plus any accrued and unpaid distributions (including as a result of any distributions paid-in-kind). Distributions are payable quarterly within 45 days after the end of the fiscal quarter. Distributions may be paid in-kind in lieu of cash distributions during the first 48 months following the September 23, 2019 initial closing date. Subsequent to the PIK period, all distributions must be paid in cash. In addition to the quarterly distributions paid to BXC, Alkali Holdings will distribute all of its distributable cash to the Partnership each quarter, which is equal to all cash and cash equivalents in the operating accounts of Alkali Holdings less cash reserves and a minimum $5 million cash balance to be maintained for working capital needs. From time to time after we have drawn at least 251,750,000, we have the option to redeem the outstanding preferred units in whole for cash at a price equal to the initial $1,000 per preferred unit purchase price, plus no less than the greater of a predetermined fixed internal rate of return amount or a multiple of invested capital metric, net of cash distributions paid to date (“Base Preferred Return”). Additionally, if all outstanding preferred units are being redeemed, we have not drawn at least 251,750,000, and BXC is not a “defaulting member” under the LLC Agreement, the Sponsor has the right to a make-whole amount on the number of undrawn preferred units. BXC is obligated to purchase a minimum of 251,750,000 of preferred units unless certain customary closing conditions are not satisfied, including the existence of a triggering event or a material uncured breach of the Securities Purchase Agreement by Alkali Holdings. A triggering event would occur if Alkali Holdings fails to pay cash distributions subsequent to the paid-in-kind period, fails to redeem preferred units when required to by a change of control event, or if any preferred units remain outstanding on the six and a half year anniversary date, amongst other events. The preferred units must be redeemed, in whole or in part, following certain change of control events, fundamental changes, or the liquidation, winding up, or dissolution of Alkali Holdings and, as applicable, the Partnership. If such an event were to occur, the preferred units would rank senior to Alkali Holdings common units and any class or series of equity of Alkali Holdings established after the issuance of the preferred units. At any time following the six and a half year anniversary of the Securities Purchase Agreement, or following the occurrence of certain triggering events, if the preferred units issued and outstanding have not been redeemed in full for cash, BXC has the right to gain control of the board of Alkali Holdings and effectuate a monetization event using its reasonable good faith efforts to maximize the consideration received to the holders of our common units, including the sale of Alkali Holdings (including all of its equity or assets and all of its equity in its subsidiaries), the proceeds of which would first be used to redeem the preferred units at the Base Preferred Return prior to any distribution to us. Pursuant to the LLC Agreement, the Board of Managers (the “Board”) for Alkali Holdings will consist of 5 managers, including 3 designated by the Partnership, 1 designated by BXC, and 1 independent manager. The independent manager is entitled to only attend Board meetings if the Board is required to vote on matters related to a bankruptcy of Alkali Holdings, and is permitted to only vote on such matters. See Item 7 for additional information regarding our non-Guarantor subsidiaries. Accounting for Redeemable Noncontrolling Interests Classification The preferred units issued and outstanding are accounted for as a redeemable noncontrolling interest in the mezzanine section on our Consolidated Balance Sheets due to the redemption features for a change of control. Initial and Subsequent Measurement We recorded the preferred units at their issuance date fair value, net of issuance costs. The fair value as of December 31, 2021 represents the carrying amount based on the issued and outstanding preferred units most probable redemption event on the six and a half year anniversary of the closing, which is the predetermined internal rate of return measure accreted using the effective interest method to the redemption value as of the reporting date. Net Loss Attributable to Genesis Energy, L.P. for the year ended December 31, 2021 includes $25.4 million of adjustments, of which $21.3 million was allocated to the distribution paid in-kind on the outstanding preferred units and $4.1 million was attributable to redemption accretion value adjustments. Net Loss Attributable to Genesis Energy, L.P. for the year ended December 31, 2020 includes $16.1 million of adjustments, of which $13.8 million was allocated to the distribution paid in-kind on the outstanding preferred units and $2.3 million was attributable to redemption accretion value adjustments. Net Income Attributable to Genesis Energy, L.P. for the year ended December 31, 2019 includes approximately $2.3 million of adjustments, of which $1.8 million was allocated to the distribution paid in-kind on the outstanding preferred units and $0.5 million was attributable to redemption accretion value adjustments. We elected to pay distributions for the periods ended December 31, 2021, December 31, 2020 and December 31, 2019 in-kind to our Alkali Holdings preferred unitholders. The unitholders liquidation preference is increased by new issuances and PIK distributions and is reduced by tax distributions paid to the unitholders, which are required to be paid by us to fulfill the income tax liabilities of each holder of Alkali Holdings preferred units. As of December 31, 2021, there are 246,394 Alkali Holdings preferred units outstanding. As of the reporting date, there are no triggering, change of control, early redemption or monetization events that are probable that would require us to revalue the preferred units. If the preferred units were redeemed on the reporting date of December 31, 2021, the redemption amount would be equal to $289.9 million, which would be the multiple of invested capital metric applied to the preferred units outstanding plus the make-whole amount on the undrawn minimum preferred units. The following table shows the change in our redeemable noncontrolling interests from initial measurement at September 23, 2019 to December 31, 2021:
Issuance of Preferred Units |  | $ | 55,000 |
Issuance costs |  | (5,600) |
Balance as of September 23, 2019 |  | $ | 49,400 |
Issuance of preferred units, net of issuance costs |  | 73,500 |
Distribution paid-in-kind |  | 1,750 |
Redemption accretion |  | 483 |
Balance as of December 31, 2019 |  | $ | 125,133 |
Issuance of preferred units, net of issuance costs(1) |  | 9,311 |
Distribution paid-in-kind |  | 13,811 |
Redemption accretion |  | 2,302 |
Tax distributions |  | (9,363) |
Balance as of December 31, 2020 |  | $ | 141,194 |
Issuance of preferred units, net of issuance costs(1) |  | 103,042 |
Distribution paid-in-kind |  | 21,291 |
Redemption accretion |  | 4,107 |
Tax distributions |  | (10,066) |
Balance as of December 31, 2021 |  | $ | 259,568 |
(1)We issued 10,145 and 9,499 Alkali Holdings preferred units to BXC to satisfy the company's obligation to pay tax distributions during 2021 and 2020, respectively. Noncontrolling Interests On November 17, 2021, we, through a subsidiary, sold 36% of the membership interests in CHOPS for proceeds of approximately $418 million. We retained 64% of the membership interests in CHOPS and remain the operator of the CHOPS pipeline and associated assets. We also own an 80% membership interest in Independence Hub, LLC, which owns an offshore hub platform. For financial reporting purposes, the assets and liabilities of these entities are consolidated with those of our own, with any third party or affiliate interest in our Consolidated Balance Sheets amounts shown as noncontrolling interests in equity.

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- Definition The entire disclosure for the formation, structure, control and ownership of the partnership. Disclosures related to accounts comprising partners' capital. Includes balances of general partners' capital account, limited partners' capital account, preferred partners' capital account and total partners' capital account and units outstanding; accumulated other comprehensive income; amount and nature of changes to amount of partner's capital and units outstanding by class, rights and privileges for each class of units; distribution policies and distributions paid by unit class; impact of and correction of an error in previously issued financial statements; limitations of partners' liability; redemption, conversion and distribution policies; and deferred compensation related to the issuance of units. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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