Crestwood Equity Partners LP (NYSE: CEQP) has completed a 1-for-10 reverse split on its common units. Pursuant to the reverse split, common unitholders automatically received one common unit for every 10 common units owned. All fractional units created by the reverse unit split were rounded to the nearest whole unit.
Under the mechanics of the reverse split, Crestwood’s common units outstanding, unit price and quarterly distribution were all adjusted proportionally. As adjusted for the reverse split: Crestwood’s common unit count was reduced from approximately 685.5 million outstanding to approximately 68.6 million outstanding; Crestwood’s unit price of $1.93 per unit, as of close of business Nov. 23, would be adjusted to $19.30 per unit; and Crestwood’s third-quarter distribution of $0.1375 per limited partner unit ($0.55 per unit annualized), which was paid Nov. 13, was not adjusted. However, the third-quarter distribution, if it were paid after the effective date of the reverse split, would have been $1.375 per limited partner unit ($5.50 per unit annualized).
Crestwood recognizes that the impact of the reverse split on quarterly distributions has been unclear to a number of unitholders and this uncertainty has been a potential driver of increased daily trading volumes over the last several days leading up to the effective date. For greater clarity, the reverse split does not in any way affect Crestwood’s ability to pay distributions. The reasons for implementing the reverse split, as described in an Oct. 22 announcement, are to mitigate investor concerns and relieve ownership constraints which have negatively affected the ability of certain investors to own CEQP units at the pre-split price level.
The units will begin trading today, Nov. 24. Crestwood will continue to trade on the New York Stock Exchange under the ticker symbol “CEQP.” Crestwood’s new CUSIP number for its common units is 226344 208.