Global Partners LP: A Strategic Growth Story

Global Partners LP (NYSE: GLP), a leading integrated owner, supplier, and operator of liquid energy terminals, fueling locations, and guest-focused retail experiences, has recently announced a cash distribution on its Series B preferred units. This announcement, along with the company's strategic acquisitions and growth prospects, highlights the Partnership's commitment to value creation and market expansion. This article will delve into the implications of the cash distribution, the non-U.S. withholding information, and the impact of the Motiva Enterprises and ExxonMobil acquisitions on the Partnership's growth prospects.

Cash Distribution on Series B Preferred Units

The cash distribution on Series B preferred units represents a fixed return on investment for preferred unitholders, contributing to the Partnership's capital structure. The declared quarterly distribution of $0.59375 per unit ($2.375 per unit on an annualized basis) for the period from May 15, 2024, through August 14, 2024, will be paid on August 15, 2024, to Series B preferred unitholders of record as of the opening of business on August 1, 2024. This distribution helps maintain the value of the preferred units and provides a predictable income stream for investors.



Non-U.S. Withholding Information

The non-U.S. withholding information provided in the press release has potential implications for the Partnership's international investor base. Brokers and nominees should treat 100% of Global Partners LP's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. This means that non-U.S. investors may be subject to federal income tax withholding at a rate equal to the highest applicable effective tax rate plus ten percent (10%). This could potentially impact the net returns that international investors receive from their investments in the Partnership.

Additionally, the withholding tax rate may vary depending on the tax treaty between the United States and the investor's country of residence. If there is no tax treaty in place, the default withholding tax rate of 30% may apply. This could result in a higher tax burden for non-U.S. investors, potentially making the Partnership's units less attractive to international investors compared to other investment opportunities.

Furthermore, the responsibility for withholding tax falls on the nominees, not the Partnership. This could potentially lead to administrative burdens and costs for the nominees, which may be passed on to the non-U.S. investors in the form of higher fees or reduced services.

Acquisition of 25 Liquid Energy Terminals from Motiva Enterprises

The acquisition of 25 liquid energy terminals from Motiva Enterprises significantly enhances Global Partners LP's growth prospects. This transaction nearly doubles the Partnership's terminal storage capacity, supported by a 25-year take-or-pay throughput agreement with Motiva that includes minimum annual revenue commitments. This expansion allows the Partnership to store and distribute more liquid energy products, increasing its market reach and potential revenue streams.

Joint Venture with ExxonMobil

The joint venture with ExxonMobil enables Global Partners LP to apply its operational and management expertise in the large and dynamic Greater Houston market. This synergy can lead to improved efficiency, cost savings, and increased profitability. Additionally, the joint venture provides access to a new market, reducing the Partnership's reliance on a single market and mitigating risks associated with regional economic fluctuations.

In conclusion, the cash distribution on Series B preferred units impacts the Partnership's capital structure by providing a fixed return on investment for preferred unitholders. The non-U.S. withholding information has potential implications for the Partnership's international investor base, including higher tax burdens, reduced net returns, and potential administrative burdens for nominees. The acquisition of 25 liquid energy terminals from Motiva Enterprises and the joint venture with ExxonMobil significantly enhance Global Partners LP's growth prospects by increasing its terminal storage capacity, diversifying its market presence, leveraging operational synergies, and aligning with the company's strategic growth objectives.