UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 23, 2020
 
USD Partners LP
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-36674
 
30-0831007
(State or other jurisdiction of
incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
811 Main Street, Suite 2800
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(281) 291-0510
Registrant’s telephone number, including area code
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Units Representing Limited Partner Interests
USDP
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company     o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o
 





Item 7.01
Regulation FD Disclosure.

Quarterly Cash Distribution

On April 23, 2020, USD Partners LP (the “Partnership”) issued a press release announcing that the board of directors of USD Partners GP LLC, acting in its capacity as the general partner of the Partnership, declared a quarterly cash distribution of $0.111 per unit for the first quarter of 2020 ($0.444 per unit on an annualized basis), representing a 70% decrease from the prior quarter’s distribution. The distribution is payable on May 15, 2020, to unitholders of record at the close of business on May 5, 2020.

First Quarter 2020 Earnings Release Date and Conference Call Information

The Partnership also announced that it plans to report first quarter 2020 financial and operating results after market close on Wednesday, May 6, 2020. The Partnership will host a conference call and webcast regarding its first quarter 2020 results at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Thursday, May 7, 2020. Information on how to access the conference call and webcast can be found in the press release and will also be posted to the Partnership’s website at www.usdpartners.com in the “Investors” tab and the “Events and Presentations” sub-tab.

Information on our website is not incorporated by reference in this Current Report on Form 8-K. A copy of the Press Release is attached hereto as Exhibit 99.1. The information in this report and the exhibit attached to this report are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that Section, and are not incorporated by reference into any registration statement or other filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, unless the Partnership expressly states that such information is considered to be “filed” under the Exchange Act or incorporates such information by specific reference in a Securities Act or Exchange Act filing.

Item 9.01
Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number
Description
99.1





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
USD Partners LP
(Registrant)
 
 
 
 
 
By:
 
USD Partners GP LLC,
 
 
 
 
its general partner
 
 
 
Date: April 23, 2020
 
By:
 
/s/ Adam Altsuler
 
 
Name:
 
Adam Altsuler
 
 
Title:
 
Senior Vice President and Chief Financial Officer



Exhibit
Exhibit 99.1

usdpartnerslogoa31.jpg


April 23, 2020

USD Partners Announces Reduction of Quarterly Distribution as Prudent Measure to Reduce Debt and Releases First Quarter 2020 Earnings Date

HOUSTON - USD Partners LP (NYSE: USDP) (the “Partnership”) announced today that the Board of Directors of its general partner has declared a quarterly cash distribution of usdpartnerslogoa31.jpg


April 23, 2020

USD Partners Announces Reduction of Quarterly Distribution as Prudent Measure to Reduce Debt and Releases First Quarter 2020 Earnings Date

HOUSTON - USD Partners LP (NYSE: USDP) (the “Partnership”) announced today that the Board of Directors of its general partner has declared a quarterly cash distribution of $0.111 per unit for the first quarter of 2020 ($0.444 per unit on an annualized basis), representing a 70% decrease from the prior quarter’s distribution. The distribution is payable on May 15, 2020, to unitholders of record at the close of business on May 5, 2020.

“The Board has made a proactive decision to strengthen our financial position by reducing our quarterly distribution and redeploying certain free cash flow to opportunistically pay down debt. Given the current uncertainty in the energy industry, we believe this is a prudent initiative which will enhance long-term value for all stakeholders,” said Dan Borgen, Chief Executive Officer and President. “With our strong contract structure and counterparty credit profile, we have historically been able to manage through down cycles and believe this decision will enhance the Partnership’s balance sheet and liquidity position providing it with a strong base to weather the current downturn and the flexibility to capitalize on opportunistic growth going forward. We believe this proactive measure taken by our Board, coupled with management’s continued focus on optimizing our cost structure across the business and unwavering commitment to safe and reliable operations, will create lasting value for our unitholders.”

“The Partnership’s terminals continue to perform well under our long-term take-or-pay contracts,” said Adam Altsuler, Senior Vice President and Chief Financial Officer. “The decision to reduce the quarterly distribution is not driven by any material deterioration in the performance of our underlying business, but rather represents a conscious effort to enhance long-term value for all stakeholders by proactively strengthening the Company’s balance sheet. We estimate this reduction will free up approximately $20-25 million per year of additional cash, which the Partnership intends to use to opportunistically de-lever. Management will continue to monitor its financial condition, operations, customers and workforce and intends to continue to assess its liquidity position and distribution policy over time.”

First Quarter 2020 Earnings Release Date and Conference Call Information

The Partnership plans to report first quarter 2020 financial and operating results after market close on Wednesday, May 6, 2020. The Partnership will host a conference call and webcast regarding first quarter 2020 results at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Thursday, May 7, 2020.

To listen live over the Internet, participants are advised to log on to the Partnership’s website at www.usdpartners.com and select the “Events & Presentations” sub-tab under the “Investors” tab. To join via telephone, participants may dial (877) 266-7551 domestically or +1 (339) 368-5209 internationally, conference ID 7886543. Participants are advised to dial in at least five minutes prior to the call.

An audio replay of the conference call will be available for thirty days by dialing (800) 585-8367 domestically or +1 (404) 537-3406 internationally, conference ID 7886543. In addition, a replay of the audio webcast will be available by accessing the Partnership’s website after the call is concluded.





usdpartnerslogoa31.jpg

About USD Partners LP
USD Partners LP is a fee-based, growth-oriented master limited partnership formed in 2014 by US Development Group, LLC (“USDG”) to acquire, develop and operate midstream infrastructure and complementary logistics solutions for crude oil, biofuels and other energy-related products. The Partnership generates substantially all of its operating cash flows from multi-year, take-or-pay contracts with primarily investment grade customers, including major integrated oil companies and refiners. The Partnership’s principal assets include a network of crude oil terminals that facilitate the transportation of heavy crude oil from Western Canada to key demand centers across North America. The Partnership’s operations include railcar loading and unloading, storage and blending in on-site tanks, inbound and outbound pipeline connectivity, truck transloading, as well as other related logistics services. In addition, the Partnership provides customers with leased railcars and fleet services to facilitate the transportation of liquid hydrocarbons and biofuels by rail.
USDG, which owns the general partner of USD Partners LP, is engaged in designing, developing, owning, and managing large-scale multi-modal logistics centers and energy-related infrastructure across North America. USDG solutions create flexible market access for customers in significant growth areas and key demand centers, including Western Canada, the U.S. Gulf Coast and Mexico. Among other projects, USDG is currently pursuing the development of a premier energy logistics terminal on the Houston Ship Channel with capacity for substantial tank storage, multiple docks (including barge and deepwater), inbound and outbound pipeline connectivity, as well as a rail terminal with unit train capabilities. For additional information, please visit texasdeepwater.com. Information on USDG’s website is not part of this press release.

Qualified Notice to Nominees

This release serves as qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b)(4) and (d). Please note that we believe that 100 percent of the Partnership’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of the Partnership’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals or corporations, as applicable. Nominees, and not the Partnership, are treated as withholding agents responsible for withholding distributions received by them on behalf of foreign investors.

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of U.S. federal securities laws, including statements with respect to the amount and timing of the Partnership’s first quarter 2020 cash distribution, the benefits of the reduction in the amount of the quarterly distribution, the amount and use of free cash flow made available by the reduction, the future liquidity and business prospects of the Partnership, the strength of the Partnership’s contracts and customer credit, and the impact of the current economic and industry downturn. Words and phrases such as “plan,” “will,” “initiative,” “believe,” “estimate,” “opportunity” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to the Partnership are based on management’s expectations, estimates and projections about the Partnership, its interests and the energy industry in general on the date this press release was issued. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. The current economic downturn and pandemic introduces unusual risks and an inability



Exhibit 99.1

usdpartnerslogoa31.jpg

to predict all risks that may impact the Partnership’s business. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include those as set forth under the heading “Risk Factors” in the Partnership’s most recent Annual Report on Form 10-K and in its subsequent filings with the Securities and Exchange Commission. The Partnership is under no obligation (and expressly disclaims any such obligation) to update, alter or withdraw its forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations Contacts:

Adam Altsuler, (281) 291-3995
Senior Vice President and Chief Financial Officer

Jennifer Waller, (832) 991-8383
Director, Financial Reporting and Investor Relations




April 23, 2020

USD Partners Announces Reduction of Quarterly Distribution as Prudent Measure to Reduce Debt and Releases First Quarter 2020 Earnings Date

HOUSTON - USD Partners LP (NYSE: USDP) (the “Partnership”) announced today that the Board of Directors of its general partner has declared a quarterly cash distribution of $0.111 per unit for the first quarter of 2020 ($0.444 per unit on an annualized basis), representing a 70% decrease from the prior quarter’s distribution. The distribution is payable on May 15, 2020, to unitholders of record at the close of business on May 5, 2020.

“The Board has made a proactive decision to strengthen our financial position by reducing our quarterly distribution and redeploying certain free cash flow to opportunistically pay down debt. Given the current uncertainty in the energy industry, we believe this is a prudent initiative which will enhance long-term value for all stakeholders,” said Dan Borgen, Chief Executive Officer and President. “With our strong contract structure and counterparty credit profile, we have historically been able to manage through down cycles and believe this decision will enhance the Partnership’s balance sheet and liquidity position providing it with a strong base to weather the current downturn and the flexibility to capitalize on opportunistic growth going forward. We believe this proactive measure taken by our Board, coupled with management’s continued focus on optimizing our cost structure across the business and unwavering commitment to safe and reliable operations, will create lasting value for our unitholders.”

“The Partnership’s terminals continue to perform well under our long-term take-or-pay contracts,” said Adam Altsuler, Senior Vice President and Chief Financial Officer. “The decision to reduce the quarterly distribution is not driven by any material deterioration in the performance of our underlying business, but rather represents a conscious effort to enhance long-term value for all stakeholders by proactively strengthening the Company’s balance sheet. We estimate this reduction will free up approximately $20-25 million per year of additional cash, which the Partnership intends to use to opportunistically de-lever. Management will continue to monitor its financial condition, operations, customers and workforce and intends to continue to assess its liquidity position and distribution policy over time.”

First Quarter 2020 Earnings Release Date and Conference Call Information

The Partnership plans to report first quarter 2020 financial and operating results after market close on Wednesday, May 6, 2020. The Partnership will host a conference call and webcast regarding first quarter 2020 results at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Thursday, May 7, 2020.

To listen live over the Internet, participants are advised to log on to the Partnership’s website at www.usdpartners.com and select the “Events & Presentations” sub-tab under the “Investors” tab. To join via telephone, participants may dial (877) 266-7551 domestically or +1 (339) 368-5209 internationally, conference ID 7886543. Participants are advised to dial in at least five minutes prior to the call.

An audio replay of the conference call will be available for thirty days by dialing (800) 585-8367 domestically or +1 (404) 537-3406 internationally, conference ID 7886543. In addition, a replay of the audio webcast will be available by accessing the Partnership’s website after the call is concluded.





usdpartnerslogoa31.jpg

About USD Partners LP
USD Partners LP is a fee-based, growth-oriented master limited partnership formed in 2014 by US Development Group, LLC (“USDG”) to acquire, develop and operate midstream infrastructure and complementary logistics solutions for crude oil, biofuels and other energy-related products. The Partnership generates substantially all of its operating cash flows from multi-year, take-or-pay contracts with primarily investment grade customers, including major integrated oil companies and refiners. The Partnership’s principal assets include a network of crude oil terminals that facilitate the transportation of heavy crude oil from Western Canada to key demand centers across North America. The Partnership’s operations include railcar loading and unloading, storage and blending in on-site tanks, inbound and outbound pipeline connectivity, truck transloading, as well as other related logistics services. In addition, the Partnership provides customers with leased railcars and fleet services to facilitate the transportation of liquid hydrocarbons and biofuels by rail.
USDG, which owns the general partner of USD Partners LP, is engaged in designing, developing, owning, and managing large-scale multi-modal logistics centers and energy-related infrastructure across North America. USDG solutions create flexible market access for customers in significant growth areas and key demand centers, including Western Canada, the U.S. Gulf Coast and Mexico. Among other projects, USDG is currently pursuing the development of a premier energy logistics terminal on the Houston Ship Channel with capacity for substantial tank storage, multiple docks (including barge and deepwater), inbound and outbound pipeline connectivity, as well as a rail terminal with unit train capabilities. For additional information, please visit texasdeepwater.com. Information on USDG’s website is not part of this press release.

Qualified Notice to Nominees

This release serves as qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b)(4) and (d). Please note that we believe that 100 percent of the Partnership’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of the Partnership’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals or corporations, as applicable. Nominees, and not the Partnership, are treated as withholding agents responsible for withholding distributions received by them on behalf of foreign investors.

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of U.S. federal securities laws, including statements with respect to the amount and timing of the Partnership’s first quarter 2020 cash distribution, the benefits of the reduction in the amount of the quarterly distribution, the amount and use of free cash flow made available by the reduction, the future liquidity and business prospects of the Partnership, the strength of the Partnership’s contracts and customer credit, and the impact of the current economic and industry downturn. Words and phrases such as “plan,” “will,” “initiative,” “believe,” “estimate,” “opportunity” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to the Partnership are based on management’s expectations, estimates and projections about the Partnership, its interests and the energy industry in general on the date this press release was issued. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. The current economic downturn and pandemic introduces unusual risks and an inability



Exhibit 99.1

usdpartnerslogoa31.jpg

to predict all risks that may impact the Partnership’s business. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include those as set forth under the heading “Risk Factors” in the Partnership’s most recent Annual Report on Form 10-K and in its subsequent filings with the Securities and Exchange Commission. The Partnership is under no obligation (and expressly disclaims any such obligation) to update, alter or withdraw its forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations Contacts:

Adam Altsuler, (281) 291-3995
Senior Vice President and Chief Financial Officer

Jennifer Waller, (832) 991-8383
Director, Financial Reporting and Investor Relations



“The Board has made a proactive decision to strengthen our financial position by reducing our quarterly distribution and redeploying certain free cash flow to opportunistically pay down debt. Given the current uncertainty in the energy industry, we believe this is a prudent initiative which will enhance long-term value for all stakeholders,” said Dan Borgen, Chief Executive Officer and President. “With our strong contract structure and counterparty credit profile, we have historically been able to manage through down cycles and believe this decision will enhance the Partnership’s balance sheet and liquidity position providing it with a strong base to weather the current downturn and the flexibility to capitalize on opportunistic growth going forward. We believe this proactive measure taken by our Board, coupled with management’s continued focus on optimizing our cost structure across the business and unwavering commitment to safe and reliable operations, will create lasting value for our unitholders.”

“The Partnership’s terminals continue to perform well under our long-term take-or-pay contracts,” said Adam Altsuler, Senior Vice President and Chief Financial Officer. “The decision to reduce the quarterly distribution is not driven by any material deterioration in the performance of our underlying business, but rather represents a conscious effort to enhance long-term value for all stakeholders by proactively strengthening the Company’s balance sheet. We estimate this reduction will free up approximately usdpartnerslogoa31.jpg" alt="usdpartnerslogoa31.jpg" style="height:42px;width:169px;">

to predict all risks that may impact the Partnership’s business. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include those as set forth under the heading “Risk Factors” in the Partnership’s most recent Annual Report on Form 10-K and in its subsequent filings with the Securities and Exchange Commission. The Partnership is under no obligation (and expressly disclaims any such obligation) to update, alter or withdraw its forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations Contacts:

Adam Altsuler, (281) 291-3995
Senior Vice President and Chief Financial Officer

Jennifer Waller, (832) 991-8383
Director, Financial Reporting and Investor Relations



First Quarter 2020 Earnings Release Date and Conference Call Information

The Partnership plans to report first quarter 2020 financial and operating results after market close on Wednesday, May 6, 2020. The Partnership will host a conference call and webcast regarding first quarter 2020 results at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Thursday, May 7, 2020.

To listen live over the Internet, participants are advised to log on to the Partnership’s website at www.usdpartners.com and select the “Events & Presentations” sub-tab under the “Investors” tab. To join via telephone, participants may dial (877) 266-7551 domestically or +1 (339) 368-5209 internationally, conference ID 7886543. Participants are advised to dial in at least five minutes prior to the call.

An audio replay of the conference call will be available for thirty days by dialing (800) 585-8367 domestically or +1 (404) 537-3406 internationally, conference ID 7886543. In addition, a replay of the audio webcast will be available by accessing the Partnership’s website after the call is concluded.





usdpartnerslogoa31.jpg

About USD Partners LP
USD Partners LP is a fee-based, growth-oriented master limited partnership formed in 2014 by US Development Group, LLC (“USDG”) to acquire, develop and operate midstream infrastructure and complementary logistics solutions for crude oil, biofuels and other energy-related products. The Partnership generates substantially all of its operating cash flows from multi-year, take-or-pay contracts with primarily investment grade customers, including major integrated oil companies and refiners. The Partnership’s principal assets include a network of crude oil terminals that facilitate the transportation of heavy crude oil from Western Canada to key demand centers across North America. The Partnership’s operations include railcar loading and unloading, storage and blending in on-site tanks, inbound and outbound pipeline connectivity, truck transloading, as well as other related logistics services. In addition, the Partnership provides customers with leased railcars and fleet services to facilitate the transportation of liquid hydrocarbons and biofuels by rail.
USDG, which owns the general partner of USD Partners LP, is engaged in designing, developing, owning, and managing large-scale multi-modal logistics centers and energy-related infrastructure across North America. USDG solutions create flexible market access for customers in significant growth areas and key demand centers, including Western Canada, the U.S. Gulf Coast and Mexico. Among other projects, USDG is currently pursuing the development of a premier energy logistics terminal on the Houston Ship Channel with capacity for substantial tank storage, multiple docks (including barge and deepwater), inbound and outbound pipeline connectivity, as well as a rail terminal with unit train capabilities. For additional information, please visit texasdeepwater.com. Information on USDG’s website is not part of this press release.

Qualified Notice to Nominees

This release serves as qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b)(4) and (d). Please note that we believe that 100 percent of the Partnership’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of the Partnership’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals or corporations, as applicable. Nominees, and not the Partnership, are treated as withholding agents responsible for withholding distributions received by them on behalf of foreign investors.

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of U.S. federal securities laws, including statements with respect to the amount and timing of the Partnership’s first quarter 2020 cash distribution, the benefits of the reduction in the amount of the quarterly distribution, the amount and use of free cash flow made available by the reduction, the future liquidity and business prospects of the Partnership, the strength of the Partnership’s contracts and customer credit, and the impact of the current economic and industry downturn. Words and phrases such as “plan,” “will,” “initiative,” “believe,” “estimate,” “opportunity” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to the Partnership are based on management’s expectations, estimates and projections about the Partnership, its interests and the energy industry in general on the date this press release was issued. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. The current economic downturn and pandemic introduces unusual risks and an inability



Exhibit 99.1

usdpartnerslogoa31.jpg

to predict all risks that may impact the Partnership’s business. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include those as set forth under the heading “Risk Factors” in the Partnership’s most recent Annual Report on Form 10-K and in its subsequent filings with the Securities and Exchange Commission. The Partnership is under no obligation (and expressly disclaims any such obligation) to update, alter or withdraw its forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations Contacts:

Adam Altsuler, (281) 291-3995
Senior Vice President and Chief Financial Officer

Jennifer Waller, (832) 991-8383
Director, Financial Reporting and Investor Relations