Calumet Suspends Quarterly Cash Distribution


Calumet Specialty Products Partners L.P. on Friday said it suspended its quarterly cash distribution, citing volatility in market conditions and saying it was part of a broader effort to maintain an adequate level of liquidity at the partnership.

Indianapolis-based Calumet posted a net loss of $116.8 million for the quarter ending Dec. 31, worse than a $63.5 million net loss in the year-earlier period. For the full year 2015, the company had a net loss of $139.4 million, compared to a $112.2 million net loss for 2014.

Fridays announcement was part of a strategic update. Calumet stated that the board of directors of its general partner unanimously voted to suspend the current quarterly cash distribution of 68.5 cents per unit, or $2.74 per unit on an annualized basis, effective for the quarter ended March 31.

Following considerable analysis and deliberation, our board of directors approved a suspension of the quarterly cash distribution, given sustained commodity price volatility and seasonally weak realized margins in our fuel products segment, Calumet CEO Tim Go said in a news release.

While the decision to suspend the distribution was a difficult one, over time this action is expected to further support our liquidity position and financial flexibility, he added. Our board expects to evaluate a reinstatement of a quarterly cash distribution in due course, taking into account a number of factors, including our liquidity requirements, the relative health of cash flows from operations, balance sheet leverage, broader market conditions and the overall performance of our business.

The company also issued preliminary, unaudited first quarter 2016 financial information. Based on preliminary data, Calumet expects to report a net loss between $59 million and $83 million. The company said the preliminary financial results reflect a combination of lower margins for benchmark refined products, seasonal weakness in asphalt sales prices and volumes sold, as well as seasonal softness in the local market premium on motor fuel products sold – compared to benchmark Gulf Coast prices – and reduced customer drilling and completion activity in the oilfield services segment.

Calumet also on Friday priced a private placement of $400 million principal amount of 11.5 percent senior secured notes due in 2021. The proceeds raised from the senior secured notes offering, in conjunction with a suspension in our quarterly cash distribution, position us to manage our capital structure with prudence and conservatism during a challenging period for our business, while repositioning the partnership for long-term strategic growth in our core specialty products markets, said Go.

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