Capital Product Partners L.P., an international owner of ocean-going vessels, announces today the approval by a majority of our unitholders, the conflicts committee of our Board of Directors (the “Committee”), our full Board of Directors (the “Board”) and our general partner, Capital GP L.L.C. (the “General Partner”), of the conversion of CPLP from a Marshall Islands limited partnership to a Marshall Islands corporation (the “Conversion”) and the renaming of CPLP to “Capital Clean Energy Carriers Corp.” (the “Name Change”). In connection with the Conversion, our General Partner will give up its existing management and consent rights with respect to CPLP.
The Conversion and the Name Change are key milestones in our strategic pivot towards the transportation of various forms of natural gas to industrial customers, including liquefied natural gas (“LNG”) and new commodities emerging as a result of the energy transition, as initially announced in November 2023. To achieve our strategic pivot, we entered into the Umbrella Agreement with Capital Maritime & Trading Corp. (“Capital Maritime”), our sponsor, and the General Partner, under which we agreed to acquire 11 newbuild LNG/C vessels (the “Newbuild LNG/C Vessels”), of which five vessels are already on the water and the remaining six vessels are expected to be delivered between the first quarter of 2026 and the first quarter of 2027. In June 2024, we also ordered 10 state-of-the-art, high-specification gas carriers, including four unique handy multi gas carriers that can carry liquid CO2. These, along with the Newbuild LNG/C Vessels, collectively form the “Energy Transition Vessels”. This $3.9 billion investment, notable both in asset value and scope, demonstrates our commitment to becoming a leading provider of transportation for LNG and other clean fuels.
We have already made significant progress on our refocus of the business with 12 latest generation LNG/C vessels currently on the water plus the disposal of seven legacy container vessels during the first half of 2024. Upon delivery of our remaining Energy Transition Vessels between the first quarter of 2026 and the third quarter of 2027, we expect to become the largest U.S.-listed LNG shipping company and will offer our industrial customers a full range of transportation solutions.
Conversion and Name Change Details
We expect to complete the Conversion and the Name Change by August 26, 2024. Upon completion, our Common Shares will trade on the Nasdaq Global Select Market (“Nasdaq”) under the name “Capital Clean Energy Carriers Corp.” with the ticker symbol “CCEC”.
As a result of the Conversion, the following changes to our capital structure and corporate governance, among others, will occur:
CPLP, a Marshall Islands limited partnership, will convert to CCEC, a Marshall Islands corporation.
Each common unit of CPLP issued and outstanding immediately prior to the Conversion will be converted into one common share of CCEC with a par value of $0.01 per share (the “Common Shares”).
The General Partner Units and Incentive Distribution Rights issued and outstanding immediately prior to the Conversion will be converted into an aggregate 3,500,000 Common Shares. Following the Conversion, Capital Maritime and its affiliates will hold in aggregate approximately 59.0% of the outstanding Common Shares.
The General Partner will give up its existing management and consent rights with respect to CPLP, including its right to appoint three directors to our Board and its veto rights over, among other things, approval of mergers, consolidations and other significant corporate transactions and amendments to CPLP’s governing documents.
Following the Conversion, the Board will consist of eight directors, a majority of which will be “independent” in accordance with Nasdaq rules.
Until Capital Maritime and its affiliates cease to own at least 25% of the outstanding Common Shares, Capital Maritime and its affiliates will have the right to nominate three out of the eight directors to the Board. If the holdings of Capital Maritime and its affiliates fall below 25% but remain above 15% of the outstanding Common Shares, Capital Maritime and its affiliates thereafter will have the right to nominate two out of eight directors to the Board. If the holdings of Capital Maritime and its affiliates fall below 15% but remain above 5% of the outstanding Common Shares, Capital Maritime and its affiliates thereafter will have the right to nominate one out of eight directors. If the holdings of Capital Maritime and its affiliates fall below 5%, Capital Maritime thereafter will no longer have any rights to nominate directors to the Board. The remaining members of the Board will be nominated by CCEC’s nominating committee and all directors will be elected by majority vote of the holders of Common Shares (including Capital Maritime and its affiliates), other than in a contested election, in which the election of directors will be by a plurality vote.
Mr. Jerry Kalogiratos, Chief Executive Officer of our General Partner, said: “Today’s announcement of Capital Product Partners’ conversion into a Marshall Islands corporation is an important step in the growth and evolution of the group. It builds upon our stated intention to become the only listed shipping company offering transportation for all gas types with an emphasis on the energy transition, as these vessels can move LPG, ammonia, butane, propylene and liquid CO2, adding to LNG, where we already have a presence. When completed, this conversion will enhance our corporate governance and is intended to position the group as a more attractive investment opportunity in the equity capital markets. We have structured the converted company in a manner that we believe will appeal to institutional investors, which we believe will further broaden our investor base and improve our trading liquidity.”
The forgoing description of the Conversion is qualified by reference to the full definitive documents for the Conversion, which will be filed with the SEC.
The Conversion and the Name Change were approved by the Committee and our Board and we obtained unitholder approval for the Conversion and the Name Change by written consent of Capital Maritime and its affiliates, which hold a majority of our outstanding common units, pursuant to Section 13.11 of our Second Amended and Restated Agreement of Limited Partnership. Raymond James & Associates, Inc served as financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP served as legal advisor to the Committee. Evercore served as financial advisor and Sullivan & Cromwell LLP served as legal advisor to Capital Maritime.
Source: Capital Product Partners L.P.