
Indianapolis, Indiana – Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) has successfully transitioned from a master limited partnership (MLP) to a C-Corporation, now operating as Calumet, Inc. This strategic move, effective from July 11, 2024, allows Calumet to broaden its investor base by attracting institutional investors and passive indices previously restricted from investing in MLPs.
The conversion was approved by unitholders at a special meeting held on July 9, 2024. As a result, the 80,388,555 common units of the Partnership were exchanged for an equal number of shares in Calumet, Inc. Additionally, New Calumet issued 5.5 million shares of common stock and 2 million warrants to purchase shares at $20.00 per share. The common stock will continue to trade under the ticker symbol “CLMT” on Nasdaq.
“The completion of the conversion to a C-Corporation is a major strategic milestone in the Calumet transformation,” said Todd Borgmann, CEO of Calumet. “This conversion is expected to meaningfully increase Calumet’s shareholder base as many institutional investors and passive indices who were not able to invest in MLPs can now participate in Calumet at an exciting and pivotal time.”
Analysis
Calumet’s transition to a C-Corporation marks a significant shift in its corporate strategy, aimed at expanding its investor base. Unlike MLPs, which often have limitations on the types of investors who can participate, C-Corporations are open to a wider range of investors, including institutional investors and passive index funds. This conversion is expected to provide Calumet access to a larger pool of capital, facilitating growth and enhancing liquidity.
A C-Corporation (C-Corp) is a legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity. This structure offers several advantages, including unlimited growth potential through the sale of stock and no restrictions on the number or type of shareholders. Additionally, C-Corps can attract institutional investors and are included in major stock indices, which typically own 20% to 30% of peer companies. This broader investor base can lead to increased stock liquidity and potentially higher valuations.
For Calumet, the conversion means not only an expanded investor base but also a potential increase in share value as it becomes more accessible to large investment funds and indices. This move aligns with Calumet’s strategic vision of focusing on specialty products and renewables, leveraging the new capital to drive transformational growth in these areas.
“This conversion is expected to meaningfully increase Calumet’s shareholder base as many institutional investors and passive indices who were not able to invest in MLPs can now participate in Calumet at an exciting and pivotal time.”
About Calumet: Calumet manufactures, formulates, and markets a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. Headquartered in Indianapolis, Indiana, Calumet operates 12 specialty product manufacturing and production facilities throughout North America. The company is committed to delivering high-quality products and sustainable solutions to its customers.