EFTA01108547.pdf

SUBJECT TO COMPLETION, DATED MARCH 10, 2016 • •-•• g PRELIMINARY PROSPECTUS SUPPLEMENT ('lb Prospectus dated March 10, 2016) IF-• Ra KKR 2° KKR & Co. L.P. TS c -Ng Units --, § g ..c % Series A Preferred Units =P3 •E -a We are offering of our % Series A Preferred Units (the "Series A Preferred Units" or the "units"). gg1 g i When, as, and if declared by the board of directors of our general partner, distributions on the Series A Preferred Units will be payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning June 15, s 2016, at a rate per annum equal to %. Distributions on the units are non-cumulative. If the board of directors of It our Managing Partner does not declare a distribution before the scheduled record date for any distribution period, we -6 4.... 0 will not make a distribution in that distribution period, whether or not distributions on the Series A Preferred Units CO = ..c al are declared or paid for any future distribution period. 4) TSe At any time or from time to time on or after June 15, 2021, we may, at our option, redeem the Series A Preferred :—. :., Units, in whole or in part, at a price of $25.00 per Series A Preferred Unit plus declared and unpaid distributions, if E ..a. any. See "Description of the Series A Preferred Units—Optional Redemption:* If a Change of Control Event (defined -a E 0 herein) occurs prior to June 15, 2021, we may, at our option, redeem the Series A Preferred Units, in whole but not in as 0 0 a. part, at a price of 525.25 per Series A Preferred Unit plus declared and unpaid distributions, if any. If (i) a Change of u a. Control Event occurs (whether before, on or after June 15, 2021) and (ii) we do not give notice prior to the 31st day et. ;. following the Change of Control Event to redeem all the outstanding Series A Preferred Units, the distribution rate 0o n per annum on the Series A Preferred Units will increase by 5.00%, beginning on the 31st day following such Change of E E 4 Control Event. See "Description of the Series A Preferred Units—Change of Control Redemption." The units will 4 e c L.. rank equally with other series of our parity units, junior to our senior units and senior to our junior units (as such terms .." a are defined herein) with respect to payment of distributions and distribution of our assets upon our liquidation, • ,,c• dissolution or winding up. See "Description of the Series A Preferred Units—Ranking." The units will not have any c.. ic voting rights, except as set forth under "Description of the Series A Preferred Units—Voting Rights." e. tt ou c ho: Investing in the Series A Preferred Units involves risks. See "Risk Factors" beginning on page S-7. We intend to apply to list the Series A Preferred Units on the New York Stock Exchange (the "NYSE") under the 2_7 G symbol " ." If the application is approved, we expect trading of the Series A Preferred Units on the NYSE to ,g. .__0 begin within 30 days after the Series A Preferred Units are first issued. 8t Neither the Securities and Exchange Commission nor any state securities commission has approved or =c.• —•., disapproved of these securities or determined if this prospectus supplement or the related prospectus is truthful or -0 c c complete. Any representation to the contrary is a criminal offense. 4.2 get._,e,E Per Unit Total Public offering price(1) S S = u Underwriting discounts and commissions ▪ OA S S -5Fd Proceeds to us before expenses(2) S S ca..;.1 $2.•-0 (1) Plus declared and unpaid distributions, if any, from March , 2016 if initial settlement occurs after that date. F. = 7, (2) Assumes no exercise of the underwriters' over-allotment option described below. qCO. II = .-. *E It We have granted the underwriters the option to purchase, exercisable within 30 days of the date of this prospectus g c") supplement, up to additional Series A Preferred Units on the same terms and conditions set forth above, solely .4 2 to cover over-allotments. .-5 e-• ...= ...if The underwriters expect that the units will be delivered to purchasers in global form through the book-entry delivery system of The Depository 'Dust Company on or about March , 2016. 0 -0 .0. u Mt.= E' Joint Book-Running Managers ....:1 0 .5 E Morgan Stanley BofA Merrill Lynch UBS Investment Bank NVells Fargo Securities O t, 9 March , 2016 EFTA01108547  TABLE OF CONTENTS Prospectus Supplement Page Page About This Prospectus Supplement iii Book-Entry, Delivery, and Form S-31 Summary S-1 Additional Material U.S. Federal Income Risk Factors S-7 Tax Considerations S-33 Use of Proceeds S-19 Certain ERISA Considerations S-35 Capitalization S-20 Underwriting S-38 Selected Historical Consolidated Financial Legal Matters S-43 Data S-21 Experts S-43 Description of the Series A Preferred Where You Can Find More Information . S-44 Units S-23 This prospectus supplement, the accompanying prospectus and the information incorporated or deemed incorporated herein, have been prepared using a number of stylistic conventions, which you should consider when reading the information herein or therein. Unless otherwise expressly stated or the context otherwise requires: (i) references to "KKR," "we," "us," "our" and "our partnership" refer to KKR & Co. LP and its consolidated subsidiaries. Prior to KKR & Co. LP. becoming listed on the New York Stock Exchange ("NYSE") on July 15, 2010, KKR Group Holdings L.P. ("Group Holdings") consolidated the financial results of KKR Management Holdings L.P. and KKR Fund Holdings L.P. and their consolidated subsidiaries. On August 5, 2014, KKR International Holdings LP became a KKR Group Partnership. We refer to KKR Management Holdings LP., KKR Fund Holdings LP and KKR International Holdings L.P. collectively as the "KKR Group Partnerships". Each KKR Group Partnership has an identical number of partner interests and, when held together, one Class A partner interest in each of the KKR Group Partnerships together represents one KKR Group Partnership Unit; (ii) references to "our Managing Partner" are to KKR Management LLC, which acts as our general partner and unless otherwise indicated, references to equity interests in KKR's business, or to percentage interests in KKR's business, reflect the aggregate equity of the KKR Group Partnerships and are net of amounts that have been allocated to our principals and other employees and non-employee operating consultants in respect of the carried interest from KKR's business as part of our "carry pool" and certain minority interests. References to "principals" are to our senior employees and non-employee operating consultants who hold interests in KKR's business through KKR Holdings L.P., which we refer to as "KKR Holdings," and references to our "senior principals" are to our senior employees who hold interests in our Managing Partner entitling them to vote for the election of its directors; (iii) references to non-employee operating consultants include employees of KKR Capstone and are not employees of KKR. KKR Capstone refers to a group of entities that are owned and controlled by their senior management. KKR Capstone is not a subsidiary or affiliate of KKR. KKR Capstone operates under several consulting agreements with KKR and uses the "KKR" name under license from KKR; and (iv) references to "unitholders" refer to the holder of any limited partnership interest in the registrant, whether common or preferred. EFTA01108548  Prior to October 1, 2009, KKR's business was conducted through multiple entities for which there was no single holding entity, but were under common control of senior KKR principals, and in which senior principals and KKR's other principals and individuals held ownership interests (collectively, the "Predecessor Owners"). On October 1, 2009, we completed the acquisition of all of the assets and liabilities of KKR & Co. (Guernsey) L.P. (f/c/a KKR Private Equity Investors, LP or "KPE") and, in connection with such acquisition, completed a series of transactions pursuant to which the business of KKR was reorganized into a holding company structure. The reorganization involved a contribution of certain equity interests in KKR's business that were held by KKR's Predecessor Owners to the KKR Group Partnerships in exchange for equity interests in the KKR Group Partnerships held through KKR Holdings. We refer to the acquisition of the assets and liabilities of KPE and to our subsequent reorganization into a holding company structure as the "KPE Transaction." In this prospectus supplement, the term "GAAP" refers to accounting principles generally accepted in the United States of America. We disclose certain financial measures in this prospectus that are calculated and presented using methodologies other than in accordance with GAAP. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to unitholders in assessing the overall performance of KKR's businesses. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP, if available. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, where applicable, can be found in our annual report on Form 10-K for the fiscal year ended December 31, 2015, which is incorporated by reference herein. EFTA01108549  ABOUT THIS PROSPECTUS SUPPLEMENT This document consists of two parts. The first part is this prospectus supplement, which describes the specific terms of this offering. The second part is the accompanying prospectus, which describes more general information, some of which may not apply to this offering. You should read both this prospectus supplement and the accompanying prospectus, together with additional information described under the heading "Where You Can Find More Information" in this prospectus supplement. If the description of the offering varies between this prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus supplement. Any statement made in this prospectus supplement, the accompanying prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus supplement will be deemed to be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or in any other subsequently filed document that is also incorporated or deemed to be incorporated by reference in this prospectus supplement modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement. See "Where You Can Find More Information" in this prospectus supplement. We are responsible for the information contained in this prospectus supplement, the accompanying prospectus, any related free writing prospectus issued by us and the documents incorporated or deemed incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information, and neither we nor the underwriters take responsibility for any other information that others may give you. This prospectus supplement may be used only where it is legal to sell the Series A Preferred Units offered hereby. You should assume that the information in this prospectus supplement, the accompanying prospectus, any related free writing prospectus or any document incorporated or deemed incorporated herein by reference is accurate only as of the date on the front cover of those respective documents. Our business, financial condition, results of operations and prospects may have changed since such dates. iii EFTA01108550  SUMMARY This summary highlights selected infomiation contained elsewhere or incorporated or deemed incorporated by reference in this prospectus supplement and the accompanying prospectus and does not contain all of the information you should consider when making your investment decision. We urge you to read all of this prospectus supplement, the accompanying prospectus and the documents incorporated or deemed incorporated by reference, including our consolidated financial statements and accompanying notes, carefully to gain a fuller understanding of our business and the terms of the Series A Preferred Units, as well as some of the other considerations that may be important to you, before making your investment decision. You should pay special attention to the "Risk Factors" section of this prospectus supplement, the accompanying prospectus and our annual report on Form 10-Kfor the fiscalyear ended December 31, 2015 to determine whether an investment in the Series A Preferred Units is appropriate for you. Overview We are a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. We aim to generate attractive investment returns by following a patient and disciplined investment approach, employing world- class people, and driving growth and value creation in the assets we manage. We invest our own capital alongside the capital we manage for fund investors and bring debt and equity investment opportunities to others through our capital markets business. Our business offers a broad range of investment management services to our fund investors and provides capital markets services to our firm, our portfolio companies and third parties. Throughout our history, we have consistently been a leader in the private equity industry, having completed more than 260 private equity investments in portfolio companies with a total transaction value in excess of $515 billion. We have grown our firm by expanding our geographical presence and building businesses in areas, such as credit, special situations, hedge funds, collateralized loan obligations, capital markets. infrastructure, energy and real estate. Our balance sheet has provided a significant source of capital in the growth and expansion of our business, and has allowed us to further align our interests with those of our fund investors. These efforts build on our core principles and industry expertise, allowing us to leverage the intellectual capital and synergies in our businesses, and to capitalize on a broader range of the opportunities we source. Additionally, we have increased our focus on meeting the needs of our existing fund investors and in developing relationships with new investors in our funds. We conduct our business with offices throughout the world, providing us with a pre-eminent global platform for sourcing transactions, raising capital and carrying out capital markets activities. Our growth has been driven by value that we have created through our operationally focused investment approach, the expansion of our existing businesses, our entry into new lines of business, innovation in the products that we offer investors in our funds, an increased focus on providing tailored solutions to our clients and the integration of capital markets distribution activities. As a global investment firm, we earn management, monitoring, transaction, incentive fees and carried interest for providing investment management, monitoring and other services to our funds, vehicles. collateralized loan obligations, managed accounts and portfolio companies, and we generate transaction- specific income from capital markets transactions. We earn additional investment income from investing our own capital alongside that of our fund investors, from other assets on our balance sheet and from the carried interest we receive from our funds and certain of our other investment vehicles. A carried interest entitles the sponsor of a fund to a specified percentage of investment gains that are generated on third- party capital that is invested. Our investment teams have deep industry knowledge and are supported by a substantial and diversified capital base, an integrated global investment platform, the expertise of operating consultants and senior advisors and a worldwide network of business relationships that provide a significant source of S-I EFTA01108551 investment opportunities, specialized knowledge during due diligence and substantial resources for creating and realizing value for stakeholders. These teams invest capital, a substantial portion of which is of a long duration and not subject to redemption. With over 75% of our fee paying assets under management not subject to redemption for at least 8 years from inception, we have significant flexibility to grow investments and select exit opportunities. We believe that these aspects of our business will help us continue to expand and grow our business and deliver strong investment performance in a variety of economic and financial conditions. Business Segments Private Markets Through our Private Markets segment, we manage and sponsor a group of private equity funds and co-investment vehicles that invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions. We also manage and sponsor a group of funds and co-investment vehicles that invest capital in real assets, such as infrastructure, energy and real estate. Public Markets Through the Public Markets segment, we operate our combined credit and hedge funds businesses. Our credit business advises funds, CLOs, separately managed accounts, and investment companies registered under the Investment Company Act of 1940, as amended, including a business development company, undertakings for collective investment in transferable securities, and alternative investments funds, which invest capital in (i) leveraged credit strategies, such as leveraged loans, high yield bonds and opportunistic credit, and (ii) alternative credit strategies such as mezzanine investments, direct lending investments, special situations investments and long/short credit investment strategies. Our Public Markets segment also includes our hedge funds business that offers a variety of investment strategies including customized hedge fund portfolios and hedge fund-of-fund solutions. Through our Public Markets segment. we also have developed strategic partnerships by acquiring minority stakes in other hedge fund managers. Capital Markets Our Capital Markets segment is comprised primarily of our global capital markets business. Our capital markets business supports our firm, our portfolio companies and third-party clients by developing and implementing both traditional and non-traditional capital solutions for investments or companies seeking financing. KKR Capital Markets LLC is an SEC-registered broker-dealer and a FINRA member. and we are also registered or authorized to easy out certain broker-dealer activities in various countries in North America, Europe, Asia-Pacific and the Middle East. Our third party capital markets activities are generally carried out through Merchant Capital Solutions LLC, a joint venture with one other unaffiliated partner, and non-bank financial companies in India. Principal Activities Through our Principal Activities segment, we manage the firm's own assets and deploy capital to support and grow our businesses. We use our Principal Activities assets to support our investment management and capital markets businesses. Typically, the funds in our Private Markets and Public Markets businesses contractually require us, as general partner of the funds, to make sizable capital commitments from time to time. We believe our general partner commitments are indicative of the conviction we have in a given fund's strategy, which assists us in raising new funds from limited partners. Our Principal Activities assets also provide the required capital to fund the various commitments of our Capital Markets business when underwriting or syndicating securities, or when providing term loan commitments for transactions involving our portfolio companies and for third parties. We also make opportunistic investments through our Principal Activities segment, which include co-investments S-2 EFTA01108552 alongside our Private Markets and Public Markets funds, as well as make Principal Activities investments that do not involve our Private Markets or Public Markets funds. Organizational Structure We are a holding partnership formed as a Delaware limited partnership on June 25, 2007. Through our wholly-owned subsidiaries, we hold equity interests in, and conduct all of our material business activities through KKR Management Holdings L.P., KKR Fund Holdings L.P. and KKR International Holdings LP., collectively, the "KKR Group Partnerships." We indirectly are the general partner of each of the KKR Group Partnerships and hold a number of KKR Group Partnership Units equal to the number of common units that we have issued, not including unvested units. Accordingly, we indirectly control all of the business and affairs of the KKR Group Partnerships and consolidate the financial results of the KKR Group Partnerships and its consolidated subsidiaries. As of December 31, 2015, we held approximately 55.9% of the total number of the KKR Group Partnership Units with the remaining KKR Group Partnership Units being held by current and former KKR principals through KKR Holdings LP. Our common units are listed on the New York Stock Exchange under the symbol "KKR." Each KKR Group Partnership has an identical number of Class A partner interests and, when held together, one Class A partner interest in each of the KKR Group Partnerships together represents one KKR Group Partnership unit ("KKR Group Partnership Unit"). KKR Group Partnership units that are held by KKR Holdings L.P. are exchangeable for our common units on a one-for-one basis, subject to customary conversion rate adjustments for splits, unit distributions and reclassifications and compliance with applicable lock-up, vesting and transfer restrictions. The Series A Preferred Units offered hereby will not be exchangeable or convertible into common units or any other class or series of our interests or any other security. We are managed by KKR Management LLC, our general partner, which we refer to as our Managing Partner. Our Managing Partner has a board of directors that is co-chaired by KKR's founders, Henry Kravis and George Roberts, who also serve as Co-Chief Executive Officers. KKR's senior principals control our Managing Partner. We reimburse our Managing Partner and its affiliates for all costs incurred in managing and operating us, and our limited partnership agreement provides that our Managing Partner will determine the expenses that are allocable to us. Our executive offices are located at 9 West 57th Street, Suite 4200, New York, NY, 10019, and our telephone number is (212) 750-8300. S-3 EFTA01108553  THE OFFERING This summary is not a complete description of the Series A Preferred Units. You should read the full text and more specific details contained elsewhere in this prospectus supplement and the accompanyingprospectus. For a more detailed description of the Series A Preferred Units, see the section entitled 'Description of the Series A Preferred Units" in this prospectus supplement. In this portion of the summary, the temis "we," "us" and "our" refer only to KKR & Co. L.P. and not to any of our subsidiaries. Issuer IUCR St Co. LP. Series A Preferred Units % Series A Preferred Units. Liquidation Preference $25.00 per Series A Preferred Unit. Option to Purchase Additional Units We have granted the underwriters an option to purchase, exercisable within 30 days of the date of this prospectus supplement, up to an additional Series A Preferred Units, at the public offering price less the underwriting discount, solely to cover over-allotments, if any. Maturity The Series A Preferred Units do not have a maturity date, and we are not required to redeem or repurchase the Series A Preferred Units. Accordingly, the Series A Preferred Units will remain outstanding indefinitely unless we decide to redeem or repurchase them. Distributions When, as, and if declared by the board of directors of our Managing Partner out of funds legally available, distributions on the Series A Preferred Units will be payable quarterly on March 15, June 15. September 15 and December 15 of each year, beginning June 15. 2016, at a rate per annum equal to %. Distributions on the Series A Preferred Units are non-cumulative. If the board of directors of our Managing Partner does not declare a distribution before the scheduled record date for any distribution period, we will not make a distribution in that distribution period, whether or not distributions on the Series A Preferred Units are declared or paid for any future distribution period. Unless distributions have been declared and paid or declared and set apart for payment on the Series A Preferred Units for the then-current quarterly distribution period, during such distribution period we may not repurchase any common units or junior units (as defined herein) and we may not declare or pay or set apart payment for distributions on any common units or junior units for such distribution period, other than distributions paid in junior units or options, warrants or rights to subscribe for or purchase junior units. S-4 EFTA01108554 Amount Payable in Liquidation . If we liquidate, dissolve or wind up, then the holders of the Series A Preferred Units outstanding at such time will be entitled to receive a payment out of our assets available for distribution to such holders equal to the sum of the $25.00 liquidation preference per Series A Preferred Unit and declared and unpaid distributions, if any, to, but excluding, the date we liquidate, dissolve or wind up (the "Preferred Unit Liquidation Value"), to the extent that we have sufficient gross income (excluding any gross income attributable to the sale or exchange of capital assets) in the year of our liquidation, dissolution or winding up and in the prior years in which the Series A Preferred Units have been outstanding to ensure that each holder of Series A Preferred Units will have a capital account balance equal to the Preferred Unit Liquidation Value. We refer to our gross income (excluding any gross income attributable to sale or exchange of capital assets) as our "gross ordinary income." Based on current information, we believe we will have sufficient gross ordinary income in calendar year 2016 to ensure that the holders of the Series A Preferred Units will have capital account balances that entitle each holder, upon our liquidation, dissolution or winding up, to the Preferred Unit Liquidation Value, but no assurance can be provided regarding the level of our future gross income. See "Description of the Series A Preferred Units—Liquidation Preference." Optional Redemption We may redeem, at our option, the Series A Preferred Units, in whole or in part, at any time on or after June 15, 2021 at a price of $25.00 per Series A Preferred Unit plus declared and unpaid distributions to. but excluding, the redemption date, without payment of any undeclared distributions. Holders of the Series A Preferred Units will have no right to require the redemption of the Series A Preferred Units. Change of Control Redemption . If a Change of Control Event (as defined under "Description of the Series A Preferred Units—Change of Control Redemption") occurs prior to June 15, 2021, we may, at our option, redeem the Series A Preferred Units, in whole but not in part, upon at least 30 days' notice. within 60 days of the occurrence of such Change of Control Event, at a price of $25.25 per Series A Preferred Unit, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. Distribution Rate Step-Up Following Change of Control Event If (i) a Change of Control Event occurs (whether before, on or after June 15, 2021) and (ii) we do not give notice prior to the 31st day following the Change of Control Event to redeem all the outstanding Series A Preferred Units, the distribution rate per annum on the Series A Preferred Units will increase by 5.00%, beginning on the 31st day following such Change of Control Event. See "Description of the Series A Preferred Units—Change of Control Redemption." S-5 EFTA01108555 Voting Rights Holders of the Series A Preferred Units will only be entitled to the voting rights provided in our limited partnership agreement. See "Description of the Series A Preferred Units—Voting Rights." Ranking The Series A Preferred Units will rank senior to our common units. See "Description of the Series A Preferred Units—Ranking." No Conversion Rights The Series A Preferred Units will not be convertible into common units or any other class or series of our interests or any other security. Use of Proceeds The net proceeds from the sale of the Series A Preferred Units are estimated to be approximately $ (or approximately $ if the underwriters exercise their over-allotment option in full), after deducting the underwriting discount and estimated offering expenses payable by us. We intend to use the net proceeds for general corporate purposes, including to fund acquisitions and investments. See "Use of Proceeds" and "Description of the Series A Preferred Units—Mirror Units" in this prospectus supplement. Listing We intend to apply to list the Series A Preferred Units on the NYSE under the symbol " ." If the application is approved, we expect trading in the Series A Preferred Units on the NYSE to begin within 30 days after the Series A Preferred Units are first issued. Ireatment See 'Additional Material U.S. Federal Income Tax Considerations" in this prospectus supplement. Transfer Agent, Registrar and Paying Agent American Stock Transfer & Ttust Company, LLC. Risk Factors Investing in the Series A Preferred Units involves risks. Before deciding whether to invest in the Series A Preferred Units, you should carefully consider the information set forth in the section of this prospectus supplement entitled "Risk Factors" beginning on page S-7. on page 2 of the accompanying prospectus and under the caption "Risk Factors" in our annual report on Form 10-K for the fiscal year ended December 31, 2015, as well as the other information contained in or incorporated by reference into this prospectus supplement and the accompanying prospectus. S-6 EFTA01108556  RISK FACTORS Investing in the Series A Preferred Units involves risks. You should carefully review the following risk factors and the risks discussed under the caption "Risk Factors" in our Annual Report on Form 10-K filed with the SEC on February 26, 2016, which is incorporated by reference in this prospectus supplement, or any similar caption in the documents that we subsequently file with the SEC that are deemed to be incorporated by reference in this prospectus supplement, and in any pricing term sheet that we provide you in connection with the offering of Series A Preferred Units pursuant to this prospectus supplement. The risks discussed under the caption "Risk Factors" in our Annual Report on Form 10-K that reference our common units are generally applicable to the Series A Preferred Units unless otherwise addressed herein. You should also carefully review the other risks and uncertainties discussed in this prospectus supplement and the accompanying prospectus, the documents incorporated and deemed to be incorporated by reference in this prospectus supplement and in any such pricing term sheet. The risks and uncertainties discussed below and in the documents referred to above, as well as other matters discussed in this prospectus supplement and in those documents, could materially and adversely affect our business, financial condition, liquidity and results of operations and the market price of the Series A Preferred Units. Moreover; the risks and uncertainties discussed below and in the foregoing documents are not the only risks and uncertainties that we face, and our business, financial condition, liquidity and results of operations and the market price of the Series A Preferred Units could be materially adversely affected by other matters that are not known to us or that we currently do not consider to be material risks to our business. Risks Related to the Series A Preferred Units The Series A Preferred Units are equity securities and are subordinated to our existing and future indebtedness. The Series A Preferred Units are our equity interests and do not constitute indebtedness. This means that the Series A Preferred Units will rank junior to all of our indebtedness and to other non-equity claims on us and our assets available to satisfy claims on us, including claims in our liquidation. Further, the Series A Preferred Units place no restrictions on our business or operations or on our ability to incur indebtedness or engage in any transactions, subject only to the limited voting rights referred to below under "Risk Factors—Holders of the Series A Preferred Units will have limited voting rights." We conduct substantially all of our operations through our subsidiaries, which hold the financial assets in which we invest. As a result, our cash flow and our ability to pay distributions on the Series A Preferred Units is dependent upon the earnings of our subsidiaries. In addition, we arc dependent on the distribution of earnings, loans or other payments by our subsidiaries to us. Distributions on the Series A Preferred Units are discretionary and non-cumulative. Distributions on the Series A Preferred Units are discretionary and non-cumulative. You will only receive distributions of the Series A Preferred Units when, as and if declared by the board of directors of our Managing Partner. Consequently, if the board of directors of our Managing Partner does not authorize and declare a distribution for a distribution period, holders of the Series A Preferred Units would not be entitled to receive any distribution for such distribution period, and such unpaid distribution will not be payable in such distribution period or in later distribution periods. We will have no obligation to pay distributions for a distribution period if the board of directors of our Managing Partner does not declare such distribution before the scheduled record date for such period, whether or not distributions are declared or paid for any subsequent distribution period with respect to the Series A Preferred Units or any other preferred units we may issue. This may result in holders of the Series A Preferred Units not receiving the full amount of distributions that they expect to receive, or any distributions, and may make it more difficult to resell Series A Preferred Units or to do so at a price that the holder finds attractive. S-7 EFTA01108557  The board of directors of our Managing Partner may, in its sole discretion, determine to suspend distributions on the Series A Preferred Units, which may have a material adverse effect on the market price of the Series A Preferred Units. There can be no assurances that our operations will generate sufficient cash flows to enable us to pay distributions on the Series A Preferred Units. Our financial and operating performance is subject to prevailing economic and industry conditions and to financial, business and other factors, some of which are beyond our control. The terms of our future indebtedness may restrict our ability to make distributions on the Series A Preferred Units or to redeem the Series A Preferred Units. Distributions will only be paid if the distribution is not restricted or prohibited by law or the terms of any senior equity securities or indebtedness. The instruments governing the terms of future financing or the refinancing of any borrowings may contain covenants that restrict our ability to make distributions on the Series A Preferred Units or redeem the Series A Preferred Units. The Series A Preferred Units place no restrictions on our ability to incur indebtedness with such restrictive covenants. The market price of the Series A Preferred Units could be adversely affected by various factors. Following the offering, the market price for the Series A Preferred Units may fluctuate based on a number of factors, including: • the trading price of our common units; • additional issuances of other series or classes of preferred units; • whether we declare or fail to declare distributions on the Series A Preferred Units from time to time and our ability to make distributions under the terms of our indebtedness; • our creditworthiness, results of operations and financial condition; • the credit ratings of the Series A Preferred Units; • the prevailing interest rates or rates of return being paid by other companies similar to us and the market for similar securities; and • economic, financial, geopolitical, regulatory or judicial events that affect us or the financial markets generally. Our performance, market conditions and prevailing interest rates have fluctuated in the past and can be expected to fluctuate in the future. Fluctuations in these factors could have an adverse effect on the price and liquidity of the Series A Preferred Units. In general, as market interest rates rise, securities with fixed interest rates or fixed distribution rates, such as the Series A Preferred Units, decline in value. Consequently, if you purchase the Series A Preferred Units and market interest rates increase, the market price of the Series A Preferred Units may decline. We cannot predict the future level of market interest rates. Our ability to pay quarterly distributions on the Series A Preferred Units will be subject to, among other things, general business conditions, our financial results, the amount of ordinary taxable income or loss earned by us, gains or losses recognized by us on the disposition of assets and our liquidity needs. Any reduction or discontinuation of quarterly distributions could cause the market price of the Series A Preferred Units to decline significantly. Accordingly, the Series A Preferred Units may trade at a discount to their purchase price. The Series A Preferred Units may not be rated and, if rated, their ratings could be lowered. We expect that Standard & Poor's Ratings Services and Fitch Ratings Inc. will assign ratings to the Series A Preferred Units. Generally, rating agencies base their ratings on such material and information, S-8 EFTA01108558 and such of their own investigative studies and assumptions, as they deem appropriate. A rating is not a recommendation to buy, sell or hold the Series A Preferred Units, and there is no assurance that any rating will apply for any given period of time or that a rating may not be adjusted or withdrawn. A downgrade or potential downgrade in these ratings, the assignment of a new rating that is lower than existing ratings, or a downgrade or potential downgrade in ratings assigned to us, our subsidiaries, the Series A Preferred Units or any of our other securities could adversely affect the trading price and liquidity of the Series A Preferred Units. We cannot be sure that rating agencies will rate the units or maintain their ratings once issued. Neither we nor any underwriter undertakes any obligation to obtain a rating, maintain the ratings once issued or to advise holders of Series A Preferred Units of any change in ratings. A failure to obtain a rating or a negative change in our ratings once issued could have an adverse effect on the market price or liquidity of the Series A Preferred Units. Rating agencies may change rating methodologies. The rating agencies that currently or may in the future publish a rating for us or the Series A Preferred Units may from time to time in the future change the methodologies that they use for analyzing securities with features similar to the Series A Preferred Units. This may include, for example, changes to the relationship between ratings assigned to an issuer's senior securities and ratings assigned to securities with features similar to the Series A Preferred Units, which is sometimes called "notching." If the rating agencies change their practices for rating lower-ranking securities in the future, and the ratings of the Series A Preferred Units are subsequently lowered or "notched" further, the trading price and liquidity of the Series A Preferred Units could be adversely affected. An active trading market may not develop for the Series A Preferred Units, which could adversely affect the price of the Series A Preferred Units in the secondary market andyour ability to resell the Series A Preferred Units. Because the Series A Preferred Units do not have a stated maturity date, investors seeking liquidity will need to rely on the secondary market. The Series A Preferred Units are a new issue of securities and there is no established trading market for the Series A Preferred Units. We intend to apply for listing of the Series A Preferred Units on the NYSE under the symbol " ." However, there is no guarantee that we will be able to list the Series A Preferred Units. If the application is approved, we expect trading in the Series A Preferred Units on the NYSE to begin within 30 days after the Series A Preferred Units are first issued; however, we cannot make any assurance as to: • the development of an active trading market; • the liquidity of any trading market that may develop; • the ability of holders to sell their Series A Preferred Units; or • the price at which the holders would be able to sell their Series A Preferred Units. If a trading market were to develop, the future trading prices of the Series A Preferred Units will depend on many factors, including prevailing interest