NEW YORK (AP) -- PetroLogistics LP, a company that makes propane into a substance called propylene that's used in consumer and industrial goods, said Monday that it plans to sell 1.5 million units as part of an initial public offering that could generate proceeds of up to $845.3 million.
The Houston-based company said in a filing with the Securities and Exchange Commission that it plans to sell its units for between $19 and $21. Based on the midpoint of that range, the offering would generate about $30 million in proceeds for the company.
At the same time, Propylene Holdings LLC, which represents the company's major stakeholders, plans to sell an additional 33.5 million units. Based on the midpoint of the company's range, that could generate $670 million in proceeds for Propylene Holdings.
In addition, if the offering's underwriters, which include Morgan Stanley, Citigroup and UBS Investment Bank, fully exercise their option to buy additional common units, Propylene Holdings will sell an additional 5.25 million common units to the public. That could yield additional proceeds of about $105 million.
If that happens, the IPO could generate total proceeds of about $805 million, based on the midpoint of the company's pricing range, or a maximum of $845.3 million.
After deducting underwriting discounts and commissions, PetroLogistics said it expects its net proceeds to total about $23.3 million, based on a per-unit price of $20.
PetroLogistics said it plans to use the money for capital and general partnership purposes, to pay for future expenses and to partially fund cash distributions to its unitholders. The company will not get any of the proceeds from Propylene Holdings' sale of its units.
The propylene made by PetroLogistics is used in paints, clothing, coatings, building materials, clothing, auto parts, packaging and other consumer and industrial products.
The company, which is jointly owned by private equity firms Lindsay Goldberg LLC and York Capital Management, started operating in October 2010 at a plant it bought from Exxon Mobil Corp. in March 2008. Last year, it posted a profit of $21.9 million up from a loss of $39.7 million in 2010. Sales rose to $614.9 million from $30.4 million.
For the quarter ended March 31, PetroLogistics estimates that it produced about 330.9 million pounds of propylene, up from 144.2 million in the same quarter last year. For the current quarter, the company said it expects to produce between 300 million and 325 million pounds, up from 221.9 million pounds in the year-ago quarter.
In its filing, PetroLogistics said it has benefited from recent trends in energy markets. The increasing supply of natural gas and lower prices for natural gas means lower costs for PetroLogistics. Propane is a by-product of processing natural gas.
Companies that make propylene out of oil, meanwhile, have seen their costs spike, and that's made them less competitive, PetroLogistics said.
The company has multiyear contracts with Dow Chemical Co., Total Petrochemicals USA Inc. and BASF Corp., among other companies.
PetroLogistics will list on the New York Stock Exchange under the symbol "PDH."