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K-Sea Transportation Partners LP · S-1/A · On 1/5/04

Filed On 1/5/04 6:14am ET   ·   SEC File 333-107084   ·   Accession Number 1047469-4-32

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  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 1/05/04  K-Sea Transportation Partners LP  S-1/A                 13:569                                    Merrill Corp/New/- FA

Pre-Effective Amendment to Registration Statement (General Form)   ·   Form S-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Pre-Effective Amendment to Registration Statement   HTML  2,075K 
                          (General Form)                                         
 2: EX-3.4      Articles of Incorporation/Organization or By-Laws   HTML    331K 
 3: EX-3.7      Articles of Incorporation/Organization or By-Laws   HTML      9K 
 4: EX-3.8      Articles of Incorporation/Organization or By-Laws   HTML    238K 
 5: EX-4.1-2    Instrument Defining the Rights of Security Holders  HTML     72K 
 6: EX-10.1     Material Contract                                   HTML    738K 
 7: EX-10.2     Material Contract                                   HTML    139K 
 8: EX-10.3     Material Contract                                   HTML     86K 
 9: EX-10.4-2   Material Contract                                   HTML     58K 
10: EX-10.5     Material Contract                                   HTML     90K 
11: EX-10.6     Material Contract                                   HTML     82K 
12: EX-10.16    Material Contract                                   HTML    111K 
13: EX-23.1     Consent of Experts or Counsel                       HTML      8K 


S-1/A   ·   Pre-Effective Amendment to Registration Statement (General Form)
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page
"Table of Contents
"Prospectus Summary
"K-Sea Transportation Partners L.P
"The Transactions
"Organizational Structure Before the Transactions
"Organizational Structure After the Transactions
"Summary of Conflicts of Interest and Fiduciary Duties
"The Offering
"Summary Historical and Pro Forma Financial and Operating Data
"Risk Factors
"Use of Proceeds
"Capitalization
"Dilution
"Cash Distribution Policy
"Cash Available for Distribution
"K-Sea Transportation Partners L.P. Statement of Forecasted Results of Operations and Cash Flows (in thousands)
"K-Sea Transportation Partners L.P. Summary of Significant Accounting Policies and Forecast Assumptions
"Selected Historical and Pro Forma Financial and Operating Data
"Management's Discussion and Analysis of Financial Condition and Results of Operations
"Overview of the Domestic Tank Vessel Industry
"Effect of OPA 90 Phase-out of U.S. Single-hull Tank Barges Reduction of Oil Transportation Capacity by Year
"Effect of OPA 90 Phase-out of U.S. Single-hull Tankers Reduction of Oil Transportation Capacity by Year
"Average Daily Demand of Refined Petroleum Products
"Tank Barge
"Tanker
"Business
"K-Sea Transportation Partners L.P. Major Customers
"K-Sea Transportation Partners L.P. Tank Vessel Fleet
"K-Sea Transportation Partners L.P. Tugboat Fleet
"Management
"Security Ownership of Certain Beneficial Owners and Management
"Certain Relationships and Related Transactions
"Conflicts of Interest and Fiduciary Duties
"Description of the Common Units
"Description of the Subordinated Units
"The Partnership Agreement
"Units Eligible for Future Sale
"Material Tax Consequences
"Investment in K-Sea Transportation Partners L.P. by Employee Benefit Plans
"Underwriting
"Validity of the Common Units
"Experts
"Where You Can Find More Information
"Forward-Looking Statements
"Index to Financial Statements
"Introduction to Unaudited Pro Forma Consolidated Financial Statements
"K-SEA TRANSPORTATION PARTNERS L.P. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (in thousands)
"K-SEA TRANSPORTATION PARTNERS L.P. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except for unit and per unit data)
"K-Sea Transportation Partners L.P. Notes to Unaudited Pro Forma Consolidated Financial Statements
"Report of Independent Auditors
"K-SEA TRANSPORTATION LLC CONSOLIDATED BALANCE SHEETS (in thousands)
"K-SEA TRANSPORTATION LLC CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands)
"K-SEA TRANSPORTATION LLC CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' EQUITY (in thousands)
"K-SEA TRANSPORTATION LLC CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
"K-SEA TRANSPORTATION LLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands)
"K-SEA TRANSPORTATION PARTNERS L.P. BALANCE SHEET July 14, 2003
"K-Sea Transportation Partners L.P. Notes to Balance Sheet
"K-SEA GENERAL PARTNER LLC BALANCE SHEET July 14, 2003
"K-Sea General Partner Llc Notes to Balance Sheet
"Second Amended and Restated Agreement of Limited Partnership of K-Sea Transportation Partners L.P
"Article I Definitions
"Article Ii Organization
"Article Iii Rights of Limited Partners
"Article Iv Certificates; Record Holders; Transfer of Partnership Interests; Redemption of Partnership Interests
"Article V Capital Contributions and Issuance of Partnership Interests
"Article Vi Allocations and Distributions
"Article Vii Management and Operation of Business
"Article Viii Books, Records, Accounting and Reports
"Article Ix Tax Matters
"Article X Admission of Partners
"Article Xi Withdrawal or Removal of Partners
"Article Xii Dissolution and Liquidation
"Article Xiii Amendment of Partnership Agreement; Meetings; Record Date
"Article Xiv Merger
"Article Xv Right to Acquire Limited Partner Interests
"Article Xvi General Provisions
"Reverse of Certificate] ABBREVIATIONS
"ASSIGNMENT OF COMMON UNITS in K-SEA TRANSPORTATION PARTNERS L.P. IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES DUE TO TAX SHELTER STATUS OF K-SEA TRANSPORTATION PARTNERS L.P
"Appendix B
"Appendix C
"Glossary of Terms
"Appendix D
"Estimated Available Cash From Operating Surplus
"Part Ii
"Information Not Required in the Prospectus
"Signatures
"Exhibit Index
"QuickLinks

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As filed with the Securities and Exchange Commission on January 5, 2004.

Registration No. 333-107084



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


K-SEA TRANSPORTATION PARTNERS L.P.
(Exact name of registrant as specified in its charter)

Delaware 4400 20-0194477
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)

3245 RICHMOND TERRACE
STATEN ISLAND, NEW YORK 10303
(718) 720-9306
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

TIMOTHY J. CASEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
K-SEA GENERAL PARTNER GP LLC
3245 RICHMOND TERRACE
STATEN ISLAND, NEW YORK 10303
(718) 720-9306
(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copies to:

JOSHUA DAVIDSON
SEAN T. WHEELER
BAKER BOTTS L.L.P.
910 LOUISIANA
ONE SHELL PLAZA
HOUSTON, TEXAS 77002-4995
(713) 229-1234
  ROBERT V. JEWELL
DAVID C. BUCK
ANDREWS KURTH LLP
600 TRAVIS, SUITE 4200
HOUSTON, TEXAS 77002
(713) 220-4200

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.


        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o 

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o 

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box: o


CALCULATION OF REGISTRATION FEE


Title of Each Class of Securities to be Registered

  Proposed Maximum
Aggregate Offering
Price(1)(2)

  Amount of
Registration Fee


Common units representing limited partner interests   $94,587,500   $7,652.13(3)

(1)
Includes common units issuable upon exercise of the underwriters' over-allotment option.
(2)
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933.
(3)
An aggregate of $7,489.32 of the registration fee was previously paid with the filings of the Registration Statement on July 16, 2003 and November 13, 2003.


                The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine.





PROSPECTUS   Subject to completion dated   January 2, 2004

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Picture -- GRAPHIC

K-Sea Transportation Partners L.P.

3,500,000 Common Units
Representing Limited Partner Interests


We are a partnership recently formed to provide refined petroleum product marine transportation, distribution and logistics services in the northeastern United States and the Gulf of Mexico. This is the initial public offering of our common units. We expect the initial public offering price to be between $21.50 and $23.50 per common unit. Holders of common units are entitled to receive distributions of available cash of $0.50 per quarter, or $2.00 on an annualized basis, before any distributions are paid on our subordinated units, to the extent we have sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including payments to our general partner. The common units have been approved for listing on the New York Stock Exchange, subject to official notice of issuance, under the symbol "KSP."

We believe that conducting our operations through a publicly traded limited partnership will offer access to the public equity and debt capital markets, a lower cost of capital for further expansions and acquisitions, an enhanced ability to use our equity securities as consideration in future acquisitions and an overall lower effective income tax rate to our unitholders.

Investing in our common units involves risk. Please read "Risk Factors" beginning on page 18.

These risks include the following:


 
  Per Common Unit
  Total
Initial public offering price   $   $
Underwriting discount (1)   $   $
Proceeds, before expenses, to K-Sea Transportation Partners L.P.   $   $

(1)
Includes structuring fees of an aggregate of $            .


We have granted the underwriters a 30-day option to purchase up to 525,000 common units on the same terms and conditions as set forth above to cover over-allotments of common units, if any. The net proceeds from any exercise of the underwriters' over-allotment option will be used to redeem an equal number of common units from an affiliate of our general partner.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Lehman Brothers, on behalf of the underwriters, expects to deliver the common units on or about            , 2004.


LEHMAN BROTHERS                               UBS INVESTMENT BANK

                    MCDONALD INVESTMENTS INC.  

 

                    RAYMOND JAMES

 

 

JEFFERIES & COMPANY, INC.

 

                         , 2004


Picture -- LOGO


 

   
TABLE OF CONTENTS

 
   
PROSPECTUS SUMMARY   1
  K-Sea Transportation Partners L.P.   1
  The Transactions   5
  Summary of Conflicts of Interest and Fiduciary Duties   9
  The Offering   11
  Summary Historical and Pro Forma Financial and Operating Data   14
RISK FACTORS   18
  Risks Inherent in Our Business   18
    We may not have sufficient cash from operations to enable us to pay the minimum quarterly distribution following establishment of cash reserves and payment of fees and expenses, including payments to our general partner.   18
    The assumptions underlying the financial forecast we include in "Cash Available for Distribution—Forecasted Available Cash from Operating Surplus" are inherently uncertain and are subject to significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those forecasted.   18
    Our business would be adversely affected if we failed to comply with the Jones Act provisions on coastwise trade, or if those provisions were modified or repealed.   19
    We must make substantial expenditures to maintain the operating capacity of our fleet, which will reduce our cash available for distribution.   19
    Our general partner is required to deduct from operating surplus each quarter estimated maintenance expenditures, which may result in less cash available to unitholders than if actual maintenance capital expenditures were deducted.   20
    Capital expenditures and other costs necessary to operate and maintain a vessel vary depending on the age of the vessel and changes in governmental regulations, safety or other equipment standards.   20
    A decline in demand for, and level of consumption of, refined petroleum products, particularly in the East Coast and Gulf Coast regions, could cause demand for tank vessel capacity and charter rates to decline, which would decrease our revenues and profitability.   20
    Marine transportation is an inherently risky business.   21
    Our insurance may not be adequate to cover our losses.   21
    We rely on a limited number of customers for a significant portion of our revenues. The loss of any of these customers could adversely affect our business and operating results.   22
    Because we obtain some of our insurance through protection and indemnity associations, we also may be subject to calls, or premiums, in amounts based not only on our own claim records, but also the claim records of all other members of the protection and indemnity associations.   22
    We may not be able to renew time charters, consecutive voyage charters, contracts of affreightment and bareboat charters when they expire.   22
    Voyage charters may not be available at rates that will allow us to operate our vessels profitably.   22
    Our purchase of existing vessels carries risks associated with the quality of those vessels.   23
    We are subject to complex laws and regulations, including environmental regulations, that can adversely affect the cost, manner or feasibility of doing business.   23
     

i


 
    Terrorist attacks have resulted in increased costs and have disrupted our business. Continued hostilities in the Middle East or other sustained military campaigns may adversely impact our results of operations.   23
    We depend upon unionized labor for the provision of our services. Any work stoppages or labor disturbances could disrupt our business.   24
    Increased competition in the domestic tank vessel industry could result in reduced profitability and loss of market share for us.   24
    Our employees are covered by federal laws that may subject us to job-related claims in addition to those provided by state laws.   24
    Delays or cost overruns in the construction of a new vessel or the modification of existing vessels could adversely affect our business. Cash flows from new or retrofitted vessels may not be immediate or as high as expected.   24
    We may not be able to grow or effectively manage our growth.   25
    We depend on key personnel for the success of our business.   25
    Changes in international trade agreements could affect our ability to provide marine transportation services at competitive rates.   26
    Due to our lack of asset diversification, adverse developments in our marine transportation business would reduce our ability to make distributions to our unitholders.   26
  Risks Inherent in an Investment in Us   26
    K-Sea General Partner L.P. and its affiliates have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to the detriment of our unitholders.   26
    Even if unitholders are dissatisfied, they cannot remove our general partner without its consent.   27
    Our general partner's discretion in establishing cash reserves may reduce the amount of cash available for distribution to you.   27
    You will experience immediate and substantial dilution of $7.22 per common unit.   28
    We may issue additional common units without your approval, which would dilute your ownership interests.   28
    Our partnership agreement currently limits the ownership of our partnership interests by individuals or entities that are not U.S. citizens. This restriction could limit the liquidity of our common units.   29
    Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price.   29
    Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.   29
    Cost reimbursements due our general partner and its affiliates will reduce cash available for distribution to you.   29
    You may not have limited liability if a court finds that unitholder action constitutes control of our business.   30
    Restrictions in our debt agreements may prevent us from engaging in some beneficial transactions or paying distributions.   30
    The control of our general partner may be transferred to a third party without unitholder consent.   31
    The partners of K-Sea Investors L.P. and their affiliates may engage in activities that compete directly with us.   31
     

ii


 
    Unitholders may have limited liquidity for their common units.   31
  Tax Risks   31
    The IRS could treat us as a corporation for tax purposes, which would substantially reduce cash available for distribution to unitholders.   31
    A successful IRS contest of the federal income tax positions we take may adversely impact the market for our common units, and the costs of any contest will be borne by us and, therefore, indirectly by our unitholders and our general partner.   32
    You may be required to pay taxes on income from us even if you do not receive any cash distributions from us.   32
    Tax gain or loss on the disposition of our common units could be different than expected.   32
    Tax-exempt entities and regulated investment companies face unique tax issues from owning common units that may result in adverse tax consequences to them.   33
    We will register as a tax shelter. This may increase the risk of an IRS audit of us or a unitholder.   33
    We will treat each purchaser of common units as having the same tax benefits without regard to the units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units.   33
    You will likely be subject to state and local taxes and return filing requirements as a result of investing in our common units.   33
    Recently enacted tax legislation may make investments in corporations more attractive when compared to an investment in our common units.   33
USE OF PROCEEDS   34
CAPITALIZATION   35
DILUTION   36
CASH DISTRIBUTION POLICY   37
  Distributions of Available Cash   37
  Operating Surplus and Capital Surplus   37
  Subordination Period   39
  Distributions of Available Cash From Operating Surplus During the Subordination Period   41
  Distributions of Available Cash From Operating Surplus After the Subordination Period   41
  Incentive Distribution Rights   41
  Percentage Allocations of Available Cash From Operating Surplus   42
  Distributions from Capital Surplus   42
  Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels   43
  Distributions of Cash Upon Liquidation   44
CASH AVAILABLE FOR DISTRIBUTION   46
  General   46
  Estimated Available Cash from Operating Surplus   46
  Forecasted Available Cash from Operating Surplus   47
SELECTED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA   55
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   58
  Overview   58
     

iii


 
  Definitions   59
  Results of Operations   61
  Liquidity and Capital Resources   67
  Inflation   75
  Related Party Transactions   75
  Seasonality   75
  Critical Accounting Policies   76
  New Accounting Pronouncements   77
  Quantitative and Qualitative Disclosures about Market Risk   79
OVERVIEW OF THE DOMESTIC TANK VESSEL INDUSTRY   80
  Introduction   80
  The Domestic Tank Vessel Fleet   80
  Demand for Domestic Tank Vessel Services   81
  Transportation of Refined Petroleum Products   82
  Types of Tank Vessels   82
  Tugboats   85
  Integrated Tug-Barge Units   86
BUSINESS   87
  Our Partnership   87
  Industry Trends   88
  Business Strategies   89
  Competitive Strengths   89
  Risk Factors   90
  Our Customers   91
  Our Vessels   91
  Bunkering   93
  Preventative Maintenance   94
  Safety   94
  Ship Management, Crewing and Employees   95
  Classification, Inspection and Certification   96
  Insurance Program   96
  Competition   97
  Regulation   98
  Seasonality   103
  Properties   104
  Legal Proceedings   104
MANAGEMENT   105
  Management of K-Sea Transportation Partners L.P.   105
  Directors and Executive Officers of K-Sea General Partner GP LLC   106
  Reimbursement of Expenses of Our General Partner   107
  Executive Compensation   107
     

iv


 
  Employment Agreements   107
  Compensation of Directors   108
  Long-Term Incentive Plan   108
  Unit Purchase Plan   110
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT   111
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS   113
  Distributions and Payments to Our General Partner and Its Affiliates   113
  Agreements Governing the Transactions   114
  Omnibus Agreement   115
CONFLICTS OF INTEREST AND FIDUCIARY DUTIES   116
  Conflicts of Interest   116
  Fiduciary Duties   118
DESCRIPTION OF THE COMMON UNITS   121
  The Units   121
  Transfer Agent and Registrar   121
  Restrictions on Foreign Ownership   121
  Transfer of Common Units   121
DESCRIPTION OF THE SUBORDINATED UNITS   123
  Cash Distribution Policy   123
  Conversion of the Subordinated Units   123
  Distributions Upon Liquidation   123
  Limited Voting Rights   123
  Restrictions on Foreign Ownership   123
THE PARTNERSHIP AGREEMENT   124
  Organization and Duration   124
  Purpose   124
  Power of Attorney   124
  Capital Contributions   125
  Limited Liability   125
  Foreign Ownership   126
  Voting Rights   127
  Issuance of Additional Securities   128
  Amendment of the Partnership Agreement   130
  Merger, Sale or Other Disposition of Assets   132
  Termination and Dissolution   132
  Liquidation and Distribution of Proceeds   133
  Withdrawal or Removal of Our General Partner   133
  Transfer of General Partner Interest   134
  Transfer of Incentive Distribution Rights   135
  Transfer of Ownership Interests in Our General Partner and in K-Sea General Partner GP LLC   135
     

v


 
  Change of Management Provisions   135
  Limited Call Right   136
  Meetings; Voting   136
  Status as Limited Partner or Assignee   137
  Non-citizen Assignees; Redemption   137
  Indemnification   138
  Reimbursement of Expenses   138
  Books and Reports   138
  Right to Inspect Our Books and Records   139
  Registration Rights   139
UNITS ELIGIBLE FOR FUTURE SALE   140
MATERIAL TAX CONSEQUENCES   142
  Partnership Status   142
  Limited Partner Status   144
  Tax Consequences of Unit Ownership   144
  Tax Treatment of Operations   148
  Disposition of Common Units   149
  Tax-Exempt Organizations and Other Investors   151
  Administrative Matters   152
  State, Local, Foreign and Other Tax Considerations   154
INVESTMENT IN K-SEA TRANSPORTATION PARTNERS L.P. BY EMPLOYEE BENEFIT PLANS   155
UNDERWRITING   156
  Commissions and Expenses   156
  Indemnification   156
  Over-Allotment Option   157
  Lock-Up Agreements   157
  Stabilization, Short Positions and Penalty Bids   157
  Listing   158
  Public Market   158
  Affiliations   159
  NASD Conduct Rules   159
  Discretionary Sales   159
  Electronic Distribution   159
  Directed Unit Program   159
VALIDITY OF THE COMMON UNITS   160
EXPERTS   160
WHERE YOU CAN FIND MORE INFORMATION   160
     

vi


 
FORWARD-LOOKING STATEMENTS   161
INDEX TO FINANCIAL STATEMENTS   F-1
 
   
   
   
APPENDIX A—   Form of Second Amended and Restated Agreement of Limited Partnership of K-Sea Transportation Partners L.P.   A-1

APPENDIX B—

 

Form of Application for Transfer of Common Units

 

B-1

APPENDIX C—

 

Glossary of Terms

 

C-1

APPENDIX D—

 

Estimated Available Cash from Operating Surplus

 

D-1

        Until            , 2004 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common units, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

vii




 

   
PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the historical and pro forma financial statements and the notes to those financial statements. The information presented in this prospectus assumes (1) an initial public offering price of $22.50 per common unit and (2) that the underwriters' over-allotment option is not exercised. You should read "—Summary of Risk Factors" beginning on page 3 and "Risk Factors" beginning on page 18 for information about important factors that you should consider before buying the common units. We include a glossary of some of the terms used in this prospectus in Appendix C.

   
K-Sea Transportation Partners L.P.

        We are a leading provider of refined petroleum product marine transportation, distribution and logistics services in the northeastern United States. Our fleet of 35 tank barges, 3 tankers and 18 tugboats serves a wide range of customers, including major oil companies, oil traders and refiners. With over two million barrels of capacity, we believe we own and operate the third-largest ocean-going tank barge fleet in the United States as measured by barrel-carrying capacity.

        Tank vessels, which include tank barges and tankers, are a critical link in the refined petroleum product distribution chain. Tank vessels transport gasoline, diesel fuel, heating oil, asphalt and other products from refineries and storage facilities to a variety of destinations, including other refineries, distribution terminals, power plants and ships. Although pipelines are a key component in the distribution chain, they do not reach all markets, may lack sufficient capacity to meet demand and are not capable of transporting all refined petroleum products. Trucks and rail cars are generally a less cost-effective means of transportation than tank vessels. Many areas along the East Coast have access to refined petroleum products only by using marine transportation as a link in their distribution chain.

        For the fiscal year ended June 30, 2003, our fleet transported approximately 100 million barrels of refined petroleum products for our customers, including BP, ChevronTexaco, ConocoPhillips and ExxonMobil. Our six largest customers in fiscal 2003 have been doing business with us for over 10 years on average. We do not assume ownership of any of the products we transport. During fiscal 2003 and the first quarter of fiscal 2004, we derived approximately 70% of our revenue from longer-term contracts that are generally for periods of one year or more.

        We have a high-quality, well-maintained fleet. Approximately 53% of our barrel-carrying capacity is double-hulled, as compared to an industry average of approximately 30% for all U.S.-flag coastwise and ocean-going tank vessels. By December 2004, we expect that approximately 72% of our barrel-carrying capacity will be double-hulled, after giving effect to the delivery of a new tank barge presently under construction, the completion of two current tank barge modification projects and the phase-out of three single-hull tank barges. Furthermore, after December 2004, we will be permitted to continue to operate our remaining single-hull tank vessels until January 1, 2015 in compliance with the Oil Pollution Act of 1990, or OPA 90, which mandates the phase-out of all single-hull tank vessels transporting petroleum and petroleum products in U.S. waters. All of our vessels operate under the U.S. flag, and all but three are qualified to transport cargo between U.S. ports under the Jones Act, the federal statutes that restrict foreign owners from operating in the U.S. marine transportation industry.

        We believe the following industry trends create a positive outlook for us:

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        Since the founding of our predecessor company in 1959, we have played an increasingly significant role in the transportation of refined petroleum products in the northeastern United States. In April 1999, our predecessor company was acquired from its founders by members of its senior management team and a private equity investment group. Since April 1999, when the company ceased being a family-owned business, we have acquired 18 tank vessels in 9 separate transactions, significantly increased our market share and improved operating and financial performance. During the period from April 30, 1999 to September 30, 2003, we increased the total barrel-carrying capacity of our fleet, net of vessel sales and retirements, from approximately 1.1 million barrels to approximately 2.3 million barrels, while improving our cost structure and increasing the net utilization of the tank vessels we operate from 75% to 88%. For selected financial information regarding the period from April 30, 1999 to September 30, 2003, please read "Selected Historical and Pro Forma Financial and Operating Data" beginning on page 55.

        For the fiscal year ended June 30, 2003 and the three months ended September 30, 2003, on a pro forma basis for the initial public offering and related transactions, we generated total revenues of $87.7 million and $23.4 million, respectively, net income of $11.6 million and $3.0 million, respectively, and earnings before interest, taxes, depreciation, amortization and net (gain) loss on reduction of debt, or EBITDA, of $30.3 million and $7.7 million, respectively. Please read "—Summary Historical and Pro Forma Financial and Operating Data—Non-GAAP Financial Measures" beginning on page 16 for an explanation of EBITDA and a reconciliation of EBITDA to net income and net cash provided by operating activities.

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Business Strategies

        Our primary business objective is to increase distributable cash flow per unit by executing the following strategies:

Competitive Strengths

        We believe we are well positioned to execute our business strategies successfully because of the following competitive strengths:

Summary of Risk Factors

        An investment in our common units involves risks associated with our business, our partnership structure and the tax characteristics of our common units. Those risks are described under the caption "Risk Factors" beginning on page 18 and include:

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The Transactions

General

        We have recently been formed as a Delaware limited partnership to own and operate the refined petroleum product marine transportation, distribution and logistics business currently conducted by K-Sea Transportation LLC, EW Holding Corp. and K-Sea Transportation Corp. At the closing of this offering, the following transactions will occur: