Plains All American Pipeline, L.P. (NYSE:PAA) Files An 8-K Entry into a Material Definitive Agreement

ME Staff 8-k
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Plains All American Pipeline, L.P. (NYSE:PAA) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01 Entry into a Material Definitive Agreement

On October4, 2017, Plains All American Pipeline, L.P. (the “Partnership”) entered into an underwriting agreement (the “Underwriting Agreement”) with J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner& Smith Incorporated, Morgan Stanley& Co. LLC and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein (the “Underwriters”), relating to the issuance and sale by the Partnership, and purchase by the Underwriters, of 800,000 of the Partnership’s 6.125% SeriesB Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “SeriesB Preferred Units”) at a price to the public of $1,000 per SeriesB Preferred Unit (the “Offering”).

The SeriesB Preferred Units are being offered and sold under the Partnership’s shelf registration statement on FormS-3 (Registration No.333-207139), as amended by Post-Effective Amendment No.1 thereto filed with the Securities and Exchange Commission on October2, 2017. The Partnership does not intend to apply for the listing of the SeriesB Preferred Units on any securities exchange.

In connection with the closing of the Offering, PAAGPLLC, the general partner of the Partnership (the “General Partner”), will execute the Seventh Amended and Restated Agreement of Limited Partnership of the Partnership (the “Seventh A&R Partnership Agreement”) to, among other things, authorize and establish the rights and preferences of the SeriesB Preferred Units.

The SeriesB Preferred Units will rank senior to (i)common units representing limited partner interests in the Partnership and (ii)each other class or series of limited partner interests or other equity securities in the Partnership that may be established after the original issue date of the SeriesB Preferred Units (the “Original Issue Date”) and that is not expressly made senior to or pari passu with the SeriesB Preferred Units as to the payment of distributions and amounts payable upon a liquidation event (the “Junior Securities”). The SeriesB Preferred Units will rank pari passu with (i)the Partnership’s outstanding SeriesA Convertible Preferred Units (the “SeriesA Preferred Units”) and (ii)each other class or series of limited partner interests or other equity securities in the Partnership that may be established after the Original Issue Date that is not expressly made senior or subordinated to the SeriesB Preferred Units as to the payment of distributions and amounts payable on a liquidation event (the “Parity Securities”). The SeriesB Preferred Units will rank junior to (i)all of the Partnership’s existing and future indebtedness and other liabilities with respect to assets available to satisfy claims against the Partnership and (ii)each other class or series of limited partner interests or other equity securities in the Partnership established after the Original Issue Date that is expressly made senior to the SeriesB Preferred Units as to the payment of distributions and amounts payable upon a liquidation event (the “Senior Securities”).

Distributions on the SeriesB Preferred Units will accrue and be cumulative from the Original Issue Date and will be payable semi-annually in arrears on the 15th day of Mayand Novemberthrough and including November15, 2022 commencing on November 15, 2017 and after November 15, 2022, quarterly in arrears on the 15th day of February, May, August, and Novemberof each year (each, a “Distribution Payment Date”) to holders of record as of the close of business on the first business day of the month of the applicable Distribution Payment Date, in each case, when, as, and if declared by the General Partner out of legally available funds for such purpose. A pro-rated initial distribution on the SeriesB Preferred Units will be payable on November15, 2017 in an amount equal to approximately $5.9549 per SeriesB Preferred Unit. If any Distribution Payment Date otherwise would fall on a day that is not a business day, declared distributions will be paid on the immediately succeeding business day without the accumulation of additional distributions.

The initial distribution rate for the SeriesB Preferred Units from and including the Original Issue Date to, but not including, November15, 2022 will be 6.125%per annum of the $1,000.00 liquidation preference per SeriesB Preferred Unit (equal to $61.25 per SeriesB Preferred Unit per annum). On and after November15, 2022, distributions on the SeriesB Preferred Units will accumulate for each distribution period at a percentage of the liquidation preference equal to the three-month LIBOR plus a spread of 4.11%.

The Partnership will not declare or pay or set aside for payment full distributions on the SeriesB Preferred Units or any Parity Securities (including the SeriesA Preferred Units) for any distribution period unless (i)full cumulative distributions have been paid or provided for on the SeriesB Preferred Units and any Parity Securities through the most recently completed distribution period for each such security and (ii)at the time of the declaration of distributions on the SeriesB Preferred Units or the Parity Securities, as applicable, the General Partner expects to have sufficient funds to pay the next distribution on the SeriesB Preferred Units and any Parity Securities in full

(regardless of the relative timing of such distributions). To the extent distributions will not be paid in full on the SeriesB Preferred Units, the General Partner will take appropriate action to ensure that all distributions declared and paid upon the SeriesB Preferred Units and any Parity Securities will be reduced, declared and paid on a pro rata basis on their respective payment dates.

The Partnership will not declare or pay, or set aside for payment, distributions on any Junior Securities (other than a distribution payable solely in Junior Securities) unless full cumulative distributions have been or contemporaneously are being paid on all outstanding SeriesB Preferred Units and any Parity Securities (including the SeriesA Preferred Units) through the most recently completed respective distribution periods. To the extent a distribution period applicable to a class of Junior Securities or Parity Securities is shorter than the distribution period applicable to the SeriesB Preferred Units (e.g., quarterly rather than semi-annual), the General Partner may declare and pay regular distributions with respect to such Junior Securities or Parity Securities so long as, at the time of declaration of such distribution, the General Partner expects to have sufficient funds to pay the full distribution in respect of the SeriesB Preferred Units on the next successive Distribution Payment Date.

The SeriesB Preferred Units will not have a stated maturity and will not be subject to mandatory redemption or any sinking fund. The SeriesB Preferred Units will remain outstanding indefinitely unless repurchased or redeemed by the Partnership. The SeriesB Preferred Units may be redeemed by the Partnership at its option (i)following the occurrence of certain ratings agency events, in whole but not in part, at a redemption price in cash of $1,020.00 per SeriesB Preferred Unit (102% of the liquidation preference of $1,000.00) plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, whether or not declared, or (ii)at any time on or after November15, 2022, in whole or in part, at a redemption price in cash of $1,000 per SeriesB Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, whether or not declared. Any such redemption would be effected only out of funds legally available for such purposes and would be subject to compliance with the provisions of the Partnership’s outstanding indebtedness.

Holders of SeriesB Preferred Units will generally have no voting rights, except for limited voting rights with respect to (i)potential amendments to the Seventh A&R Partnership Agreement that would have a material adverse effect on the existing preferences, rights, powers or duties of the SeriesB Preferred Units, (ii)the creation or issuance of any Parity Securities if the cumulative distributions payable on then outstanding SeriesB Preferred Units are in arrears, (iii)the creation or issuance of any Senior Securities and (iv)the payment of distributions to the Partnership’s common unitholders out of capital surplus.

The closing of the Offering is expected to occur on October10, 2017, subject to customary closing conditions. The Partnership expects to receive net proceeds from the Offering of approximately $787.8 million (after deducting Underwriters’ discounts and the estimated expenses) and intends to use such net proceeds to repay amounts outstanding under its credit facilities and commercial paper program and for general partnership purposes, which may include, among other things, repayment of indebtedness, acquisitions, capital expenditures and additions to working capital.

The Underwriting Agreement contains customary representations, warranties and agreements by the Partnership, and customary termination provisions, and it provides that the obligations of the Underwriters to purchase the ClassB Preferred Units are subject to customary closing conditions. The Underwriting Agreement also includes customary indemnification provisions to which the Partnership has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments the Underwriters may be required to make because of any of those liabilities.

The foregoing description of the Underwriting Agreement is qualified in its entirety by reference to the full text of the Underwriting Agreement, which is filed as Exhibit1.1 to this Current Report on Form8-K and is incorporated herein by reference.

ITEM 9.01 Financial Statements and Exhibits

(d)Exhibits.

Exhibit Number

Description

1.1

Underwriting Agreement, dated October4, 2017, by and among Plains All American Pipeline, L.P. and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner& Smith Incorporated, Morgan Stanley& Co. LLC and Wells Fargo Securities, LLC, as representatives of the several underwriters named therein.

5.1

Opinion of Vinson & Elkins L.L.P. relating to the legality of the securities.

8.1

Opinion of Vinson & Elkins L.L.P. relating to tax matters.

23.1

Consent of Vinson & Elkins L.L.P. (contained in Exhibits 5.1 and 8.1).


PLAINS ALL AMERICAN PIPELINE LP Exhibit
EX-1.1 2 a17-22685_4ex1d1.htm EX-1.1 Exhibit 1.1   PLAINS ALL AMERICAN PIPELINE,…
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About Plains All American Pipeline, L.P. (NYSE:PAA)

Plains All American Pipeline, L.P. owns and operates midstream energy infrastructure and provide logistics services for crude oil, natural gas liquids (NGL), natural gas and refined products. The Company operates through three segments: Transportation, Facilities, and Supply and Logistics. Its Transportation segment operations consist of activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges. Its Facilities segment operations consist of activities associated with providing storage, terminalling and throughput services for crude oil, refined products, NGL and natural gas, as well as NGL fractionation and isomerization services and natural gas and condensate processing services. Its supply and logistics segment operations consist of the merchant-related activities, including sale of gathered and bulk-purchased crude oil, as well as sales of NGL volumes purchased from suppliers and natural gas sales attributable to the activities.