Plains All American Pipeline, L.P. and Plains GP Holdings, L.P. Announce Closing of Simplification Transactions
November 15 2016 - 4:22PM
Business Wire
Plains All American Pipeline, L.P. (NYSE: PAA) and Plains GP
Holdings (NYSE: PAGP) announced the closing of the transactions
(the “Simplification Transactions”) contemplated by the July 11,
2016 Simplification Agreement entered into by such parties and
certain affiliated entities (the “Simplification Agreement”). In
satisfaction of one of the conditions to the closing of the
Simplification Transactions, PAGP also announced that, at a special
meeting of limited partners of PAGP held today, holders of
approximately 579.8 million Class A and Class B shares, or
approximately 99.9% of the number of Class A and Class B shares
that voted at such meeting representing approximately 90.3% of the
aggregate number of Class A and Class B shares outstanding and
entitled to vote as of the September 30, 2016 record date for such
meeting, voted in favor of a proposal to approve the Simplification
Agreement and the Simplification Transactions. In addition, 99.8%
of the Class A shares that voted at such meeting voted in favor of
such proposal, which shares constituted approximately 77.2% of the
aggregate number of Class A shares outstanding and entitled to vote
as of such record date.
The Simplification Transactions completed today included the
following:
- the permanent elimination of PAA's
incentive distribution rights and the economic rights associated
with PAA's 2% general partner interest in exchange for the issuance
by PAA to Plains AAP, L.P. (“AAP”) of 245,500,000 PAA common units
(including approximately 800,000 units to be issued in the future)
representing an approximate 34% limited partner interest in PAA,
and the assumption by PAA of all of AAP's outstanding debt
(approximately $642 million);
- as previously announced, the execution
by PAGP of a reverse split of its Class A and Class B shares at a
ratio of approximately 1-for-2.663;
- the implementation of a unified
governance structure pursuant to which the board of directors of
PAGP’s general partner (the “PAGP Board”) has assumed oversight
responsibility over both PAA and PAGP, the board of PAA’s general
partner has been eliminated and the size of the PAGP Board has been
expanded to 10 members to include the three members of the former
PAA board who were not already serving on the PAGP Board;
- the classification of the PAGP Board
(excluding the CEO) into three classes with initial terms expiring
in 2018, 2019 and 2020, with each class having a three year term
following its initial term;
- provision for shareholder election of
certain directors with expiring terms beginning in 2018, and the
participation of PAA’s common unitholders in such elections through
PAA’s ownership of newly issued Class C shares in PAGP, which
provide PAA, as the sole holder, the right to vote in elections of
eligible PAGP directors together with the holders of PAGP Class A
and Class B shares; and the granting to holders of AAP Class A
units (other than PAGP) of the right to cause AAP to redeem such
Class A units in exchange for an equivalent number of PAA common
units held by AAP, subject to certain limitations; and
- the entry by PAA, AAP and PAGP into an
Omnibus Agreement designed to promote economic alignment between
PAGP’s Class A shareholders and PAA’s common unitholders by, among
other measures, maintaining a one-to-one relationship between the
number of PAGP outstanding Class A shares and the number of PAA
common units indirectly owned by PAGP through AAP.
“We are pleased with the overwhelming support of the
Simplification Transactions by PAGP’s shareholders,” stated Greg
Armstrong, Chairman and CEO of Plains All American. “The closing of
the Simplification Transactions simplifies our capital structure,
better aligns the interests of our equity stakeholders, streamlines
our governance structure, improves PAA’s overall credit profile,
reduces PAA’s cost of equity capital and improves its distribution
coverage, while allowing us to maintain the tax efficient
flexibility of our current organizational structure.”
Plains All American Pipeline, L.P. is a publicly traded master
limited partnership that owns and operates midstream energy
infrastructure and provides logistics services for crude oil,
natural gas liquids ("NGL"), natural gas and refined products. PAA
owns an extensive network of pipeline transportation, terminalling,
storage and gathering assets in key crude oil and NGL producing
basins and transportation corridors and at major market hubs in the
United States and Canada. On average, PAA handles over 4.6 million
barrels per day of crude oil and NGL in its Transportation segment.
PAA is headquartered in Houston, Texas.
PAGP is a publicly traded entity that owns a non-economic
controlling interest in the general partner of PAA and an indirect
14% limited partner interest in PAA, one of the largest energy
infrastructure and logistics companies in North America. PAGP is
headquartered in Houston, Texas.
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Plains All American Pipeline, L.P. and Plains GP HoldingsRyan
Smith, (866) 809-1291Director, Investor Relations
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