Plains All American to repay revolver debt using new issue proceeds

By Susanna Moon

Chicago, Nov. 15 – Plains All American Pipeline, LP plans to repay debt under its five-year senior revolving credit facility using proceeds of a planned new senior notes issue, according to a 424B5 filing with the Securities and Exchange Commission.

Proceeds also will be used to repay commercial paper and for general partnership purposes.

Plains said it may draw debt in the future under its revolver and commercial paper program to fund its expansion capital program, for future acquisitions and investments or for general partnership purposes.

As of Monday, the company had about $900 million of debt outstanding under its senior secured hedged inventory facility with a weighted average interest rate of 1.6%.

The company had no debt outstanding under its revolver as of Monday and planned to borrow $642 million under the revolver and its senior secured hedged inventory facility on Tuesday to repay the debt incurred for its “simplification agreement.”

There was no debt outstanding under the company’s senior 364-day revolving credit facility, and there was about $756 million outstanding under its commercial paper program with a weighted average interest rate of about 1.44% with maturity dates of three months or less. The commercial paper program is backstopped by the company’s senior secured hedged inventory facility and its five-year revolver. The company’s commercial paper is used to fund hedged NGL and crude oil inventory and Nymex and ICE margin deposits, capital investments and for other general partnership purposes.

The company said it entered into a simplification agreement on July 11 with Plains GP Holdings, LP, Plains AAP, LP, PAA GP LLC, Plains All American GP LLC and PAA GP Holdings LLC. Under the simplification agreement, in exchange for the issue by the company to Plains AAP of about 245.5 million common units and the assumption of Plains AAP's outstanding debt of about $642 million, Plains AAP will contribute incentive distribution rights for cancellation, and PAA GP's 2% economic general partner interest will be converted into a non-economic general partner interest.

After the simplification agreement closes on Tuesday, PAA and PAGP will continue to be publicly traded, and the company will be required to repay the debt of Plains AAP assumed by the company in connection with the simplification agreement within two business days, with settlement on Thursday.

Plains is an oil and natural gas transportation, production and storage company based in Houston.

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