Plains All American Pipeline, L.P. and Plains GP Holdings Announce Distributions; PAA Confirms 2016 Adjusted EBITDA Guidance
Plains
All American Pipeline, L.P. (NYSE: PAA)
and Plains
GP Holdings (NYSE: PAGP)
today announced their quarterly distributions with respect to the second
quarter of 2016. The distributions will be payable on August 12, 2016 to
holders of record of each security at the close of business on July 29,
2016.
PAA announced a quarterly cash distribution of $0.70 per common unit
($2.80 per unit on an annualized basis), which is unchanged from the
quarterly distribution paid in May 2016. Additionally, PAA announced a
payment-in-kind (“PIK”) of the quarterly distribution with respect to
its Series A Preferred Units, which will result in the issuance of an
additional 1,237,765 Series A Preferred Units. The PIK amount equates to
a quarterly distribution of $0.525 per Series A Preferred Unit or $2.10
annualized.
PAGP announced a quarterly cash distribution of $0.231 per Class A share
($0.924 per Class A share on an annualized basis), which is unchanged
from the quarterly distribution paid in May 2016.
PAA also stated that it plans to release second-quarter earnings and
furnish financial guidance after market close on Tuesday, August 2,
2016. PAA currently forecasts that its full year 2016 adjusted EBITDA
guidance will be in line with the $2.175 billion midpoint guidance
furnished on May 4, 2016.
In a separate release today, PAA and PAGP announced the results of its
simplification process and related actions. In connection with the
simplification transaction (“Simplification Transaction”) and effective
with the third quarter distribution to be paid in November, PAA intends
to pay a quarterly distribution of $0.55 per common unit ($2.20 per unit
on an annualized basis). This equates to a 21% reduction to the current
quarterly payout per PAA common unit. Giving effect to the
Simplification Transaction, the pro forma quarterly distribution payable
to the holders of PAGP Class A shares for the third quarter of 2016 will
be $0.2065 per Class A share ($0.8260 annually), representing an 11%
reduction from the current quarterly distribution per PAGP Class A share.
PAA will conduct a conference call on Tuesday, July 12, 2016 to further
discuss the Simplification Transaction, quarterly distributions, PAA’s
confirmation of its 2016 adjusted EBITDA guidance and related matters.
The conference call will be held at 8:30 a.m. ET (7:30 a.m. CT). Access
to the live webcast is available at either of the addresses below.
Registering for the webcast in advance is recommended.
www.plainsallamerican.com
(Navigate to: Investor Relations/ either “PAA” or “PAGP”/ News & Events/
Conference Calls)
or
https://event.webcasts.com/starthere.jsp?ei=1089822
The slide presentation accompanying the conference call will be posted a
few minutes prior to the call at www.plainsallamerican.com
under the “Investor Relations” sections of the website (Navigate to:
Investor Relations/ either “PAA” or “PAGP”/ News & Events/ Conference
Calls).
Additional Information and Where to Find It
The Simplification Transaction will be submitted to the shareholders of
PAGP for their consideration, and PAGP will file with the SEC a proxy
statement to be used by PAGP to solicit the required approval of its
shareholders in connection with the Simplification Transaction. PAGP
also plans to file other documents with the SEC regarding the proposed
Simplification Transaction. INVESTORS AND SECURITY HOLDERS OF PAGP ARE
URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS THAT WILL
BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
SIMPLIFICATION TRANSACTION. Security holders may obtain free copies of
the proxy statement and other documents containing important information
about PAGP, once such documents are filed with the SEC, through the
website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed with the SEC by PAGP will be available
free of charge on PAGP’s website at ir.pagp.com
or by contacting PAGP’s Investor Relations Department at (866) 809-1291.
Participants in the Solicitation
PAGP and the directors and executive officers of its general partner
(“PAGP GP”), and PAA and the directors and executive officers of the
general partner of the sole member of its general partner, Plains All
American GP LLC (”GP LLC”), may be deemed to be “participants” in the
solicitation of proxies from PAGP’s shareholders in connection with the
Simplification Transaction. Information about the directors and
executive officers of PAGP GP is set forth in PAGP’s Annual Report on
Form 10-K and information about the directors and executive officers of
GP LLC is set forth in PAA’s Annual Report on Form 10-K, which were each
filed with the SEC on February 25, 2016, and PAGP’s and PAA’s subsequent
Quarterly Reports on Form 10-Q. These documents can be obtained free of
charge from the sources indicated above. Other information regarding the
participants in the proxy solicitation and a description of their direct
and indirect interests, by security holdings or otherwise, will be
contained in the proxy statement that PAGP intends to file with the SEC.
Non-GAAP Financial Measures
EBITDA and adjusted EBITDA are non-GAAP financial measures that are most
directly comparable to GAAP measures of net income and cash flow from
operating activities. PAA does not, however, reconcile cash flows from
operating activities to EBITDA or adjusted EBITDA because such
reconciliations are impractical for a forecasted period. Adjusted EBITDA
excludes selected items impacting comparability, which are items that
PAA management believes should be excluded in understanding PAA’s core
operating performance. PAA’s Form 8-K furnished on May 4, 2016 presents
a calculation of EBITDA and adjusted EBITDA, a reconciliation of these
non-GAAP measures to the most directly comparable GAAP measures and
further discussion regarding why PAA management believes that the
presentation of such financial measures provides useful information to
investors regarding performance. A copy of PAA’s May 4th Form 8-K is
available on PAA’s website (www.plainsallamerican.com)
under “Investor Relations — Financial Information — Operating &
Financial Guidance,” or “Investor Relations — Financial Information —
SEC Filings.” In addition, PAA maintains a reconciliation of all
non-GAAP financial information, such as EBITDA and adjusted EBITDA, to
the most comparable GAAP measures under “Investor Relations — Financial
Information — Non-GAAP Reconciliations” section of its website.
Forward Looking Statements
Except for the historical information contained herein, the matters
discussed in this release consist of forward-looking statements that
involve certain risks and uncertainties that could cause actual results
or outcomes to differ materially from results or outcomes anticipated in
the forward-looking statements. These risks and uncertainties include,
among other things, declines in the volume of crude oil, refined product
and NGL shipped, processed, purchased, stored, fractionated and/or
gathered at or through the use of our assets, whether due to declines in
production from existing oil and gas reserves, failure to develop or
slowdown in the development of additional oil and gas reserves, whether
from reduced cash flow to fund drilling or the inability to access
capital, or other factors; the effects of competition; failure to
implement or capitalize, or delays in implementing or capitalizing, on
expansion projects; unanticipated changes in crude oil market structure,
grade differentials and volatility (or lack thereof); environmental
liabilities or events that are not covered by an indemnity, insurance or
existing reserves; fluctuations in refinery capacity in areas supplied
by our mainlines and other factors affecting demand for various grades
of crude oil, refined products and natural gas and resulting changes in
pricing conditions or transportation throughput requirements; the
occurrence of a natural disaster, catastrophe, terrorist attack or other
event, including attacks on our electronic and computer systems;
maintenance of our credit rating and ability to receive open credit from
our suppliers and trade counterparties; tightened capital markets or
other factors that increase our cost of capital or limit our ability to
obtain debt or equity financing on satisfactory terms to fund additional
acquisitions, expansion projects, working capital requirements and the
repayment or refinancing of indebtedness; the currency exchange rate of
the Canadian dollar; continued creditworthiness of, and performance by,
our counterparties, including financial institutions and trading
companies with which we do business; inability to recognize current
revenue attributable to deficiency payments received from customers who
fail to ship or move more than minimum contracted volumes until the
related credits expire or are used; non-utilization of our assets and
facilities; increased costs, or lack of availability, of insurance;
weather interference with business operations or project construction,
including the impact of extreme weather events or conditions; the
availability of, and our ability to consummate, acquisition or
combination opportunities; the successful integration and future
performance of acquired assets or businesses and the risks associated
with operating in lines of business that are distinct and separate from
our historical operations; the effectiveness of our risk management
activities; shortages or cost increases of supplies, materials or labor;
the impact of current and future laws, rulings, governmental
regulations, accounting standards and statements and related
interpretations; fluctuations in the debt and equity markets, including
the price of our units at the time of vesting under our long-term
incentive plans; risks related to the development and operation of our
assets, including our ability to satisfy our contractual obligations to
our customers; factors affecting demand for natural gas and natural gas
storage services and rates; general economic, market or business
conditions and the amplification of other risks caused by volatile
financial markets, capital constraints and pervasive liquidity concerns;
and other factors and uncertainties inherent in the transportation,
storage, terminalling and marketing of crude oil and refined products,
as well as in the storage of natural gas and the processing,
transportation, fractionation, storage and marketing of natural gas
liquids as discussed in the Partnerships' filings with the Securities
and Exchange Commission.
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.
Plains GP Holdings is a publicly traded entity that owns an interest in
the general partner and incentive distribution rights of Plains All
American Pipeline, L.P., one of the largest energy infrastructure and
logistics companies in North America. PAGP is headquartered in Houston,
Texas.
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