Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report: December 17, 2002
ENTERPRISE PRODUCTS PARTNERS L.P.
ENTERPRISE PRODUCTS OPERATING L.P.
(Exact name of registrants as specified in their
charters)
Delaware Delaware |
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1-14323 333-93239-01 |
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76-0568219 76-0568220 |
(State or other jurisdiction of incorporation of organization) |
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(Commission File Number)
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(I.R.S. Employer Identification
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2727 North Loop West, Houston, Texas (Address of principal executive offices) |
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77008-1037 (Zip Code)
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Registrants telephone number, including area code:
(713) 880-6500
EXPLANATORY NOTE
This report constitutes a combined report for Enterprise Products Partners L.P. (Enterprise) (Commission File No. 1-14323) and its 98.9899% owned subsidiary, Enterprise Products Operating
L.P. (the Operating Partnership) (Commission File No. 333-93239-01). Since the Operating Partnership owns substantially all of Enterprises consolidated assets and conducts substantially all of Enterprises business and
operations, the information set forth herein constitutes combined information for Enterprise and the Operating Partnership.
Unless the
context requires otherwise, references to we, us or our are intended to mean the consolidated business and operations of Enterprise Products Partners L.P., which includes Enterprise Products Operating L.P. and its
subsidiaries.
Item 5. OTHER EVENTS.
On December 17, 2002, Enterprise Products Partners L.P. (NYSE: EPD) announced that it and its General Partner, Enterprise Products GP LLC, have amended Enterprises partnership
agreement to eliminate the General Partners incentive distribution right to receive 50% of total cash distributions with respect to that portion of quarterly cash distributions that exceed $0.392 per unit. This amendment is effective
immediately and no consideration was paid to the General Partner to give up this right.
Under the terms of the amendment, Enterprise has
capped the General Partners incentive distribution rights at its current level of 25% of the total cash distributions with respect to that portion of the quarterly cash distribution to partners that exceeds $0.3085 per unit. On November 12,
2002, Enterprise paid a distribution of $0.345 per unit with respect to the third quarter of 2002. Prior to the amendment, the General Partner was also entitled to 50% of the total quarterly cash distributions in excess of $0.392 per unit.
A copy of the press release announcing this amendment is attached as Exhibit 99.1 to this Current Report on Form 8-K. We have also
attached the amendment to the partnership agreement as Exhibit 3.5.
Item 7. FINANCIAL STATEMENTS AND
EXHIBITS.
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(a) |
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Financial statements of businesses acquired. |
Not applicable.
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(b) |
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Pro forma unaudited financial information. |
Not applicable.
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3.5 |
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Amendment No. 2 to Third Amended and Restated Agreement of Limited Partnership of Enterprise Products Partners L.P. dated December 17, 2002.
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99.1 |
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Press Release regarding change in General Partners incentive distribution rights. |
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99.2 |
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Slide Presentation regarding change in General Partners incentive distribution rights. |
Item 9. REGULATION FD DISCLOSURE
On December 17, 2002, Enterprise will host a conference call that will further discuss the aforementioned amendment to Enterprises partnership agreement. The call will be broadcast live over the Internet at 5:30 p.m. Eastern
Time. To access the webcast, participants should visit Enterprises website (http://www.epplp.com) at least fifteen minutes prior to the start of the conference call to download and install any necessary audio software. A slide presentation
describing the amendment is filed as Exhibit 99.2 to this Current Report on Form 8-K. This information is also available on our website under Investor Information, Presentations.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their
behalf by the undersigned hereunto duly authorized.
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ENTERPRISE PRODUCTS PARTNERS L.P. |
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ENTERPRISE PRODUCTS OPERATING L.P. |
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By: |
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Enterprise Products GP, LLC, the general partner of Enterprise and Operating Partnership |
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Date: December 17, 2002 |
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By: |
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/s/ Michael J. Knesek
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Michael J. Knesek Vice President, Controller, and Principal Accounting Officer of Enterprise Products GP, LLC |
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Partnership Agreement
EXHIBIT 3.5
AMENDMENT NO. 2
TO
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ENTERPRISE PRODUCTS PARTNERS L.P.
This Amendment No. 2, dated as of December 17, 2002 (this Amendment), to the Third Amended and Restated Agreement of Limited
Partnership of Enterprise Products Partners L.P. (the Partnership Agreement), is entered into by and among Enterprise Products GP, LLC, a Delaware limited liability company, as the General Partner, and the Limited Partners as provided
herein. Each capitalized term used but not otherwise defined herein shall have the meaning assigned to such term in the Partnership Agreement.
W I T N E S S E T H:
WHEREAS, Section 13.1(d) of the Partnership Agreement
provides that the General Partner, without the approval of any Partner, may amend any provision of the Partnership Agreement to reflect a change that, in the discretion of the General Partner, does not adversely affect the Limited Partners in any
material respect; and
WHEREAS, the General Partner deems it in the best interest of the Partnership to effect
this Amendment in order to reduce the highest level of Incentive Distributions that the General Partner is entitled to receive under the Partnership Agreement from 49.4898% to 24.2347%; and
WHEREAS, on December 17, 2002, the Board of Directors and the Executive Committee of the General Partner approved this Amendment;
NOW, THEREFORE, the Partnership Agreement is hereby amended as follows:
1. Section 6.1(c)(i) is hereby amended to read in its entirety as follows:
(i) If a Net Termination Gain is recognized (or deemed recognized pursuant to Section 5.5(d)), such Net Termination Gain shall be
allocated among the Partners in the following manner (and the Capital Accounts of the Partners shall be increased by the amount so allocated in each of the following subclauses, in the order listed, before an allocation is made pursuant to the next
succeeding subclause):
A. First, to each Partner having a deficit balance
in its Capital Account, in the proportion that such deficit balance bears to the total deficit balances in the Capital Accounts of all Partners, until each such Partner has been allocated Net Termination Gain equal to any such deficit balance in its
Capital Account;
B. Second, if prior to the conversion of the last
Outstanding Class A Special Unit, the Per Unit Capital Amount with respect to a Class A Special Unit is higher or lower than the Per Unit Capital Amount with respect to each Common Unit, 99% to the Unitholders holding Common Units and Class A
Special Units in the manner and amount necessary to equalize, to the maximum extent possible, the Per Unit Capital Amount with respect to each Common Unit and each Class A Special Unit, and 1% to the General Partner;
C. Third, 99% to all Unitholders holding Common Units, in proportion to their relative Percentage
Interests, and 1% to the General Partner until the Capital Account in respect of each Common Unit then Outstanding is equal to the sum of (1) its Unrecovered Capital plus (2) the Minimum Quarterly Distribution for the Quarter during which the
Liquidation Date occurs, reduced by any distribution pursuant to Section 6.4(a)(i) or (b)(i) with respect to such
Common Unit for such Quarter (the amount determined pursuant to this clause (2)
is hereinafter defined as the Unpaid MQD), plus (3) any then existing Cumulative Common Unit Arrearage;
D. Fourth, if such Net Termination Gain is recognized (or is deemed to be recognized) prior to the expiration of the Subordination Period, 99% to all Unitholders holding Subordinated Units, in
proportion to their relative Percentage Interests, and 1% to the General Partner until the Capital Account in respect of each Subordinated Unit then Outstanding equals the sum of (1) its Unrecovered Capital, determined for the taxable year (or
portion thereof) to which this allocation of gain relates, plus (2) the Minimum Quarterly Distribution for the Quarter during which the Liquidation Date occurs, reduced by any distribution pursuant to Section 6.4(a)(iii) with respect to such
Subordinated Unit for such Quarter;
E. Fifth, 99% to all Unitholders, in
accordance with their relative Percentage Interests, and 1% to the General Partner until the Capital Account in respect of each Common Unit then Outstanding is equal to the sum of (1) its Unrecovered Capital, plus (2) the Unpaid MQD, plus (3) any
then existing Cumulative Common Unit Arrearage, plus (4) the excess of (aa) the First Target Distribution less the Minimum Quarterly Distribution for each Quarter of the Partnerships existence over (bb) the cumulative per Unit amount of any
distributions of Operating Surplus that was distributed pursuant to Sections 6.4(a)(iv) and 6.4(b)(ii) (the sum of (1) plus (2) plus (3) plus (4) is hereinafter defined as the First Liquidation Target Amount);
F. Sixth, 85.8673% to all Unitholders, in accordance with their relative Percentage Interests, and
14.1327% to the General Partner until the Capital Account in respect of each Common Unit then Outstanding is equal to the sum of (1) the First Liquidation Target Amount, plus (2) the excess of (aa) the Second Target Distribution less the First
Target Distribution for each Quarter of the Partnerships existence over (bb) the cumulative per Unit amount of any distributions of Operating Surplus that was distributed pursuant to Sections 6.4(a)(v) and 6.4(b)(iii); and
G. Finally, any remaining amount 75.7653% to all Unitholders, in accordance with their
relative Percentage Interests, and 24.2347% to the General Partner.
2. Section 6.4 is
hereby amended to read in its entirety as follows:
(a) During
Subordination Period. Available Cash with respect to any Quarter within the Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section 6.3 or 6.5 shall, subject to Section 17- 607 of the Delaware Act, be
distributed as follows, except as otherwise required by Section 5.6(b) in respect of additional Partnership Securities issued pursuant thereto:
(i) First, 99% to the Unitholders holding Common Units, Pro Rata, and 1% to the General Partner until there has been distributed in respect of each Common Unit then Outstanding
an amount equal to the Minimum Quarterly Distribution for such Quarter;
(ii)
Second, 99% to the Unitholders holding Common Units, Pro Rata, and 1% to the General Partner until there has been distributed in respect of each Common Unit then Outstanding an amount equal to the Cumulative Common Unit
Arrearage existing with respect to such Quarter;
(iii) Third, 99% to the
Unitholders holding Subordinated Units, Pro Rata, and 1% to the General Partner until there has been distributed in respect of each Subordinated Unit then Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;
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(iv) Fourth, 99% to all Unitholders
holding Common Units and all Unitholders holding Subordinated Units, Pro Rata, and 1% to the General Partner until there has been distributed in respect of each such Unit then Outstanding an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution for such Quarter;
(v)
Fifth, 85.8673% to all Unitholders holding Common Units and all Unitholders holding Subordinated Units, Pro Rata, and 14.1327% to the General Partner until there has been distributed in respect of each such Unit then
Outstanding an amount equal to the excess of the Second Target Distribution over the First Target Distribution for such Quarter; and
(vi) Thereafter, 75.7653% to all Unitholders holding Common Units and all Unitholders holding Subordinated Units, Pro Rata, and 24.2347% to the General Partner;
provided, however, if the Minimum Quarterly Distribution, the First Target Distribution and the Second Target Distribution have
been reduced to zero pursuant to the second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be Operating Surplus with respect to any Quarter will be made solely in accordance with Section 6.4(a)(vi).
(b) After Subordination Period. Available Cash with respect to any Quarter after the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section 6.3 or 6.5, subject to Section 17-607 of the Delaware Act, shall be distributed as follows, except as otherwise required by Section 5.6(b) in respect
of additional Partnership Securities issued pursuant thereto:
(i) First,
99% to all Unitholders holding Common Units and all Unitholders holding Subordinated Units, Pro Rata, and 1% to the General Partner until there has been distributed in respect of each such Unit then Outstanding an amount equal to the Minimum
Quarterly Distribution for such Quarter;
(ii) Second, 99% to all
Unitholders holding Common Units and all Unitholders holding Subordinated Units, Pro Rata, and 1% to the General Partner until there has been distributed in respect of each such Unit then Outstanding an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution for such Quarter;
(iii)
Third, 85.8673% to all Unitholders holding Common Units and all Unitholders holding Subordinated Units, Pro Rata, and 14.1327% to the General Partner until there has been distributed in respect of each such Unit then
Outstanding an amount equal to the excess of the Second Target Distribution over the First Target Distribution for such Quarter;
(iv) Thereafter, 75.7653% to all Unitholders holding Common Units and all Unitholders holding Subordinated Units, Pro Rata, and 24.2347% to the General Partner;
provided, however, if the Minimum Quarterly Distribution, the First Target Distribution and the Second Target Distribution have
been reduced to zero pursuant to the second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be Operating Surplus with respect to any Quarter will be made solely in accordance with Section 6.4(b)(iv).
3. Section 6.6(a) is hereby amended to delete the references to the Third Target Distribution.
4. Section 6.6(b) is hereby amended to delete the reference to the Third Target
Distribution.
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5. Section 6.8 is hereby amended to delete the reference
to the Third Target Distribution.
6. In Attachment I to the Partnership Agreement, the
definitions of Second Liquidation Target Amount and Third Target Distribution are hereby deleted, and the definition of Incentive Distributions is hereby amended to delete the references to Section 6.4(a)(vii) and
Section 6.4(b)(v).
7. As amended hereby, the Partnership Agreement is in all respects
ratified, confirmed and approved and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the date first written above.
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GENERAL PARTNER: |
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ENTERPRISE PRODUCTS GP, LLC |
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By: |
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/s/ Richard H. Bachmann
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Richard H. Bachmann |
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Executive Vice President |
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LIMITED PARTNERS: |
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All Limited Partners now and hereafter admitted as Limited Partners of the Partnership, pursuant to Powers of Attorney now and hereafter executed in favor
of, and granted and delivered to the General Partner. |
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By: |
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Enterprise Products GP, LLC |
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General Partner, as attorney-in-fact for the Limited Partners pursuant to the Powers of Attorney granted pursuant to Section 2.6 |
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By: |
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/s/ Richard H. Bachmann
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Richard H. Bachmann |
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Executive Vice President |
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Press Release
[LOGO OF ENTERPRISE] |
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Enterprise Products Partners L.P. P.O. Box 4324 Houston, TX 77210 (713) 880-6500 |
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EXHIBIT 99.1 |
Enterprise Eliminates General Partners 50% Incentive Rights
Houston, Texas December 17, 2002 Enterprise Products Partners L.P. (NYSE: EPD)
announced that it and its general partner, Enterprise Products GP LLC, have amended Enterprises partnership agreement to eliminate the general partners incentive distribution right to receive 50% of total cash distributions with respect
to that portion of quarterly cash distributions that exceed $0.392 per unit. This amendment is effective immediately and no consideration was paid to the general partner to give up this right.
Under the terms of the amendment, Enterprise has capped the general partners incentive distribution rights at its current level of 25% of the total cash
distributions with respect to that portion of the quarterly cash distribution to partners that exceeds $0.3085 per unit. On November 12, 2002, Enterprise paid a distribution of $0.345 per unit with respect to the third quarter of 2002. Prior to the
amendment, the general partner was also entitled to 50% of the total quarterly cash distributions in excess of $0.392 per unit.
The elimination of the general partners 50% incentive distribution rights significantly increases the intrinsic value of our limited partner units, said O.S. Dub Andras, President and Chief Executive
Officer of Enterprise. This amendment is consistent with our efforts to maximize the long-term total return of our limited partner units, including our goal of increasing the cash distribution rate on our units by at least 10% per year.
We believe that as our partnership continues to grow, this action will substantially increase the amount of
cash available for distributions to our limited partners, for reinvestment in the growth of our partnership and for debt retirement to provide our partnership with greater financial flexibility. Eliminating the general partners highest level
of incentive distributions reduces our cash cost of capital, which should enable us to provide our limited partners with greater economic returns on capital investments, stated Andras.
Today, Enterprise will host a conference call that will further discuss this amendment to Enterprises partnership agreement. The call will be broadcast live over the
Internet at 5:30 p.m. Eastern Time at http://www.epplp.com. To access the webcast, participants should visit the home page of the website, at least fifteen minutes prior to the start of the conference call to download and install any necessary audio
software.
Enterprise Products Partners L.P. is the second largest publicly traded, midstream energy partnership
with an enterprise value of approximately $6 billion. Enterprise is a leading North American provider of midstream energy services to producers and consumers of natural gas and natural gas liquids (NGLs). The Companys services
include natural gas transportation, processing and storage and NGL fractionation (or separation), transportation, storage and import/export terminalling.
This press release contains various forward-looking statements and information that are based on the Companys beliefs and those of its general partner, as well as assumptions made by and
information currently available to the Company. When used in this press release, words such as anticipate, project, expect, plan, goal, forecast, intend,
could, believe, may, and similar expressions and statements regarding the plans and objectives of the Company for future operations, are intended to identify forward-looking statements. Although the Company and
its general partner believe that such expectations reflected in such forward looking statements are reasonable, neither the Company nor its general partner can give assurances that such expectations will prove to be correct. Such statements are
subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if
underlying assumptions prove incorrect, the Companys actual results may vary materially from those
the Company anticipated, estimated, projected or expected. Among the key risk factors that may have a direct bearing on the Companys results of operations and financial condition are:
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competitive practices in the industries in which the Company competes; |
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fluctuations in oil, natural gas and NGL prices and production due to weather and other natural and economic forces; |
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operational and systems risks; |
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environmental liabilities that are not covered by indemnity or insurance; |
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the impact of current and future laws and governmental regulations (including environmental regulations) affecting the midstream energy industry in general and
the Companys NGL and natural gas operations in particular; |
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the loss of a significant customer; |
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the use of financial instruments to hedge commodity and other risks that prove to be economically ineffective; and |
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failure to complete one or more new projects on time or within budget. |
The Company has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Contact: Randy Burkhalter, Investor Relations, Enterprise Products Partners L.P. (713) 880-6812, www.epplp.com
Presentation