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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 (Date of earliest event reported): August 12, 1997
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BUCKEYE PARTNERS, L.P.
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(Exact name of Registrant specified in Charter)
Delaware 1-9356 23-2432497
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(State or Other (Commission (IRS Employee
Jurisdiction of File Number) Identification No.)
Incorporation)
3900 Hamilton Boulevard
Allentown, Pennsylvania 18103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone, including area code: (610) 770-4700
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(Former Name and Former Address, if Changed Since Last Report)
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Item 5. Other Events.
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On August 12, 1997, the Partnership restructured the BMC Acquisition
Company Employee Stock Ownership Plan (the "ESOP") by replacing the ESOP's
investment in BMC Acquisition Company Series A Convertible Preferred Stock,
stated value $1,000 per share (the "BAC Preferred Stock"), with a beneficial
ownership interest in LP Units representing limited partnership interests ("LP
Units") issued by the Partnership (the "ESOP Restructuring"). Pursuant to the LP
Unit Subscription Agreement, dated August 12, 1997 (the "LP Unit Subscription
Agreement"), the Partnership issued 1,286,573 LP Units to Buckeye Pipe Line
Services Company, a Pennsylvania corporation wholly owned by the ESOP
("Services"), in consideration for receiving the 63,000 shares of BAC Preferred
Stock owned by the ESOP. On the same date, Services became the sponsor of the
ESOP and the employer of all of the employees previously employed by Buckeye
Pipe Line Company, the sole general partner and manager of each of the
Partnership's operating partnerships (the "Manager"). Pursuant to an Exchange
Agreement, dated August 12, 1997 (the "Exchange Agreement"), the BAC Preferred
Stock received by the Partnership in exchange for the issuance of LP Units to
Services (after being converted to BMC Acquisition Company Common Stock) was
exchanged for, among other things, (i) the permanent release of the
Partnership's obligation to reimburse Buckeye Management Company, the general
partner of the Partnership (the "General Partner"), and its affiliates for
certain senior executive compensation costs, and (ii) the reduction of the
General Partner's incentive compensation under the Incentive Compensation
Agreement (as discussed below).
In connection with the ESOP Restructuring, the General Partner's $63
million, 15-year term loan (the "ESOP Loan") was restructured. The amount, term
and interest rate applicable to the ESOP Loan were not changed, but the ESOP
became the direct borrower under the ESOP Loan rather than the General Partner.
The ESOP secured the ESOP Loan with, among other things, a pledge of the LP
Units held by Services. The ESOP Loan is guaranteed by BMC Acquisition Company,
the parent of the General Partner ("BAC"), the Manager, the General Partner and
Services. The distributions on the LP Units held by the ESOP will be used to pay
the principal and interest on the ESOP Loan. The General Partner will make an
additional contribution to the ESOP (the "top-up contribution"), if necessary,
to pay any balance due under the ESOP Loan. The top-up contribution would be
reimbursed by the Partnership to the extent it exceeds certain reserves
established by the General Partner for that purpose under the Exchange
Agreement.
The Incentive Compensation Agreement was amended as part of the ESOP
Restructuring to provide that, subject to certain limitations and adjustments,
if a quarterly cash distribution exceeds a target of $0.65 per LP Unit, the
Partnership will pay the General Partner, in respect of each outstanding LP
Unit, incentive compensation equal to (i) 15% of that portion of the
distribution per LP Unit which exceeds the target quarterly amount of $0.65 but
is not more than $0.70; plus (ii) 25% of the amount, if any, by which the
quarterly distribution per LP Unit exceeds $0.70 but is not more than $0.75;
plus (iii) 30% of the amount, if any, by which the
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quarterly distribution per LP Unit exceeds $0.75 but is not more than $0.80;
(iv) 35% of the amount, if any, by which the quarterly distribution per LP Unit
exceeds $0.80 but is not more than $0.85; (v) 40% of the amount, if any, by
which the quarterly distribution per LP Unit exceeds $0.85 but is not more than
$1.05; and (vi) 45% of the amount, if any, by which the quarterly distribution
per LP Unit exceeds $1.05. In the amended Incentive Compensation Agreement, the
General Partner agreed not to receive any incentive compensation on
distributions on the LP Units issued pursuant to the ESOP Restructuring. The
General Partner will be entitled to receive approximately $3.1 million on an
annualized basis if cash distributions to unitholders remain at $3.52 per year.
The Amended and Restated Agreement of Limited Partnership, as amended (the
"Partnership Agreement"), was amended as part of the ESOP Restructuring to,
among other things, (i) relieve the General Partner of any obligation to make an
additional capital contribution to the Partnership upon the issuance of
additional LP Units if the General Partner receives a legal opinion that such
additional capital contribution is not required for the Partnership or any of
its operating partnerships to avoid being treated as an association taxable as a
corporation for federal income tax purposes and (ii) to bind any successor
general partner, upon removal and replacement of the General Partner by the
unitholders, to the obligations of the General Partner and its affiliates under
the Exchange Agreement and to consider this obligation in determining the value
of the general partnership interest which must be acquired by a successor
general partner.
The issuance of LP Units to Services in exchange for BAC Preferred Stock
and the amendment of the Partnership Agreement were approved by unitholders
holding approximately 63 percent of the outstanding LP Units at the Special
Meeting of Unitholders held on August 11, 1997.
The Board of Directors of the General Partner announced on August 12, 1997,
a regular quarterly Partnership cash distribution of $.88 per LP Unit payable
August 29, 1997, to unitholders of record on August 22, 1997. This cash
distribution represents a quarterly increase of $.13 per LP Unit, an increase of
over 17 percent from the prior quarterly cash distribution level of $.75 per LP
Unit, to an indicated annual cash distribution level of $3.52 per LP Unit. The
amount of cash available for distribution to the unitholders by the Partnership
is determined quarterly by the Board of Directors of the General Partner based
upon numerous factors, including profitability of operations, fluctuations in
working capital, capital expenditures, prevailing economic conditions and
financial, business and other factors.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits.
Exhibit No. Exhibit
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3.1 Amendment No. 3 to Amended and Restated Agreement of
Limited Partnership of Buckeye Partners, L.P. dated
August 12, 1997 (Incorporated herein by reference
from the Partnership's Proxy Statement dated June 24,
1997).
10.1 LP Unit Subscription Agreement, dated as of August
12, 1997, between Buckeye Partners, L.P. and Buckeye
Pipe Line Services Company (Incorporated herein by
reference from the Partnership's Proxy Statement
dated June 28, 1997).
10.2 Exchange Agreement, dated as of August 12, 1997,
among Buckeye Management Company, Buckeye Partners,
L.P., Buckeye Pipe Line Company, Buckeye Pipe Line
Company, L.P., Buckeye Pipe Line Company of
Michigan, L.P., Laurel Pipe Line Company, L.P.,
Everglades Pipe Line Company, L.P., Buckeye Tank
Terminals Company, L.P. and BMC Acquisition Company
(Incorporated herein by reference from the
Partnership's Proxy Statement dated June 24, 1997).
99.1 Press release, dated August 12, 1997
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Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BUCKEYE PARTNERS, L.P.
By: Buckeye Management Company,
Its General Partner
By: /s/ Stephen C. Muther
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Name: Stephen C. Muther
Title: Senior Vice President, Administration,
General Counsel and Secretary
Dated: August 18, 1997
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Exhibit Index
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Exhibit No. Exhibit Page
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3.1 Amendment No. 3 to Amended and Restated
Agreement of Limited Partnership of
Buckeye Partners, L.P. dated August 12,
1997 (Incorporated herein by reference
from the Partnership's Proxy Statement
dated June 24, 1997).
10.1 LP Unit Subscription Agreement, dated as
of August 12, 1997, between Buckeye
Partners, L.P. and Buckeye Pipe Line
Services Company (Incorporated herein by
reference from the Partnership's Proxy
Statement dated June 28, 1997).
10.2 Exchange Agreement, dated as of August 12,
1997, among Buckeye Management Company,
Buckeye Partners, L.P., Buckeye Pipe Line
Company, Buckeye Pipe Line Company, L.P.,
Buckeye Pipe Line Company of Michigan,
L.P., Laurel Pipe Line Company, L.P.,
Everglades Pipe Line Company, L.P.,
Buckeye Tank Terminals Company, L.P. and
BMC Acquisition Company (Incorporated
herein by reference from the Partnership's
Proxy Statement dated June 24, 1997).
99.1 Press Release dated August 12, 1997 7
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Exhibit 99.1
Buckeye Partners, L.P.
3900 Hamilton Boulevard
Allentown, Pennsylvania
18103
(800) 422-2825
Contact: Thomas B. Dornblaser
Manager, Investor Relations
News Release
New York Stock Exchange (BPL) FOR IMMEDIATE RELEASE
August 12, 1997
Allentown, PA August 12, 1997 . . . Buckeye Management Company, the
general partner of Buckeye Partners, L.P., today announced that the
restructuring of its employee stock ownership plan ("ESOP") had been approved by
Unitholders at a special meeting held on August 11, 1997, and that the
restructuring was consummated on August 12, 1997. As part of the transaction,
Buckeye Partners, L.P. issued an additional 1,286,573 LP Units, representing
approximately 10 percent of the total outstanding LP Units, for the benefit of
the ESOP.
The Board of Directors of Buckeye Management Company also declared a
regular quarterly partnership cash distribution of $.88 per unit payable August
29, 1997 to unitholders of record on August 22, 1997. This cash distribution
represents a quarterly increase of $.13 per unit, an increase of over 17 percent
from the prior quarterly cash distribution level of $.75 per unit, to an
indicated annual cash distribution of $3.52 per unit. This is the 42nd
consecutive quarterly cash distribution paid by the Partnership.
Buckeye Partners, L.P., through its subsidiary partnerships, is one of the
nation's largest independent pipeline common carriers of refined petroleum
products with nearly 3,500 miles of pipeline operating in 10 states.
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