As filed with the Securities and Exchange Commission on June 9, 1998
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Kinder Morgan Energy Partners, L.P.
(Exact name of registrant as specified in its charter)
Delaware 76-0380342
(State of incorporation) (I.R.S. Employer Identification Number)
Kinder Morgan Energy Partners, L.P.
1301 McKinney Street, Suite 3450
Houston, Texas 77010
(Address, including zip code, of principal executive offices)
Kinder Morgan Energy Partners, L.P. Common Unit Option Plan
(Full title of plan)
Clare H. Doyle
Kinder Morgan Energy Partners, L.P.
1301 McKinney Street, Suite 3450
Houston, Texas 77010
(Name and address of agent for service)
(713) 844-9500
(Telephone number, including area code, of agent for service)
Copy to:
George E. Rider,
Patrick J. Respeliers
Morrison & Hecker, L.L.P.
2600 Grand Avenue
Kansas City, Missouri 64108
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CALCULATION OF REGISTRATION FEE
====================================================================
Title of Amount to Proposed Proposed Amount of
Securities be Maximum Maximum Registration
to be Registered Registered Offering Aggregate Fee
(1) Price Per Offering
Unit Price
====================================================================
Common 5,000 $ 34.5625 (2) $ 172,813 $ 51
Units......... 118,000 $ 35.4375 (2) $4,181,625 $ 1,234
2,500 $ 36.0000 (2) $ 90,000 $ 27
10,000 $ 36.2500 (2) $ 362,500 $ 107
114,500 $ 37.2188 (3) $4,261,553 $ 1,257
------- -------- ---------- -------
250,000 $142.2500 $9,068,491 $ 2,676
====================================================================
(1) In the event of a unit split, unit dividend, or similar transaction
involving the common units of the Partnership (the "Units"), the
number of units registered hereby shall automatically be increased to
cover such additional units as may be issued, in accordance with Rule
416(a) under the Securities Act of 1933, as amended (the "Securities
Act").
<PAGE>
(2) Computed pursuant to Rule 457(h) under the Securities Act.
(3) Pursuant to Rule 457(c) and (h) under the Securities Act, the offering
price is estimated, solely for the purpose of determining the
registration fee, using the average of the high and low sales prices
for the Units on June 5, 1998, as reported in the consolidated
reporting system of the New York Stock Exchange.
<PAGE>
EXPLANATORY NOTE
The Reoffer Prospectus which is filed as a part of this Registration
Statement has been prepared in accordance with the requirements of Part I of
Form S-3 and may be used for reoffers or resales of the Units of Kinder Morgan
Energy Partners, L.P., a Delaware limited partnership (the "Partnership"),
acquired by "affiliates" (as such term is defined in Rule 405 of the General
Rules and Regulations under the Securities Act of 1933, as amended) pursuant to
the exercise of options under the Kinder Morgan Energy Partners, L.P. Common
Unit Option Plan.
<PAGE>
Kinder Morgan Energy Partners, L.P.
Reoffer Prospectus
250,000 Units Representing Limited Partner Interests
This Reoffer Prospectus (this "Prospectus") relates to an aggregate of
250,000 common units (the "Units") representing limited partner interests in
Kinder Morgan Energy Partners, L.P. (the "Partnership") that may be offered from
time to time by certain selling unitholders (the "Selling Unitholders") who may
be deemed "affiliates" of the Partnership (as such term is defined in Rule 405
of the General Rules and Regulations under the Securities Act of 1933, as
amended (the "Securities Act")) subsequent to the exercise of Unit options that
have been granted or that may in the future be granted pursuant to the Kinder
Morgan Energy Partners, L.P. Common Unit Option Plan (the "Plan"). The
Partnership's Units trade on the New York Stock Exchange under the symbol "ENP."
When acquired by the Selling Unitholders as a result of the exercise of options
granted pursuant to the Plan, Units may be sold, from time to time, in ordinary
brokers' transactions through the New York Stock Exchange at the price
prevailing at the time of such sales. The commission payable will be the regular
commission a broker receives for effecting such sales. Units may also be offered
in block trades, private transactions or otherwise. See "Plan of Distribution."
The net proceeds to the Selling Unitholders will be the proceeds received by
them upon such sales, less brokerage commissions incurred in connection
therewith. The Partnership will receive no proceeds from the sale of such Units.
See "Use of Proceeds." Information regarding the Selling Unitholders is set
forth below under the heading "Selling Unitholders". All expenses of
registration incurred in connection with this offering are being borne by the
Partnership, but the selling and other expenses incurred by individual Selling
Unitholders will be borne by each such person.
No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus in connection with the offer contained in this Prospectus, and, if
given or made, any such information or representation must not be relied upon as
having been authorized by the Partnership. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy securities in any state or
other jurisdiction where, or to any person to whom, it is unlawful to make such
an offer or solicitation. The delivery of this Prospectus or any sale made
hereunder shall not, under any circumstances, create any implication that there
has been no change in the affairs of the Partnership since the date hereof. On
June 5, 1998, the last reported sale price of the Units on the New York Stock
Exchange was $36.9375 per Unit.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Reoffer Prospectus is June 9, 1998.
<PAGE>
AVAILABLE INFORMATION
The Partnership is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy and information
statements and other information filed by the Partnership can be inspected and
copied at the Commission's office at 450 Fifth Street, N.W., Washington, DC
20549 and the Commission's Regional Offices in New York (Seven World Trade
Center, 13th Floor, New York, New York 10048) and Chicago (Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661). Copies of
such material can be obtained from the Public Records section of the Commission
at 450 Fifth Street, N.W., Washington, DC 20549, at prescribed rates. The
Commission maintains an Internet Web site that contains reports, proxy and
information statements and other information regarding the registrants that file
electronically with the Commission. The address of such Internet Web site is
http://www.sec.gov.
The Partnership has filed a registration statement (the "Registration
Statement") on Form S-8 with respect to the Units offered hereby with the
Commission under the Securities Act. This Prospectus, which constitutes a part
of the Registration Statement, does not contain all the information set forth in
the Registration Statement, certain items of which are contained in schedules
and exhibits to the Registration Statement as permitted by the rules and
regulations of the Commission. Statements contained in this Prospectus as to the
contents of any agreement, instrument or other document referred to are not
necessarily complete. With respect to each such agreement, instrument or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed previously with the Commission are specifically
incorporated herein by reference:
(1)The Partnership's Annual Report on Form 10-K for the Partnership's fiscal
year ended December 31, 1997 (the "Form 10-K");
(2)The Partnership's Current Report on Form 8-K dated March 5, 1998, as
amended; and
(3)The Partnership's Quarterly Report on Form 10-Q for the period ended
March 31, 1998.
The description of the Units which is contained in the Partnership's
registration statement on Form S-1 (File No. 33-48142) under the Securities Act
filed on June 1, 1992, including any amendment or reports filed for the purpose
of updating such description, is incorporated herein by reference.
All documents filed by the Partnership pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be incorporated by reference into this Prospectus and be a part hereof on the
date such documents are filed by the Partnership with the Commission. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or in any
document filed subsequent to the date of this Prospectus which also is or is
deemed to be incorporated by reference, modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
Any person receiving a copy of this Prospectus, including any prospective
beneficial owner of Units, may obtain without charge and upon request a copy of
any and all of the documents incorporated herein by reference, except for the
exhibits to such documents. Written requests should be mailed to the principal
executive office of the Partnership, as follows: Kinder Morgan Energy Partners,
L.P., 1301 McKinney Street, Suite 3450, Houston, Texas 77010, Attention:
Secretary. Telephone requests may be directed to the Partnership at (713)
844-9500, which is the telephone number for the principal executive office of
the Partnership.
2
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INFORMATION REGARDING FORWARD LOOKING STATEMENTS
This Prospectus and the documents incorporated herein by reference include
forward looking statements. These forward looking statements are identified as
any statement that does not relate strictly to historical or current facts. They
use words such as plans, expects, anticipates, estimates, will and other words
and phrases of similar meaning. Although the Partnership believes that its
expectations are based on reasonable assumptions, it can give no assurance that
its goals will be achieved. Such forward looking statements involve known and
unknown risks and uncertainties. Given these uncertainties, prospective
investors are cautioned not to rely on such forward looking statements. The
Partnership's actual actions or results may differ materially from those
discussed in the forward looking statements. Specific factors which could cause
actual results to differ from those in the forward looking statements, include,
among others:
* price trends and overall demand for natural gas liquids ("NGLs"), refined
petroleum products, carbon dioxide ("CO2"), and coal in the United States
(which may be affected by general levels of economic activity, weather,
alternative energy sources, conservation and technological advances);
* changes in the Partnership's tariff rates set by the Federal Energy
Regulatory Commission ("FERC") and the California Public Utilities
Commission ("CPUC");
* the Partnership's ability to integrate the acquired operations of Santa Fe
Pacific Pipeline Partners, L.P. ("Santa Fe") (and other future
acquisitions) into its existing operations;
* with respect to the Partnership's coal terminals, the ability of railroads
to deliver coal to the terminals on a timely basis;
* the Partnership's ability to successfully identify and close strategic
acquisitions and realize cost savings;
* the discontinuation of operations at major end-users of the products
transported by the Partnership's liquids pipelines (such as refineries,
petrochemical plants, or military bases); and
* the condition of the capital markets and equity markets in the United
States.
The availability to a Unitholder of the federal income tax benefits of an
investment in the Partnership largely depends on the classification of the
Partnership as a partnership for that purpose. The Partnership will rely on an
opinion of counsel, and not a ruling from the Internal Revenue Service, on that
issue and others relevant to a Unitholder.
For additional information which could affect the forward looking statements,
see "Risk Factors" listed on page 4 of this Prospectus and "Risk Factors"
included in the Form 10-K, which is incorporated herein by reference. The
Partnership disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward looking statements
included or incorporated by reference herein to reflect future events or
developments.
The information referred to above should be considered by potential investors
when reviewing any forward looking statements contained in this Prospectus, in
any documents incorporated herein by reference, in any of the Partnership's
public filings or press releases or in any oral statements made by the
Partnership or any of its officers or other persons acting on its behalf.
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RISK FACTORS
Prior to making an investment decision, prospective investors should
carefully consider each of the following risk factors, together with other
information set forth elsewhere in the Prospectus or incorporated herein by
reference. A more detailed description of each of these risks factors, as well
as other risk factors, is included in the Partnership's Form 10-K, which is
incorporated herein by reference.
Pending FERC and CPUC Proceedings Seek Substantial Refunds and Reductions in
Tariff Rates
Various shippers have filed complaints before the FERC and the CPUC
challenging certain pipeline tariff rates of the Partnership's Pacific
Operations. The FERC complaints allege that such rates are not entitled to
"grandfathered" status under the Energy Policy Act of 1992. The CPUC complaint
generally challenges rates changed by the Pacific Operations for intrastate
transportation of refined petroleum products in California and seeks prospective
rate reductions. If such challenges before the FERC and CPUC are upheld they
could result in substantial rate refunds and prospective rate reductions, which
could result in a material adverse effect on the Partnership's results of
operations, financial condition, liquidity and funds available for
distributions.
The Partnership May Experience Difficulties Integrating Santa Fe's Operations
and Realizing Synergies
The Partnership may incur costs or encounter other challenges not currently
anticipated in integrating the acquired operations of Santa Fe into the
Partnership, which may negatively affect its prospects. The integration of
operations following the acquisition will require the dedication of management
and other personnel which may temporarily distract their attention from the
day-to-day business of the Partnership, the development or acquisition of new
properties and the pursuit of other business acquisition opportunities.
Possible Insufficient Cash to Pay Current Level of Distributions
The pro forma historical combined cash flow of the Partnership and Santa Fe
for 1997 would not be sufficient to pay the Partnership's current annual
distribution on all of its outstanding Units. The Partnership must realize
anticipated cost savings resulting from the acquisition of Santa Fe and increase
revenues in certain sectors in accordance with the Partnership's 1998 business
plan, if it is to continue its current level of distributions. In addition,
adverse changes in the Partnership's business, including the disruption of
operations at major suppliers or end-users, may adversely affect distributions
to Unitholders.
Risks Associated With Leverage
Substantially all of the Partnership's assets are pledged to secure its
indebtedness. If the Partnership defaults in the payment of its indebtedness,
the Partnership's lenders will be able to sell the Partnership's assets to pay
the debt. In addition, the agreements relating to the Partnership's debt contain
restrictive covenants which may in the future prevent the General Partner from
taking actions that it believes are in the best interest of the Partnership. The
agreements governing the Partnership's indebtedness generally prohibit the
Partnership from making cash distributions to holders of Units more frequently
than quarterly, from distributing amounts in excess of 100% of Available Cash
(as defined in the Partnership Agreement) for the immediately preceding calendar
quarter and from making any distribution to holders of Units an event of default
exists or would exist upon making such distribution.
Possible Change of Control if KMI Defaults on its Debt
Kinder Morgan, Inc. ("KMI"), the parent of the General Partner, has pledged
all of the stock of the General Partner to secure KMI's indebtedness. If KMI
were to default in the payment of such debt, the lenders could acquire control
of the General Partner.
The Partnership Could Have Significant Environmental Costs in the Future
The Partnership could incur significant costs and liabilities in the event
of an accidental leak or spill in connection with liquid petroleum products
transportation and storage. In addition, it is possible that other developments,
4
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such as increasingly strict environmental laws and regulations, could result in
significant increased costs and liabilities to the Partnership.
Loss of Easements for Liquids Pipelines
A significant portion of the Liquids Pipelines are located on properties
for which the Partnership has been granted an easement for the construction and
operation of such pipelines. If any such easements were successfully challenged
(or if any non-perpetual easement were to expire), the Partnership should be
able to exercise the power of eminent domain to obtain a new easement at a cost
that would not have a material adverse effect on the Partnership, although no
assurance in this regard can be given. The Partnership does not believe that
Shell CO2 Company has the power of eminent domain with respect to its CO2
pipelines. The inability of the Partnership to exercise the power of eminent
domain could disrupt the Liquids Pipelines' operations in those instances where
the Partnership will not have the right through leases, easements,
rights-of-way, permits or licenses to use or occupy the property used for the
operation of the Liquids Pipelines and where the Partnership is unable to obtain
such rights.
Change in Management of Santa Fe Assets
As a result of the Partnership's acquisition of Santa Fe, the assets of
Santa Fe are under the ultimate control and management of different persons.
Risks Associated with Shell CO2 Company
The Partnership is entitled during the four year period ended December 31,
2002 to a fixed, quarterly distribution from Shell CO2 Company, to the extent
funds are available. If such amount exceeds the Partnership's proportionate
share of distributions during such period, the Partnership would receive less
than its proportionate share of distributions during the next two years (and
could be required to return a portion of the distributions received during the
first four years).
Competition
The Partnership is subject to competition from a variety of sources,
including competition from alternative energy sources (which affect the demand
for the Partnership's services) and other sources of transportation.
Risks Associated with the Partnership Agreement and State Law
There are various risks associated with the Partnership's Second Amended
and Restated Agreement of Limited Partnership (the "Partnership Agreement"),
including, among others:
* Unitholders have limited voting rights. Unitholders do not have the ability
to elect the management of the Partnership.
* The vote of 66 2/3% of the Units is required to remove the General Partner,
which means that it will be difficult to remove the General Partner if one
or more Unitholders disagree with the General Partner.
* The General Partner has the right to purchase all of the Units if at any
time the General Partner and its affiliates own 80% or more of the
outstanding limited partner interests. In addition, any Units held by a
person (other than the General Partner and its affiliates) that owns 20% or
more of the Units cannot be voted. The General Partner also has preemptive
rights with respect to new issuances of Units. These provisions may make it
more difficult for another entity to acquire control of the Partnership.
* No limit exists on the number or type of additional limited partner
interests that the Partnership may sell. A Unitholders' percentage interest
in the Partnership is therefore potentially subject to significant
dilution.
5
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* The Partnership Agreement purports to limit the General Partner's liability
and fiduciary duties to the holders of Units.
* Unitholders may be required to return funds that they knew were wrongfully
distributed to them.
Conflicts of Interest
The General Partner may experience conflicts of interest with the
Partnership, which could result in the General Partner taking actions that are
not in the best interests of the Unit holders.
THE PARTNERSHIP
Kinder Morgan Energy Partners, L.P., a Delaware limited partnership ("the
Partnership"), is a publicly traded master limited partnership ("MLP") formed in
August 1992. The Partnership manages a diversified portfolio of midstream energy
assets, including six refined products/liquids pipeline systems containing over
5,000 miles of trunk pipeline (the "Liquids Pipelines") and 21 truck loading
terminals. The Partnership also owns two coal terminals, a 20% interest in a
joint venture with affiliates of Shell Oil Company ("Shell") which produces,
markets and delivers CO2 for enhanced oil recovery ("Shell CO2 Company") and a
25% interest in a Y-grade fractionation facility. The Partnership is the largest
pipeline MLP and has the second largest products pipeline system in the United
States in terms of volumes delivered.
The Partnership's objective is to operate as a low-cost, growth-oriented
MLP by reducing operating expenses, better utilizing and expanding its asset
base and making selective, strategic acquisitions that are accretive to
Unitholder distributions. The Partnership regularly evaluates potential
acquisitions of complementary assets and businesses, although there are
currently no agreements or commitments with respect to any material acquisition.
The General Partner's incentive distributions provide it with a strong incentive
to increase Unitholder distributions through successful management and growth of
the Partnership's business. The success of this strategy was demonstrated in the
first quarter of 1998 and in 1997 as net income (before extraordinary items)
grew by 307% and 49%, respectively, over the first quarter of 1997 and the 1996
fiscal year, respectively. As a result of this strong financial performance, the
Partnership was able to increase its distribution to Unitholders by 90% from an
annualized rate of $1.26 per Unit at year-end 1996 to an annualized rate of
$2.40 per Unit commencing in the second quarter of 1998, as announced on May 13,
1998.
On March 6, 1998, the Partnership acquired substantially all of the assets
of Santa Fe Pacific Pipeline Partners, L.P. ("Santa Fe"), which assets currently
comprise the Partnership's Pacific Operations, for an aggregate consideration of
approximately $1.4 billion consisting of approximately 26.6 million Units, $84.4
million in cash and the assumption of certain liabilities. On March 5, 1998, the
Partnership contributed its 157 mile Central Basin CO2 Pipeline and
approximately $25.0 million in cash for a 20% limited partner interest in Shell
CO2 Company.
The Partnership's operations are grouped into three reportable business
segments: Liquids Pipelines; Coal Transfer, Storage and Services; and Gas
Processing and Fractionation.
Liquids Pipelines
The Liquids Pipelines segment includes both interstate common carrier
pipelines regulated by FERC and intrastate pipeline systems, which are regulated
by the CPUC in California. Products transported on the Liquids Pipelines segment
include refined petroleum products, NGLs and CO2. The Liquids Pipelines segment
conducts operations through two geographic divisions: Kinder Morgan Pacific
Operations and Kinder Morgan Mid-Continent Operations.
Pacific Operations. The Pacific Operations include four pipeline systems
which transport approximately one million barrels per day of refined petroleum
products such as gasoline, diesel and jet fuel, and 13 truck loading terminals.
These operations serve approximately 44 customer-owned terminals, three
commercial airports and 12 military bases in six western states. Pipeline
transportation of gasoline and jet fuel has a direct correlation with changing
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demographics, and the Partnership serves, directly or indirectly, some of the
fastest growing populations in the United States, such as the Los Angeles and
Orange, California, the Las Vegas, Nevada and the Tucson and Phoenix Arizona
areas. The Pacific Operations transport, directly or indirectly, virtually all
of the refined products utilized in Arizona and Nevada, together with the
majority of refined products utilized in California. The Partnership plans to
extend its presence in these rapidly growing markets in the western United
States through accretive acquisitions and incremental expansions of the Pacific
Operations. In the near term, the Partnership expects to realize $15-20 million
per year in cost savings through elimination of redundant general and
administrative and other expenses following the acquisition of Santa Fe.
Mid-Continent Operations. The Mid-Continent Operations consist of two
pipeline systems (the North System and the Cypress Pipeline), the Partnership's
indirect interest in Shell CO2 Company and a 50% interest in Heartland Pipeline
Company.
The North System includes a 1,600 mile NGL and refined products pipeline
which is a major transporter of products between the NGL hub in Bushton, Kansas
and Chicago, Illinois industrial area consumers, such as refineries and
petrochemical plants. In addition, the North System has eight truck loading
terminals, which primarily deliver propane throughout the upper midwest, and
approximately 3 million barrels of storage capacity. Since the North System
serves a relatively mature market, the Partnership intends to focus on
increasing throughput by remaining a reliable, cost-effective provider of
transportation services and by continuing to increase the range of products
transported and services offered.
The Cypress Pipeline is a 100 mile NGL pipeline originating in the NGL hub
in Mont Belvieu, Texas which serves a major petrochemical producer in Lake
Charles, Louisiana. The bulk of the capacity of this pipeline is under a long
term ship or pay contract with this producer.
Shell CO2 Company is a leader in the production, transportation and
marketing of CO2 and serves oil producers, primarily in the Permian Basin of
Texas and the Oklahoma panhandle, utilizing enhanced oil recovery programs. With
ownership interests in two CO2 domes, two CO2 trunklines, and a distribution
pipeline running throughout the Permian basin, Shell CO2 Company can deliver
over 1 billion cubic feet of CO2 per day. Within the Permian Basin, Shell CO2
Company offers its customers "one-stop shopping" for CO2 supply, transportation
and technical service. Outside the Permian Basin, Shell CO2 Company intends to
compete aggressively for new supply and transportation projects which the
Partnership believes will arise as other United States oil producing basins
mature and make the transition from primary production to enhanced recovery
methods.
The Heartland Pipeline Company transports refined petroleum products over
the North System from refineries in Kansas and Oklahoma to a Conoco terminal in
Lincoln, Nebraska and Heartland's terminal in Des Moines, Iowa. Demand for, and
supply of, refined petroleum products in the geographic regions served by
Heartland directly affect the volume of refined petroleum products it
transports.
Coal Transfer, Storage and Services
The Coal Transfer, Storage and Services segment consists of two coal
terminals with capacity to transload approximately 40 million tons of coal
annually. The Cora Terminal is a high-speed, rail-to-barge coal transfer and
storage facility located on the upper Mississippi River near Cora, Illinois. The
Grand Rivers Terminal, located on the Tennessee River near Paducah, Kentucky, is
a modern, high-speed coal handling terminal featuring a direct dump
train-to-barge facility, a bottom dump train-to-storage facility, a barge
unloading facility and a coal blending facility. A majority of the coal loaded
through these terminals is low sulfur western coal. The Partnership believes
demand for this coal should increase due to the provisions of the Clean Air Act
Amendments of 1990 mandating decreased sulfur emissions from power plants. This
low sulfur coal is often blended at the terminals with higher sulfur/higher Btu
Illinois Basin Coal. The Partnership's modern blending facilities and rail
access to low sulfur western coal enable it to offer higher margin services to
its customers. Through the Partnership's Red Lightning Energy Services unit, the
Partnership markets specialized coal services for both the Cora Terminal and the
Grand Rivers Terminal.
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Gas Processing and Fractionation
The Gas Processing and Fractionation segment consists of (i) the
Partnership's 25% indirect interest in the Mount Belvieu Fractionator and (ii)
the Painter Gas Processing Plant. The Mount Belvieu Fractionator is a full
service fractionating facility with capacity of approximately 200,000 barrels
per day. Located in proximity to major end-users of it products, the Mount
Belvieu Fractionator has consistent access to the largest domestic market for
NGL products, as well as to deepwater port loading facilities via the Port of
Houston, allowing access to import and export markets. The Painter Gas
Processing Plant includes a natural gas processing plant, a nitrogen rejection
fractionation facility, an NGL terminal and interconnecting pipelines with truck
and rail loading facilities. Most of the Painter facilities are leased to Amoco
under a long-term arrangement.
SELLING UNITHOLDERS
Units offered pursuant to this Prospectus have been or will be acquired by
Selling Unitholders upon the exercise of unit options granted by the Partnership
pursuant to the Plan.
The following table sets forth: (i) the name of each Selling Unitholder and
his or her position with the Partnership during the past three years; (ii) the
number of Units owned beneficially by him or her as of June 4, 1998; (iii) the
maximum number of Units that may be offered by him or her pursuant to this
Prospectus as of the date of this Prospectus; and (iv) the number of Units that
will be owned by him or her assuming sale of the maximum number of Units offered
for sale pursuant to this Prospectus. No Selling Unitholder will own more than
1% of the outstanding Units after completion of the offering contemplated
hereby.
<TABLE>
<CAPTION>
Units
(Including All Units
Units Subject Acquired or
to Options) Expected to Units
Owned on Be Acquired to be
Name and Position(s) June 4, Pursuant to Plan Owned after
with Partnership 1998 <F1> Options Offering
-------------------------- -------------- ------- --------
<S> <C> <C> <C>
Alan L. Atterbury - Director 8,000 5,000 13,000
Clare Doyle - Vice President, 0 5,000 5,000
Secretary
Edward O. Gaylord - Director 4,000 5,000 9,000
James Higgins - Vice President 0 5,000 5,000
Roger M. Knouse - Vice President 400 4,000 4,400
Mary F. Morgan - Vice President 0 5,000 5,000
Roger C. Mosby - Vice President 1,600 5,000 6,600
William White - Vice President 800 9,000 9,800
Eashy Yang - Vice President 4,000 4,000
<FN>
<F1>The number of Units shown includes the Units actually owned as of June 4,
1998 and the Units that the identified person had the right to acquire
within 60 days of June 4, 1998 pursuant to the exercise of Unit options or
conversion of securities.
</FN>
</TABLE>
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The preceding table reflects all Selling Unitholders who are eligible to
reoffer and resell Units, whether or not they have a present intent to do so.
There is no assurance that any of the Selling Unitholders will sell any or all
of the Units offered by them hereunder. The inclusion in the foregoing table of
the individuals named therein shall not be deemed to be an admission that any
such individuals are "affiliates" of the Partnership.
This Prospectus may be amended or supplemented from time to time to add or
delete Selling Unitholders.
USE OF PROCEEDS
The Partnership will receive no portion of the proceeds of the sale of the
Units.
PLAN OF DISTRIBUTION
The Units may be sold from time to time by or for the account of the Selling
Unitholders in the over-the-counter market, on the NYSE or otherwise, at prices
and on terms then prevailing or at prices related to the then current market
price, at fixed prices that may be changed or in negotiated transactions at
negotiated prices. The Units may be sold by any one or more of the following
methods: (a) a block trade (which may involve crosses) in which the broker or
dealer so engaged will attempt to sell the securities as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) exchange distributions
and/or secondary distributions in accordance with the rules of the applicable
exchange; (d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and (e) privately negotiated transactions. In
effecting sales, brokers or dealers engaged by the Selling Unitholders may
arrange for other brokers or dealers to participate in the sales. In addition,
any Units covered by this Prospectus which qualify for sale pursuant to Rule 144
may be sold under Rule 144 rather than pursuant to this Prospectus.
In connection with the distribution of the Units, the Selling Unitholders may
enter into hedging transactions with brokers or dealers. In connection with such
transactions, brokers or dealers may engage in short sales of the Units in the
course of hedging the positions they assume with the Selling Unitholders. The
Selling Unitholders may also enter into option or other transactions with
brokers or dealers which require the delivery to the broker or dealer of the
Units, which the broker or dealer may resell or otherwise transfer pursuant to
this Prospectus. The Selling Unitholders may also loan or pledge the Units to a
broker or dealer, and the broker or dealer may sell the Units so loaned or, upon
a default, effect sales of the Units so pledged, pursuant to this Prospectus.
The Selling Unitholders may effect such transactions by selling Units through
brokers or dealers, and such brokers or dealers may receive compensation in the
form of commissions, discounts or concessions from the Selling Unitholders
(which may or may not exceed those customary in the types of transactions
involved). The Selling Unitholders and any brokers or dealers that participate
in the distribution of the Units may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any profit on
the sale of Units by it and any commissions, discounts or concessions received
by any such broker or dealer may be deemed to be underwriting discounts and
commissions under the Securities Act.
The Partnership has agreed to indemnify the Selling Unitholders, their
officers, directors, controlling persons, and agents, and any person acting as
an underwriter in connection with the offering and sale of the Units, against
certain liabilities, including liabilities arising under the Securities Act, and
the Selling Unitholders also may agree to indemnify any such agent or
underwriter against certain of such liabilities. The Partnership will pay all
costs and expenses of the registration and offering of the Units, other than
discounts and commissions, and other than costs incurred after six months from
the effectiveness of the registration of the Units that are required to maintain
the effectiveness of such registration beyond such six months.
9
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LEGAL MATTERS
The validity of Units offered hereby will be passed upon for the Partnership
by Morrison & Hecker L.L.P., 2600 Grand Avenue, Kansas City, Missouri 64108.
EXPERTS
The consolidated financial statements as of and for the year ended December
31, 1997 of the Partnership and its subsidiaries and the financial statements as
of and for the year ended December 31, 1997 of Mont Belvieu Associates
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 1997, have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of the Partnership and subsidiaries and
the financial statements of Mont Belvieu Associates as of December 31, 1996 and
for the two years ended December 31, 1996 included in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1997 and incorporated by
reference in this Prospectus and elsewhere in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated herein in
reliance upon the authority of said firm as experts in giving said reports.
The consolidated financial statements of Santa Fe as of December 31, 1997 and
1996 and for each of the three years in the period ended December 31, 1997
incorporated in this Prospectus by reference to the Partnership's Current Report
on Form 8-K dated March 5, 1998, as amended, have been so incorporated in
reliance upon the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
The balance sheet of the General Partner as of December 31, 1997,
incorporated by reference in the Registration Statement of which this Prospectus
is a part, has been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
10
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Partnership with the Commission pursuant
to the Exchange Act are incorporated in this Registration Statement by
reference:
(1)The Partnership's Annual Report on Form 10-K for the Partnership's fiscal
year ended December 31, 1997 (File No.
1-11234);
(2)The Partnership's Current Report on Form 8-K dated March 5, 1998, as
amended; and
(3)The Partnership's Quarterly Report on Form 10-Q for the period ended
March 31, 1998.
The description of the Units which is contained in the Partnership's
registration statement on Form S-1 (File No. 33-48142) under the Securities Act
filed on June 1, 1992, including any amendment or reports filed for the purpose
of updating such description, is incorporated herein by reference.
All documents filed by the Partnership subsequent to the date of this
Registration Statement pursuant to Section 13, 14 or 15(d) of the Exchange Act
and prior to any filing by the Partnership of a post-effective amendment
indicating that all securities offered hereby have been sold or de-registering
all securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other document filed subsequently which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statements so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not applicable, the Units are registered under Section 12 of the Exchange
Act.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Partnership Agreement provides that the Partnership will indemnify any
person who is or was an officer or director of the General Partner or any
departing partner, to the fullest extent permitted by law. In addition, the
Partnership may indemnify, to the extent deemed advisable by the General Partner
and to the fullest extent permitted by law, any person who is or was serving at
the request of the General Partner or any affiliate of the General Partner or
any departing partner as an officer or director of the General Partner, a
departing partner or any of their Affiliates (as defined in Partnership
Agreement) ("Indemnitees") from and against any and all losses, claims, damages,
liabilities (joint or several), expenses (including, without limitation, legal
fees and expenses), judgments, fines, settlements and other amounts arising from
any and all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason of
its status as an officer or director or a person serving at the request of the
Partnership in another entity in a similar capacity, provided that in each case
the Indemnitee acted in good faith and in a manner which such Indemnitee
believed to be in or not opposed to the best interests of the Partnership and,
with respect to any criminal proceeding, had no reasonable cause to believe its
conduct was unlawful. Any indemnification under these provisions will be only
out of
II-1
<PAGE>
the assets of the Partnership and the General Partner shall not be personally
liable for, or have any obligation to contribute or loan funds or assets to the
Partnership to enable it to effectuate, such indemnification. The Partnership is
authorized to purchase (or to reimburse the General Partner or its affiliates
for the cost of) insurance against liabilities asserted against and expenses
incurred by such person to indemnify such person against such liabilities under
the provisions described above.
Article XII(c) of the Certificate of Incorporation of the General Partner
(the "Corporation" therein) contains the following provisions relating to
indemnification of directors and officers:
(c) Each director and each officer of the corporation (and such
holder's heirs, executors and administrators) shall be indemnified by the
corporation against expenses reasonably incurred by him in connection with
any claim made against him or any action, suit or proceeding to which he
may be made a party, by reason of such holder being or having been a
director or officer of the corporation (whether or not he continues to be
a director or officer of the corporation at the time of incurring such
expenses), except in cases where the claim made against him shall be
admitted by him to be just, and except in cases where such action, suit or
proceeding shall be settled prior to adjudication by payment of all or a
substantial portion of the amount claimed, and except in cases in which he
shall be adjudged in such action, suit or proceeding to be liable or to
have been derelict in the performance of such holder's duty as such
director or officer. Such right of indemnification shall not be exclusive
of other rights to which he may be entitled as a matter of law.
Richard D. Kinder, the Chairman of the Board of Directors and Chief Executive
Officer of the General Partner, and William V. Morgan, a Director and Vice
Chairman of the General Partner, are also officers and directors of Kinder
Morgan, Inc., the parent corporation of the General Partner ("KMI") and are
entitled to similar indemnification from KMI pursuant to KMI's certificate of
incorporation and bylaws.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
The following exhibits are filed herewith or are incorporated herein by
reference to the indicated documents filed by the Partnership with the
Commission.
Exhibit No.
**4.1 - Second Amended and Restated Agreement of Limited Partnership of Kinder
Morgan Energy Partners, L.P. (Exhibit 3.1 to Kinder Morgan Energy
Partners, L.P. Amendment No. 1 to Registration Statement on Form S-4
filed April 13, 1998 (File No. 333-46709))
**4.2 - Kinder Morgan Energy Partners, L.P. Common Unit Option Plan.(Exhibit
10.6 to Annual Report on Form 10K for the year ended December 31,
1997).
**4.3 - Form of Certificate representing a Common Unit. (Exhibit 3.1 to Kinder
Morgan Energy Partners, L.P. registration on Form S-4 filed February
4, 1998 (File No. 333-44519)).
*5.1 - Opinion of Morrison & Hecker L.L.P. regarding legality of shares.
*23.1 - Consent of Morrison & Hecker L.L.P. (included in Exhibit 5).
*23.2 - Consent of Price Waterhouse LLP.
*23.3 - Consent of Price Waterhouse LLP.
*23.4 - Consent of Arthur Andersen LLP.
*24.1 - Power of Attorney (included on the signature page).
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<PAGE>
**99.1 - Balance Sheet of Kinder Morgan G.P., Inc. as of December 31, 1997
(Exhibit 99.1 to Amendment No. 1 to the Partnership's Registration
Statement on Form S-4 (File No. 333-46709) filed April 14, 1998).
* Filed herewith.
** Incorporated by reference.
Item 9. Undertakings.
A. The undersigned registrant hereby undertakes:
(i) To file, during any period in which offers or sales of securities are
being made, a post-effective amendment to this registration statement
to:
(a) include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) promulgated under the Securities Act of
1933 if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(c) include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a) and (b) do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(ii) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(iii) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the security being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on June 8, 1998.
KINDER MORGAN ENERGY PARTNERS, L.P.
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., INC.,
as General Partner
By:/s/ Thomas B. King
-------------------
Thomas B. King
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Kinder, Thomas B. King and William V.
Morgan, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign and file (i) any or all amendments (including
post-effective amendments) to this Registration Statement and any and all other
documents in connection therewith, and all exhibits thereto, and (ii) a
Registration statement, and any and all amendments thereto, relating to the
offering covered hereby filed pursuant to Rule 462(b) under the Securities Act,
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as might or could be done in person, hereby ratifying
and confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Name Title Date
/s/ Richard D. Kinder Chairman of the Board and June 8, 1998
- --------------------- Chief
Richard D. Kinder Executive Officer of Kinder
Morgan G.P., Inc.
/s/ William V. Morgan Director and Vice Chairman June 8, 1998
- --------------------- of Kinder Morgan G.P., Inc.
William V. Morgan
/s/ Alan L. Atterbury Director of Kinder Morgan June 8, 1998
- --------------------- G.P., Inc.
Alan L. Atterbury
/s/ Edward O. Gaylord Director of Kinder Morgan June 8, 1998
- ------------------------ G.P., Inc.
Edward O. Gaylord
/s/ Thomas B. King Director, President and June 8, 1998
- ------------------------ Chief Operating Officer of
Thomas B. King Kinder Morgan G.P., Inc.
/s/ David G. Dehaemers, Jr. Vice President of Kinder June 8, 1998
- ------------------------ Morgan G.P., Inc. (Chief
David G. Dehaemers, Jr. Financial Officer and Chief
Accounting Officer)
II-5
MORRISON & HECKER L.L.P.
ATTORNEYS AT LAW
2600 Grand Avenue
Kansas City,
Missouri 64108-4606
Telephone (816)
691-2600
Telefax (816) 474-4208
June 8, 1998
Kinder Morgan Energy Partners, L.P.
1301 McKinney, Suite 3450
Houston, Texas 77010
Re: Registration Statement on Form S-8
Common Unit Option Plan
Ladies and Gentlemen:
In connection with the filing of a Registration Statement on Form S-8 for
Kinder Morgan Energy Partners, L.P. (the "Partnership") relating to both the
issuance pursuant to the Kinder Morgan Energy Partners, L.P. Common Unit Option
Plan (the "Plan") and the subsequent reoffering and resale of common units of
the Partnership (the "Units"), you have requested our opinion on the legality of
the Units being issued thereunder. We have examined the Partnership Agreement of
the Partnership, as amended, minutes of applicable meetings of the Board of
Directors of the general partner of the Partnership, the Plan, and such other
records and documents, together with applicable certificates of public
officials, that we have deemed relevant to this opinion.
Based on the foregoing, it is our opinion that:
All necessary partnership actions have been taken to authorize the
issuance and sale of 250,000 Units in the manner and as provided for in the
Registration Statement on Form S-8, and when such Registration Statement becomes
effective and the Units are issued and the payment received therefore in
accordance with the Plan, the Units will be validly issued and, on the
assumption that the limited partners of the Partnership take no part in the
control of the Partnership's business and otherwise act in conformity with the
provisions of the Partnership Agreement (Articles VI and VII) regarding control
and management of the Partnership, such Units will be fully paid and
nonassessable.
We hereby consent to the reference to our firm in the Registration
Statement on Form S-8, and consent to the filing of this letter, or copies
hereof, as an exhibit to such Registration Statement.
Very truly yours,
/s/ MORRISON & HECKER L.L.P.
Washington, D.C. / Phoenix, Arizona / Overland Park, Kansas / Wichita, Kansas
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Kinder Morgan Energy Partners, L.P., of our report
dated March 6, 1998 relating to the consolidated financial statements of Kinder
Morgan Energy Partners, L.P. appearing on page F-2 and of our report dated March
6, 1998 relating to the financial statements of Mont Belvieu Associates
appearing on page F-20 of Kinder Morgan Energy Partners, L.P.'s Annual Report on
Form 10-K for the year ended December 31, 1997. We also hereby consent to the
incorporation by reference in this Registration Statement on Form S-8 of Kinder
Morgan Energy Partners, L.P. of our report dated March 16, 1998 relating to the
balance sheet of Kinder Morgan G.P., Inc., appearing in Exhibit 99.1 of Kinder
Morgan Energy Partners, L.P.'s Amendment 1 to Form S-4 (No. 33-46709). We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
PRICE WATERHOUSE LLP
/s/ Price Waterhouse LLP
Houston, Texas
June 3, 1998
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-8 of Kinder Morgan
Energy Partners, L.P. of our report dated January 30, 1998 except as to Note 9,
which is as of March 6, 1998, appearing on page F-1 of Kinder Morgan Energy
Partners, L.P.'s Current Report on Form 8-K dated March 5, 1998, as amended. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Los Angeles, California
June 3, 1998
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our reports dated February 21, 1997
included in Kinder Morgan Energy Partners, L.P.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, and to all references to our Firm
included in this Registration Statement.
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
Houston, Texas
June 3, 1998
