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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 29, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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KINDER MORGAN ENERGY PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
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DELAWARE
(State or other jurisdiction 4619
of 1321 76-0380342
incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification No.)
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<TABLE>
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JOSEPH LISTENGART
ONE ALLEN CENTER, SUITE 1000 ONE ALLEN CENTER, SUITE 1000
500 DALLAS STREET 500 DALLAS STREET
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
(713) 369-9000 (713) 369-9000
(Address, including zip code, and telephone (Address, including zip code, and telephone
number, including area code, of registrant's number, including area code, of registrant's
principal executive offices) agent for service of process)
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Copy to:
GARY W. ORLOFF
BRACEWELL & PATTERSON, L.L.P.
SOUTH TOWER PENNZOIL PLACE, SUITE 2900
711 LOUISIANA STREET
HOUSTON, TEXAS 77002-2781
PHONE: (713) 221-1306
FAX: (713) 221-2166
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company or there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
7.50% Senior Notes due 2010... $250,000,000 100% $250,000,000 $66,000
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 29, 2000
$250,000,000
[KINDER MORGAN LOGO]
OFFER TO EXCHANGE
7.50% EXCHANGE SENIOR NOTES DUE 2010
FOR ANY AND ALL OUTSTANDING 7.50% SENIOR NOTES DUE 2010
---------------------
This prospectus, and accompanying letter of transmittal, relate to our
proposed exchange offer. We are offering to exchange up to $250,000,000
aggregate principal amount of new 7.50% senior notes due 2010, which we call the
exchange notes, which will be freely transferable, for any and all outstanding
7.50% senior notes due 2010, which we call the original notes, issued in a
private offering on November 8, 2000 and which have certain transfer
restrictions.
In this prospectus we sometimes refer to the exchange notes and the original
notes collectively as the Notes.
- The exchange offer expires at 5:00 p.m., New York City time, on
, 2000, unless extended.
- The terms of the exchange notes are substantially identical to the terms
of the original notes, except that the exchange notes will be freely
transferable and issued free of any covenants regarding exchange and
registration rights.
- All original notes that are validly tendered and not validly withdrawn
will be exchanged.
- Tenders of original notes may be withdrawn at any time prior to expiration
of the exchange offer.
- We will not receive any proceeds from the exchange offer.
- The exchange of original notes for exchange notes will not be a taxable
event for United States federal income tax purposes.
- Holders of original notes do not have any appraisal or dissenters' rights
in connection with the exchange offer.
- Original notes not exchanged in the exchange offer will remain outstanding
and be entitled to the benefits of the Indenture, but except under certain
circumstances, will have no further exchange or registration rights under
the registration rights agreement discussed in this prospectus.
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PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF FACTORS
YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
---------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the exchange notes or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read this entire prospectus,
the accompanying letter of transmittal and related documents and any amendments
or supplements to this prospectus carefully before making your investment
decision.
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The date of this prospectus is , 2000.
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TABLE OF CONTENTS
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PAGE
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Summary..................................................... 3
Risk Factors................................................ 9
The Exchange Offer.......................................... 13
Use of Proceeds............................................. 25
Consolidated Ratios of Earnings to Fixed Charges............ 26
Description of Notes........................................ 27
Certain Federal Income Tax Considerations................... 40
Validity of the Exchange Notes.............................. 45
Experts..................................................... 45
Where You Can Find More Information......................... 46
Information Regarding Forward-Looking Statements............ 47
Annex A-Letter of Transmittal............................... A-1
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. THIS PROSPECTUS MAY ONLY BE USED WHERE IT IS LEGAL TO
SELL THE NOTES. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT COVER OF THOSE DOCUMENTS. OUR BUSINESS, FINANCIAL CONDITION, RESULTS
OF OPERATIONS AND PROSPECTUS MAY HAVE CHANGED SINCE THOSE DATES.
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SUMMARY
This summary highlights information appearing in other sections of this
prospectus. It may not contain all of the information that is important to you.
This prospectus includes or incorporates by reference information about the
notes, the exchange offers, our business and our financial and operating data.
Before making an investment decision, we encourage you to read the entire
prospectus carefully, including:
- the "Risk Factors" section; and
- the financial statements and the footnotes to those statements, which are
incorporated by reference in this prospectus.
KINDER MORGAN ENERGY PARTNERS, L.P.
We are a Delaware limited partnership formed in August 1992. We are the
largest publicly-traded pipeline master limited partnership in the United States
and have the second largest products pipeline system based on volumes delivered.
Our operations are grouped into four reportable business segments. These
segments and their major assets are as follows:
- Product Pipelines, consisting of:
- the Pacific operations, including approximately 3,300 miles of
pipelines which transport over one million barrels per day of refined
petroleum products to some of the faster growing population centers in
the United States, including Los Angeles, San Diego and Orange County,
California; the San Francisco Bay area; Las Vegas, Nevada and Tucson
and Phoenix, Arizona; 13 truck-loading terminals with an aggregate
usable tankage capacity of approximately 8.2 million barrels; and a 50%
interest in the Colton Processing Facility, a petroleum pipeline
transmix processing facility located in Colton, California;
- a 51% interest in Plantation Pipe Line Company, which owns and operates
a 3,100 mile refined petroleum products pipeline system throughout the
southeastern United States, serving major metropolitan areas including
Birmingham, Alabama; Atlanta, Georgia; Charlotte, North Carolina; and
the Washington, D.C. area;
- the North System, a 1,600 mile pipeline that transports natural gas
liquids and refined petroleum products between south central Kansas and
the Chicago area and various intermediate points, including eight
terminals;
- the Cypress Pipeline, which transports natural gas liquids from Mont
Belvieu, Texas to a major petrochemical producer in Lake Charles,
Louisiana;
- transmix operations, which include the processing and marketing of
petroleum pipeline transmix via transmix processing plants in Richmond,
Virginia and Dorsey Junction, Maryland, and via the recently acquired
plants in Indianola, Pennsylvania and Wood River, Illinois; and
- a 50% interest in Heartland Pipeline Company, which ships refined
petroleum products in the Midwest;
- Natural Gas Pipelines, consisting of assets acquired in late 1999,
including:
- Kinder Morgan Interstate Gas Transmission LLC, which owns a 6,700 mile
natural gas pipeline, including the Pony Express pipeline facilities,
that extends from northwestern Wyoming east into Nebraska and Missouri
and south through Colorado and Kansas;
- a 66 2/3% interest in Trailblazer Pipeline Company, which transmits
natural gas from Colorado through
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southeastern Wyoming to Beatrice, Nebraska; and
- a 49% interest in Red Cedar Gathering Company, which gathers natural
gas in La Plata County, Colorado and owns and operates a carbon dioxide
processing plant;
- CO(2) Pipelines, consisting of:
- Kinder Morgan CO(2 ) Company, L.P., which transports, markets and
produces carbon dioxide for use in enhanced oil recovery operations in
the continental United States;
- an 81% equity interest in Canyon Reef Carriers CO(2 ) Pipeline, a 71%
working interest in the SACROC Unit, and minority interests in the
Sharon Ridge Unit and Reinecke Unit, all of which are located in the
Permian Basin of West Texas; and
- Bulk Terminals, consisting of over 20 owned or operated bulk terminal
facilities, including:
- coal terminals located in Cora, Illinois; Paducah, Kentucky; Newport
News, Virginia; Mount Vernon, Indiana; and Los Angeles, California;
- petroleum coke terminals located on the lower Mississippi River; and
- other bulk terminals handling alumina, cement, salt, soda ash,
fertilizer and other dry bulk materials.
BUSINESS STRATEGY
Management's objective is to operate Kinder Morgan Energy Partners as a
low-cost, growth-oriented master limited partnership by:
- reducing operating expenses;
- better utilizing and expanding our asset base; and
- making selective, strategic acquisitions that will increase unitholder
distributions. We regularly consider and enter into discussions regarding
potential acquisitions and are currently contemplating potential
acquisitions. While there are currently no unannounced purchase
agreements pending for the acquisition of any business or assets, such
transactions can be effected quickly, may occur at any time and may be
significant in size relative to our existing assets.
We primarily transport and/or handle products for a fee and largely are not
engaged in the purchase and resale of commodity products. As a result, we do not
face significant risks relating directly to shifts in commodity prices.
Product Pipelines. We plan to continue to expand our presence in the
rapidly growing refined products markets in the western and southeastern United
States through incremental expansions of our Pacific operations and our
Plantation system and through acquisitions that increase unitholder
distributions. Because the North system serves a relatively mature market, we
intend to focus on increasing throughput within the system by remaining a
reliable, cost-effective provider of transportation services and by continuing
to increase the range of products transported and services offered.
The acquisition of the transmix operations in September 1999 and October
2000 strengthened our existing transmix processing business and added fee-based
services related to our core refined products pipeline business.
Natural Gas Pipelines. Kinder Morgan Interstate Gas Transmission also
serves a stable, mature market, and thus we are focused on reducing costs and
securing throughput for this pipeline. New measurement systems and other
improvements will aid in managing expenses. We will explore expansion and
storage opportunities to increase utilization levels. Trailblazer is currently
pursuing an expansion of its system supported by commitments secured in August
2000. Red Cedar Gathering Company, a partnership with the Southern Ute Indian
Tribe, is pursuing additional gathering and processing opportunities on tribal
land.
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CO(2) Pipelines. Kinder Morgan CO(2) Company's Permian Basin strategy is to
offer customers "one-stop shopping" for carbon dioxide supply, transportation
and technical support service. Outside the Permian Basin, Kinder Morgan CO(2)
Company intends to compete aggressively for new supply and transportation
projects. Management believes these projects will arise as other U.S. oil
producing basins mature and make the transition from primary production to
enhanced recovery methods.
Bulk Terminals. We are dedicated to growing our bulk terminals business
through selective acquisitions, expansions, and the development of new
terminals. The bulk terminals industry in the United States is highly
fragmented, leading to opportunities for us to make selective, accretive
acquisitions. We will make investments to expand and improve existing
facilities, particularly those facilities that handle low-sulfur western coal.
Additionally, we plan to design, construct and operate new facilities for
current and prospective customers. Management believes we can use newly acquired
or developed facilities to leverage our operational expertise and customer
relationships.
The address of our principal executive offices is One Allen Center, Suite
1000, 500 Dallas Street, Houston, Texas 77002 and our telephone number at this
address is (713) 369-9000. Our limited partner interests trade under the New
York Stock Exchange symbol "KMP."
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THE EXCHANGE OFFER
Registration Rights
Agreement................ We sold $250 million in aggregate principal amount
of original notes to qualified institutional buyers
as defined in Rule 144A under the Securities Act
through Banc of America Securities LLC, as initial
purchaser. We entered into a registration rights
agreement dated as of November 8, 2000 with the
initial purchaser which grants the holders of the
original notes certain exchange and registration
rights. The exchange offer made hereby are intended
to satisfy such exchange rights.
The Exchange Offer......... $1,000 principal amount of exchange notes in
exchange for each $1,000 principal amount of
original notes. As of the date hereof, $250 million
aggregate principal amount of the original notes
are outstanding. We will issue exchange notes to
holders on the earliest practicable date following
the Expiration Date.
Resales of the Exchange
Notes.................... Based on an interpretation by the staff of the SEC
set forth in no-action letters issued to third
parties, we believe that, except as described
below, the exchange notes issued pursuant to the
exchange offer may be offered for resale, resold
and otherwise transferred by a holder thereof,
other than any such holder that is an "affiliate"
of ours within the meaning of Rule 405 under the
Securities Act, without compliance with the
registration and prospectus delivery provisions of
the Securities Act, provided that such exchange
notes are acquired in the ordinary course of such
holder's business and that such holder has no
arrangement or understanding with any person to
participate in the distribution of such exchange
notes.
Each broker-dealer that receives exchange notes
pursuant to the exchange offer in exchange for
original notes that such broker-dealer acquired for
its own account as a result of market-making
activities or other trading activities, other than
original notes acquired directly from us or our
affiliates, must acknowledge that it will deliver a
prospectus in connection with any resale of such
exchange notes. The letter of transmittal states
that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the
meaning of the Securities Act.
If we receive certain notices in the letter of
transmittal, this prospectus, as it may be amended
or supplemented from time to time, may be used for
the period described below by a broker-dealer in
connection with resales of exchange notes received
in exchange for original notes where such original
notes were acquired by such broker-dealer as a
result of market-making activities or other trading
activities and not acquired directly from us. We
have agreed that, if we receive certain notices in
the letter of transmittal, for a period of 180 days
after the date on which the registration statement
becomes effective, we will make this prospectus
available to any such broker-dealer for use in
connection with any such resale.
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The letter of transmittal requires broker-dealers
tendering original notes in the exchange offer to
indicate whether such broker-dealer acquired the
original notes for its own account as a result of
market-making activities or other trading
activities, other than original notes acquired
directly from us or any of our affiliates. If no
broker-dealer indicates that the original notes
were so acquired, we have no obligation under the
registration rights agreement to maintain the
effectiveness of the registration statement past
the consummation of the exchange offer or to allow
the use of this prospectus for such resales. See
"The Exchange Offer -- Registration Rights" and
"-- Resale of the Exchange Notes; Plan of
Distribution."
Expiration Date............ The exchange offer expires at 5:00 p.m., New York
City time, on , 2000, unless we extend the
exchange offer in our sole discretion, in which
case the term "Expiration Date" means the latest
date and time to which the exchange offer is
extended.
Conditions to the Exchange
Offer...................... The exchange offer is subject to certain conditions
which we may waive. See "The Exchange
Offer -- Conditions to the Exchange Offer."
Procedures for Tendering
the Original Notes......... Each holder of original notes wishing to accept the
exchange offer must complete, sign and date the
accompanying letter of transmittal in accordance
with the instructions contained herein and therein,
and mail or otherwise deliver such letter of
transmittal together with the original notes and
any other required documentation to the exchange
agent identified below under "Exchange Agent" at
the address set forth herein. By executing the
letter of transmittal, a holder will make certain
representations to us. See "The Exchange
Offer -- Registration Rights" and "-- Procedures
for Tendering Original Notes."
Special Procedures for
Beneficial Owners........ Any beneficial owner whose original notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
who wishes to tender should contact the registered
holder promptly and instruct the registered holder
to tender on such beneficial owner's behalf. See
"The Exchange Offer -- Procedures for Tendering
Original Notes."
Guaranteed Delivery
Procedures............... Holders of original notes who wish to tender their
original notes when those securities are not
immediately available or who cannot deliver their
original notes, the letter of transmittal or any
other documents required by the letter of
transmittal to the exchange agent prior to the
Expiration Date must tender their original notes
according to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Procedures for
Tendering Original Notes -- Guaranteed Delivery."
Withdrawal Rights.......... Tenders of original notes pursuant to the exchange
offer may be withdrawn at any time prior to the
Expiration Date.
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Acceptance of Original
Notes and Delivery of
Exchange Notes........... We will accept for exchange any and all original
notes that are properly tendered in the exchange
offer, and not withdrawn, prior to the exchange
offer's Expiration Date. The exchange notes issued
pursuant to the exchange offer will be issued on
the earliest practicable date following our
acceptance for exchange of original notes. See "The
Exchange Offer -- Terms of the Exchange Offer."
Exchange Agent............. First Union National Bank is serving as exchange
agent in connection with the exchange offer.
Federal Income Tax
Considerations........... We have received an opinion of counsel advising
that the exchange of original notes for exchange
notes pursuant to the exchange offer will not be
treated as a taxable exchange for federal income
tax purposes. See "Certain Federal Income Tax
Considerations."
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RISK FACTORS
You should carefully consider the risks described below in addition to
other information contained or incorporated by reference in this prospectus.
Realization of any of the following risks could have a material adverse effect
on our business, financial condition, cash flows and results of operations.
PENDING FEDERAL ENERGY REGULATORY COMMISSION AND CALIFORNIA PUBLIC UTILITIES
COMMISSION PROCEEDINGS SEEK SUBSTANTIAL REFUNDS AND REDUCTIONS IN TARIFF RATES
ON SOME OF OUR PIPELINES.
Some shippers on our pipelines have filed complaints with the Federal
Energy Regulatory Commission and California Public Utilities Commission that
seek substantial refunds and reductions in the tariff rates on our Pacific
operations. Adverse decisions regarding these complaints could negatively impact
our cash flow. Additional challenges to tariff rates could be filed with the
Federal Energy Regulatory Commission and California Public Utilities Commission
in the future.
In the first set of complaints filed between 1992 and 1995 before the
Federal Energy Regulatory Commission, some shippers alleged that pipeline tariff
rates:
- for the West line, serving southern California and Arizona, were not
entitled to "grandfathered" status under the Energy Policy Act because
"substantially changed circumstances" had occurred pursuant to the Energy
Policy Act; and
- for the East line, serving New Mexico and Arizona, were unjust and
unreasonable.
An initial decision by the Federal Energy Regulatory Commission administrative
law judge was issued on September 25, 1997. The initial decision determined that
the Pacific operations' West line rates were grandfathered under the Energy
Policy Act. The initial decision also included rulings that were generally
adverse to the Pacific operations regarding certain cost of service issues for
the East line.
On January 13, 1999, the Federal Energy Regulatory Commission issued an
opinion that affirmed, in major respects, the initial decision, but also
modified parts of the decision that were adverse to us. In May 2000, the Federal
Energy Regulatory Commission issued a new opinion affirming in part and
modifying and clarifying in part the January 13, 1999 opinion. We believe the
effect of the opinions will be less than the amount that we have accrued as a
reserve. Some of the complainants have appealed the Federal Energy Regulatory
Commission's decision to the United States Court of Appeals for the District of
Columbia Circuit.
During the pendency of the above-referenced complaint proceeding, some
shippers filed complaints that predominantly attacked the pipeline tariff rates
of the Pacific operations, contending that the rates were not just and
reasonable under the Interstate Commerce Act and should not be entitled to
"grandfathered" status under the Energy Policy Act. These complaints covered
rates for service on the East line, the West line, the North line serving the
area between San Francisco, California and Reno, Nevada, and the Oregon line
serving the area from Portland, Oregon to Eugene, Oregon. The complaints seek
substantial reparations for alleged overcharges during the years in question and
request prospective rate reduction on each of the challenged facilities. These
complaints are expected to proceed to hearing in August 2001, with an initial
decision by the administrative law judge expected in the first half of 2002. In
January 2000, several of the shippers amended and restated their complaints
challenging the tariff rates of the Pacific operations and filed additional
complaints in July and August 2000. We are vigorously defending against all of
these complaints.
The complaints filed before the California Public Utilities Commission
challenge the rates charged for intrastate transportation of refined petroleum
through the Pacific operations' pipeline system in California. On August 6,
1998, the California Public Utilities Commission issued its decision dismissing
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the complainants' challenge to SFPP, L.P.'s intrastate rates. On June 24, 1999,
the California Public Utilities Commission granted limited rehearing of its
August 1998 decision for the purpose of:
- addressing the proper ratemaking treatment for partnership tax expenses;
- the calculation of environmental costs; and
- the public utility status of SFPP, L.P.'s Sepulveda line and its Watson
Station gathering enhancement facilities.
In pursuing these rehearing issues, the complainants seek prospective rate
reductions aggregating approximately $10 million per year.
On April 10, 2000, the complainants filed a new complaint with the
California Public Utilities Commission asserting SFPP, L.P.'s intrastate rates
were not just and reasonable.
WE GENERALLY DO NOT OWN THE LAND ON WHICH OUR PIPELINES ARE CONSTRUCTED AND WE
ARE SUBJECT TO THE POSSIBILITY OF INCREASED COSTS FOR THE LOSS OF LAND USE.
We generally do not own the land on which our pipelines are constructed.
Instead, we obtain the right to construct and operate the pipelines on other
people's land for a period of time. If we were to lose these rights, our
business could be affected negatively.
Southern Pacific Transportation Company has allowed us to construct and
operate a significant portion of our Pacific operations' pipeline under their
railroad tracks. Southern Pacific Transportation Company and its predecessors
were given the right to construct their railroad tracks under federal statutes
enacted in 1871 and 1875. The 1871 statute was thought to be an outright grant
of ownership that would continue until the land ceased to be used for railroad
purposes. Two United States Circuit Courts, however, ruled in 1979 and 1980 that
railroad rights-of-way granted under laws similar to the 1871 statute provide
only the right to use the surface of the land for railroad purposes without any
right to the underground portion. If a court were to rule that the 1871 statute
does not permit the use of the underground portion for the operation of a
pipeline, we may be required to obtain permission from the land owners in order
to continue to maintain the pipelines. Although no assurance can be given, we
believe we could obtain that permission over time at a cost that would not
negatively affect us.
Whether we have the power of eminent domain for our pipelines varies from
state to state depending upon the type of pipeline -- petroleum liquids, natural
gas or carbon dioxide -- and the laws of the particular state. Our inability to
exercise the power of eminent domain could negatively affect our business if we
were to lose the right to use or occupy the property on which our pipelines are
located.
ENVIRONMENTAL REGULATION SIGNIFICANTLY AFFECTS OUR BUSINESS.
Our business operations are subject to federal, state and local laws and
regulations relating to environmental protection. If an accidental leak or spill
of liquid petroleum products occurs from our pipelines or at our storage
facilities, we may have to pay a significant amount to clean up the leak or
spill. The resulting costs and liabilities could negatively affect our level of
cash flow. In addition, emission controls required under the Federal Clean Air
Act and other similar federal and state laws could require significant capital
expenditures at our facilities. Although we cannot predict the impact of
Environmental Protection Agency standards or future environmental measures, our
costs could increase significantly if environmental laws and regulations become
stricter. Since the costs of environmental regulation are already significant,
additional regulation could negatively affect our business.
COMPETITION COULD ULTIMATELY LEAD TO LOWER LEVELS OF PROFITS AND LOWER OUR CASH
FLOW.
Competition could ultimately lead to lower levels of profits and lower our
cash flow. Propane competes with electricity, fuel, oil and natural gas in the
residential and
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commercial heating market. In the engine fuel market, propane competes with
gasoline and diesel fuel. Butanes and natural gasoline used in motor gasoline
blending and isobutane used in premium fuel production compete with alternative
products. Natural gas liquids used as feed stocks for refineries and
petrochemical plants compete with alternative feed stocks. The availability and
prices of alternative energy sources and feed stocks significantly affect demand
for natural gas liquids.
Refined product pipelines are generally the lowest cost method for
intermediate and long-haul overland refined product movement. Accordingly, the
most significant competitors to our product pipelines are:
- proprietary pipelines owned and operated by major oil companies in the
areas where our pipelines deliver products;
- refineries within the market areas served by our product pipelines; and
- trucks.
Additional product pipelines may be constructed in the future to serve
specific markets now served by our pipelines. Trucks competitively deliver
products in certain markets. Recently, major oil companies have increased the
usage of trucks, resulting in minor but notable reductions in product volumes
delivered to certain shorter-haul destinations, primarily Orange County and
Colton, California served by the South and West lines of the Pacific operations.
We cannot predict with certainty whether this trend towards increased
short-haul trucking will continue in the future. Demand for terminaling services
varies widely throughout the product pipeline system. Certain major petroleum
companies and independent terminal operators directly compete with us at several
terminal locations. At those locations, pricing, service capabilities and
available tank capacity control market share.
Our natural gas pipelines compete against other existing natural gas
pipelines originating from the same sources or serving the same markets as our
natural gas pipelines. In addition, we also may face competition from natural
gas pipelines that may be built in the future.
Our ability to compete also depends upon general market conditions, which
may change. We conduct our operations without the benefit of exclusive
franchises from government entities. We provide common carrier transportation
services through our pipelines at posted tariffs and, with respect to our
Pacific operations, almost always without long-term contracts for transportation
service with customers. Demand for transportation services on our pipelines is
primarily a function of:
- total and per capita consumption;
- prevailing economic and demographic conditions;
- alternate modes of transportation;
- alternate sources; and
- price.
OUR ACQUISITION STRATEGY MAY REQUIRE ACCESS TO NEW CAPITAL, AND TIGHTENED CREDIT
MARKETS OR MORE EXPENSIVE CAPITAL WILL IMPAIR OUR ABILITY TO EXECUTE OUR
STRATEGY.
Part of our business strategy includes acquiring additional businesses that
will allow us to increase distributions to unitholders. During the period from
December 31, 1996 to October 31, 2000, we made several acquisitions that
increased our asset base and increased our net income over ten times. We
regularly consider and enter into discussions regarding potential acquisitions
and are currently contemplating potential acquisitions. While there are
currently no unannounced purchase agreements pending for the acquisition of any
business or assets, such transactions can be effected quickly, may occur at any
time and may be significant in size relative to our existing assets. We may need
new capital to finance these acquisitions. Limitations on our access to capital
will impair our ability to execute our strategy. Expensive capital will limit
our ability to make acquisitions accretive. Our ability to
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maintain our capital structure may impact the value of the notes and our other
securities.
OUR RAPID GROWTH MAY CAUSE DIFFICULTIES INTEGRATING NEW OPERATIONS.
Part of our business strategy includes acquiring additional businesses that
will allow us to increase distributions to unitholders. During the period from
December 31, 1996 to October 31, 2000, we made several acquisitions that
increased our asset base and increased our net income over ten times. We believe
that we can profitably combine the operations of acquired businesses with our
existing operations. However, unexpected costs or challenges may arise whenever
businesses with different operations and management are combined. Successful
business combinations require management and other personnel to devote
significant amounts of time to integrating the acquired business with existing
operations. These efforts may temporarily distract their attention from
day-to-day business, the development or acquisition of new properties and other
business opportunities. In addition, the management of the acquired business
often will not join our management team. The change in management may make it
more difficult to integrate an acquired business with our existing operations.
OUR DEBT SECURITIES ARE SUBORDINATED TO THE DEBT OF SFPP, L.P.
Since SFPP, L.P. cannot guarantee the notes, the notes will be effectively
subordinated to all debt of SFPP, L.P. If SFPP, L.P. defaults on its debt, the
holders of the notes would not receive any money from SFPP, L.P. until SFPP,
L.P. repaid its debt in full. SFPP, L.P. is the operating partnership that owns
our Pacific operations. See "Description of Notes."
OUR DEBT INSTRUMENTS MAY LIMIT OUR FINANCIAL FLEXIBILITY.
The instruments governing our debt contain restrictive covenants that may
prevent us from engaging in certain beneficial transactions. The agreements
governing our debt generally require us to comply with various affirmative and
negative covenants, including the maintenance of certain financial ratios and
restrictions on:
- incurring additional debt;
- entering into mergers, consolidations and sales of assets; and
- granting liens.
The instruments governing any additional debt incurred to refinance our
debt may also contain similar restrictions.
RESTRICTIONS ON OUR ABILITY TO PREPAY THE DEBT OF SFPP, L.P. MAY LIMIT OUR
FINANCIAL FLEXIBILITY.
SFPP, L.P. is subject to restrictions with respect to its debt that may
limit our flexibility in structuring or refinancing existing or future debt.
These restrictions include the following:
- before December 15, 2002, we may prepay SFPP, L.P.'s first mortgage notes
with a make-whole prepayment premium; and
- we agreed as part of the acquisition of the Pacific operations not to
take actions with respect to $355 million of SFPP, L.P.'s debt that would
cause adverse tax consequences for the prior general partner of SFPP,
L.P.
THERE IS NO PUBLIC MARKET FOR THE NOTES AND YOU CANNOT BE SURE AN ACTIVE TRADING
MARKET FOR THE NOTES WILL DEVELOP.
The original notes have not been registered under the Securities Act, and
may not be resold by purchasers thereof unless the original notes are
subsequently registered or an exemption from the registration requirements of
the Securities Act is available. There can be no assurance, even following
registration or exchange of the original notes for exchange notes, that an
active trading market for the original notes or the exchange notes will exist.
At the time of the private placement of the original notes, the initial
purchaser advised us that it intended to make a market in the original notes
and, if issued, the exchange notes. However, the initial purchaser is not
obligated
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to make a market in the original notes or the exchange notes, and any such
market-making may be discontinued at any time at the sole discretion of the
initial purchaser. No assurance can be given as to the liquidity of or trading
market for the original notes or the exchange notes.
The liquidity of any market for the notes will depend upon the number of
holders of the notes, our performance, the market for similar securities, the
interest of securities dealers in making a market in the notes and other
factors.
THE MARKET VALUE OF YOUR ORIGINAL NOTES MAY BE LOWER IF YOU DO NOT EXCHANGE YOUR
ORIGINAL NOTES OR FAIL TO PROPERLY TENDER YOUR ORIGINAL NOTES FOR EXCHANGE.
CONSEQUENCES OF FAILURE TO EXCHANGE. To the extent that original notes are
tendered and accepted for exchange pursuant to the exchange offer, the trading
market for original notes that remain outstanding may be significantly more
limited, which might adversely affect the liquidity of the original notes not
tendered for exchange. The extent of the market and the availability of price
quotations for original notes would depend upon a number of factors, including
the number of holders of original notes remaining at such time and the interest
in maintaining a market in such original notes on the part of securities firms.
An issue of securities with a smaller outstanding market value available for
trading (the "float") may command a lower price than would a comparable issue of
securities with a greater float. Therefore, the market price for original notes
that are not exchanged in the exchange offer may be affected adversely to the
extent that the amount of original notes exchanged pursuant to the exchange
offer reduces the float. The reduced float also may tend to make the trading
price of the original notes that are not exchanged more volatile.
CONSEQUENCES OF FAILURE TO PROPERLY TENDER. Issuance of the exchange notes
in exchange for the original notes pursuant to the exchange offer will be made
following the prior satisfaction, or waiver, of the conditions set forth in "The
Exchange Offer -- Conditions to the Exchange Offer" and only after timely
receipt by the exchange agent of such original notes, a properly completed and
duly executed letter of transmittal and all other required documents. Therefore,
holders of original notes desiring to tender such original notes in exchange for
exchange notes should allow sufficient time to ensure timely delivery of all
required documentation. Neither we, the exchange agent nor any other person is
under any duty to give notification of defects or irregularities with respect to
the tenders of original notes for exchange. Original notes that may be tendered
in the exchange offer but which are not validly tendered will, following the
consummation of the exchange offer, remain outstanding and will continue to be
subject to the same transfer restrictions currently applicable to such original
notes.
THE EXCHANGE OFFER
REGISTRATION RIGHTS
At the closing of the offering of the original notes, we entered into the
registration rights agreement with the initial purchaser pursuant to which we
agreed, for the benefit of the holders of the original notes, at our cost,
- within 120 days after the date of the original issuance of the original
notes, to file an exchange offer registration statement with the SEC with
respect to the exchange offer for the exchange notes, and
- to use our reasonable efforts to cause the exchange offer registration
statement to be declared effective under the Securities Act within 210
days after the date of original issuance of the original notes.
Upon the exchange offer registration statement being declared effective, we
agreed
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to offer the exchange notes in exchange for surrender of the original notes. We
agreed to keep the exchange offer open for not less than 30 days (or longer if
required by applicable law) after the date notice of the exchange offer is
mailed to the holders of the original notes.
For each original note surrendered to us pursuant to the exchange offer,
the holder of such original note will receive an exchange note having a
principal amount equal to that of the surrendered original note. Interest on
each exchange note will accrue from the last interest payment date on which
interest was paid on the original note surrendered in exchange therefor or, if
no interest has been paid on such original note, from the date of its original
issue. The registration rights agreement also provides an agreement to include
in the prospectus for the exchange offer certain information necessary to allow
a broker-dealer who holds original notes that were acquired for its own account
as a result of market-making activities or other ordinary course trading
activities (other than original notes acquired directly from us or one of our
affiliates) to exchange such original notes pursuant to the exchange offer and
to satisfy the prospectus delivery requirements in connection with resales of
exchange notes received by such broker-dealer in the exchange offer. We agreed
to maintain the effectiveness of the registration statement for these purposes
for 90 days after the consummation of the exchange offer.
The preceding agreement is needed because any broker-dealer who acquires
original notes for its own account as a result of market-making activities or
other trading activities is required to deliver a prospectus meeting the
requirements of the Securities Act. This prospectus covers the offer and sale of
the exchange notes pursuant to the exchange offer made hereby and the resale of
exchange notes received in the Exchange Offer by any broker-dealer who held
original notes of the same series acquired for its own account as a result of
market-making activities or other trading activities other than original notes
acquired directly from us or one of our affiliates.
Under existing interpretations of the staff of the SEC contained in several
no-action letters to third parties, the exchange notes would in general be
freely tradeable after the exchange offer without further registration under the
Securities Act. However, any purchaser of original notes who is an "affiliate"
of ours or who intends to participate in the exchange offer for the purpose of
distributing the related exchange notes (1) will not be able to rely on the
interpretation of the staff of the SEC, (2) will not be able to tender its
original notes in the exchange offer and (3) must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any sale or transfer of the original notes unless such sale or transfer is made
pursuant to an exemption from such requirements.
Each holder of the original notes (other than certain specified holders)
who wishes to exchange original notes for exchange notes in the exchange offer
will be required to make certain representations, including that (1) it is not
an affiliate of ours, (2) any exchange notes to be received by it were acquired
in the ordinary course of its business and (3) at the time of commencement of
the exchange offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the exchange notes.
In the event that any changes in law or the applicable interpretations of
the staff of the SEC do not permit us to effect the exchange offer, or if for
any other reason the exchange offer is not consummated within 210 days of the
date of issuance and sale of the original notes, or the exchange offer is not
available to the initial purchaser based upon an opinion of counsel,we will, at
our cost,
- as promptly as practicable, file a shelf registration statement (which
may be an amendment of the registration statement of which this
prospectus is a part) covering resales of the original notes,
- use all reasonable efforts to cause the shelf registration statement to
be
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declared effective under the Securities Act, and
- use all reasonable efforts to keep effective the shelf registration
statement until two years after its effective date, or, if Rule 144(k)
under the Securities Act is amended to provide a shorter restricted
period, such shorter period, or until all original notes have been sold.
We will, in the event of the filing of a shelf registration statement, (1)
provide to each holder of the original notes copies of the prospectus which is a
part of the shelf registration statement, (2) notify each such holder when the
shelf registration statement for the original notes has become effective, and
(3) take certain other actions as are required to permit unrestricted resales of
the original notes. A holder of original notes that sells such original notes
pursuant to the shelf registration statement generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the registration rights agreement which are
applicable to such holder, including certain indemnification obligations. In
addition, each holder of the original notes will be required to deliver
information to be used in connection with the shelf registration statement and
to provide comments on the shelf registration statement within the time periods
set forth in the registration rights agreement in order to have their original
notes included in the shelf registration statement and to benefit from the
provisions regarding additional interest set forth in the following paragraph.
We will pay additional interest on the original notes upon the occurrence
of any of the following events:
- if the exchange offer registration statement or shelf registration
statement is not filed within 120 days following the date of original
issuance of the original notes, then commencing on the 121st day after
the date of original issuance of the original notes, additional interest
shall accrue on the original notes over and above the otherwise
applicable interest rate at a rate of .25% per year;
- if an exchange offer registration statement or a shelf registration
statement is filed and is not declared effective within 210 days
following the date of original issuance of the original notes, then
commencing on the 211th day after the date of original issuance of the
original notes, additional interest shall accrue on the original notes
over and above the otherwise applicable interest rate at a rate of .25%
per year; or
- if either:
(A) we have not issued exchange notes for all original notes validly
tendered in accordance with the terms of the exchange offer on or
prior to 45 business days after the date on which the exchange
offer registration statement was declared effective; or
(B) the shelf registration statement has been declared effective but
such shelf registration statement ceases to be effective at any
time:
(1) prior to the expiration of the second anniversary of the
closing date, or, if Rule 144(k) is amended to provide a
shorter restrictive period, such shorter period, and
(2) while any registrable securities are outstanding, then
additional interest shall accrue on the original notes over
and above the otherwise applicable interest rate at a rate of
.25% per year commencing on the 46th business day after such
effective date, in the case of (A) above, or the day such
shelf registration
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statement ceases to be effective, in the case of (B) above.
The foregoing circumstances under which we may be required to pay
additional interest are not cumulative. In no event will the additional interest
rate on the original notes exceed .25% per year. Further, any additional
interest will cease to accrue when all of the events described above have been
cured or upon the expiration of the second anniversary of the date of original
issuance of the original notes, or, if Rule 144(k) is amended to provide a
shorter restrictive period, the shorter period. For purposes of clarifying the
foregoing provisions, the registration rights agreement states that additional
interest shall not accrue at any time that there are no registrable securities
outstanding. The receipt of additional interest will be the sole monetary remedy
available to a holder if we fail to meet these obligations.
This summary of the material provisions of the registration rights
agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the registration rights
agreement, a copy of which is filed as an exhibit to the registration statement
of which this prospectus is a part.
Except as set forth above, after consummation of the exchange offer,
holders of original notes which are the subject of the exchange offer have no
registration or exchange rights under the registration rights agreement. See
"-- Consequences of Failure to Exchange," and "-- Resale of the Exchange Notes;
Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
The original notes which are not exchanged for exchange notes pursuant to
the exchange offer and are not included in a resale prospectus which, if
required, will be filed as part of an amendment to the registration statement of
which this prospectus is a part, will remain restricted securities and subject
to restrictions on transfer. Accordingly, such original notes may only be resold
(1) to us, upon redemption thereof or otherwise,
(2) so long as the original notes are eligible for resale pursuant to
Rule 144A, to a person whom the seller reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A under the Securities
Act, purchasing for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or
other transfer is being made in reliance on Rule 144A,
(3) in an offshore transaction in accordance with Regulation S under
the Securities Act,
(4) pursuant to an exemption from registration in accordance with Rule
144, if available, under the Securities Act,
(5) in reliance on another exemption from the registration
requirements of the Securities Act, or
(6) pursuant to an effective registration statement under the
Securities Act.
In all of the situations discussed above, the resale must be in accordance
with any applicable securities laws of any state of the United States and
subject to certain requirements of the registrar or co-registrar being met,
including receipt by the registrar or co-registrar of a certification and, in
the case of (3), (4) and (5) above, an opinion of counsel reasonably acceptable
to us and the registrar.
To the extent original notes are tendered and accepted in the exchange
offer, the principal amount of outstanding original notes will decrease with a
resulting decrease in the liquidity in the market therefor. Accordingly, the
liquidity of the market of the original notes could be adversely affected. See
"Risk Factors -- Consequences to Non-Tendering Holders of Original Notes."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, a copy of which is attached to this prospectus
as Annex A, we
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will accept any and all original notes validly tendered and not withdrawn prior
to the Expiration Date. We will issue $1,000 principal amount of exchange notes
in exchange for each $1,000 principal amount of original notes accepted in the
exchange offer. Holders may tender some or all of their original notes pursuant
to the exchange offer. However, original notes may be tendered only in integral
multiples of $1,000 principal amount.
The form and terms of the exchange notes are the same as the form and terms
of the original notes, except that
- the exchange notes will have been registered under the Securities Act and
will not bear legends restricting their transfer pursuant to the
Securities Act, and
- except as otherwise described above, holders of the exchange notes will
not be entitled to the rights of holders of original notes under the
registration rights agreement.
The exchange notes will evidence the same debt as the original notes which
they replace, and will be issued under, and be entitled to the benefits of, the
indenture which governs all of the notes.
Solely for reasons of administration and for no other purpose, we have
fixed the close of business on , 2000 as the record date for the exchange
offer for purposes of determining the persons to whom this prospectus and the
letter of transmittal will be mailed initially. Only a registered holder of
original notes or such holder's legal representative or attorney-in-fact as
reflected on the records of the trustee under the indenture may participate in
the exchange offer. There will be no fixed record date for determining
registered holders of the original notes entitled to participate in the exchange
offer.
Holders of the original notes do not have any appraisal or dissenters'
rights under Delaware law or the indenture in connection with the exchange
offer. We intend to conduct the exchange offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder.
We shall be deemed to have accepted validly tendered original notes when,
as and if we have given oral or written notice thereof to the exchange agent.
The exchange agent will act as agent for the tendering holders of the original
notes for the purposes of receiving the exchange notes. The exchange notes
delivered pursuant to the exchange offer will be issued on the earliest
practicable date following our acceptance for exchange of original notes.
If any tendered original notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted original notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender original notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of the
original notes pursuant to the exchange offer. We will pay all charges and
expenses, other than certain applicable taxes, in connection with the exchange
offer. See " -- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" with respect to the exchange offer, shall mean
5:00 p.m., New York City time, on , 2000, unless we, in our sole
discretion, extend the exchange offer, in which case the term "Expiration Date"
shall mean the latest date and time to which the exchange offer is extended.
In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral or written notice and will make a public announcement
thereof, each prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date of the exchange offer.
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We reserve the right, in our sole discretion,
(1) to delay accepting any original notes,
(2) to extend the exchange offer,
(3) if any of the conditions set forth below under " -- Conditions to
the Exchange Offer" have not been satisfied, to terminate the exchange
offer, or
(4) to amend the terms of the exchange offer in any manner.
We may effect any such delay, extension or termination by giving oral or
written notice thereof to the exchange agent.
Except as specified in the second paragraph under this heading, any such
delay in acceptance, extension, termination or amendment will be followed as
promptly as practicable by a public announcement thereof. If the exchange offer
is amended in a manner determined by us to constitute a material change, we will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered holders of the original notes. The exchange
offer will then be extended for a period of five to 10 business days, as
required by law, depending upon the significance of the amendment and the manner
of disclosure to the registered holders, if the exchange offer would otherwise
expire during such five to 10 business day period.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, termination or amendment of the exchange
offer, we shall not have an obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
thereof to the Dow Jones News Service.
PROCEDURES FOR TENDERING ORIGINAL NOTES
TENDERS OF ORIGINAL NOTES. The tender by a holder of original notes
pursuant to any of the procedures set forth below will constitute the tendering
holder's acceptance of the terms and conditions of the exchange offer. Our
acceptance for exchange of original notes tendered pursuant to any of the
procedures described below will constitute a binding agreement between such
tendering holder and us in accordance with the terms and subject to the
conditions of the exchange offer. Only holders are authorized to tender their
original notes. The procedures by which original notes may be tendered by
beneficial owners that are not holders will depend upon the manner in which the
original notes are held.
DTC has authorized DTC participants that are beneficial owners of original
notes through DTC to tender their original notes as if they were holders. To
effect a tender, DTC participants should either (1) complete and sign the letter
of transmittal or a facsimile thereof, have the signature thereon guaranteed if
required by Instruction 1 of the letter of transmittal, and mail or deliver the
letter of transmittal or such facsimile pursuant to the procedures for
book-entry transfer set forth below under "-- Book-Entry Delivery Procedures,"
or (2) transmit their acceptance to DTC through the DTC Automated Tender Offer
Program ("ATOP"), for which the transaction will be eligible, and follow the
procedures for book-entry transfer, set forth below under "-- Book-Entry
Delivery Procedures."
TENDER OF ORIGINAL NOTES HELD IN PHYSICAL FORM. To tender effectively
original notes held in physical form pursuant to the exchange offer,
- a properly completed letter of transmittal applicable to such notes (or a
facsimile thereof) duly executed by the holder thereof, and any other
documents required by the letter of transmittal, must be received by the
exchange agent at one of its addresses set forth below, and tendered
original notes must be received by the exchange agent at such address (or
delivery effected through the deposit of original notes into the exchange
agent's account with DTC and making book-entry delivery as set forth
below) on or prior to the Expiration Date of the exchange offer, or
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- the tendering holder must comply with the guaranteed delivery procedures
set forth below.
LETTERS OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT ONLY TO THE
EXCHANGE AGENT AND SHOULD NOT BE SENT TO US.
TENDER OF ORIGINAL NOTES HELD THROUGH A CUSTODIAN. To tender effectively
original notes that are held of record by a custodian bank, depository, broker,
trust company or other nominee, the beneficial owner thereof must instruct such
holder to tender the original notes on the beneficial owner's behalf. A letter
of instructions from the record owner to the beneficial owner may be included in
the materials provided along with this prospectus which may be used by the
beneficial owner in this process to instruct the registered holder of such
owner's original notes to effect the tender.
TENDER OF ORIGINAL NOTES HELD THROUGH DTC. To tender effectively original
notes that are held through DTC, DTC participants should either
- properly complete and duly execute the letter of transmittal (or a
facsimile thereof), and any other documents required by the letter of
transmittal, and mail or deliver the letter of transmittal or such
facsimile pursuant to the procedures for book-entry transfer set forth
below, or
- transmit their acceptance through ATOP, for which the transaction will be
eligible, and DTC will then edit and verify the acceptance and send an
Agent's Message to the exchange agent for its acceptance.
Delivery of tendering original notes held through DTC must be made to the
exchange agent pursuant to the book-entry delivery procedures set forth below or
the tendering DTC participant must comply with the guaranteed delivery
procedures set forth below.
THE METHOD OF DELIVERY OF ORIGINAL NOTES AND LETTERS OF TRANSMITTAL, ANY
REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING
DELIVERY THROUGH DTC AND ANY ACCEPTANCE OR AGENT'S MESSAGE TRANSMITTED THROUGH
ATOP, IS AT THE ELECTION AND RISK OF THE PERSON TENDERING ORIGINAL NOTES AND
DELIVERING LETTERS OF TRANSMITTAL. EXCEPT AS OTHERWISE PROVIDED IN THE LETTER OF
TRANSMITTAL, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE
PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE.
Except as provided below, unless the original notes being tendered are
deposited with the exchange agent on or prior to the Expiration Date
(accompanied by a properly completed and duly executed letter of transmittal or
a properly transmitted Agent's Message), we may, at our option, reject such
tender. Exchange of exchange notes for original notes will be made only against
deposit of the tendered original notes and delivery of all other required
documents.
BOOK-ENTRY DELIVERY PROCEDURES. The exchange agent will establish accounts
with respect to the original notes at DTC for purposes of the exchange offer
within two business days after the date of this prospectus, and any financial
institution that is a participant in DTC may make book-entry delivery of the
original notes by causing DTC to transfer such original notes into the exchange
agent's account in accordance with DTC's procedures for such transfer. However,
although delivery of original notes may be effected through book-entry at DTC,
the letter of transmittal (or facsimile thereof), with any required signature
guarantees or an Agent's Message in connection with a book-entry transfer, and
any other required documents, must, in any case, be transmitted to and received
by the exchange agent at one or more of its addresses set forth in this
prospectus on or prior to the Expiration Date, or compliance must be made with
the guaranteed delivery procedures described below. Delivery of documents to DTC
does not constitute delivery to the exchange agent. The confirmation of a
book-entry transfer into the exchange agent's account at DTC as
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described above is referred to herein as a "Book-Entry Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the exchange agent and forming a part of the Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
each participant in DTC tendering the original notes and that such participant
has received the letter of transmittal and agrees to be bound by the terms of
the letter of transmittal and we may enforce such agreement against such
participant.
SIGNATURE GUARANTEES. Signatures on all letters of transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an
"Eligible Institution"), unless the original notes tendered thereby are tendered
(1) by a registered holder of original notes (or by a participant in DTC whose
name appears on a DTC security position listing as the owner of such original
notes) who has not completed either the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the letter of transmittal,
or (2) for the account of an Eligible Institution. See Instruction 1 of the
letters of transmittal. If the original notes are registered in the name of a
person other than the signer of the letter of transmittal or if original notes
not accepted for exchange or not tendered are to be returned to a person other
than the registered holder, then the signatures on the letter of transmittal
accompanying the tendered original notes must be guaranteed by an Eligible
Institution as described above. See Instructions 1 and 5 of the letter of
transmittal.
GUARANTEED DELIVERY. If a holder desires to tender original notes pursuant
to the exchange offer and time will not permit the letter of transmittal,
certificates representing such original notes and all other required documents
to reach the exchange agent, or the procedures for book-entry transfer cannot be
completed, on or prior to the Expiration Date of the exchange offer, such
original notes may nevertheless be tendered if all the following conditions are
satisfied:
(1) the tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by us herewith, or an
Agent's Message with respect to guaranteed delivery that is
accepted by us, is received by the exchange agent on or prior to
the Expiration Date, as provided below; and
(3) the certificates for the tendered original notes, in proper form
for transfer (or a Book-Entry Confirmation of the transfer of such
original notes into the exchange agent's account at DTC as
described above), together with the letter of transmittal (or
facsimile thereof), property completed and duly executed, with any
required signature guarantees and any other documents required by
the letter of transmittal or a properly transmitted Agent's
Message, are received by the exchange agent within two business
days after the date of execution of the Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery, telegram,
facsimile transmission or mail to the exchange agent and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, delivery of exchange notes by
the exchange agent for original notes tendered and accepted for exchange
pursuant to the exchange offer will, in all cases, be made only after timely
receipt by the exchange agent of such original notes (or Book-Entry Confirmation
of the transfer of such original notes into the exchange agent's account at
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DTC as described above), and the letter of transmittal (or facsimile thereof)
with respect to such original notes, properly completed and duly executed, with
any required signature guarantees and any other documents required by the letter
of transmittal, or a properly transmitted Agent's Message.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of tendered
original notes will be determined by us in our sole discretion, which
determination will be final and binding. We reserve the absolute right to reject
any and all original notes not properly tendered or any original notes our
acceptance of which, in the opinion of our counsel, would be unlawful.
We also reserve the right to waive any defects, irregularities or
conditions of tender as to particular original notes. The interpretation of the
terms and conditions of our exchange offer (including the instructions in the
letter of transmittal) by us will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of original
notes must be cured within such time as we shall determine.
Although we intend to notify holders of defects or irregularities with
respect to tenders of original notes through the exchange agent, neither we, the
exchange agent nor any other person is under any duty to give such notice, nor
shall they incur any liability for failure to give such notification. Tenders of
original notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.
Any original notes received by the exchange agent that are not validly
tendered and as to which the defects or irregularities have not been cured or
waived, or if original notes are submitted in a principal amount greater than
the principal amount of original notes being tendered by such tendering holder,
such unaccepted or non-exchanged original notes will either be
(1) returned by the exchange agent to the tendering holders, or
(2) in the case of original notes tendered by book-entry transfer into
the exchange agent's account at the Book-Entry Transfer Facility pursuant
to the book-entry transfer procedures described below, credited to an
account maintained with such Book-Entry Transfer Facility.
By tendering, each registered holder will represent to us that, among other
things,
(1) the exchange notes to be acquired by the holder and any beneficial
owner(s) of the original notes in connection with the exchange offer are
being acquired by the holder and any beneficial owner(s) in the ordinary
course of business of the holder and any beneficial owner(s),
(2) the holder and each beneficial owner are not participating, do not
intend to participate, and have no arrangement or understanding with any
person to participate, in a distribution of the exchange notes,
(3) the holder and each beneficial owner acknowledge and agree that
(x) any person participating in the exchange offer for the purpose of
distributing the exchange notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction with respect to the exchange notes acquired by
such person and cannot rely on the position of the Staff of the SEC set
forth in no-action letters that are discussed herein under "-- Resale of
the Exchange Notes; Plan of Distribution," and (y) any broker-dealer that
receives exchange notes for its own account in exchange for original notes
pursuant to the exchange offer must delivery a prospectus in connection
with any resale of such exchange notes, but by so acknowledging, the holder
shall not be deemed to admit that, by delivering a prospectus, it is an
"underwriter" within the meaning of the Securities Act,
(4) neither the holder nor any beneficial owner is an "affiliate," as
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<PAGE> 23
defined under Rule 405 of the Securities Act, of ours except as otherwise
disclosed to us in writing, and
(5) the holder and each beneficial owner understands, that a secondary
resale transaction described in clause (3) above should be covered by an
effective registration statement containing the selling securityholder
information required by Item 507 of Regulation S-K of the SEC.
Each broker-dealer that receives exchange notes for its own account in
exchange for original notes, where such original notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. See "-- Resale of the Exchange Notes;
Plan of Distribution."
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of original notes pursuant to
the exchange offer may be withdrawn, unless therefore accepted for exchange as
provided in the exchange offer, at any time prior to the Expiration Date of the
exchange offer.
To be effective, a written or facsimile transmission notice of withdrawal
must be received by the exchange agent at its address set forth herein prior to
the Expiration Date of the exchange offer. Any such notice of withdrawal must
- specify the name of the person having deposited the original notes to be
withdrawn,
- identify the original notes to be withdrawn, including the certificate
number or numbers of the particular certificates evidencing the original
notes (unless such original notes were tendered by book-entry transfer),
and aggregate principal amount of such original notes, and
- be signed by the holder in the same manner as the original signature on
the letter of transmittal (including any required signature guarantees)
or be accompanied by documents of transfer sufficient to have the trustee
under the indenture register the transfer of the original notes into the
name of the person withdrawing such original notes.
If original notes have been delivered pursuant to the procedures for
book-entry transfer set forth in "-- Procedures for Tendering Original
Notes -- Book-Entry Delivery Procedures," any notice of withdrawal must specify
the name and number of the account at the appropriate book-entry transfer
facility to be credited with such withdrawn original notes and must otherwise
comply with such book-entry transfer facility's procedures.
If the original notes to be withdrawn have been delivered or otherwise
identified to the exchange agent, a signed notice of withdrawal meeting the
requirements discussed above is effective immediately upon written or facsimile
notice of withdrawal even if physical release is not yet effected. A withdrawal
of original notes can only be accomplished in accordance with these procedures.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us in our sole discretion, which
determination shall be final and binding on all parties. No withdrawal of
original notes will be deemed to have been properly made until all defects or
irregularities have been cured or expressly waived. Neither we, the exchange
agent nor any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or revocation, nor shall
we or they incur any liability for failure to give any such notification. Any
original notes so withdrawn will be deemed not to have been validly tendered for
purposes of the exchange offer and no exchange notes will be issued with respect
thereto unless the original notes so withdrawn are retendered. Properly
withdrawn original notes may be retendered by following one of the procedures
described above under "-- Procedures for Tendering Original Notes" at any time
prior to the Expiration Date of the exchange offer.
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<PAGE> 24
Any original notes which have been tendered but which are not accepted for
exchange due to the rejection of the tender due to uncured defects or the prior
termination of the exchange offer, or which have been validly withdrawn, will be
returned to the holder thereof unless otherwise provided in the letter of
transmittal, as soon as practicable following the Expiration Date of the
exchange offer or, if so requested in the notice of withdrawal, promptly after
receipt by us of notice of withdrawal without cost to such holder.
CONDITIONS TO THE EXCHANGE OFFER
The exchange offer shall not be subject to any conditions, other than that
(1) the SEC has issued an order or orders declaring the indenture
governing the notes qualified under the Trust Indenture Act of 1939,
(2) the exchange offer, or the making of any exchange by a holder,
does not violate applicable law or any applicable interpretation of the
staff of the SEC,
(3) no action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency with respect to the
exchange offer, which, in our judgment, might impair our ability to proceed
with the exchange offer,
(4) there shall not have been adopted or enacted any law, statute,
rule or regulation which, in our judgment, would materially impair our
ability to proceed with the exchange offer, or
(5) there shall not have occurred any material change in the financial
markets in the United States or any outbreak of hostilities or escalation
thereof or other calamity or crisis the effect of which on the financial
markets of the United States, in our judgment, would materially impair our
ability to proceed with the exchange offer.
If we determine in our sole discretion that any of the conditions to the
exchange offer are not satisfied, we may
(1) refuse to accept any original notes and return all tendered
original notes to the tendering holders,
(2) extend the exchange offer and retain all original notes tendered
prior to the Expiration Date applicable to the exchange offer, subject,
however, to the rights of holders to withdraw such original notes
(see"-- Withdrawal of Original Tenders"), or
(3) waive such unsatisfied conditions with respect to the exchange
offer and accept all validly tendered original notes which have not been
withdrawn.
If such waiver constitutes a material change to the exchange offer, we will
promptly disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders, and will extend the exchange offer for a
period of five to 10 business days, depending upon the significance of the
waiver and the manner of disclosure to the registered holders, if the exchange
offer would otherwise expire during such five to 10 business day period.
EXCHANGE AGENT
First Union National Bank, the trustee under the indenture governing the
notes, has been appointed as exchange agent for the exchange offer. Questions
and requests for assistance, requests for additional copies of this prospectus
or of the letter of transmittal and requests for Notices of Guaranteed Delivery
and other documents should be directed to the exchange agent addressed as
follows:
By Mail:
First Union National Bank
First Union Customer Information Center
Corporate Trust Operations -- NC1153
1525 West W.T. Harris Boulevard -- 3C3
Charlotte, NC 28288
Attention: Mike Klotz
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<PAGE> 25
By Facsimile:
(704) 590-7628
Confirm by
Telephone:
(704) 590-7408
By Hand:
First Union National Bank
First Union Customer Information Center
Corporate Trust Operations -- NC1153
1525 West W.T. Harris Boulevard -- 3C3
Charlotte, NC 28262-1153
Attention: Mike Klotz
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, additional solicitation may be made by
telegraph, telecopy, telephone or in person by officers and regular employees of
the partnership, the general partner and its affiliates.
No dealer-manager has been retained in connection with the exchange offer
and no payments will be made to brokers, dealers or others soliciting acceptance
of the exchange offer. However, reasonable and customary fees will be paid to
the exchange agent for its services and it will be reimbursed for its reasonable
out-of-pocket expenses in connection therewith.
We estimate that our out of pocket expenses for the exchange offer will be
approximately $300,000. Such expenses include fees and expenses of the exchange
agent and the trustee under the indenture, accounting and legal fees and
printing costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of the
original notes pursuant to the exchange offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the original notes pursuant to
the exchange offer, then the amount of any such transfer taxes (whether imposed
on the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the letter of transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the carrying value of the original
notes and no gain or loss for accounting purposes will be recognized. The
expenses of the exchange offer will be amortized over the term of the exchange
notes.
RESALE OF THE EXCHANGE NOTES; PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of exchange notes. This prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of exchange notes received in exchange
for original notes where such original notes were acquired as a result of
market-making activities or other trading activities. We have agreed that, for a
period of 90 days after the Expiration Date of the exchange offer, we will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until , 2001 (90
days after the date of this prospectus), all dealers effecting transactions in
the exchange notes, whether or not participating in this distribution, may be
required to deliver a prospectus. This requirement is in addition to the
obligation of dealers to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
We will not receive any proceeds from any sale of exchange notes by broker-
dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions
(1) in the over-the-counter market,
(2) in negotiated transactions,
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(3) through the writing of options on the exchange notes or a
combination of such methods of resale,
(4) at market prices prevailing at the time of resale,
(5) at prices related to such prevailing market prices, or
(6) at negotiated prices.
Any such resale may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such exchange
notes.
Any broker-dealer that resells exchange notes that were received by it for
its own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of exchange notes and any commission on concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that, by acknowledging that it will
deliver a prospectus and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 90 days after the Expiration Date of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident to the
exchange offer (including the expenses of one counsel for the holders of the
notes approved in writing by the holders of a majority in aggregate principal
amount of the notes) other than commissions or concessions of any brokers or
dealers and will indemnify the holders of the notes (including any
broker-dealers) required to use this prospectus in connection with their resale
of exchange notes as described above against certain liabilities, including
liabilities under the Securities Act.
USE OF PROCEEDS
The exchange offer is intended to satisfy our obligations under the
registration rights agreement. We will not receive any cash proceeds from the
issuance of the exchange notes offered by this prospectus. In consideration for
issuing the exchange notes as contemplated in this prospectus, we will receive
in exchange original notes in like principal amount, the form and terms of which
are the same as the form and terms of the exchange notes, except as otherwise
described herein under "The Exchange Offer -- Terms of the Exchange Offer." The
original notes surrendered in exchange for the exchange notes will be retired
and canceled and cannot be reissued. Accordingly, issuance of the exchange notes
will not result in any increase in our indebtedness.
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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The historical ratios of earnings to fixed charges of Kinder Morgan Energy
Partners and our consolidated subsidiaries for the periods indicated is as
follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
2000 1999 1998 1997 1996 1995
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
4.43 3.78 2.35 2.05 2.02
</TABLE>
In all cases, earnings represent:
- income before income taxes, extraordinary items, equity income and minority
interest; plus
- fixed charges, excluding capitalized interest and distributed income of equity
investees.
In all cases, fixed charges include:
- interest, including capitalized interest; plus
- amortization of debt issuance costs.
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DESCRIPTION OF NOTES
GENERAL
The original notes were issued, and the exchange notes are to be issued,
under an indenture dated November 8, 2000. The indenture is a contract between
us and First Union National Bank, which acts as trustee. The indenture will not
be qualified under the Trust Indenture Act of 1939, except upon effectiveness of
a registration statement for the exchange offer. By its terms, however, the
indenture incorporates certain provisions of the Trust Indenture Act and, upon
consummation of the exchange offer, the indenture will be subject to and
governed by the Trust Indenture Act. References to the notes include the
exchange notes unless the context otherwise requires. The indenture and the
notes contain the full legal text of the matters described in this section. The
indenture and the notes are governed by New York law.
The following description of the material provisions of the notes and the
indenture is a summary only. Because this section is a summary, it does not
describe every aspect of those documents. We urge you to read the indenture
because it, and not this summary, defines your rights as holders of the notes.
In the summary we have included references to selected sections of the indenture
so that you can locate these provisions. We have filed a copy of the indenture
as an exhibit to the registration statement of which this prospectus is a part.
PRINCIPAL AND MATURITY
The notes are unsecured obligations of Kinder Morgan Energy Partners.
Although only $250,000,000 aggregate principal amount of the notes were
originally issued, so long as no Event of Default under the indenture has
occurred and is continuing, we may issue and sell additional notes of the same
series and with the same terms, without the consent of holders of the notes. The
notes mature on November 1, 2010, unless sooner redeemed as described under
"-- Optional Redemption." The notes are not entitled to the benefits of a
sinking fund.
All of the notes are held initially in the form of one or more global
notes. See "-- Legal Ownership -- Global Notes" for a general description of the
global notes.
INTEREST
The notes bear interest from November 8, 2000, payable semi-annually in
arrears on May 1 and November 1 of each year to noteholders in whose name the
notes are registered at the close of business on April 15 or October 15 (whether
or not a business day) preceding the applicable interest payment date. If an
interest payment date or a redemption date occurs on a date which is not a
business day, payment will be made on the next business day and no additional
interest shall accrue. Interest payments shall commence on May 1, 2001.
Interest on the notes is computed on the basis of a 360-day year comprised
of twelve 30-day months.
RANKING
The notes will rank equally with all of our other unsecured and
unsubordinated indebtedness from time to time outstanding. Holders of the notes
will generally have a junior position to claims of creditors and preferred
stockholders of our subsidiaries who do not become guarantors, if applicable.
SFPP, L.P., the subsidiary that owns our Pacific operations, currently has debt
agreements that prohibit it from becoming a guarantor of any of our debt. As a
result, SFPP, L.P. will not become a guarantor, and you will be subordinated to
any creditors of SFPP, L.P. On December 31, 1999, SFPP, L.P. had approximately
$355 million of outstanding debt. The indenture does not limit our ability to
incur additional indebtedness.
OPTIONAL REDEMPTION
The notes will be redeemable, at our option, at any time in whole, or from
time to time in part, upon not less than 30 and not more than 60 days notice
mailed to each holder of notes to be redeemed at the holder's address appearing
in the note
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register, at a price equal to 100% of the principal amount of the notes plus
accrued interest to the redemption date, subject to the right of holders of
record on the relevant record date to receive interest due on an interest
payment date that is on or prior to the redemption date, plus a make-whole
premium, if any. In no event will the redemption price ever be less than 100% of
the principal amount of the notes plus accrued interest to the redemption date.
The amount of the make-whole premium on any note, or portion of a note, to
be redeemed will be equal to the excess, if any, of:
(1) the sum of the present values, calculated as of the redemption
date, of:
- each interest payment that, but for the redemption, would have
been payable on the note, or portion of a note, being redeemed
on each interest payment date occurring after the redemption
date, excluding any accrued interest for the period prior to
the redemption date; and
- the principal amount that, but for the redemption, would have
been payable at the stated maturity of the note, or portion of
a note, being redeemed;
over
(2) the principal amount of the note, or portion of a note, being
redeemed.
The present value of interest and principal payments referred to in clause
(1) above will be determined in accordance with generally accepted principles of
financial analysis. The present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the redemption date
at a discount rate equal to the Treasury Yield, as defined below, plus 0.25%.
The make-whole premium will be calculated by an independent investment
banking institution of national standing appointed by us. It could be the
initial purchaser. If we fail to make that appointment at least 30 business days
prior to the redemption date, or if the institution so appointed is unwilling or
unable to make the calculation, Banc of America Securities LLC will make the
calculation. If Banc of America Securities LLC is unwilling or unable to make
the calculation, an independent investment banking institution of national
standing appointed by the trustee will make the calculation.
For purposes of determining the make-whole premium, Treasury Yield refers
to a rate of interest per annum equal to the weekly average yield to maturity of
United States Treasury Notes that have a constant maturity that corresponds to
the remaining term to maturity of the notes, calculated to the nearest 1/12 of a
year, which we call the remaining term. The Treasury Yield will be determined as
of the third business day immediately preceding the applicable redemption date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release, which we call the H.15 Statistical Release. If
the H.15 Statistical Release sets forth a weekly average yield for United States
Treasury Notes having a constant maturity that is the same as the remaining
term, then the Treasury Yield will be equal to that weekly average yield. In all
other cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
remaining term and the United States Treasury Notes that have a constant
maturity closest to and less than the remaining term, in each case as set forth
in the H.15 Statistical Release. Any weekly average yields so calculated by
interpolation will be rounded to the nearest 0.01%, with any figure of
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<PAGE> 30
0.005% or more being rounded upward. If weekly average yields for United States
Treasury Notes are not available in the H.15 Statistical Release or otherwise,
then the Treasury Yield will be calculated by interpolation of comparable rates
selected by the independent investment banking institution.
If less than all of the notes are to be redeemed, the trustee will select
the notes to be redeemed by a method that the trustee deems fair and
appropriate. The trustee may select for redemption notes and portions of notes
in amounts of $1,000 or whole multiples of $1,000.
SAME DAY SETTLEMENT
The original notes trade in, and the exchange notes will trade in, The
Depository Trust Company's settlement system until maturity. As a result, The
Depository Trust Company will require secondary trading activity in the notes to
be settled in immediately available funds. So long as the notes continue to
trade in The Depository Trust Company's settlement system, all payments of
principal and interest on the global notes will be made by us in immediately
available funds.
IMPORTANT COVENANTS
LIMITATIONS ON LIENS
The indenture provides that we will not, nor will we permit any subsidiary
to, create, assume, incur or suffer to exist any lien upon any Principal
Property, as defined below, or upon any shares of capital stock of any
subsidiary owning or leasing any Principal Property, whether owned or leased on
the date of the indenture or thereafter acquired, to secure any of our debt or
debt of any other person, other than the notes issued under the indenture,
without making effective provision for all of the notes outstanding under the
indenture to be secured equally and ratably with, or prior to, that debt so long
as that debt is so secured.
Principal Property means, whether owned or leased on the date of the
indenture or thereafter acquired:
- any pipeline assets of ours or any subsidiary, including any related
facilities employed in the transportation, distribution, storage or
marketing of refined petroleum products, natural gas liquids, coal and
carbon dioxide, that are located in the United States of America or any
territory or political subdivision thereof; and
- any processing or manufacturing plant or terminal owned or leased by
us or any subsidiary that is located in the United States or any territory
or political subdivision thereof,
except, in the case of either of the foregoing clauses:
(1) any of those assets consisting of inventories, furniture, office
fixtures and equipment, including data processing equipment, vehicles and
equipment used on, or with, vehicles; and
(2) any of those assets, plant or terminal which, in the opinion of
the board of directors of Kinder Morgan G.P., Inc., our general partner, is
not material in relation to our activities or with our subsidiaries, taken
as a whole.
There is excluded from this restriction:
(1) Permitted Liens, as defined below;
(2) any lien upon any property or assets created at the time of
acquisition of that property or assets by us or any subsidiary or within
one year after the time to secure all or a portion of the purchase price
for that property or assets or debt incurred to finance the purchase price,
whether that debt was incurred prior to, at the time of or within one year
after the date of the acquisition;
(3) any lien upon any property or assets to secure all or part of the
cost of construction, development, repair or improvements thereon or to
secure debt
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incurred prior to, at the time of, or within one year after completion of
the construction, development, repair or improvements or the commencement
of full operations thereof, whichever is later, to provide funds for that
purpose;
(4) any lien upon any property or assets existing thereon at the time
of the acquisition thereof by us or any subsidiary; provided, however, that
the lien only encumbers the property or assets so acquired;
(5) any lien upon any property or assets of an entity existing thereon
at the time that entity becomes a subsidiary by acquisition, merger or
otherwise; provided, however, that the lien only encumbers the property or
assets of that entity at the time it becomes a subsidiary;
(6) any lien upon any property or assets of ours or any subsidiary in
existence on the date the notes are first issued or provided for pursuant
to agreements existing on that date;
(7) liens imposed by law or order as a result of any proceeding before
any court or regulatory body that is being contested in good faith, and
liens which secure a judgment or other court-ordered award or settlement as
to which we or the applicable subsidiary have not exhausted our appellate
rights;
(8) any extension, renewal, refinancing, refunding or replacement, or
successive extensions, renewals, refinancing, refunding or replacements, of
liens, in whole or in part, referred to in clauses (1) through (7) above;
provided, however, that any extension, renewal, refinancing, refunding or
replacement lien shall be limited to the property or assets covered by the
lien extended, renewed, refinanced, refunded or replaced and that the
obligations secured by any extension, renewal, refinancing, refunding or
replacement lien shall be in an amount not greater than the amount of the
obligations secured by the lien extended, renewed, refinanced, refunded or
replaced and any expenses of ours and our subsidiaries, including any
premium, incurred in connection with any extension, renewal, refinancing,
refunding or replacement; or
(9) any lien resulting from the deposit of moneys or evidence of
indebtedness in trust for the purpose of defeasing debt of ours or any
subsidiary.
Notwithstanding the foregoing, under the indenture, we may, and may permit
any subsidiary to, create, assume, incur, or suffer to exist any lien upon any
Principal Property to secure debt of ours or any person, other than the notes,
that is not excepted by clauses (1) through (9) above, without securing the
notes issued under the indenture; provided that the aggregate principal amount
of all debt then outstanding secured by the lien and all similar liens, together
with all Attributable Indebtedness, as defined below, from Sale-Leaseback
Transactions (excluding Sale-Leaseback Transactions permitted by clauses (1)
through (4), inclusive, of the first paragraph of the restriction on sale-
leasebacks covenant described below) does not exceed 10% of Consolidated Net
Tangible Assets, as defined below. (Section 1006)
Permitted Liens means:
(1) liens upon rights-of-way for pipeline purposes;
(2) any statutory or governmental lien or lien arising by operation of
law, or any mechanic's, repairman's, materialman's, supplier's, carrier's,
landlord's, warehouseman's or similar lien incurred in the ordinary course
of business which is not yet due or which is being contested in good faith
by appropriate proceedings and any undetermined lien which is incidental to
construction, development, improvement or repair;
(3) the right reserved to, or vested in, any municipality or public
authority by the terms of any right, power, franchise, grant, license,
permit or by any provision of law, to purchase or recapture or to designate
a purchaser of, any property;
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(4) liens of taxes and assessments which are (A) for the then current
year, (B) not at the time delinquent, or (C) delinquent but the validity of
which is being contested at the time by us or any subsidiary in good faith;
(5) liens of, or to secure performance of, leases, other than capital
leases;
(6) any lien upon, or deposits of, any assets in favor of any surety
company or clerk of court for the purpose of obtaining indemnity or stay of
judicial proceedings;
(7) any lien upon property or assets acquired or sold by us or any
subsidiary resulting from the exercise of any rights arising out of
defaults on receivables;
(8) any lien incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance, temporary disability,
social security, retiree health or similar laws or regulations or to secure
obligations imposed by statute or governmental regulations;
(9) any lien in favor of us or any subsidiary;
(10) any lien in favor of the United States of America or any state of
the United States, or any department, agency or instrumentality or
political subdivision of the United States of America or any state of the
United States, to secure partial, progress, advance, or other payments
pursuant to any contract or statute, or any debt incurred by us or any
subsidiary for the purpose of financing all or any part of the purchase
price of, or the cost of constructing, developing, repairing or improving,
the property or assets subject to the lien;
(11) any lien securing industrial development, pollution control or
similar revenue bonds;
(12) any lien securing debt of ours or any subsidiary, all or a
portion of the net proceeds of which are used, substantially concurrent
with the funding thereof (and for purposes of determining "substantial
concurrence," taking into consideration, among other things, required
notices to be given to holders of outstanding notes under the indenture in
connection with the refunding, refinancing or repurchase, and the required
corresponding durations thereof), to refinance, refund or repurchase all
outstanding notes under the indenture, including the amount of all accrued
interest thereon and reasonable fees and expenses and premium, if any,
incurred by us or any subsidiary in connection therewith;
(13) liens in favor of any person to secure obligations under the
provisions of any letters of credit, bank guarantees, bonds or surety
obligations required or requested by any governmental authority in
connection with any contract or statute; or
(14) any lien upon or deposits of any assets to secure performance of
bids, trade contracts, leases or statutory obligations.
Consolidated Net Tangible Assets means, at any date of determination, the
total amount of assets after deducting:
- all current liabilities, excluding:
- any current liabilities that by their terms are extendable or
renewable at the option of the obligor to a time more than 12 months
after the time as of which the amount is being computed; and
- current maturities of long-term debt; and
- the value, net of any applicable reserves, of all goodwill, trade names,
trademarks, patents and other like intangible assets,
all as set forth, or on a pro forma basis as would be set forth, on our
consolidated balance sheet for our most recently completed fiscal quarter,
prepared in accordance with generally accepted accounting principles.
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RESTRICTION ON SALE-LEASEBACKS
The indenture provides that we will not, and will not permit any of our
subsidiaries to, engage in the sale or transfer by us or any subsidiary of any
Principal Property to a person, other than us or a subsidiary, and the taking
back by us or any subsidiary, as the case may be, of a lease of the Principal
Property, which we call a Sale-Leaseback Transaction, unless:
(1) the Sale-Leaseback Transaction occurs within one year from the
date of completion of the acquisition of the Principal Property subject
thereto or the date of the completion of construction, development or
substantial repair or improvement, or commencement of full operations on
the Principal Property, whichever is later;
(2) the Sale-Leaseback Transaction involves a lease for a period,
including renewals, of not more than three years;
(3) we or a subsidiary would be entitled to incur debt secured by a
lien on the Principal Property subject thereto in a principal amount equal
to or exceeding the Attributable Indebtedness from the Sale-Leaseback
Transaction without equally and ratably securing the notes; or
(4) we or a subsidiary, within a one-year period after the
Sale-Leaseback Transaction, applies or causes to be applied an amount not
less than the Attributable Indebtedness from the Sale-Leaseback Transaction
to:
- the prepayment, repayment, redemption, reduction or retirement of any of
our debt or debt of any subsidiary that is not subordinated to the notes;
or
- the expenditure or expenditures for Principal Property used or to be used
in the ordinary course of our business or the business of our
subsidiaries.
Attributable Indebtedness, when used with respect to any to any
Sale-Leaseback Transaction, means, as at the time of determination, the present
value, discounted at the rate set forth or implicit in the terms of the lease
included in the transaction, of the total obligations of the lessee for rental
payments during the remaining term of the lease included in the Sale-Leaseback
Transaction, including any period for which the lease has been extended;
provided that the rental payments shall include amounts required to be paid on
account of property taxes, maintenance, repairs, insurance, assessments,
utilities, operating and labor costs and other items that do not constitute
payments for property rights. In the case of any lease that is terminable by the
lessee upon the payment of a penalty or other termination payment, the amount
shall be the lesser of the amount determined assuming termination upon the first
date the lease may be terminated, in which case the amount shall also include
the amount of the penalty or termination payment, but no rent shall be
considered as required to be paid under the lease subsequent to the first date
upon which it may be so terminated, or the amount determined assuming no
termination.
Notwithstanding the foregoing, the indenture provides that we may, and may
permit any subsidiary to, effect any Sale-Leaseback Transaction that is not
excepted by clauses (1) through (4), inclusive, of the first paragraph above,
provided that the Attributable Indebtedness from the Sale-Leaseback Transaction,
together with the aggregate principal amount of outstanding debt, other than the
notes, secured by liens upon Principal Properties not excepted by clauses (1)
through (9), inclusive, of the first paragraph of the limitation on liens
covenant described above, do not exceed 10% of the Consolidated Net Tangible
Assets. (Section 1007)
POTENTIAL GUARANTY OF NOTES BY SUBSIDIARIES
We are a holding company that conducts all of our operations through our
subsidiaries. Initially, none of our subsidiaries will guarantee the notes.
However, the indenture will require our subsidiaries which become guarantors or
co-obligors of our Funded Debt, as defined below, to fully and unconditionally
guarantee, as "guarantors," our payment obligations on the notes. In
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particular, the indenture will require those subsidiaries who become guarantors
or borrowers under our bank credit agreement to equally guarantee the notes.
In the indenture, the term subsidiary means, with respect to any person:
- any entity of which more than 50% of the total voting power of the equity
interests entitled, without regard to the occurrence of any contingency,
to vote in the election of directors, managers or trustees thereof; or
- any partnership of which more than 50% of the partners' equity interests,
considering all partners' equity interests as a single class, is at the
time owned or controlled, directly or indirectly, by that person or one
or more of the other subsidiaries of that person or combination thereof.
Funded Debt means all debt:
- maturing one year or more from the date of its creation;
- directly or indirectly renewable or extendable, at the option of the
debtor, by its terms or by the terms of any instrument or agreement
relating to the debt, to a date one year or more from the date of its
creation; or
- under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of one year or more.
ADDITION AND RELEASE OF GUARANTEES
The indenture provides that if any of our subsidiaries is a guarantor or
obligor of any of our Funded Debt at any time on or subsequent to the date on
which the notes are originally issued, including, without limitation, following
any release of the subsidiary from its guarantee as described below, then we
will cause the notes to be equally and ratably guaranteed by that subsidiary.
Under the terms of the indenture, a guarantor may be released from its guarantee
if the guarantor is not a guarantor or obligor of any of our Funded Debt,
provided that no default or Event of Default under the indenture has occurred or
is continuing. (Sections 1401 and 1402)
Each of the guarantees would be an unsecured obligation of a guarantor and
would rank equally with that guarantor's guarantee, if any, under our bank
credit agreement and existing and future unsecured debt that is not expressly
subordinated to its guarantee.
Each guarantor would be obligated under its guarantee only up to an amount
that would not constitute a fraudulent conveyance or fraudulent transfer under
federal, state or foreign law.
NOTES EFFECTIVELY SUBORDINATED TO DEBT OF NON-GUARANTOR SUBSIDIARIES
Holders of notes will effectively have a junior position to claims of
creditors and preferred stockholders of our subsidiaries who are not guarantors.
SFPP, L.P., the subsidiary that owns our Pacific operations, currently has debt
agreements that prohibit it from being a guarantor of any of our debt. As a
result, SFPP, L.P. will not become a guarantor. As of September 30, 2000, SFPP,
L.P. had approximately $181 million of outstanding debt. This debt of SFPP, L.P.
and any future debt it incurs effectively will be senior to the notes.
CONSOLIDATION, MERGER OR ASSET SALE
The indenture generally allows us to consolidate or merge with a domestic
partnership or corporation. It also allows us to sell, lease or transfer all or
substantially all of our property and assets to a domestic partnership or
corporation. If this happens, the remaining or acquiring partnership or
corporation must assume all of our responsibilities and liabilities under the
indenture, including the payment of all amounts due on the notes and performance
of the covenants in the indenture.
However, we will consolidate or merge only with or into any other
partnership or corporation or sell, lease or transfer all or substantially all
of our assets according to the
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terms and conditions of the indenture, which include the following requirements:
- the remaining or acquiring partnership or corporation is organized under
the laws of the United States, any state or the District of Columbia;
- the remaining or acquiring partnership or corporation assumes our
obligations under the indenture; and
- immediately after giving effect to the transaction no Event of Default,
as defined below, exists.
The remaining or acquiring partnership or corporation will be substituted
for us in the indenture with the same effect as if it had been an original party
to the indenture. Thereafter, the successor may exercise our rights and powers
under the indenture, in our name or in its own name. If we sell or transfer all
or substantially all of our assets, we will be released from all our liabilities
and obligations under any indenture and under the notes. If we lease all or
substantially all of our assets, we will not be released from our obligations
under the indenture. (Sections 801 and 802)
If, at any time, any of our subsidiaries are required to guaranty the
notes, the restriction on our ability to consolidate or merge and to sell, lease
or transfer all or substantially all of our property and assets also will apply
to that subsidiary.
MODIFICATION OF THE INDENTURE
Under the indenture, generally we and the trustee may modify our rights and
obligations, any guarantors' rights and obligations and the rights of the
holders with the consent of the holders of a majority in aggregate principal
amount of the outstanding notes of each series affected by the modification. No
modification of the principal or interest payment terms, and no modification
reducing the percentage required for modifications, is effective against any
holder without its consent. In addition, we and the trustee may amend the
indenture without the consent of any holder of the notes to make certain
technical changes, such as:
- correcting errors;
- providing for a successor trustee; or
- qualifying the indenture under the Trust Indenture Act. (Sections 901 and
902)
EVENTS OF DEFAULT AND REMEDIES
In the indenture, Event of Default will mean any of the following:
- failure to pay the principal of or any premium on any note when due;
- failure to pay interest on any Note for 30 days;
- failure to perform any other covenant in the indenture that continues for
60 days after being given written notice; or
- our bankruptcy, insolvency or reorganization. (Section 501)
An Event of Default under the notes does not necessarily constitute an
event of default under our other indebtedness and vice versa. The trustee may
withhold notice to the holders of notes of any default, except in the payment of
principal or interest, if it considers such withholding of notice to be in the
best interests of the holders. (Section 602)
If an Event of Default occurs and continues, the trustee or the holders of
at least 25% in aggregate principal amount of the notes may declare the entire
principal of all the notes to be due and payable immediately. If this happens,
subject to some conditions, the holders of a majority of the aggregate principal
amount of the notes can void the declaration. (Section 502)
Other than its duties in case of a default, the trustee is not obligated to
exercise any of its rights or powers under the indenture at the request, order
or direction of any holders, unless the holders offer the trustee reasonable
indemnity. (Section 601) If the holders provide this reasonable indemnity, the
holders of a majority in principal amount of any series of notes may direct the
time, method and place of conducting any
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proceeding for any remedy available to the trustee, or exercising any power
conferred upon the trustee, for the notes. (Section 512)
MINIMUM DENOMINATIONS
The notes will be issued in registered form in amounts of $1,000 each or
multiples of $1,000.
NO PERSONAL LIABILITY OF KINDER MORGAN G.P., INC.
Kinder Morgan G.P., Inc., our general partner, and its directors, officers,
employees and shareholders will not have any liability for our obligations under
the indenture or the notes. Each holder of notes by accepting a note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the notes.
DISCHARGING OUR OBLIGATIONS
We and the guarantors, if any, may choose either to discharge our
obligations on the notes in a legal defeasance, or to release ourselves from our
covenant restrictions on the notes in a covenant defeasance. We may do so at any
time on the 91st day after we deposit with the trustee sufficient cash or
government securities to pay the principal, interest, any premium and any other
sums due to the stated maturity date or a redemption date of the notes. If we
choose this legal defeasance option, the holders of the notes will not be
entitled to the benefits of the indenture except for registration of transfer
and exchange of notes, replacement of lost, stolen or mutilated notes,
conversion or exchange of notes and receipt of principal and interest on the
original stated due dates or specified redemption dates. (Section 1302)
We may discharge our obligations under the indenture or release ourselves
from covenant restrictions only if we meet certain requirements. Among other
things, we must deliver an opinion of our legal counsel that the discharge will
not result in holders having to recognize taxable income or loss or subject them
to different tax treatment. In the case of legal defeasance, this opinion must
be based on either an IRS letter ruling or change in federal tax law. We may not
have a default on the notes discharged on the date of deposit. The discharge may
not violate any of our agreements. The discharge may not result in our becoming
an investment company in violation of the Investment Company Act of 1940.
THE TRUSTEE
First Union National Bank, 40 Broad Street, Suite 550, New York, New York
10004 will initially act as trustee under the indenture.
The trustee may resign or be removed by us with respect to the notes and a
successor trustee may be appointed to act with respect to the notes. The holders
of a majority in aggregate principal amount of the notes may remove the trustee.
(Section 610)
LIMITATIONS ON TRUSTEE IF IT IS A CREDITOR OF KINDER MORGAN ENERGY PARTNERS
The indenture contains certain limitations on the right of the trustee, in
the event that it becomes our creditor, to obtain payment of claims in some
cases, or to realize on property received in respect of any such claim, as
security or otherwise. (Section 613)
ANNUAL TRUSTEE REPORT TO HOLDERS OF NOTES
The trustee is required to submit an annual report to the holders of the
notes regarding, among other things, the trustee's eligibility to so serve, the
priority of the trustee's claims regarding certain advances made by it, and any
action taken by the trustee materially affecting the notes.
CERTIFICATES AND OPINIONS TO BE FURNISHED TO TRUSTEE
The indenture provides that, in addition to other certificates or opinions
that may be specifically required by other provisions of the indenture, every
application by us for action by the trustee shall be accompanied by a
certificate of our officers and an opinion of counsel, who may be our counsel,
stating that, in the opinion of the signers, we have complied with all
applicable conditions precedent to the action. (Section 102)
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LEGAL OWNERSHIP
STREET NAME AND OTHER INDIRECT HOLDERS
Investors who hold notes in accounts at banks, brokers and other financial
institutions will generally not be recognized by us as legal holders of notes.
This is called holding in street name. These intermediary banks, brokers and
other financial institutions pass along principal, interest and other payments
on the notes, either because they agree to do so in their customer agreements or
because they are legally required to. If you hold notes in street name, you
should check with your own institution to find out:
- how it handles securities payments and notices;
- whether it imposes fees or charges;
- how it would handle voting if required; and
- how it would pursue rights under the notes if there were a default or
other event triggering the need for holders to act to protect their
interests.
DIRECT HOLDERS
Our obligations, as well as the obligations of the trustee and those of any
third parties employed by us or the trustee, extend only to persons who are
registered as holders of notes. As described above, we do not have any
obligations to you if you hold notes in street name or other indirect means
because the notes are issued in the form of global notes as described below. For
example, once we make a payment to the registered holder, we have no further
responsibility for the payment, even if that holder is legally required to pass
the payment along to you as a street name customer but does not do so.
GLOBAL NOTES
A global note is a special type of indirectly held note. Because we will
issue the notes only in the form of global notes, the ultimate beneficial owners
can only be indirect holders. We do this by requiring that the global notes be
registered in the name of a financial institution we select and by requiring
that the notes included in the global notes not be transferred to the name of
any other direct holder unless the special circumstances described below occur.
The financial institution that acts as the sole direct holder of the global note
is called the depositary. Any person wishing to own a note must do so indirectly
by virtue of an account with a bank, broker or other financial institution that
in turn has an account with the depositary.
SPECIAL INVESTOR CONSIDERATIONS FOR GLOBAL NOTES. As an indirect holder, an
investor's rights relating to the global notes will be governed by the account
rules of the investor's bank, broker or other financial institution and of the
depositary, as well as general laws relating to securities transfers. We do not
recognize this type of investor as a holder of notes and instead deal only with
the depositary that holds the global notes.
If you are an investor, you should be aware that:
- you cannot get notes registered in your own name;
- you cannot receive physical certificates for your interest in the notes;
- you will be a street name holder and must look to your own bank, broker
or other financial institution for payments on the notes and protection
of your legal rights relating to the notes; see "Street Name and Other
Indirect Holders;"
- you may not be able to sell or pledge interests in the notes to some
insurance companies and other institutions that are required by law to
own their securities in the form of physical certificates; and
- the depositary's policies will govern payments, transfers, exchange and
other matters relating to your interest in the global notes. We and the
trustee have no responsibility for any aspect of the depositary's actions
or for its records of ownership interest in the global notes. We and the
trustee also do not supervise the depositary in any way.
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SPECIAL SITUATIONS WHEN GLOBAL NOTES WILL BE TERMINATED. In a few special
situations described in the next paragraph, the global notes will terminate and
interests in them will be exchanged for physical certificates representing
notes. After that exchange, the choice of whether to hold notes directly or in
street name will be up to you. You must consult your own bank, broker or other
financial institution to find out how to have your interests in the notes
transferred to your own name, so that you will be a direct holder. The rights of
street name investors and direct holders in the notes have been previously
described in the subsections entitled "-- Street Name and Other Indirect
Holders" and "-- Direct Holders."
The special situations for termination of the global notes are:
- when the depositary notifies us that it is unwilling, unable or no longer
qualified to continue as depositary;
- when we notify the trustee that we wish to terminate the global notes;
and
- when an event of default on the notes has occurred and has not been
cured, disregarding for this purpose any requirement of notice or that
the default exist for a specified period of time.
ADDITIONAL MECHANICS
GLOBAL NOTES
The original notes offered and sold to qualified institutional buyers
pursuant to Rule 144A were issued in the form of one or more registered notes in
global form, without interest coupons, which we call the Rule 144A Global Notes.
The Rule 144A Global Notes were deposited on the date of initial issuance of the
original notes with, or on behalf of, The Depository Trust Company or will
remain in the custody of the trustee pursuant to the FAST Balance Certificate
Agreement between The Depository Trust Company and the trustee, and registered
in the name of Cede & Co., as nominee of The Depository Trust Company. Interests
in the Rule 144A Global Notes will be available for purchase only by qualified
institutional buyers.
The Depository Trust Company has advised us that it is a limited-purpose
trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to
Section 17A of the Exchange Act. The Depository Trust Company was created to
hold securities of persons who have accounts with The Depository Trust Company,
otherwise known as participants, and to facilitate the clearance and settlement
of securities transactions among its participants in securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of certificates. These participants
include securities brokers and dealers, banks, trust companies and other
clearing corporations. Indirect access to The Depository Trust Company's
book-entry system also is available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. The Depository Trust Company is
owned by a number of its participants, and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. The rules applicable to The Depository Trust Company and its
participants are on file with the SEC.
Notes offered and sold in offshore transactions following the initial
offering of the original notes to Non-U.S. Persons in reliance on Regulation S
will be issued in the form of one or more registered notes in global form,
without interest coupons, which we call the Regulation S Global Notes. Each
Regulation S Global Note will be deposited upon issuance with, or on behalf of,
a custodian for The Depository Trust Company in the manner described in the
preceding paragraph for credit to the respective accounts of the purchasers, or
to other accounts as they may direct, at Morgan Guaranty Trust Company of New
York, Brussels Office, as operator of the Euroclear System, or Clearstream
Banking, as
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applicable; provided that prior to the 41st day after the later of the
commencement of the offering of the original notes and the date of initial
issuance of the original notes, which we call the restricted period, beneficial
interests in the Regulation S Global Notes may be held only in or through
accounts maintained at The Depository Trust Company by Euroclear or Clearstream
unless exchanged for interests in the Rule 144A Global Notes.
You may hold your interests in the applicable Regulation S Global Note
directly through Euroclear or Clearstream, if you are a participant in those
systems, or indirectly through organizations which are participants in such
systems. After the expiration of the restricted period, but not earlier, you may
also hold your interests through organizations other than Euroclear or
Clearstream that are participants in The Depository Trust Company system.
Euroclear and Clearstream will hold the interests in the applicable Regulation S
Global Notes on behalf of their participants through customers' securities
accounts in their names on the books of their depositaries. These depositaries,
in turn, will hold such interests in the applicable Regulation S Global Note in
customers' securities accounts in the depositaries' names on the books of The
Depository Trust Company.
EXCHANGES AMONG THE GLOBAL NOTES
Prior to the expiration of the restricted period, transfers by an owner of
a beneficial interest in a Regulation S Global Note to a transferee who takes
delivery of such interest through a Rule 144A Global Note will be made only in
accordance with the following procedures. The trustee must receive a written
certification from the transferor of the beneficial interest in the form
provided in the indenture to the effect that the transfer is being made to a
person who the transferor reasonably believes is a qualified institutional buyer
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A. (Section 305)
Transfers by an owner of a beneficial interest in a Rule 144A Global Note
to a transferee who takes delivery of the interest through a Regulation S Global
Note, whether before or after the expiration of the restricted period, will be
made only after the trustee receives a certification form from the transferor of
the beneficial interest in the form provided in the indenture to the effect that
the transfer is being made in accordance with Regulation S or, if available,
Rule 144 under the Securities Act and that, if the transfer is being made prior
to the expiration of the restricted period, the interests transferred will be
held immediately thereafter through Euroclear or Clearstream. (Section 305)
FORM, EXCHANGE AND TRANSFER OF PHYSICAL NOTES
The following discussion only applies if the global notes are terminated as
described above under "-- Legal Ownership -- Global Notes -- Special Situations
When Global Notes Will Be Terminated" and the notes are issued in the form of
physical certificates.
The notes will be issued:
- only in registered form;
- without interest coupons; and
- in denominations that are even multiples of $1,000. (Section 302)
You may have your notes divided into more notes of smaller denominations or
combined into fewer notes of larger denominations, as long as the total
principal amount is not changed. (Section 305) This is called an exchange.
You may exchange or transfer notes at the office of the trustee. The
trustee acts as our agent for registering notes in the names of holders and
transferring notes. We may change this appointment to another entity or perform
these functions ourselves. The entity performing the role of maintaining the
list of registered holders is called the security registrar. It will also
perform transfers. (Section 305)
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You will not be required to pay a service charge to transfer or exchange
the notes, but you may be required to pay for any tax or other governmental
charge associated with the exchange or transfer. The transfer or exchange will
only be made if the security registrar is satisfied with your proof of
ownership. (Section 305)
We may cancel the designation of any particular transfer agent. We may also
approve a change in the office through which any transfer agent acts. (Section
1002)
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain material United States federal
income tax consequences relevant to the purchase, ownership and disposition of
the notes and reflects the opinion provided by Bracewell & Patterson, L.L.P.,
our counsel as to these matters. This discussion is for general information only
and does not address all aspects of federal income taxation that may be relevant
to particular investors in light of their personal investment circumstances, nor
does it address the federal income tax consequences which may be relevant to
certain types of investors subject to special treatment under the federal income
tax laws (for example, certain financial institutions, insurance companies,
tax-exempt entities, broker-dealers, and taxpayers subject to the alternative
minimum tax). In addition, this discussion does not discuss any aspects of
state, local, or foreign tax laws. This discussion is applicable only to
purchasers that acquired the notes under the offering at the initial offering
price and does not address the tax consequences to subsequent purchasers of the
notes. This discussion assumes that investors will hold their notes as "capital
assets" (generally, property held for investment), within the meaning of Section
1221 of the Internal Revenue Code, and not as part of an integrated investment
(for example, a hedge, straddle or conversion transaction).
No ruling from the Internal Revenue Service (the "IRS") will be requested
with respect to any of the matters discussed herein. There can be no assurance
that the IRS will not take different positions concerning the matters discussed
below and that such positions would not be sustained. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF NOTES SHOULD CONSULT HIS OR HER OWN TAX
ADVISOR WITH RESPECT TO HIS OR HER PARTICULAR TAX SITUATION AND AS TO ANY
FEDERAL, FOREIGN, STATE, LOCAL OR OTHER TAX CONSIDERATIONS (INCLUDING ANY
POSSIBLE CHANGES IN TAX LAW) AFFECTING THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE NOTES.
This discussion is based on the provisions of the Internal Revenue Code,
existing and proposed Treasury regulations promulgated thereunder, judicial
authority interpreting the Internal Revenue Code, and current administrative
rulings and pronouncements of the IRS now in effect, all of which are subject to
change at any time by legislative, judicial or administrative action. Any such
changes may be retroactively applied in a manner that could result in federal
income tax consequences different from those discussed below and could adversely
affect a holder of notes.
EXCHANGE OF ORIGINAL NOTES FOR EXCHANGE NOTES
The exchange of original notes for exchange notes of the same series should
not constitute a significant modification of the terms of the original notes,
and, accordingly, will not be treated as a taxable exchange for United States
federal income tax purposes. Consequently, no gain or loss will be recognized by
holders of original notes upon receipt of the exchange notes of the same series.
A holder will have the same adjusted basis in an exchange note as the holder had
in the original note exchanged therefor. In addition, a holder's holding period
for an exchange note will include the holding period for the original note
exchanged therefor.
The remaining summary of federal income considerations relates to owning
and disposing of exchange notes, and also applies to holders of original notes
who do not accept the exchange offer.
UNITED STATES FEDERAL INCOME TAXATION OF UNITED STATES HOLDERS
As used herein, the term "United States Holder" means a holder of a note
that is for United States federal income tax purposes (1) an individual citizen
or resident of the United States, (2) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, (3) an estate the income of which is subject to United
States federal income taxation regardless of source,
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or (4) a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States persons who have the
authority to control all substantial decisions of the trust.
STATED INTEREST. Stated interest on the notes generally will be taxable to
a United States Holder as ordinary income from domestic sources at the time it
is paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes.
AMORTIZABLE BOND PREMIUM. If a United States Holder purchases a note for an
amount that is greater than the sum of all payments payable on the note after
the purchase date, other than qualified stated interest, such United States
Holder will be considered to have purchased such note at a premium. A United
States Holder may elect to amortize such bond premium over the remaining term of
such note (or if it results in a smaller amount of amortizable bond premium,
until an earlier call date, and in such case by reference to the amount payable
on that date).
If bond premium is amortized, the amount of interest on the note included
in the United States Holder's income for each accrual period ending on an
interest payment date or on the stated maturity of the note, as the case may be,
will be reduced by a portion of the bond premium allocable to such accrual
period based on the note's yield to maturity (or earlier call date, if reference
to such call date produces a smaller amount of amortizable bond premium). If the
amortizable bond premium allocable to such accrual period exceeds the amount of
interest allocable to such accrual period, such excess would be allowed as a
deduction for such accrual period, but only to the extent of the United States
Holder's prior inclusion in income of interest payments on the note. Any excess
above such prior interest inclusions is generally carried forward to the next
accrual period. A United States Holder who elects to amortize bond premium must
reduce such United States Holder's tax basis in the notes as described under
" -- Disposition of Notes." If such an election to amortize bond premium is not
made, a United States Holder must include the full amount of each interest
payment on the note in income in accordance with its regular method of
accounting and will receive a tax benefit from the bond premium only in
computing such United States Holder's gain or loss upon disposition of the note.
An election to amortize bond premium will apply to all taxable debt
obligations then held or subsequently acquired by the electing United States
Holder on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS. A United States
Holder should consult with such United States Holder's tax advisor with respect
to the general applicability of the amortizable bond premium rules of the
Internal Revenue Code to such United States Holder, and whether such United
States Holder should make an election under these rules.
MARKET DISCOUNT. If a United States Holder purchases a note for an amount
that is less than its stated redemption price at maturity (i.e., the sum of all
payments on the note other than stated interest payments), the amount of the
difference will be treated as "market discount" for federal income tax purposes,
unless such difference is less than a de minimis amount as specified by the
Internal Revenue Code. Under the market discount rules, a United States Holder
will be required to treat any principal payment on, or any gain on the sale,
exchange, retirement or other disposition of a note as ordinary income to the
extent of the market discount which has not previously been included in income
and is treated as having accrued on such note at the time of such payment or
disposition. In addition, the United States Holder may be required to defer,
until maturity of the note or its earlier disposition in a taxable transaction,
the deduction of all or a portion of the interest expense on any indebtedness
incurred or maintained to purchase or carry such note.
The notes provide for optional redemption and (in the case of a Change in
Control) mandatory offers to purchase, in whole or in part, prior to maturity.
If the notes were redeemed, a United States Holder
41
<PAGE> 43
generally would be required to include in gross income as ordinary income the
portion of the gain recognized on the redemption attributable to accrued market
discount, if any.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the notes, unless the
United States Holder elects to accrue market discount on a constant interest
method. A United States Holder of a note may elect to include market discount in
income currently as it accrues (under either a ratable or constant interest
method). This election to include currently, once made, applies to all market
discount obligations acquired in or after the first taxable year to which the
election applies and may not be revoked without the consent of the IRS. If a
United States Holder of notes makes such an election, the foregoing rules with
respect to the recognition of ordinary income on sales and other dispositions of
instruments, and with respect to the deferral of interest deductions incurred or
maintained to purchase or carry such notes, would not apply.
DISPOSITION OF NOTES. Upon the sale, exchange, retirement, redemption or
other disposition of a note, a United States Holder will recognize taxable gain
or loss equal to the difference between (1) the amount of cash and the fair
market value of property received in exchange therefor (except to the extent
such amount is attributable to accrued but unpaid interest, which amount will
generally be taxable as ordinary income) and (2) the United States Holder's
adjusted tax basis in the note. A United States Holder's adjusted tax basis in a
note will generally equal the United States Holder's purchase price for such
note, increased by any market discount previously included in income by the
United States Holder and decreased by any principal payments received by the
United States Holder, and any amortizable bond premium deducted over the term of
the note. Any gain or loss recognized on the sale, exchange, retirement or other
disposition of a note will generally be capital gain or loss (except to the
extent of any accrued market discount). Capital gains of individuals derived in
respect of capital assets held for more than one year are eligible for reduced
rates of taxation which may vary depending upon the holding period of such
capital assets. The deduction of capital losses is subject to certain
limitations. A United States Holder should consult such United States Holder's
tax advisor regarding the treatment of capital gains or losses.
BACKUP WITHHOLDING. Certain non-corporate United States Holders of notes
may be subject to backup withholding at the rate of 31% with respect to interest
payments on the notes and cash payments received in certain circumstances upon
the disposition of such notes. Generally, backup withholding is applied only
when the taxpayer (1) fails to furnish or certify its correct taxpayer
identification number to the payor in the manner required, (2) is notified by
the IRS that is has failed to report payments of interest and dividends
properly, or (3) under certain circumstances, fails to certify that it has not
been notified by the IRS that it is subject to backup withholding for failure to
report interest and dividend payments. Any amounts withheld under the backup
withholding rules will be allowed as a refund or credit against a United States
Holder's United States federal income tax liability, provided that such United
States Holder furnished the required information to the IRS.
Treasury regulations, generally effective for payments made after December
31, 2000 (the "New Withholding Regulations"), modify certain of the
certification requirements for backup withholding. It is possible that Kinder
Morgan Energy Partners, L.P. and other withholding agents may request a new
withholding exemption from United States Holders in order to qualify for
continued exemption from backup withholding under the New Withholding
Regulations.
UNITED STATES FEDERAL INCOME TAXATION OF NON-UNITED STATES HOLDERS
This section discusses certain special rules applicable to a holder of
notes that is a Non-United States Holder. For purposes of this discussion, a
"Non-United States Holder" means a holder of notes that is not (1) an
42
<PAGE> 44
individual citizen or resident of the United States, (2) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, (3) an estate the income of
which is subject to United States federal income taxation regardless of source,
or (4) a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States persons who have the
authority to control all substantial decisions of the trust.
For purposes of the following summary, interest and gain on the sale,
exchange or other disposition of the notes will be considered "United States
trade or business income" if such income or gain is (1) effectively connected
with the conduct of a trade or business in the United States, or (2) in the case
of a treaty resident, attributable to a permanent establishment (or, in the case
of an individual, to a fixed base) in the United States.
RECEIPT OF STATED INTEREST BY NON-UNITED STATES HOLDER.
A Non-United States Holder that is not subject to United States federal
income tax as a result of any direct or indirect connection to the United States
other than its ownership of the notes will not be subject to United States
federal income or withholding tax in respect of interest income on the notes if
(1) the interest is not United States trade or business income, (2) the
Non-United States Holder provides an appropriate statement on IRS Forms W-8ECI,
W-8BEN, W-8EXP or W-8IMY, together with all appropriate attachments, signed
under penalties of perjury, identifying the Non-United States Holder and
stating, among other things, that the Non-United States Holder is not a United
States person for United States federal income tax purposes, and (3) the
Non-United States Holder is not a "10-percent shareholder" or a "related
controlled foreign corporation" with respect to Kinder Morgan Energy Partners,
L.P. as specifically defined for United States federal income tax purposes.
If a note is held through a securities clearing organization or certain
other financial institutions, the organization or institution may provide a
signed statement to eliminate withholding tax. However, in such case, the signed
statement must be accompanied by a copy of the IRS Form W-8BEN or the substitute
form provided by the beneficial owner to the organization or institution. For
interest paid with respect to a note after December 31, 2000, a Non-United
States Holder that is treated as a partnership for United States federal income
tax purposes generally will be required to provide an IRS Form W-8IMY and to
attach an appropriate certification by each beneficial owner of the Non-United
States Holder (including, in certain cases, such beneficial owner's beneficial
owners). Prospective investors, including foreign partnerships and their
partners, should consult their tax advisors regarding these possible additional
reporting requirements.
The New Withholding Regulations revise (substantially in certain respects)
the certification procedures discussed above for payments made after December
31, 2000. It is possible that Kinder Morgan Energy Partners, L.P. and other
withholding agents may request new certifications or statements from Non-United
States Holders in order to qualify for continued exemption from withholding
under the New Withholding Regulations. Each Non-United States Holder should
consult its own tax advisor regarding the application to such holder of the New
Withholding Regulations.
To the extent these conditions are not met, a 30% withholding tax will
apply to interest income on the notes, unless an income tax treaty reduces or
eliminates such tax or unless the interest is United States trade or business
income with respect to such Non-United States Holder and the Non-United States
Holder provides an appropriate statement to that effect. In the latter case,
such Non-United States Holder generally will be subject to United States federal
income tax with respect to all income from the notes at regular rates applicable
to United States taxpayers. Additionally, in such event, Non-United States
Holders that are corporations could be subject to a branch profits tax on such
income.
43
<PAGE> 45
GAIN ON DISPOSITION OF NOTES. In general, a Non-United States Holder will
not be subject to United States federal income tax on any amount received (other
than amounts in respect of accrued but unpaid interest) upon retirement or
disposition of a note unless such Non-United States Holder is an individual
present in the United States for 183 days or more in the taxable year of the
retirement or disposition and certain other requirements are met, or unless the
gain is United States trade or business income. In the latter event, Non-United
States Holders generally will be subject to United States federal income tax
with respect to such gain at regular rates applicable to United States
taxpayers. Additionally, in such event, Non-United States Holders that are
corporations could be subject to a branch profits tax on such gain.
INFORMATION REPORTING AND BACKUP WITHHOLDING. Under certain circumstances,
the Internal Revenue Code requires "information reporting" annually to the IRS
and to each holder of notes, and "backup withholding" at a rate of 31% with
respect to certain payments made on or with respect to the notes. Backup
withholding generally does not apply with respect to certain holders of notes,
including corporations.
A Non-United States Holder that provides an IRS Forms W-8ECI, W-8BEN,
W-8EXP or W-8IMY, together will all appropriate attachments, signed under
penalties of perjury, identifying the Non-United States Holder and stating that
the Non-United States Holder is not a United States person for United States
federal income tax purposes, will not be subject to IRS reporting requirements
and United States backup withholding. With respect to interest paid after
December 31, 2000, IRS Forms W-8BEN will generally be required from the
beneficial owners of interests in a Non-United States Holder that is treated as
a partnership for United States federal income tax purposes.
The payment of proceeds on the disposition of a note to or through the
United States office of a broker generally will be subject to information
reporting and backup withholding at a rate of 31% unless the Non-United States
Holder either certifies its status as a Non-United States Holder under penalties
of perjury on IRS Form W-8BEN (as described above) or otherwise establishes an
exemption. The payment of the proceeds on the disposition of a note by a
Non-United States Holder to or through a non-United States office of a
non-United States broker will not be subject to backup withholding or
information reporting unless the non-United States broker is a "United States
related person" (as defined below). The payment of proceeds on the disposition
of a note by a Non-United States Holder to or through a non-United States office
of a United States broker or a United States related person generally will not
be subject to backup withholding but will be subject to information reporting
unless the Non-United States Holder certifies its status as a Non-United States
Holder under penalties of perjury or the broker has certain documentary evidence
in its files as to the Non-United States Holder's foreign status and the broker
has no actual knowledge to the contrary.
For this purpose, a "United States related person" is (1) a "controlled
foreign corporation" as specifically defined for United States federal income
tax purposes, (2) a foreign person 50% or more of whose gross income from all
sources for the three-year period ending with the close of its taxable year
preceding the payment (or for such part of the period that the broker has been
in existence) is derived from activities that are effectively connected with the
conduct of a United States trade or business, or (3) for payments made after
December 31, 2000, a foreign partnership if at any time during its tax year one
or more of its partners are United States persons who, in the aggregate, hold
more than 50% of the income or capital interest of the partnership or if, at any
time during its taxable year, the partnership is engaged in the conduct of a
United States trade or business.
Backup withholding is not an additional tax and may be refunded (or
credited against the Non-United States Holder's United States federal income tax
liability, if any), provided that certain required information is furnished.
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<PAGE> 46
The information reporting requirements may apply regardless of whether
withholding is required. Copies of the information returns reporting such
interest and withholding also may be made available to the tax authorities in
the country in which a Non-United States Holder is a resident under the
provisions of an applicable income tax treaty or agreement.
The New Withholding Regulations revise (substantially in certain respects)
the procedures that withholding agents and payees must follow to comply with, or
the establish an exemption from, these information reporting and backup
withholding provisions for payments made after December 31, 2000. It is possible
that Kinder Morgan Energy Partners, L.P. and other withholding agents may
request a new withholding exemption from Non-United States Holders in order to
qualify for continued exemption from backup withholding under the New
Withholding Regulations. Each Non-United States Holder should consult its own
tax advisor regarding the application to such holder of the New Withholding
Regulations.
VALIDITY OF THE EXCHANGE NOTES
The validity of the exchange notes being offered hereby will be passed upon
for us by Bracewell & Patterson, L.L.P., Houston, Texas.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1999, have been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
In addition, (1) the balance sheet of Kinder Morgan G.P., Inc. as of
December 31, 1999; (2) the statements of income, cash flows and changes in
member's equity of Kinder Morgan Interstate Gas Transmission LLC for the year
ended December 31, 1999; and (3) the statements of income, cash flows and
changes in partners' equity of Trailblazer Pipeline Company for the year ended
December 31, 1999 incorporated by reference in this prospectus have been so
incorporated in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The financial statements of Red Cedar Gathering Company as of and for the
years ended December 31, 1999 and 1998 included in Kinder Morgan Energy
Partners, L.P.'s Form 8-KA filed on March 28, 2000, incorporated by reference in
this registration statement, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report dated March 24,
2000, with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
45
<PAGE> 47
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. The SEC allows us to incorporate by reference
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information as well as the information included in this
prospectus. We incorporate by reference the following documents:
- Our annual report on Form 10-K for the year ended December 31, 1999;
- Our quarterly reports on Form 10-Q for the quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000;
- Our current reports on Form 8-K and Form 8-K/A filed on March 28, 2000,
March 31, 2000, April 3, 2000, June 28, 2000 and November 6, 2000; and
- All documents filed with the SEC under Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act between the date of this prospectus and the
completion of the Exchange Offer.
You may read and copy any document we file at the SEC's public reference
rooms located at:
- 450 Fifth Street, N.W.
Washington, D.C. 20549
- Seven World Trade Center
New York, New York 10048
- Northwest Atrium Center
500 West Madison Street
Chicago, Illinois 60661
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms and their copy charges. Our SEC filings are also available to
the public on the SEC's Web site at http://www.sec.gov and through the New York
Stock Exchange, 20 Broad Street, New York, New York 10005, on which our limited
partner interests are listed.
We will provide a copy of any document incorporated by reference in this
prospectus and any exhibit specifically incorporated by reference in those
documents at no cost by request directed to us at the following address and
telephone number:
Kinder Morgan Energy Partners, L.P.
Investor Relations Department
One Allen Center, Suite 1000
500 Dallas Street
Houston, Texas 77002
(713) 369-9000
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<PAGE> 48
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in this prospectus by
reference include forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. These forward-looking
statements are identified as any statement that does not relate strictly to
historical or current facts. They use words such as "anticipate," "believe,"
"intend," "plan," "projection," "forecast," "strategy," "position," "continue,"
"estimate," "expect," "may," "will," or the negative of those terms or other
variations of them or by comparable terminology. In particular, statements,
express or implied, concerning future operating results or the ability to
generate sales, income or cash flow are forward-looking statements.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results of our operations may
differ materially from those expressed in these forward-looking statements. Many
of the factors that will determine these results are beyond our ability to
control or predict. Specific factors which could cause actual results to differ
from those in the forward-looking statements, include:
- price trends and overall demand for natural gas liquids, refined
petroleum products, carbon dioxide, natural gas, coal and other bulk
materials in the United States. Economic activity, weather, alternative
energy sources, conservation and technological advances may affect price
trends and demand;
- changes in our tariff rates implemented by the Federal Energy Regulatory
Commission or the California Public Utilities Commission;
- our ability to integrate any acquired operations into our existing
operations;
- any difficulties or delays experienced by railroads in delivering
products to the bulk terminals;
- our ability to successfully identify and close strategic acquisitions and
make cost saving changes in operations;
- shut-downs or cutbacks at major refineries, petrochemical plants,
utilities, military bases or other businesses that use our services;
- the condition of the capital markets and equity markets in the United
States; and
- the political and economic stability of the oil producing nations of the
world.
You should not put undue reliance on any forward-looking statements.
See Items 1 and 2 "Business and Properties - Risk Factors" in our Annual
Report on Form 10-K for the fiscal year ended December 31, 1999, for a more
detailed description of these and other factors that may affect the
forward-looking statements. When considering forward-looking statements, one
should keep in mind the risk factors described under "Risk Factors" in this
prospectus. We disclaim any obligation to update the above list or to announce
publicly the result of any revisions to any of the forward-looking statements to
reflect future events or developments.
In addition, our classification as a partnership for federal income tax
purposes means that we do not generally pay federal income taxes on our net
income. We do, however, pay taxes on the net income of subsidiaries that are
corporations. We are relying on a legal opinion from our counsel, and not a
ruling from the Internal Revenue Service, as to our proper classification for
federal income tax purposes. See Items 1 and 2 "Business and Properties - Tax
Treatment of Publicly Traded Partnerships Under the Internal Revenue Code" of
our Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
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ANNEX A
KINDER MORGAN ENERGY PARTNERS, L.P.
LETTER OF TRANSMITTAL
<PAGE> 50
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
7.50% SENIOR NOTES DUE 2010
OF
KINDER MORGAN ENERGY PARTNERS, L.P.
PURSUANT TO THE PROSPECTUS DATED , 2000
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
2000 UNLESS EXTENDED BY THE PARTNERSHIP IN ITS SOLE DISCRETION (THE "EXPIRATION
DATE"). TENDERS OF NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION
DATE.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
FIRST UNION NATIONAL BANK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand:
First Union National Bank (704) 590-7628 First Union National Bank First Union
First Union Customer Information Customer Information Center
Center Confirm by Telephone: Corporate Trust Operations -- NC1153
Corporate Trust Operations -- NC1153 (704) 590-7408 1525 West W.T. Harris Boulevard -- 3C3
1525 West W.T. Harris Boulevard -- 3C3 Charlotte, NC 28262-1153
Charlotte, NC 28288 Attention: Mike Klotz
Attention: Mike Klotz
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN
AS LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES PURSUANT TO THE
EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR ORIGINAL NOTES TO
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal is to be used by holders ("Holders") of 7.50%
Senior Notes due 2010 (the "Original Notes") of Kinder Morgan Energy Partners,
L.P. (the "Partnership") to receive 7.50% Exchange Notes (the "Exchange Notes")
if: (i) certificates representing Original Notes are to be physically delivered
to the Exchange Agent herewith by such Holders; (ii) tender of Original Notes is
to be made by book-entry transfer to the Exchange Agent's account at The
Depository Trust Company ("DTC") pursuant to the procedures set forth under the
caption "The Exchange Offers -- Procedures for Tendering Original
Notes -- Book-Entry Delivery Procedures" in the Prospectus dated ,
2000 (the "Prospectus"); or (iii) tender of Original Notes is to be made
according to the guaranteed delivery procedures set forth under the caption "The
Exchange Offers -- Procedures for Tendering Original Notes -- Guaranteed
Delivery" in the Prospectus, and, in each case, instructions are not being
transmitted through the DTC Automated Tender Offer Program ("ATOP"). The
undersigned hereby acknowledges receipt of the Prospectus. All capitalized terms
used herein and not defined shall have the meanings ascribed to them in the
Prospectus.
Holders of Original Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through ATOP, for which
the transaction will be eligible. DTC participants that are accepting the
exchange offer as set forth in the Prospectus and this Letter of Transmittal
(together, the
<PAGE> 51
"Exchange Offer") must transmit their acceptance to DTC which will edit and
verify the acceptance and execute a book-entry delivery to the Exchange Agent's
account at DTC. DTC will then send an Agent's Message to the Exchange Agent for
its acceptance. Delivery of the Agent's Message by DTC will satisfy the terms of
the Offer as to execution and delivery of a Letter of Transmittal by the
participant identified in the Agent's Message. DTC participants may also accept
the Exchange Offer by submitting a notice of guaranteed delivery through ATOP.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
If a Holder desires to tender Original Notes pursuant to the Exchange Offer
and time will not permit this Letter of Transmittal, certificates representing
such Original Notes and all other required documents to reach the Exchange
Agent, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, then such Holder must tender such Original Notes
according to the guaranteed delivery procedures set forth under the caption "The
Exchange Offer -- Procedures for Tendering Original Notes -- Guaranteed
Delivery" in the Prospectus. See Instruction 2.
The undersigned should complete, execute and deliver this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
TENDER OF ORIGINAL NOTES
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
------------------------------------------------------------------------------
Account Number:
----------------------------------------------------------------------------
Transaction Code Number:
----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
------------------------------------------------------------------------
Window Ticker Number (if any):
---------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
---------------------------------------------------
2
<PAGE> 52
List below the Original Notes to which this Letter of Transmittal relates.
The name(s) and address(es) of the registered Holder(s) should be printed, if
not already printed below, exactly as they appear on the Original Notes tendered
hereby. The Original Notes and the principal amount of Original Notes that the
undersigned wishes to tender would be indicated in the appropriate boxes. If the
space provided is inadequate, list the certificate number(s) and principal
amount(s) on a separately executed schedule and affix the schedule to this
Letter of Transmittal.
<TABLE>
<S> <C> <C> <C>
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DESCRIPTION OF ORIGINAL NOTES
-----------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES)
OF REGISTERED HOLDER(S) AGGREGATE PRINCIPAL
(PLEASE FILL IN IF BLANK) SEE CERTIFICATE AMOUNT PRINCIPAL AMOUNT
INSTRUCTION 3. NUMBER(S)* REPRESENTED** TENDERED**
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL
AMOUNT OF ORIGINAL NOTES
-----------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Unless otherwise specified, the entire aggregate principal amount represented by the Original Notes described above will
be deemed to be tendered. See Instruction 4.
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 53
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Kinder Morgan Energy Partners (the
"Partnership"), upon the terms and subject to the conditions set forth in its
Prospectus dated , 2000 (the "Prospectus"), receipt of which is hereby
acknowledged, and in accordance with this Letter of Transmittal (which together
constitute the "Exchange Offer"), the principal amount of Original Notes
indicated in the foregoing table entitled "Description of Original Notes" under
the column heading "Principal Amount Tendered." The undersigned represents that
it is duly authorized to tender all of the Original Notes tendered hereby which
it holds for the account of beneficial owners of such Original Notes
("Beneficial Owner(s)") and to make the representations and statements set forth
herein on behalf of such Beneficial Owner(s).
Subject to, and effective upon, the acceptance for purchase of the
principal amount of Original Notes tendered herewith in accordance with the
terms and subject to the conditions of the Exchange Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Partnership,
all right, title and interest in and to all of the Original Notes tendered
hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent the true and lawful agent and attorney-in-fact of the undersigned (with
full knowledge that the Exchange Agent also acts as the agent of the
Partnership) with respect to such Original Notes, with full powers of
substitution and revocation (such power of attorney being deemed to be an
irrevocable power coupled with an interest) to (i) present such Original Notes
and all evidences of transfer and authenticity to, or transfer ownership of,
such Original Notes on the account books maintained by DTC to, or upon the order
of, the Partnership, (ii) present such Original Notes for transfer of ownership
on the books of the Partnership, and (iii) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Original Notes, all in
accordance with the terms and conditions of the Exchange Offer as described in
the Prospectus.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that:
(1) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being
acquired by the undersigned and any Beneficial Owner(s) in the ordinary
course of business of the undersigned and any Beneficial Owner(s),
(2) the undersigned and each Beneficial Owner are not participating,
do not intend to participate, and have no arrangement or understanding with
any person to participate, in the distribution of the Exchange Notes,
(3) except as indicated below, neither the undersigned nor any
Beneficial Owner is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), of the Partnership, and
(4) the undersigned and each Beneficial Owner acknowledge and agree
that (x) any person participating in the Exchange Offer with the intention
or for the purpose of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale of the Exchange Notes acquired by such
person with a registration statement containing the selling securityholder
information required by Item 507 of Regulation S-K of the Securities and
Exchange Commission (the "SEC") and cannot rely on the interpretation of
the Staff of the SEC set forth in the no-action letters that are noted in
the section of the Prospectus entitled "The Exchange Offer -- Registration
Rights" and (y) any broker-dealer that pursuant to the Exchange Offer
receives Exchange Notes for its own account in exchange for Original Notes
which it acquired for its own account as a result of market-making
activities or other trading activities must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of
such Exchange Notes.
4
<PAGE> 54
If the undersigned is a broker-dealer that will receive Exchange Notes for
its own account in exchange for Original Notes that were acquired as the result
of market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
By so acknowledging and by delivering a prospectus, a broker-dealer shall not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
The undersigned understands that tenders of Original Notes may be withdrawn
by written notice of withdrawal received by the Exchange Agent at any time prior
to the Expiration Date in accordance with the Prospectus. In the event of a
termination of the Exchange Offer, the Original Notes tendered pursuant to the
Exchange Offer will be returned to the tendering Holders promptly (or, in the
case of Original Notes tendered by book-entry transfer, such Original Notes will
be credited to the account maintained at DTC from which such Original Notes were
delivered). If the Partnership makes a material change in the terms of the
Exchange Offer or the information concerning the Exchange Offer or waives a
material condition of such Exchange Offer, the Partnership will disseminate
additional Exchange Offer materials and extend such Exchange Offer, if and to
the extent required by law.
The undersigned understands that the tender of Original Notes pursuant to
any of the procedures set forth in the Prospectus and in the instructions hereto
will constitute the undersigned's acceptance of the terms and conditions of the
Exchange Offer. The Partnership's acceptance for exchange of Original Notes
tendered pursuant to any of the procedures described in the Prospectus will
constitute a binding agreement between the undersigned and the Partnership in
accordance with the terms and subject to the conditions of the Exchange Offer.
For purposes of the Exchange Offer, the undersigned understands that validly
tendered Original Notes (or defectively tendered Original Notes with respect to
which the Partnership has, or has caused to be, waived such defect) will be
deemed to have been accepted by the Partnership if, as and when the Partnership
gives oral or written notice thereof to the Exchange Agent.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Original Notes
tendered hereby, and that when such tendered Original Notes are accepted for
purchase by the Partnership, the Partnership will acquire good title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim or right. The undersigned and each Beneficial Owner
will, upon request, execute and deliver any additional documents deemed by the
Exchange Agent or by the Partnership to be necessary or desirable to complete
the sale, assignment and transfer of the Original Notes tendered hereby.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive the death or incapacity
of the undersigned and any Beneficial Owner(s), and any obligation of the
undersigned or any Beneficial Owner(s) hereunder shall be binding upon the
heirs, executors, administrators, trustees in bankruptcy, personal and legal
representatives, successors and assigns of the undersigned and such Beneficial
Owner(s).
The undersigned understands that the delivery and surrender of any Original
Notes is not effective, and the risk of loss of the Original Notes does not pass
to the Exchange Agent or the Partnership, until receipt by the Exchange Agent of
this Letter of Transmittal, or a manually signed facsimile hereof, properly
completed and duly executed, together with all accompanying evidences of
authority and any other required documents in form satisfactory to the
Partnership. All questions as to form of all documents and the validity
(including time of receipt) and acceptance of tenders and withdrawals of
Original Notes will be determined by the Partnership, in its sole discretion,
which determination shall be final and binding.
Unless otherwise indicated herein under "Special Issuance Instructions,"
the undersigned hereby requests that any Original Notes representing principal
amounts not tendered or not accepted for exchange be issued in the name(s) of
the undersigned (and in the case of Original Notes tendered by book-entry
transfer, by credit to the account of DTC), and Exchange Notes issued in
exchange for Original Notes pursuant to the Exchange Offer be issued to the
undersigned. Similarly, unless otherwise indicated herein under "Special
Delivery Instructions," the undersigned hereby requests that any Original Notes
representing principal amounts not tendered or not accepted for exchange and
Exchange Notes issued in exchange for Original Notes pursuant to the Exchange
Offer be delivered to the undersigned at the address
5
<PAGE> 55
shown below the undersigned's signature(s). In the event that the "Special
Issuance Instructions" box or the "Special Delivery Instructions" box is, or
both are, completed, the undersigned hereby requests that any Original Notes
representing principal amounts not tendered or not accepted for purchase be
issued in the name(s) of, certificates for such Original Notes be delivered to,
and Exchange Notes issued in exchange for Original Notes pursuant to the
Exchange Offer be issued in the name(s) of, and be delivered to, the person(s)
at the address(es) so indicated, as applicable. The undersigned recognizes that
the Partnership has no obligation pursuant to the "Special Issuance
Instructions" box or "Special Delivery Instructions" box to transfer any
Original Notes from the name of the registered Holder(s) thereof if the
Partnership does not accept for exchange any of the principal amount of such
Original Notes so tendered.
[ ] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU HOLD ORIGINAL NOTES
IS AN AFFILIATE OF THE PARTNERSHIP.
[ ] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU HOLD ORIGINAL NOTES
TENDERED HEREBY IS A BROKER-DEALER WHO ACQUIRED SUCH NOTES DIRECTLY FROM THE
PARTNERSHIP OR AN AFFILIATE OF THE PARTNERSHIP.
[ ] CHECK HERE AND COMPLETE THE LINES BELOW IF YOU OR ANY BENEFICIAL OWNER FOR
WHOM YOU HOLD ORIGINAL NOTES TENDERED HEREBY IS A BROKER-DEALER WHO ACQUIRED
SUCH NOTES IN MARKET-MAKING OR OTHER TRADING ACTIVITIES. IF THIS BOX IS
CHECKED, THE PARTNERSHIP WILL SEND 10 ADDITIONAL COPIES OF THE PROSPECTUS
AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO TO YOU OR SUCH
BENEFICIAL OWNER AT THE ADDRESS SPECIFIED IN THE FOLLOWING LINES.
Name:
--------------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
6
<PAGE> 56
------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Original Notes in a principal amount not
tendered or not accepted for exchange are to be issued in the name of, or
Exchange Notes are to be issued in the name of, someone other than the
person(s) whose signature(s) appear(s) within this Letter of Transmittal
or issued to an address different from that shown in the box entitled
"Description of Original Notes" within this Letter of Transmittal.
Issue: [ ] Original Notes
[ ] Exchange Notes
(check as applicable)
Name
----------------------------------------------------
(PLEASE PRINT)
Address
-------------------------------------------------
(PLEASE PRINT)
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Original Notes in a principal amount not
tendered or not accepted for exchange or Exchange Notes are to be sent to
someone other than the person(s) whose signature(s) appear(s) within this
Letter of Transmittal or to an address different from that shown in the
box entitled "Description of Original Notes" within this Letter of
Transmittal.
Issue: [ ] Original Notes
[ ] Exchange Notes
(check as applicable)
Name
----------------------------------------------------
(PLEASE PRINT)
Address
-------------------------------------------------
(PLEASE PRINT)
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 HEREIN)
------------------------------------------------------------
7
<PAGE> 57
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF ORIGINAL NOTES
REGARDLESS OF WHETHER ORIGINAL NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the registered Holder(s) exactly as
name(s) appear(s) on certificate(s) for Original Notes or, if tendered by a
participant in DTC exactly as such participant's name appears on a security
position listing as owner of Original Notes, or by the person(s) authorized to
become registered Holder(s) by endorsements and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 5.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Signature(s) of Registered Holder(s) or Authorized Signatory
(See guarantee requirement below)
Dated: -------------------------------------------------------------------------
Name(s): -----------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please Print)
Capacity (Full Title):
-------------------------------------------------------------
Address:------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number: ------------------------------------------------
Tax Identification or Social Security Number:
----------------------------------------
(Complete Accompanying Substitute Form W-9)
SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature------------------------------------------------------------
Name of Firm -------------------------------------------------------------------
[PLACE SEAL HERE]
8
<PAGE> 58
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Signature Guarantees. Signatures of this Letter of Transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an
"Eligible Institution"), unless the Original Notes tendered hereby are tendered
(i) by a registered Holder of Original Notes (or by a participant in DTC whose
name appears on a security position listing as the owner of such Original Notes)
that has not completed either the box entitled "Special Issuance Instructions"
or the box entitled "Special Delivery Instructions" on this Letter of
Transmittal, or (ii) for the account of an Eligible Institution. If the Original
Notes are registered in the name of a person other than the signer of this
Letter of Transmittal, if Original Notes not accepted for exchange or not
tendered are to be returned to a person other than the registered Holder or if
Exchange Notes are to be issued in the name of or sent to a person other than
the registered Holder, then the signatures on this Letter of Transmittal
accompanying the tendered Original Notes must be guaranteed by an Eligible
Institution as described above. See Instruction 5.
2. Delivery of Letter of Transmittal and Original Notes. This Letter of
Transmittal is to be completed by Holders if (i) certificates representing
Original Notes are to be physically delivered to the Exchange Agent herewith by
such Holders; (ii) tender of Original Notes is to be made by book-entry transfer
to the Exchange Agent's account at DTC pursuant to the procedures set forth
under the caption "The Exchange Offer -- Procedures for Tendering Original
Notes -- Book-Entry Delivery Procedures" in the Prospectus; or (iii) tender of
Original Notes is to be made according to the guaranteed delivery procedures set
forth under the caption "The Exchange Offer -- Procedures for Tendering Original
Notes -- Guaranteed Delivery" in the Prospectus. All physically delivered
Original Notes, or a confirmation of a book-entry transfer into the Exchange
Agent's account at DTC of all Original Notes delivered electronically, as well
as a properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof), any required signature guarantees and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at one of its addresses set forth on the cover page hereto on or
prior to the Expiration Date, or the tendering Holder must comply with the
guaranteed delivery procedures set forth below. DELIVERY OF DOCUMENTS TO DTC
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
If a Holder desires to tender Original Notes pursuant to the Exchange Offer
and time will not permit this Letter of Transmittal, certificates representing
such Original Notes and all other required documents to reach the Exchange
Agent, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, such Holder must tender such Original Notes
pursuant to the guaranteed delivery procedures set forth under the caption "The
Exchange Offer -- Procedures for Tendering Original Notes -- Guaranteed
Delivery" in the Prospectus. Pursuant to such procedures, (i) such tender must
be made by or through an Eligible Institution; (ii) a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the form provided
by the Partnership, or an Agent's Message with respect to guaranteed delivery
that is accepted by the Partnership, must be received by the Exchange Agent,
either by hand delivery, mail, telegram, or facsimile transmission, on or prior
to the Expiration Date; and (iii) the certificates for all tendered Original
Notes, in proper form for transfer (or confirmation of a book-entry transfer or
all Original Notes delivered electronically into the Exchange Agent's account at
DTC pursuant to the procedures for such transfer set forth in the Prospectus),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) and any other documents required by this
Letter of Transmittal, or in the case of a book-entry transfer, a properly
transmitted Agent's Message, must be received by the Exchange Agent within two
business days after the date of the execution of the Notice of Guaranteed
Delivery.
9
<PAGE> 59
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE ORIGINAL NOTES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC AND ANY
ACCEPTANCE OR AGENT'S MESSAGE DELIVERED THROUGH ATOP, IS AT THE ELECTION AND
RISK OF THE TENDERING HOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS
INSTRUCTION 2, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE
PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of this Letter of Transmittal (or a facsimile
thereof), waive any right to receive any notice of the acceptance of their
Original Notes for exchange.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the principal amount represented by Original Notes
should be listed on separate signed schedule attached hereto.
4. Partial Tenders. (Not applicable to Holders who tender by book-entry
transfer). If Holders wish to tender less than the entire principal amount
evidenced by an Original Note submitted, such Holders must fill in the principal
amount that is to be tendered in the column entitled "Principal Amount
Tendered." The minimum permitted tender is $1,000 in principal amount of
Original Notes. All other tenders must be in integral multiples of $1,000 in
principal amount. In the case of a partial tender of Original Notes, as soon as
practicable after the Expiration Date, new certificates for the remainder of the
Original Notes that were evidenced by such Holder's old certificates will be
sent to such Holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal. The entire principal amount that is represented by
Original Notes delivered to the Exchange Agent will be deemed to have been
tendered, unless otherwise indicated.
5. Signatures on Letter of Transmittal, Instruments of Transfer and
Endorsements. If this Letter of Transmittal is signed by the registered
Holder(s) of the Original Notes tendered hereby, the signatures must correspond
with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever. If this Letter of Transmittal
is signed by a participant in DTC whose name is shown as the owner of the
Original Notes tendered hereby, the signature must correspond with the name
shown on the security position listing as the owner of the Original Notes.
If any of the Original Notes tendered hereby are registered in the name of
two or more Holders, all such Holders must sign this Letter of Transmittal. If
any of the Original Notes tendered hereby are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Original Note or instrument of
transfer is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person should so indicate when
signing, and proper evidence satisfactory to the Partnership of such person's
authority to so act must be submitted.
When this Letter of Transmittal is signed by the registered Holder(s) of
the Original Notes listed herein and transmitted hereby, no endorsements of
Original Notes or separate instruments of transfer are required unless Exchange
Notes are to be issued, or Original Notes not tendered or exchanged are to be
issued, to a person other than the registered Holder(s), in which case
signatures on such Original Notes or instruments of transfer must be guaranteed
by an Eligible Institution.
10
<PAGE> 60
IF THIS LETTER OF TRANSMITTAL IS SIGNED OTHER THAN BY THE REGISTERED
HOLDER(S) OF THE ORIGINAL NOTES LISTED HEREIN, THE ORIGINAL NOTES MUST BE
ENDORSED OR ACCOMPANIED BY APPROPRIATE INSTRUMENTS OF TRANSFER, IN EITHER CASE
SIGNED EXACTLY AS THE NAME(S) OF THE REGISTERED HOLDER(S) APPEAR ON THE ORIGINAL
NOTES AND SIGNATURES ON SUCH ORIGINAL NOTES OR INSTRUMENTS OF TRANSFER ARE
REQUIRED AND MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION, UNLESS THE SIGNATURE
IS THAT OF AN ELIGIBLE INSTITUTION.
6. Special Issuance and Delivery Instructions. If certificates for Exchange
Notes or unexchanged or untendered Original Notes are to be issued in the name
of a person other than the signer of this Letter of Transmittal, or if Exchange
Notes or such Original Notes are to be sent to someone other than the signer of
this Letter of Transmittal or to an address other than that shown herein, the
appropriate boxes on this Letter of Transmittal should be completed. All
Original Notes tendered by book-entry transfer and not accepted for payment will
be returned by crediting the account at DTC designated herein as the account for
which such Original Notes were delivered.
7. Transfer Taxes. Except as set forth in this Instruction 7, the
Partnership will pay or cause to be paid any transfer taxes with respect to the
transfer and sale of Original Notes to it, or to its order, pursuant to the
Exchange Offer. If Exchange Notes, or Original Notes not tendered or exchanged
are to be registered in the name of any persons other than the registered
owners, or if tendered Original Notes are registered in the name of any persons
other than the persons signing this Letter of Transmittal, the amount of any
transfer taxes (whether imposed on the registered Holder or such other person)
payable on account of the transfer to such other person must be paid to the
Partnership or the Exchange Agent (unless satisfactory evidence of the payment
of such taxes or exemption therefrom is submitted) before the Exchange Notes
will be issued.
8. Waiver of Conditions. The conditions of the Exchange Offer may be
amended or waived by the Partnership, in whole or in part, at any time and from
time to time in the Partnership's sole discretion, in the case of any Original
Notes tendered.
9. Substitute Form W-9. Each tendering owner of a Note (or other payee) is
required to provide the Exchange Agent with a correct taxpayer identification
number ("TIN"), generally the owner's social security or federal employer
identification number, and with certain other information, on Substitute Form
W-9, which is provided hereafter under "Important Tax Information," and to
certify that the owner (or other payee) is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering owner (or other payee) to a $50 penalty imposed by the Internal
Revenue Service and 31% federal income tax withholding. The box in Part 3 of the
Substitute Form W-9 may be checked if the tendering owner (or other payee) has
not been issued a TIN and has applied for a TIN or intends to apply for a TIN in
the near future. If the box in Part 3 is checked and the Exchange Agent is not
provided with a TIN within 60 days of the date on the Substitute Form W-9, the
Exchange Agent will withhold 31% until a TIN is provided to the Exchange Agent.
10. Broker-dealers Participating in the Exchange Offer. If no broker-dealer
checks the last box on page 7 of this Letter of Transmittal, the Partnership has
no obligation under the Registration Rights Agreement to allow the use of the
Prospectus for resales of the Exchange Notes by broker-dealers or to maintain
the effectiveness of the Registration Statement of which the Prospectus is a
part after the consummation of the Exchange Offer.
11. Requests for Assistance or Additional Copies. Any questions or requests
for assistance or additional copies of the Prospectus, this Letter of
Transmittal or the Notice of Guaranteed Delivery may be directed to the Exchange
Agent at the telephone numbers and location listed above. A Holder or owner may
also contact such Holder's or owner's broker, dealer, commercial bank or trust
company or nominee for assistance concerning the Exchange Offer.
11
<PAGE> 61
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH CERTIFICATES REPRESENTING THE ORIGINAL NOTES AND ALL OTHER REQUIRED
DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE EXCHANGE
AGENT ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, an owner of Original Notes whose tendered
Original Notes are accepted for exchange is required to provide the Exchange
Agent with such owner's current TIN on Substitute Form W-9 below. If such owner
is an individual, the TIN is his or her social security number. If the Exchange
Agent is not provided with the correct TIN, the owner or other recipient of
Exchange Notes may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, any interest on Exchange Notes paid to such owner or other
recipient may be subject to 31% backup withholding tax.
Certain owners of Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that owner must submit to the Exchange Agent a properly
completed Internal Revenue Service Forms W-8ECI, W-8BEN, W-8EXP or W-8IMY
(collectively, a "Form W-8"), signed under penalties of perjury, attesting to
that individual's exempt status. A Form W-8 can be obtained from the Exchange
Agent. See the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional instructions.
Backup withholding is not an additional tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding the owner is required to notify the Exchange
Agent of the owner's current TIN (or the TIN of any other payee) by completing
the following form, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such owner is awaiting a TIN), and that (i) the owner is exempt
from withholding, (ii) the owner has not been notified by the Internal Revenue
Service that the owner is subject to backup withholding as a result of failure
to report all interest or dividends or (iii) the Internal Revenue Service has
notified the owner that the owner is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the owner of the Original
Notes. If the Original Notes are registered in more than one name or are not
registered in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9", for
additional guidance on which number to report.
12
<PAGE> 62
<TABLE>
<C> <S> <C> <C>
-------------------------------------------------------------------------------------------------------------------------------
PAYEE'S NAME:
-------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE Social Security Number(s)
FORM W-9 BOX AT THE RIGHT AND CERTIFY BY SIGNING or
AND DATING BELOW. Employer Identification Number(s)
------------------------------
-----------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2 -- Certifications -- Under penalties of perjury, I certify that:
INTERNAL REVENUE SERVICE (1) The number shown on this form is my correct taxpayer identification number (or I
am waiting for a number to be issued to me) and
PAYER'S REQUEST FOR (2) I am not subject to backup withholding because: (a) I am exempt from backup
TAXPAYER IDENTIFICATION withholding, or (b) I have not been notified by the Internal Revenue Service
NUMBER ("TIN") ("IRS") that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of under-reporting interest or dividends on your tax return.
-----------------------------------------------------------------------------------------
Signature ----------------------------- PART 3 --
Awaiting TIN [ ]
Date -----------------------------------
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF 31%.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days of the date
in this form, 31% of all reportable cash payments made to me will be withheld
until I provide a taxpayer identification number.
Signature Date
------------------------------------- -----------
13
<PAGE> 63
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Partnership Agreement for Kinder Morgan Energy Partners, L.P. ("Kinder
Morgan Energy Partners") provides that Kinder Morgan Energy Partners will
indemnify any person who is or was an officer or director of Kinder Morgan G.P.,
Inc. (the "KM General Partner") or any departing partner, to the fullest extent
permitted by law. In addition, Kinder Morgan Energy Partners may indemnify, to
the extent deemed advisable by the KM General Partner and to the fullest extent
permitted by law, any person who is or was serving at the request of the KM
General Partner or any affiliate of the KM General Partner or any departing
partner as an officer or director of the KM General Partner, a departing partner
or any of their Affiliates (as defined in Kinder Morgan Energy Partners
Partnership Agreement) ("Indemnitees") from and against any and all losses,
claims, damages, liabilities (joint or several), expenses (including, without
limitation, legal fees and expenses), judgement, 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 Kinder Morgan Energy Partners 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 Kinder Morgan Energy Partners 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 the assets of Kinder
Morgan Energy Partners and the KM General Partner shall not be personally liable
for, or have any obligation to contribute or loan funds or assets to Kinder
Morgan Energy Partners to enable it to effectuate such indemnification. Kinder
Morgan Energy Partners is authorized to purchase (or to reimburse the KM 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 KM 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 KM General Partner, and William V. Morgan, a Director
and Vice Chairman of the KM General Partner, are also officers and directors of
Kinder Morgan, Inc. and are entitled to similar indemnification from Kinder
Morgan, Inc. pursuant to Kinder Morgan, Inc.'s certificate of incorporation and
bylaws.
II-1
<PAGE> 64
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.1* -- Form of Indenture dated November 8, 2000 between Kinder
Morgan Energy Partners and First Union National Bank, as
Trustee.
4.2* -- Form of 7.50% Note (contained in the Indenture filed as
Exhibit 4.1).
4.3* -- Form of Registration Rights Agreement dated November 8,
2000 between Kinder Morgan Energy Partners and Banc of
America Securities LLC.
5* -- Opinion of Bracewell & Patterson, L.L.P. as to the
legality of the notes being offered.
8* -- Opinion of Bracewell & Patterson, L.L.P. as to certain
federal income tax matters.
12* -- Calculation of Earnings to Fixed Charges.
23.1* -- Consent of Bracewell & Patterson, L.L.P. (included in
their opinions filed as Exhibit 5 and Exhibit 8 hereto).
23.2* -- Consent of PricewaterhouseCoopers LLP.
23.3* -- Consent of Arthur Andersen LLP.
24* -- Powers of attorney.
25* -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of First Union Bank.
27 -- Financial Data Schedule (filed as an exhibit to Kinder
Morgan Energy Partner's Annual Report on Form 10-K for
the year ended December 31, 1999 and incorporated herein
by reference).
</TABLE>
---------------
* Filed herewith.
(b) Financial Statement Schedules
No financial statement schedules are included herein. All other schedules
for which provision is made in the applicable accounting regulation of the
Commission are not required under the related instructions, are inapplicable, or
the information is included in the consolidated financial statements, and have
therefore been omitted.
(c) Reports, Opinions, and Appraisals
The following reports, opinions, and appraisals are included herein.
None
ITEM 22. UNDERTAKINGS.
(a) Regulation S-K, Item 512 Undertakings
(1) The undersigned registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment
II-2
<PAGE> 65
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) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(c) To 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;
(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 therein, 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 which remain unsold at
the termination of the offering.
(2) The undersigned registrant hereby undertakes that, for 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 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) Registration on Form S-4 of Securities Offered for Resale.
(i) The undersigned hereby undertakes as follows: That prior to any
public reoffering of the securities registered hereunder through the use
of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes such reoffering prospectus will
contain the information called for by the applicable registration form
with respect to reofferings by person who may be deemed underwriters, in
addition to the information called for by the other Items of the
applicable form.
(ii) The registrant undertakes that every prospectus (a) that is
filed pursuant to the paragraph immediately preceding, or (b) that
purports to meet the requirements of section 10(a)(3) of the Act and is
used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for
purposes 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 therein, and
the offering of new securities at the time shall be deemed to be the
initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other that payment by the Company
of expenses incurred or paid by a director,
II-3
<PAGE> 66
officer or controlling person of the Company in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company 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 Securities Act and will be governed by
the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4 of this Form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
(c) The undersigned hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired therein, that was not the subject of and included in the
registration statement when it became effective.
II-4
<PAGE> 67
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement or amendment thereto to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on November 29, 2000.
KINDER MORGAN ENERGY PARTNERS, L.P.
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., INC.,
as General Partner
By: /s/ JOSEPH LISTENGART
----------------------------------
Joseph Listengart
Vice President, General Counsel
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed below by the
following persons in the indicated capacities on November 29, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ RICHARD D. KINDER Director, Chairman of the Board and Chief
----------------------------------------------------- Executive Officer of Kinder Morgan G.P.,
Richard D. Kinder Inc. (Principal Executive Officer)
/s/ WILLIAM V. MORGAN* Director, Vice Chairman of the Board and
----------------------------------------------------- President of Kinder Morgan G.P., Inc.
William V. Morgan
/s/ EDWARD O. GAYLORD* Director of Kinder Morgan G.P., Inc.
-----------------------------------------------------
Edward O. Gaylord
/s/ C. PARK SHAPER Vice President, Treasurer and Chief
----------------------------------------------------- Financial Officer of Kinder Morgan G.P.,
C. Park Shaper Inc. (Principal Financial Officer and
Principal Accounting Officer)
/s/ PERRY M. WAUGHTAL* Director of Kinder Morgan G.P., Inc.
-----------------------------------------------------
Perry M. Waughtal
Constituting a majority of the Board of Directors of
Kinder Morgan G.P., Inc.
</TABLE>
*By: /s/ JOSEPH LISTENGART
-------------------------------
Joseph Listengart
(Attorney-in-fact
for persons indicated)
II-5
<PAGE> 68
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.1* -- Form of Indenture dated November 8, 2000 between Kinder
Morgan Energy Partners and First Union National Bank, as
Trustee.
4.2* -- Form of 7.50% Note (contained in the Indenture filed as
Exhibit 4.1).
4.3* -- Form of Registration Rights Agreement dated November 8,
2000 between Kinder Morgan Energy Partners and Banc of
America Securities LLC.
5* -- Opinion of Bracewell & Patterson, L.L.P. as to the
legality of the notes being offered.
8* -- Opinion of Bracewell & Patterson, L.L.P. as to certain
federal income tax matters.
12* -- Calculation of Earnings to Fixed Charges.
23.1* -- Consent of Bracewell & Patterson, L.L.P. (included in
their opinions filed as Exhibit 5 and Exhibit 8 hereto).
23.2* -- Consent of PricewaterhouseCoopers LLP.
23.3* -- Consent of Arthur Andersen LLP.
24* -- Powers of attorney.
25* -- Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of First Union Bank.
27 -- Financial Data Schedule (filed as an exhibit to the
Kinder Morgan Energy Partners' Annual Report on Form 10-K
for the year ended December 31, 1999 and incorporated
herein by reference).
</TABLE>
---------------
* Filed herewith.
