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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-35112
$400,000,000
LOGO
OFFER TO EXCHANGE
FLOATING RATE EXCHANGE SENIOR NOTES DUE 2002
FOR ANY AND ALL OUTSTANDING FLOATING RATE SENIOR NOTES DUE 2002
AND
OFFER TO EXCHANGE
8% EXCHANGE SENIOR NOTES DUE 2005
FOR ANY AND ALL OUTSTANDING 8% SENIOR NOTES DUE 2005
---------------------
This prospectus, and accompanying Letters of Transmittal, relate to our
proposed exchange offers. In one exchange offer, we are offering to exchange up
to $200,000,000 aggregate principal amount of new floating rate senior notes due
2002, which we call the Floating Rate Exchange Notes, which will be freely
transferable, for any and all outstanding floating rate senior notes due 2002,
which we call the Original Floating Rate Notes, issued in a private offering on
March 22, 2000 and which have certain transfer restrictions. In the other
exchange offer, we are offering to exchange up to $200,000,000 aggregate
principal amount of new 8% senior notes due 2005, which we call the 8% Exchange
Notes, which will be freely transferable, for any and all outstanding 8% senior
notes due 2005, which we call the Original 8% Notes, also issued in a private
offering on March 22, 2000 and which have certain transfer restrictions.
In this prospectus we sometimes refer to the Original Floating Rate Notes
and the Original 8% Notes collectively as the Original Notes, the Floating Rate
Exchange Notes and the 8% Exchange Notes collectively as the Exchange Notes and
the Exchange Notes and the Original Notes collectively as the Notes.
- Each Exchange Offer expires at 5:00 p.m., New York City time, on May 31,
2000, unless extended.
- The terms of each series of Exchange Notes are substantially identical to
the terms of the Original Notes of the same series, except that the
Exchange Notes will be freely transferable and issued free of any
covenants regarding exchange and registration rights.
- All Original Notes of each series that are validly tendered and not
validly withdrawn will be exchanged.
- Tenders of Original Notes of each series may be withdrawn at any time
prior to expiration of the Exchange Offer relating to that series of
Original Notes.
- We will not receive any proceeds from the Exchange Offers.
- The exchange of Original Notes for Exchange Notes of the same series 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 Offers.
- Original Notes not exchanged in the Exchange Offers 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.
---------------------
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF FACTORS
YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFERS.
---------------------
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 Letters of Transmittal and related documents and any amendments
or supplements to this prospectus carefully before making your investment
decision.
---------------------
The date of this prospectus is May 1, 2000.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary..................................................... 3
Risk Factors................................................ 12
The Exchange Offers......................................... 16
Use of Proceeds............................................. 28
Unaudited Pro Forma Combined Statements of Income........... 29
Consolidated Ratios of Earnings to Fixed Charges............ 31
Description of Notes........................................ 32
Certain Federal Income Tax Considerations................... 46
Validity of the Exchange Notes.............................. 51
Experts..................................................... 51
Where You Can Find More Information......................... 52
Information Regarding Forward-Looking Statements............ 53
Annex A-Letter of Transmittal for Floating Rate Notes....... A-1
Annex B-Letter of Transmittal for 8% Notes.................. B-1
</TABLE>
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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:
- Pacific operations, consisting of:
- 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;
- Mid-Continent operations, consisting of products pipelines and joint
venture projects including:
- 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;
- 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;
- a 20% limited partner interest in Shell CO(2) Company, Ltd. which
transports, markets and produces carbon dioxide for use in enhanced
oil recovery operations in the continental United States; on March
9, 2000, we announced a definitive agreement to acquire the
remaining 80% interest in Shell CO(2) Company;
- 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 along the Atlantic Coast via two
transmix processing plants;
- a 50% interest in the Heartland Pipeline Company, which ships
refined petroleum products in the Midwest; and
- the Painter Gas Processing Plant, a natural gas processing plant,
fractionator and natural gas liquids terminal with truck and rail
loading facilities; the Painter Plant is
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leased to BP Amoco under a long-term arrangement;
- Natural gas operations, 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 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;
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
along the west coast of the United States; 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. Management has announced that we intend to spend
approximately $1 billion for acquisitions annually.
Kinder Morgan Energy Partners primarily transports and/or handles products
for a fee and largely is not engaged in the purchase and resale of commodity
products. As a result, Kinder Morgan Energy Partners does not face significant
risks relating directly to shifts in commodity prices.
Pacific Operations. We plan to continue to expand our presence in the
rapidly growing refined products market in the western United States through
incremental expansions of the Pacific operations and through acquisitions that
increase unitholder distributions. In May 1999, we completed an expansion of our
southern California products pipeline system. The expansion involved
construction of 13 miles of 16-inch diameter pipeline from Carson, California to
Norwalk, California, and increased the capacity of the West Line Southern
California products pipeline system from 340,000 barrels per day to 520,000
barrels per day, an increase of over 50%.
Mid-Continent Operations. 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.
Management believes favorable demographics in the southeastern United States
will serve as a platform for increased use and expansion of Plantation's
pipeline system, which serves major metropolitan areas including Birmingham,
Alabama; Atlanta, Georgia; Charlotte, North Carolina; and the Washington, D.C.
area.
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For the Shell CO(2) Company, our Permian Basin strategy is to offer
customers "one-stop shopping" for carbon dioxide supply, transportation and
technical support service. Outside the Permian Basin, Shell 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. The acquisition of the transmix operations, in September 1999,
strengthened our existing transmix processing business and added fee-based
services related to our core refined products pipeline business.
Natural Gas Operations. 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. Shippers have expressed
interest in expanding the Trailblazer Pipeline Company pipeline, which we will
pursue if we can obtain commitments for the additional capacity. Red Cedar
Gathering Company, a partnership with the Southern Ute Indian Tribe, is pursuing
gathering and processing opportunities on tribal land.
Bulk Terminals. We are dedicated to growing our bulk terminal business and
have a target of investing $100 to $200 million annually in our bulk terminals
business. We will make investments to expand and improve existing facilities,
particularly those facilities that handle low-sulfur western coal. We will also
consider making selective acquisitions that increase unitholder distributions.
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 1301 McKinney Street,
Suite 3400, Houston, Texas 77010 and our telephone number at this address is
(713) 844-9500. Our limited partner interests trade under the New York Stock
Exchange symbol "KMP."
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RECENT DEVELOPMENTS
TRANSFERRED ASSETS
Effective December 31, 1999, Kinder Morgan, Inc. transferred over $700
million of assets to us for $330 million and the issuance of 9.81 million of our
common units representing limited partner interests. We financed a portion of
the $330 million through Kinder Morgan, Inc. which has been repaid. We agreed as
part of the asset transfer to fund the $330 million through debt incurred by us
and to not take certain actions with respect to the debt that could cause
adverse tax consequences to Kinder Morgan, Inc. Assets included in the transfer
were Kinder Morgan Interstate Gas Transmission LLC, formerly K N Interstate Gas
Transmission Co., an additional 33 1/3% interest in Trailblazer Pipeline Company
and a 49% interest in Red Cedar Gathering Company.
MILWAUKEE AND DAKOTA BULK TERMINALS
On February 7, 2000, we announced our acquisition of all of the shares of
the capital stock of Milwaukee Bulk Terminals, Inc. and Dakota Bulk Terminal,
Inc., both Wisconsin corporations, for 574,172 units. The effective date of the
acquisitions was January 1, 2000, and going forward from that date, we will
include the activities of these two terminals as part of our bulk terminals
business segment.
SHELL CO(2) COMPANY
On March 9, 2000, we announced we had reached a definitive agreement to
increase our interest in Shell CO(2) Company to 100% by acquiring a 78% limited
partner interest and a 2% general partner interest from affiliates of Shell
Exploration & Production Company. Previously, we owned a 20% limited partner
interest in Shell CO(2) Company. The transaction price was $185.5 million. The
closing occurred on April 5, 2000 and we changed the name of Shell CO(2) Company
to Kinder Morgan CO(2) Company. Kinder Morgan CO(2) Company is the largest
transporter and marketer of carbon dioxide in the United States, currently
delivering approximately 400 million cubic feet per day. Carbon dioxide flooding
is a proven technology for increasing the production of oil reserves.
THE EXCHANGE OFFERS
Registration Rights
Agreement................ We sold $200 million in aggregate principal amount
of Original Floating Rate Notes and $200 million in
aggregate principal amount of Original 8% Notes to
qualified institutional buyers as defined in Rule
144A under the Securities Act through Goldman,
Sachs & Co., Merrill Lynch & Co., Banc of America
Securities LLC and First Union Securities, Inc., as
initial purchasers. The initial purchasers and we
entered into a registration rights agreement dated
as of March 22, 2000 which grants the holders of
the Original Notes certain exchange and
registration rights. The Exchange Offers made
hereby are intended to satisfy such exchange
rights.
The Exchange Offers........ $1,000 principal amount of Floating Rate Exchange
Notes in exchange for each $1,000 principal amount
of Original Floating Rate Notes and $1,000
principal amount of 8% Exchange Notes in exchange
for each $1,000 principal amount of 8% Original
Notes. As of the date hereof, $400 million
aggregate principal amount of the Original Notes
are outstanding. We will issue each series of
Exchange Notes to holders on the earliest
practicable date following the applicable
Expiration Date.
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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 Offers 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 an Exchange Offer in exchange for
Original Notes of that series 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.
Each Letter of Transmittal requires broker-dealers
tendering Original Notes in an 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 Offers -- Registration Rights" and
"-- Resale of the Exchange Notes; Plan of
Distribution."
Expiration Date............ Each Exchange Offer expires at 5:00 p.m., New York
City time, on May 31, 2000, unless we extend an
Exchange Offer in our sole discretion, in which
case the term "Expiration Date"
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means the latest date and time to which that
Exchange Offer is extended.
Conditions to the Exchange
Offers..................... Each Exchange Offer is subject to certain
conditions which we may waive. See "The Exchange
Offers -- Conditions to the Exchange Offers."
Procedures for Tendering
the Original Notes......... Each holder of Original Notes wishing to accept an
Exchange Offer must complete, sign and date the
accompanying applicable 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 Offers -- 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 Offers -- 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 applicable Letter of
Transmittal or any other documents required by that
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
Offers -- Procedures for Tendering Original
Notes -- Guaranteed Delivery."
Withdrawal Rights.......... Tenders of Original Notes pursuant to an Exchange
Offer may be withdrawn at any time prior to the
applicable Expiration Date.
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 applicable
Exchange Offer, and not withdrawn, prior to that
Exchange Offer's Expiration Date. The Exchange
Notes issued pursuant to an Exchange Offer will be
issued on the earliest practicable date following
our acceptance for exchange of Original Notes of
that series. See "The Exchange Offers -- Terms of
the Exchange Offers."
Exchange Agent............. First Union National Bank is serving as exchange
agent in connection with each Exchange Offer.
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Federal Income Tax
Considerations........... We have received an opinion of counsel advising
that the exchange of Original Notes for Exchange
Notes of the same series pursuant to an Exchange
Offer will not be treated as a taxable exchange for
federal income tax purposes. See "Certain Federal
Income Tax Considerations."
SUMMARY OF RISK FACTORS
- - Pending Federal Energy Regulatory Commission and California Public Utilities
Commission proceedings seek substantial refunds and reductions in tariff rates
on some of our pipelines.
- - 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.
- - Environmental regulation significantly affects our business.
- - Competition could ultimately lead to lower levels of profits and lower our
cash flow.
- - Our rapid growth may cause difficulties integrating new operations.
- - Our debt securities are subordinated to SFPP, L.P.'s debt.
- - Our debt instruments may limit our financial flexibility.
- - Restrictions on our ability to prepay SFPP, L.P.'s debt may limit our
financial flexibility.
- - There is no public market for the Notes and you cannot be sure an active
trading market for the Notes will develop.
- - 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.
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SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA
Our summary historical consolidated income statement and balance sheet data
shown below are derived from our financial statements and the notes to the
financial statements.
Our summary historical consolidated financial data should be read:
- with the understanding that the current management of Kinder Morgan G.P.,
Inc. was elected after the acquisition of Enron Liquids Pipeline Company,
the predecessor to Kinder Morgan G.P., Inc., in February 1997 and was
unable to influence our activities prior to that date;
- together with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in our Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, incorporated in
this prospectus by reference; and
- together with our financial statements and their notes included in our
Annual Report on Form 10-K for the fiscal year ended December 31, 1999,
incorporated in this prospectus by reference.
Net income per unit before extraordinary charge is adjusted for the
two-for-one split of units on October 1, 1997. Net income before extraordinary
charge per unit was computed by dividing the net income before extraordinary
charge allocated to holders of units by the weighted average number of units
outstanding during the period. The Pacific operations' volumes reflect Kinder
Morgan Energy Partners' acquisition of its Pacific operations on March 6, 1998.
The Mid-Continent operations' volumes include only the volumes for the North
system and the Cypress pipeline. The bulk terminals' transport volumes represent
the volumes:
- of the Cora terminal, excluding ship or pay volumes of 252 thousands tons
for 1996;
- of the Grand Rivers terminal from September 1997;
- of Kinder Morgan Bulk Terminals, Inc. from July 1, 1998; and
- of the Pier IX and Shipyard River terminals from December 18, 1998.
The financial data for the year ended December 31, 1999, includes the
results of operations for:
- our increase to a 51% interest in Plantation Pipe Line Company from June
16, 1999;
- Mid-Continent's transmix operations from September 10, 1999; and
- our initial 33 1/3% interest in Trailblazer Pipeline Company from
November 30, 1999.
The financial data for the year ended December 31, 1999, includes the
balance sheet data, but not the results of operations since these assets were
acquired effective as of December 31, 1999, for:
- Kinder Morgan Interstate Gas Transmission LLC;
- our additional 33 1/3% interest in Trailblazer Pipeline Company; and
- our 49% interest in Red Cedar Gathering Company.
The financial data for the year ended December 31, 1998, includes the
results of operations for:
- the Pacific operations from March 6, 1998;
- Kinder Morgan Bulk Terminals, Inc. from July 1, 1998; and
- our 24% interest in Plantation Pipe Line Company from September 15, 1998.
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SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER UNIT AND OPERATING DATA)
<S> <C> <C> <C> <C> <C>
INCOME AND CASH FLOW DATA:
Revenues...................................... $ 428,749 $ 322,617 $ 73,932 $ 71,250 $ 64,304
Cost of product sold.......................... 16,241 5,860 7,154 7,874 8,020
Operating expense............................. 111,275 77,162 17,982 22,347 15,928
Fuel and power................................ 31,745 22,385 5,636 4,916 3,934
Depreciation and amortization................. 46,469 36,557 10,067 9,908 9,548
General and administrative.................... 35,612 39,984 8,862 9,132 8,739
---------- ---------- -------- -------- --------
Operating income.............................. 187,407 140,669 24,231 17,073 18,135
Earnings from equity investments.............. 42,918 25,732 5,724 5,675 5,755
Amortization of excess cost of equity
investments................................. (4,254) (764) -- -- --
Interest expense.............................. (54,336) (40,856) (12,605) (12,634) (12,455)
Interest income and other, net................ 22,988 (5,992) (353) 3,129 1,311
Income tax (provision) benefit................ (9,826) (1,572) 740 (1,343) (1,432)
---------- ---------- -------- -------- --------
Net income before extraordinary charge........ 184,897 117,217 17,737 11,900 11,314
Extraordinary charge.......................... (2,595) (13,611) -- -- --
---------- ---------- -------- -------- --------
Net income.................................... $ 182,302 $ 103,606 $ 17,737 $ 11,900 $ 11,314
========== ========== ======== ======== ========
Net income per unit before extraordinary
charge...................................... $ 2.63 $ 2.09 $ 1.02 $ 0.90 $ 0.85
========== ========== ======== ======== ========
Net income per unit........................... $ 2.57 $ 1.75 $ 1.02 $ 0.90 $ 0.85
========== ========== ======== ======== ========
Per unit cash distribution paid............... $ 2.78 $ 2.39 $ 1.63 $ 1.26 $ 1.26
========== ========== ======== ======== ========
Additions to property, plant and equipment.... $ 82,725 $ 38,407 $ 6,884 $ 8,575 $ 7,826
BALANCE SHEET DATA (AT PERIOD END):
Net property, plant and equipment............. $2,578,313 $1,763,386 $244,967 $235,994 $236,854
Total assets.................................. $3,228,738 $2,152,272 $312,906 $303,603 $303,664
Long-term debt, including current portion..... $1,198,301 $ 611,571 $146,824 $160,211 $156,938
Partners' capital............................. $1,774,798 $1,360,663 $150,224 $118,344 $123,116
OPERATING DATA:
Pacific operations -
Mainline delivery volumes (thousands of
barrels)................................ 375,663 307,997 -- -- --
Other delivery volumes (thousands of
barrels)................................ 10,025 17,957 -- -- --
Mid-Continent operations -
Delivery volumes (thousands of barrels)... 50,124 44,783 46,309 46,601 41,613
Bulk terminals -
Transport volumes (thousands of tons)..... 39,190 24,016 9,087 6,090 6,486
</TABLE>
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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.
The complaints filed before the Federal Energy Regulatory Commission allege
that pipeline tariff rates:
- for the West line, serving southern California and Arizona, are not
entitled to "grandfathered" status under the Energy Policy Act because
"changed circumstances" may have occurred pursuant to the Energy Policy
Act; and
- for the East line, serving New Mexico and Arizona, are 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. We believe the effect of
the opinion 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 attack the pipeline tariff rates of
the Pacific operations, contending that the rates are not just and reasonable
under the Interstate Commerce Act and should not be entitled to "grandfathered"
status under the Energy Policy Act. These complaints cover rates for service on
the pipeline systems serving:
- southern California and Arizona;
- northern California and Nevada; and
- 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 were suspended pending final disposition
of the Federal Energy Regulatory Commission's January 13, 1999, decision, but
are expected to proceed to hearing at some point in the future. In January 2000,
several of the shippers amended and restated their complaints challenging the
tariff rates of the Pacific operations. We are vigorously defending the amended
and restated complaints as we have defended the previous round of 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
the complainants' challenge to SFPP, L.P.'s intrastate rates. On June 24, 1999,
the California Public Utilities Commission granted
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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.
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. 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 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.
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Pipelines are generally the lowest cost method for intermediate and
long-haul overland product movement. Accordingly, the most significant
competitors to our 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 pipelines; and
- trucks.
Additional 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 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 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 almost always without
long-term contracts for transportation service with customers. Demand for
transportation services for refined petroleum products is primarily a function
of:
- total and per capita fuel consumption;
- prevailing economic and demographic conditions;
- alternate modes of transportation;
- alternate product sources; and
- price.
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 December 31, 1999, we made several acquisitions that
increased our asset base and 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 SFPP, L.P.'S DEBT.
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
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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 SFPP, L.P.'S DEBT 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 to not
take certain actions with respect to $190 million of SFPP, L.P.'s first
mortgage notes 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
purchasers advised us that they intended to make a market in the Original Notes
and, if issued, the Exchange Notes. However, the initial purchasers are not
obligated 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 purchasers. 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 Offers, 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 of each series 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 of a series that are not exchanged in the Exchange Offers may
be affected adversely to the extent that the amount of Original Notes exchanged
pursuant to the Exchange Offers reduces the float. The reduced float also may
tend to make the trading price of the Original Notes of a series 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 Offers will be made
following
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the prior satisfaction, or waiver, of the conditions set forth in "The Exchange
Offers -- Conditions to the Exchange Offers" 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 Offers but which are not validly tendered will, following the
consummation of the Exchange Offers, remain outstanding and will continue to be
subject to the same transfer restrictions currently applicable to such Original
Notes.
THE EXCHANGE OFFERS
REGISTRATION RIGHTS
At the closing of the offering of the Original Notes, we entered into the
registration rights agreement with the initial purchasers pursuant to which we
agreed, for the benefit of the holders of the Original Notes, at our cost,
- within 90 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 Offers 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 180
days after the date of original issuance of the Original Notes.
Upon the exchange offer registration statement being declared effective, we
agreed 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
Offers is mailed to the holders of the Original Notes.
For each Original Note surrendered to us pursuant to its Exchange Offer,
the holder of such Original Note will receive an Exchange Note of the same
series 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 Offers 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 Offers and
to satisfy the prospectus delivery requirements in connection with resales of
Exchange Notes received by such broker-dealer in the Exchange Offers. We agreed
to maintain the effectiveness of the registration statement for these purposes
for 90 days after the consummation of the Exchange Offers.
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 Offers made hereby and the resale of
Exchange Notes received in an 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
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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 Offers 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 an 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 applicable 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 of the same series in
an 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 Offers, or if for
any other reason the Exchange Offers are not consummated within 180 days of the
date of issuance and sale of the Original Notes, or the Exchange Offers are not
available to any initial purchasers 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 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 90 days following the date of original
issuance
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of the Original Notes, then commencing on the 91st 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 180 days
following the date of original issuance of the Original Notes, then
commencing on the 181st 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 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 certain 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 an Exchange Offer, holders
of Original Notes which are the subject of an 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 of the same
series pursuant to an 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
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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
Offers, 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 OFFERS
Upon the terms and subject to the conditions set forth in this prospectus
and in the respective Letters of Transmittal, copies of which are attached to
this prospectus as Annex A and Annex B, respectively, we will accept any and all
Original Notes validly tendered and not withdrawn prior to the applicable
Expiration Date. We will issue $1,000 principal amount of Floating Rate Exchange
Notes in exchange for each $1,000 principal amount of Original Floating Rate
Notes accepted in the Exchange Offer, and we will issue $1,000 principal amount
of 8% Exchange Notes in exchange for each $1,000 principal amount of Original 8%
Notes accepted in the Exchange Offer. Holders may tender some or all of their
Original Notes pursuant to the respective Exchange Offer. However, Original
Notes may be tendered only in integral multiples of $1,000 principal amount.
The form and terms of the Floating Rate Exchange Notes and the 8% Exchange
Notes are the same as the form and terms of the Original Floating Rate Notes and
the Original 8% Notes, respectively, 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 April 26, 2000 as the record date for the
Exchange Offers for purposes of determining the persons to whom this prospectus
and the Letter of Transmittal designated for such Notes will be mailed
initially. Only a registered holder of
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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 an Exchange Offer. There will be no fixed
record date for determining registered holders of the Original Notes entitled to
participate in the relevant 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
Offers. We intend to conduct the Exchange Offers 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 Offers will be issued on the earliest
practicable date following the acceptance for exchange of Original Notes by us.
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 applicable Expiration Date.
Holders who tender Original Notes in the Exchange Offers will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal designated for such Original Notes, transfer taxes
with respect to the exchange of the Original Notes pursuant to the Exchange
Offers. We will pay all charges and expenses, other than certain applicable
taxes, in connection with the Exchange Offers. See " -- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" with respect to each Exchange Offer, shall mean
5:00 p.m., New York City time, on May 31, 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 that Exchange Offer is extended.
In order to extend an 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 that Exchange Offer.
We reserve the right, in our sole discretion,
(1) to delay accepting any Original Notes,
(2) to extend either or both Exchange Offers,
(3) if any of the conditions set forth below under " -- Conditions to
the Exchange Offers" have not been satisfied, to terminate either or both
Exchange Offers, or
(4) to amend the terms of an 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 an 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. That 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.
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Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, termination or amendment of these Exchange
Offers, 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 applicable
to such Notes. 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 applicable to such Original Notes. 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
applicable 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 an 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 that Exchange Offer, or
- 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 applicable
to such Notes (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
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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 APPLICABLE 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 applicable 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 of the same series 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 Offers
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 applicable 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 applicable 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 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 applicable 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
22
<PAGE> 23
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 Letters of Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Original Notes pursuant
to an Exchange Offer and time will not permit the applicable 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 that
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 applicable 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 of the same series tendered and accepted
for exchange pursuant to an 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 DTC as described above), and the applicable 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 Offers (including the instructions in the
Letters 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
23
<PAGE> 24
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 applicable 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
of the same series 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
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 of the same series, 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
an Exchange Offer may be withdrawn, unless therefore accepted for exchange as
provided
24
<PAGE> 25
in the applicable Exchange Offer, at any time prior to the Expiration Date of
that 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 that 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 that 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 that Exchange Offer.
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 applicable Exchange Offer, or which have been validly
withdrawn, will be returned to the holder thereof unless otherwise provided in
the applicable Letter of Transmittal, as soon as practicable following the
Expiration Date of that 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 OFFERS
Neither Exchange Offer shall 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
25
<PAGE> 26
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 that
Exchange Offer, which, in our judgment, might impair our ability to proceed
with that 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 an
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 that 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 applicable 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 that
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 Offers. Questions
and requests for assistance, requests for additional copies of this prospectus
or of the Letters 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
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 Offers
and no payments will be made to brokers, dealers or others soliciting acceptance
of the Exchange Offers. However, reasonable and customary fees will be paid to
the exchange agent for its
26
<PAGE> 27
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 Offers 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 Offers. If, however, a transfer tax is
imposed for any reason other than the exchange of the Original Notes pursuant to
the applicable 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 of the same series and no gain or loss for accounting purposes will be
recognized. The expenses of the Exchange Offers will be amortized over the term
of the applicable Exchange Notes.
RESALE OF THE EXCHANGE NOTES; PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to an 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 of the same series 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 an 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 July 31, 2000 (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 an 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,
(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 an 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 Letters of Transmittal state that, by acknowledging that it will
deliver
27
<PAGE> 28
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 an 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 Offers (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 Offers are 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 of the same series 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 Offers -- Terms of the
Exchange Offers." The Original Notes surrendered in exchange for the Exchange
Notes of the same series will be retired and canceled and cannot be reissued.
Accordingly, issuance of the Exchange Notes will not result in any increase in
our indebtedness.
28
<PAGE> 29
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
The following unaudited pro forma combined statements of income have been
prepared from our historical financial statements to give effect to:
- our acquisition from Kinder Morgan, Inc. effective as of December 31,
1999, of Kinder Morgan Interstate Gas Transmission LLC, a 33 1/3%
interest in Trailblazer Pipeline Company and a 49% interest in Red Cedar
Gathering Company in exchange for 9,810,000 common units and $330 million
in cash; and
- our acquisition from Columbia Gulf Transmission Company on November 30,
1999, of a 33 1/3% interest in Trailblazer Pipeline Company for $37.6
million in cash.
The unaudited pro forma combined statements of income reflect adjustments
as if the above acquisitions had occurred on January 1, 1999. The pro forma
adjustments reflected in the accompanying unaudited pro forma combined
statements of income were prepared using the purchase method of accounting. The
pro forma adjustments are based on preliminary estimates, contractual
obligations and certain assumptions that we believe are reasonable under the
circumstances.
The column entitled "Kinder Morgan Energy Partners Historical" includes
earnings from equity investments from our 33 1/3% interest in Trailblazer
Pipeline Company acquired on November 30, 1999.
The column entitled "Acquired Assets Historical" consists of the historical
results of operations of Kinder Morgan Interstate Gas Transmission LLC, a
33 1/3% equity interest in Trailblazer Pipeline Company and a 49% equity
interest in Red Cedar Gathering Company for the year ended December 31, 1999.
The Trailblazer consolidating adjustments consist of the adjustments
required to consolidate the results of operations of Trailblazer.
The pro forma adjustments to operating expenses and general and
administrative expenses reflect reductions that are contractually guaranteed
under the terms of an agreement whereby Kinder Morgan, Inc. will continue to
operate, on our behalf, Kinder Morgan Interstate Gas Transmission LLC.
The pro forma adjustments to depreciation and amortization reflect:
- the reductions in estimated depreciation expense as a result of the
reduced cost of property, plant and equipment; and
- an adjustment to include a full year of depreciation for Kinder Morgan
Interstate Gas Transmission LLC, because Kinder Morgan Interstate Gas
Transmission LLC was accounted for as a discontinued operation by Kinder
Morgan, Inc. for a portion of 1999.
The pro forma adjustments to the amortization of excess cost of equity
investments reflect the amortization of the excess cost of our investment in Red
Cedar Gathering Company over our share of the book value of the underlying net
assets of Red Cedar Gathering Company.
The pro forma adjustment to interest, net reflects the reversal of Kinder
Morgan Interstate Gas Transmission LLC's historical interest expense and the
incremental interest expense on the additional $367.6 million in debt incurred
with respect to the acquisitions at a rate of 6.17%, our average borrowing rate
for 1999.
The pro forma adjustments to minority interest, general partner's interest
in net income and limited partners' net income give effect to the allocation of
pro forma net income to the general partner and the limited partners resulting
from the utilization of partnership sharing ratios.
The general partner's interest in net income includes incentive
distributions the general partner would have received based on total
distributions. These incentive distributions are greater under the pro forma
statements due to our announced $0.05 increase in per unit quarterly
distributions resulting from cash flow attributable to all of the acquired
interests and
29
<PAGE> 30
the issuance of the 9,810,000 common units to Kinder Morgan, Inc. as
consideration for the acquired interests.
The pro forma adjustment to income tax benefit (expense) reflects the
reversal of Kinder Morgan Interstate Gas Transmission LLC's historical income
tax expense.
Merger-related and severance costs in the column entitled "Acquired Assets
Historical" are non-recurring, allocated expenses related to the acquisition by
K N Energy, Inc. of Kinder Morgan, Inc. These non-recurring expenses have been
reversed in the column entitled "Pro Forma Adjustments" as they are unrelated to
the financial performance of the acquired assets and unrelated to the transfer
of the acquired assets from Kinder Morgan, Inc. to Kinder Morgan Energy
Partners.
The unaudited pro forma combined statements of income do not purport to
present the results of operations of Kinder Morgan Energy Partners had the
assumed acquisitions and assumed events occurred on the dates specified, nor are
they necessarily indicative of the results of operations that may be achieved in
the future. The unaudited pro forma combined statements of income do not give
effect to any operating efficiencies or cost savings that may be realized as a
result of the acquisitions, primarily related to reduction of duplicative
operating, general and administrative expenses, other than those cost savings
which are contractually guaranteed.
The unaudited pro forma combined statements of income should be read in
conjunction with the historical financial statements, including the related
notes which are included in our Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, incorporated by reference.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
KINDER MORGAN
ENERGY ACQUIRED TRAILBLAZER
PARTNERS ASSETS CONSOLIDATING PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED ADJUSTMENTS COMBINED
------------- ---------- ------------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues........................................ $428,749 $113,207 $33,711 $575,667 $ -- $575,667
Costs and expenses
Operating expenses............................. 143,107 37,333 2,827 183,267 (12,514) 170,753
Depreciation and amortization.................. 46,469 16,985 16,973 80,427 (4,710) 75,717
General and administrative..................... 35,612 9,566 -- 45,178 (3,516) 41,662
Taxes, other than income taxes................. 16,154 4,608 879 21,641 -- 21,641
Merger-related and severance costs............. -- 3,054 -- 3,054 (3,054) --
-------- -------- ------- -------- -------- --------
241,342 71,546 20,679 333,567 (23,794) 309,773
Operating income................................ 187,407 41,661 13,032 242,100 23,794 265,894
Other income (expense)
Earnings from equity investments............... 42,918 16,280 (3,666) 55,532 -- 55,532
Amortization of excess cost of equity
investments.................................. (4,254) -- 24 (4,230) (1,110) (5,340)
Interest, net.................................. (52,605) (27,119) (2,882) (82,606) 4,631 (77,975)
Other, net..................................... 14,085 (248) -- 13,837 -- 13,837
Gain on sale of equity interest and special
charges...................................... 10,063 -- -- 10,063 -- 10,063
Minority interest.............................. (2,891) -- (3,383) (6,274) (616) (6,890)
-------- -------- ------- -------- -------- --------
Income before income taxes and extraordinary
charge......................................... 194,723 30,574 3,125 228,422 26,699 255,121
Income tax benefit (expense).................... (9,826) (5,948) -- (15,774) 5,948 (9,826)
-------- -------- ------- -------- -------- --------
Income before extraordinary charge.............. 184,897 24,626 3,125 212,648 32,647 245,295
Extraordinary charge on early extinguishment of
debt........................................... (2,595) -- -- (2,595) -- (2,595)
-------- -------- ------- -------- -------- --------
Net income...................................... $182,302 $ 24,626 $ 3,125 $210,053 $ 32,647 $242,700
======== ======== ======= ======== ======== ========
Calculation of limited partners' interest in
income before extraordinary item:
Income before extraordinary charge.............. $184,897 60,398 245,295
Less: general partner's interest in net
income......................................... (56,273) (22,793) (79,066)
-------- -------- --------
Limited partners' net income before
extraordinary item............................. 128,624 37,605 166,229
Less: extraordinary charge on early
extinguishment of debt......................... (2,595) -- (2,595)
-------- -------- --------
Limited partners' net income.................... $126,029 37,605 163,634
======== ======== ========
Net income per unit before extraordinary
charge......................................... $ 2.63 0.20 2.83
======== ========
Extraordinary charge per unit................... $ (0.06) 0.01 (0.05)
======== ========
Net income per unit............................. $ 2.57 0.21 2.78
======== ========
Declared distribution per unit.................. $ 2.85 0.20 3.05
======== ========
Number of units used in computation............. 48,974 9,810 58,784
======== ========
</TABLE>
30
<PAGE> 31
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>
YEAR ENDED DECEMBER 31,
- --------------------------------
1999 1998 1997 1996 1995
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
4.39 3.67 2.67 2.15 2.05
</TABLE>
The pro forma ratio of earnings to fixed charges assuming we made the
acquisitions detailed in the pro forma financial statements discussed earlier in
this prospectus on January 1, 1999, for the period indicated is as follows:
<TABLE>
<CAPTION>
PRO FORMA
FOR THE
YEAR ENDED
DECEMBER 31,
1999
------------
<S> <C> <C>
4.13
</TABLE>
In both 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 both cases, fixed charges include:
- - interest, including capitalized interest; plus
- - amortization of debt issuance costs.
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DESCRIPTION OF THE NOTES
GENERAL
The Notes are to be issued under an indenture dated March 22, 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
Offers. By its terms, however, the indenture incorporates certain provisions of
the Trust Indenture Act and, upon consummation of the Exchange Offers, 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.
Additionally, we refer to the Original Floating Rate Notes and the Floating Rate
Exchange Notes collectively as the Floating Rate Notes and the Original 8% Notes
and the 8% Exchange Notes collectively as the 8% Notes. 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. The
Floating Rate Notes are limited to $200,000,000 aggregate principal amount and
the 8% Notes are limited to $200,000,000 aggregate principal amount. The
Floating Rate Notes mature on March 22 of their year of maturity. The 8% Notes
mature on March 15 of their year of maturity, unless sooner redeemed. 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.
FIXED RATE INTEREST
The 8% Notes bear interest from March 22, 2000, payable semi-annually in
arrears on March 15 and September 15 of each year. We refer to each of those
days as a fixed rate interest payment date. Interest payments shall commence on
September 15, 2000, to noteholders in whose name the 8% Notes are registered at
the close of business on the 15th day preceding the respective fixed rate
interest payment date.
Interest on the 8% Notes is computed on the basis of a 360-day year
comprised of twelve 30-day months.
FLOATING RATE INTEREST
The Floating Rate Notes bear interest from March 22, 2000 at a floating
rate determined in the manner provided below, payable quarterly on March 22,
June 22, September 22 and December 22 of each year. We refer to each of those
days as a floating rate interest payment date. Interest payments shall commence
on June 22, 2000, to noteholders in whose name the Floating Rate Notes are
registered at the close of business on the 15th day preceding the respective
floating rate interest payment date.
The per annum interest rate on the Floating Rate Notes, which we call the
floating interest rate, in effect for each day of an interest period, as defined
below, will be equal to the three-month LIBOR rate, as defined below, plus 50
basis points (0.5%). The floating interest rate for each interest period will be
set on the 22nd day of the months of March, June, September and December of each
year, commencing March 22, 2000. We refer to each of those days as an interest
reset date. The applicable floating interest rate shall apply until the
principal on the Floating Rate Notes is paid or
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made available for payment, with that date called the principal payment date. If
any interest reset date and floating rate interest payment date would otherwise
be a day that is not a LIBOR business day, as defined below, such interest reset
date and floating rate interest payment date shall be the next succeeding LIBOR
business day. LIBOR business day refers to any day that is not a Saturday or
Sunday and that, in The City of New York or The City of London, is not a day on
which banking institutions are generally authorized or obligated by law to
close. Interest period refers to the period from and including an interest reset
date until, but excluding, the next succeeding interest reset date. The last
interest period is from and including the interest reset date immediately
preceding the maturity date or the principal payment date, as the case may be,
until, but not including, the maturity date or the principal payment date, as
the case may be. If the principal payment date or the maturity date is not a
LIBOR business day, then the principal amount of the Floating Rate Notes plus
accrued and unpaid interest shall be paid on the next succeeding LIBOR business
day and no interest shall accrue for the maturity date, the principal payment
date or any day after.
The three-month LIBOR rate refers to the rate determined in accordance with
the following provisions:
- On the interest determination date, which will be the second London
business day preceding each interest reset date, First Union National
Bank, as the calculation agent, will determine the three-month LIBOR rate
which shall be the rate for deposits in the London interbank market in
U.S. dollars having a three-month maturity commencing on the second
London business day immediately following such interest determination
date which appears on the Telerate Page 3750 as of 11:00 a.m., London
time, on such interest determination date. Telerate Page 3750 refers to
the display on Page 3750 of the Dow Jones Telerate Service, or such other
page as may replace that page on that service for the purpose of
displaying London interbank offered rates of major banks for U.S. dollar
deposits. If the three-month LIBOR rate on such interest determination
date does not appear on the Telerate Page 3750, the three-month LIBOR
rate will be determined as described in the clause below. London business
day means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
- With respect to an interest determination date for which the three-month
LIBOR rate does not appear on the Telerate Page 3750 as specified in the
clause above, the calculation agent will request the principal London
offices of each of four major banks in the London interbank market, as
selected by the calculation agent, to provide the calculation agent with
its offered quotation for deposits in U.S. dollars having a three-month
maturity commencing on the second London business day immediately
following such interest determination date to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on the
interest determination date and in a principal amount that is
representative for a single transaction in that market at such time. If
at least two quotations are provided, the three-month LIBOR rate on the
interest determination date will be the arithmetic mean, rounded upwards,
if necessary, to the nearest one hundred-thousandth of a percentage
point, with 5 or more one-millionths of one percentage point rounded
upwards, of the quotations. If fewer than two quotations are provided,
the three-month LIBOR rate determined on the interest determination date
will be the arithmetic mean, rounded upwards, if necessary, to the
nearest one hundred-thousandth of a percentage point, with 5 or more
one-millionths of one percentage point rounded upwards, of the rates
quoted at approximately
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11:00 a.m., New York City time, on the interest determination date for
loans in U.S. dollars to leading European banks, having a three-month
maturity commencing on the second London business day immediately
following the interest determination date and in a principal amount that
is representative for a single transaction in that market at such time by
three major banks in New York City selected by the calculation agent.
However, if the banks selected by the calculation agent are not quoting
as mentioned in the immediately preceding sentence, the three-month LIBOR
rate with respect to the interest determination date will be the
three-month LIBOR rate in effect on the interest determination date.
The amount of interest for each day that a Floating Rate Note is
outstanding will be calculated by dividing the floating interest rate in effect
for such day by 360 and multiplying the result by the principal amount of that
Floating Rate Note. The amount of interest to be paid on such Floating Rate Note
for any interest period will be calculated by adding the daily interest amounts
for each day in such interest period.
The floating interest rate will in no event be higher than the maximum rate
permitted by New York law or the law of the United States.
The floating interest rate and amount of interest to be paid on the
Floating Rate Notes for each interest period will be determined by the
calculation agent. All calculations made by the calculation agent shall, in the
absence of manifest error, be conclusive for all purposes and binding on Kinder
Morgan Energy Partners and the holders of the Floating Rate Notes. So long as
the three-month LIBOR rate is required to be determined with respect to the
Floating Rate Notes, there will at all times be a calculation agent. In the
event that the calculation agent shall be unable or unwilling to act, or that
the calculation agent shall fail duly to establish the three-month LIBOR rate
for any interest period, or that Kinder Morgan Energy Partners proposes to
remove the calculation agent, Kinder Morgan Energy Partners shall appoint
another person which is a bank, trust company, investment banking firm or other
financial institution to act as the calculation agent.
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
FLOATING RATE NOTES. The Floating Rate Notes will not be redeemable prior
to maturity.
FIXED RATE NOTES. The 8% 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 8% Notes to be redeemed at the
holder's address appearing in the 8% Note register, at a price equal to 100% of
the principal amount of the 8% 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 8% Notes
plus accrued interest to the redemption date.
The amount of the make-whole premium on any 8% Note, or portion of an 8%
Note, to
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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 8% Note, or portion of an 8% 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 8% Note, or portion
of a 8% Note, being redeemed;
over
(2) the principal amount of the 8% Note, or portion of an 8% 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 one of the
initial purchasers. 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, Goldman, Sachs & Co. will make the
calculation. If Goldman Sachs 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 8% 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 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 8% Notes are to be redeemed, the trustee will
select the 8% Notes to be redeemed by a method that the trustee deems fair and
appropriate. The trustee may select for redemption 8% Notes and portions of 8%
Notes in amounts of $1,000 or whole multiples of $1,000.
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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 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
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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 mechanics', repairmen's, materialmen's, suppliers', carriers',
landlords', warehousemen'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;
(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
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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.
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
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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 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
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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 December 31, 1999, SFPP,
L.P. had approximately $355 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 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.
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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 for either series of Notes does not necessarily
constitute an Event of Default for the other series of Notes. 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 for either series of Notes occurs and continues, the
trustee or the holders of at least 25% in aggregate principal amount of the
Notes of the series may declare the entire principal of all the Notes of that
series 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 of that series 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 proceeding for any remedy available to
the trustee, or exercising any power conferred upon the trustee, for any series
of 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
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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 8% Notes in a legal defeasance, or to release ourselves from
our covenant restrictions on the 8% 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 8% Notes. If we
choose this legal defeasance option, the holders of the 8% Notes will not be
entitled to the benefits of the indenture except for registration of transfer
and exchange of 8% Notes, replacement of lost, stolen or mutilated 8% Notes,
conversion or exchange of 8% 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 8% 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, 1001 Fannin, Suite 2255, Houston, Texas 77002
will initially act as trustee under the indenture. First Union National Bank is
an affiliate of First Union Securities, Inc., one of the initial purchasers of
the Original Notes.
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 of each series 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)
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
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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.
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
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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
Each of 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.
Any 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 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.
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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)
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
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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
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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 Form W-8 or
Form W-8BEN, together will 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-8 or 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.
49
<PAGE> 50
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 Form W-8 or Form W-8BEN,
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-8 or 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.
50
<PAGE> 51
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 historical financial statements incorporated by reference in this
registration statement have been audited by various independent accountants. The
organizations and periods covered by these audits are indicated in the
individual accountants' independent auditors' reports. Such financial statements
have been so included in reliance on the reports of the various independent
accountants given on the authority of such firms as experts in auditing and
accounting.
51
<PAGE> 52
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 current report on Form 8-K filed on April 3, 2000;
- Our current report on Form 8-K filed on March 31, 2000;
- Our current report on Form 8-K/A filed on March 28, 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 Offers.
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.
You may request a copy of any document incorporated by reference in this
prospectus (in most cases, without exhibits), without charge, by request
directed to us at the following address and telephone number:
Kinder Morgan Energy Partners, L.P.
Investor Relations Department
1301 McKinney, Suite 3400
Houston, Texas 77010
(713) 844-9500
52
<PAGE> 53
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.
53
<PAGE> 54
ANNEX A
KINDER MORGAN ENERGY PARTNERS, L.P.
LETTER OF TRANSMITTAL
FOR FLOATING RATE NOTES
<PAGE> 55
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
FLOATING RATE SENIOR NOTES DUE 2002
OF
KINDER MORGAN ENERGY PARTNERS, L.P.
PURSUANT TO THE PROSPECTUS DATED MAY 1, 2000
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MAY 31, 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 Customer Information Center First Union Customer Information Center
Corporate Trust Operations -- NC1153 Confirm by Telephone: Corporate Trust Operations -- NC1153
1525 West W.T. Harris Boulevard -- 3C3 (704) 590-7408 1525 West W.T. Harris Boulevard -- 3C3
Charlotte, NC 28288 Charlotte, NC 28262-1153
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 Floating
Rate Senior Notes due 2002 (the "Original Notes") of Kinder Morgan Energy
Partners, L.P. (the "Partnership") to receive Floating Rate 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 May 1,
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.
A-1
<PAGE> 56
DTC participants that are accepting the exchange offer as set forth in the
Prospectus and this Letter of Transmittal (together, the "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 Offers -- 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:
-----------------
- --------------------------------------------------------------------------------
A-2
<PAGE> 57
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>
- -----------------------------------------------------------------------------------------------------------------------------
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>
A-3
<PAGE> 58
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 May 1, 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 Offers -- 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
A-4
<PAGE> 59
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.
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.
A-5
<PAGE> 60
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 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:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-6
<PAGE> 61
- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------
A-7
<PAGE> 62
- --------------------------------------------------------------------------------
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]
- --------------------------------------------------------------------------------
A-8
<PAGE> 63
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 Offers -- 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 Offers -- 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 Offers -- 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.
A-9
<PAGE> 64
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.
A-10
<PAGE> 65
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 by the time of payment, 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.
A-11
<PAGE> 66
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 Form W-8 (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 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
(ii) 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.
A-12
<PAGE> 67
<TABLE>
<C> <S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
PAYER'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 by the time of payment, 31%
of all reportable cash payments made to me will be withheld until I provide a
taxpayer identification number.
Signature Date
- ------------------------------------------------- -------------------------
A-13
<PAGE> 68
ANNEX B
KINDER MORGAN ENERGY PARTNERS, L.P.
LETTER OF TRANSMITTAL
FOR 8% NOTES
<PAGE> 69
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
8% SENIOR NOTES DUE 2005
OF
KINDER MORGAN ENERGY PARTNERS, L.P.
PURSUANT TO THE PROSPECTUS DATED MAY 1, 2000
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON MAY 31, 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 8%
Senior Notes due 2005 (the "Original Notes") of Kinder Morgan Energy Partners,
L.P. (the "Partnership") to receive 8% 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 May 1, 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 "Exchange Offer") must transmit their acceptance to DTC which
will edit and verify the acceptance and
B-1
<PAGE> 70
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 Offers -- 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:
------------------
- --------------------------------------------------------------------------------
B-2
<PAGE> 71
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>
- -----------------------------------------------------------------------------------------------------------------------------
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>
B-3
<PAGE> 72
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 May 1, 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 Offers -- 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.
B-4
<PAGE> 73
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
B-5
<PAGE> 74
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:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-6
<PAGE> 75
- --------------------------------------------------------------------------------
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)
- --------------------------------------------------------------------------------
B-7
<PAGE> 76
- --------------------------------------------------------------------------------
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]
- --------------------------------------------------------------------------------
B-8
<PAGE> 77
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 Offers -- 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 Offers -- 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 Offers -- 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.
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
B-9
<PAGE> 78
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.
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.
B-10
<PAGE> 79
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 by the time of payment, 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.
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 Form W-8 (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
B-11
<PAGE> 80
"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 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
(ii) 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.
B-12
<PAGE> 81
<TABLE>
<C> <S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
PAYER'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 by the time of payment, 31%
of all reportable cash payments made to me will be withheld until I provide a
taxpayer identification number.
Signature Date
----------------------------------------- -----------------------
B-13
