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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT: NOVEMBER 2, 2000
COMMISSION FILE NUMBER 1-12202
NORTHERN BORDER PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 93-1120873
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
ENRON BUILDING
1400 SMITH STREET
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL (ZIP CODE)
EXECUTIVE OFFICES)
(713) 853-6161
(REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS
RECENT TAX DEVELOPMENTS
This section is a summary of certain recent federal income tax developments
that may be relevant to you. The IRS has recently finalized regulations under
Sections 743, 197, and 1223 of the Internal Revenue Code.
Treasury Regulations under Section 743 require a portion of the Section
743(b) adjustment attributable to property subject to cost recovery deductions
under Section 168 to be recovered over the remaining cost recovery period for
the Section 704(c) built-in gain in such property. Recently finalized Treasury
Regulations under Section 197 similarly require a portion of the Section 743(b)
adjustment attributable to amortizable section 197 intangibles to be amortized
over the remaining amortization period for the Section 704(c) built-in gain in
such intangibles. These Regulations apply only to partnerships that have adopted
the remedial method, which we may adopt. If a different method is adopted, the
Section 743(b) adjustment attributable to property subject to cost recovery
deductions under Section 168 or amortization under Section 197 must be taken
into account as if it were newly-purchased property placed in service when the
transfer giving rise to the Section 743(b) adjustment occurs. Regardless of the
method adopted, Treasury Regulation Section 1.167(c)-1(a)(6) requires the
portion of a Section 743(b) adjustment attributable to property subject to
depreciation under Section 167 of the Internal Revenue Code to be depreciated
using either the straight-line method or the 150% declining balance method.
Under our partnership agreement, the general partner is authorized to adopt
a convention to preserve the uniformity of common units even if that convention
is not consistent with specified Treasury Regulations. Although our counsel is
unable to opine as to the validity of such an approach, we intend to adopt a
method to depreciate and amortize the Section 743(b) adjustment attributable to
unrealized appreciation in the value of contributed property that will preserve
the uniformity of common units. Regardless of the method we adopt, the ratio of
federal taxable income allocated to unitholders for the period 2000 to 2003 to
the amount of cash distributed to such unitholders with respect to that period
is not expected to be materially affected.
The method we adopt for amortizing and depreciating the Section 743(b)
adjustment may be inconsistent with the Treasury Regulations. If the IRS
successfully challenged our method for depreciating or amortizing the Section
743(b) adjustment, the uniformity of common units might be affected, and the
gain realized by a partner from the sale of common units might be increased
without the benefit of additional deductions.
The IRS has ruled that a partner who acquires interests in a partnership in
separate transactions must combine those interests and maintain a single
adjusted basis for all those interests. Upon a sale or disposition of less than
all of those interests, a portion of that basis must be allocated to the
interests sold using an "equitable apportionment" method. The IRS has recently
finalized regulations under Section 1223 of the Code that make it clear that
this ruling applies to publicly traded partnerships such as us. These recently
finalized regulations would, however, allow a selling unitholder who can
identify the common units transferred with an ascertainable holding period to
elect to use the actual holding period of the common units transferred. Thus,
according to the ruling, a unitholder will be unable to select high or low basis
common units to sell as would be the case with corporate stock, but, according
to the regulations, may designate specific common units sold for purposes of
determining the holding period of common units transferred. A unitholder
electing to use the actual holding period of common units transferred must use
that identification method for all subsequent sales or exchanges of common
units. A unitholder considering the purchase of additional common units or a
sale of common units purchased in separate transactions should consult his tax
advisor as to the possible consequences of this ruling and application of the
proposed regulations.
PUBLIC OFFERING OF COMMON UNITS
Northern Border Partners, L.P. (the "Partnership") is filing this
Current Report on Form 8-K in connection with the public offering (the
"Offering") of up to 2,156,250 common units representing limited partner
interests in the Partnership, including common units issuable pursuant to an
over-allotment option granted to underwriters, under the Partnership's shelf
registration statement on Form S-3 (Registration No. 333-72323) (the
"Registration Statement"), as supplemented by the Prospectus Supplement dated
November 1, 2000 filed with the Securities and Exchange Commission pursuant to
Rule 424(b) under the Securities Act of 1933. The Underwriting Agreement dated
November 1, 2000 among the Partnership, Northern Border Intermediate Limited
Partnership, PaineWebber
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Incorporated, Salomon Smith Barney Inc. and Lehman Brothers Inc. and the opinion
of Vinson & Elkins L.L.P. attached as exhibits hereto relate to the Offering,
and are being filed as exhibits hereto in lieu of filing them as exhibits to the
Registration Statement by means of a post-effective amendment thereto. Instead,
upon filing, this Current Report on Form 8-K is incorporated by reference into
the Registration Statement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
1 -- Underwriting Agreement dated November 1, 2000 among
Northern Border Partners, L.P., Northern Border
Intermediate Limited Partnership, PaineWebber
Incorporated, Salomon Smith Barney Inc. and Lehman
Brothers Inc.
8 -- Opinion of Vinson & Elkins L.L.P. as to certain tax
matters.
23 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit
8).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTHERN BORDER PARTNERS, L.P.
(A Delaware Limited Partnership)
By: /s/ Jerry L. Peters
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Jerry L. Peters
Chief Financial and Accounting
Officer
Date: November 2, 2000
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
1 -- Underwriting Agreement dated November 1, 2000 among Northern Border
Partners, L.P., Northern Border Intermediate Limited Partnership,
PaineWebber Incorporated, Salomon Smith Barney Inc. and Lehman
Brothers Inc.
8 -- Opinion of Vinson & Elkins L.L.P. as to certain tax matters.
23 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit 8).
</TABLE>
