-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KaPuRpHnu5lU/idMmk1NuifJzC5MQHQW0jk7VlU+V6w+2PmSA50XeE5EL12fgaVJ ZN0uaEeOFSyDy+DfLtbpLg== 0000888228-00-000002.txt : 20000207 0000888228-00-000002.hdr.sgml : 20000207 ACCESSION NUMBER: 0000888228-00-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000120 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINDER MORGAN ENERGY PARTNERS L P CENTRAL INDEX KEY: 0000888228 STANDARD INDUSTRIAL CLASSIFICATION: PIPE LINES (NO NATURAL GAS) [4610] IRS NUMBER: 760380342 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11234 FILM NUMBER: 524537 BUSINESS ADDRESS: STREET 1: 1301 MCKINNEY ST STREET 2: STE 3450 CITY: HOUSTON STATE: TX ZIP: 77010 BUSINESS PHONE: 7138449500 MAIL ADDRESS: STREET 1: 370 VAN GORDON STREET CITY: LAKEWOOD STATE: CO ZIP: 80228-8304 FORMER COMPANY: FORMER CONFORMED NAME: ENRON LIQUIDS PIPELINE L P DATE OF NAME CHANGE: 19970304 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 January 20, 2000 (Date of earliest event reported) KINDER MORGAN ENERGY PARTNERS, L.P. (Exact name of registrant as specified in its charter) Delaware 1-11234 76-0380342 (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification No.) incorporation) 1301 McKinney, Suite 3400 Houston, Texas 77010 (Address of principal executive offices, including zip code) 713-844-9500 (Registrant's telephone number, including area code) 2 Item 2. Acquisition of Assets. On December 30, 1999, Kinder Morgan Energy Partners, L.P., a Delaware limited partnership (the "Partnership"), entered into a Contribution Agreement among the Partnership, Kinder Morgan G.P., Inc., a Delaware corporation ("KMGP"), Kinder Morgan, Inc., a Kansas corporation ("KMI"), Natural Gas Pipeline Company of America, a Delaware corporation ("NGPL"), and KN Gas Gathering, Inc., a Colorado corporation ("KNGG"). On January 20, 2000, but effective as of December 31, 1999, the contribution of assets by KMI, NGPL and KNGG to the Partnership was completed. In exchange for the contribution to the Partnership of: (i) all of KMI's interest in Kinder Morgan Interstate Gas Transmission, LLC, a Colorado single-member limited liability company ("KM Interstate"), (ii) all of NGPL's interest in Kinder Morgan Trailblazer LLC, a Delaware single-member limited liability company ("KM Trailblazer"), and (iii) all of KNGG's interest in Red Cedar Gathering Company, a Colorado general partnership ("Red Cedar"), the Partnership took the following actions: (1) issued an aggregate of 9,810,000 common units representing limited partnership units of KMEP to KMI, NGPL and KNGG, (2) made a special distribution in the amount of $200,000,000 in cash to KMI, and (3) has the obligation to pay KMI $130,000,000 within 90 days of the closing. Upon the contribution, the Partnership acquired (i) the assets of KM Interstate, including an interstate natural gas transmission system, consisting of approximately 6,600 miles of pipeline, that transports natural gas eastward from the Rocky Mountains, (ii) KM Trailblazer's one-third partnership interest in Trailblazer Pipeline Company, an Illinois general partnership whose assets include an interstate natural gas transmission system, consisting of approximately 430 miles of pipeline and one compression station, that transports natural gas eastward from the Rocky Mountains and (iii) KNGG's 49% interest in Red Cedar, whose assets consist of over 450 miles of gathering pipeline connecting more than 600 producing gas wells and provide natural gas gathering and treating facilities for natural gas producers in certain regions of Colorado. The Partnership intends to continue the same use of all of these assets. The Partnership's distribution and issuance of common units in exchange for the contribution was determined pursuant to an arms-length negotiation between the parties, with both sides receiving a fairness opinion from independent financial advisors. The source of funds for the $200 million special distribution was a borrowing under the Partnership's existing 364-Day, $300,000,000 Credit Agreement, dated as of September 29, 1999, among the Partnership, the lenders party thereto and First Union National Bank, as administrative agent for such lenders. The source of funds for the remaining $130 million has not been determined. In connection with the Contribution, KMGP amended the Partnership's Second Amended and Restated Agreement of Limited Partnership, as allowed by that agreement, to provide for (i) the special distribution of $330 million to KMI, (ii) a revision to the definition of "Conflicts and Audit Committee" to remove an outdated reference, (iii) a revision to the definition of "Record Holder" to indicate that KMI, NGPL and KNGG shall not receive dividends on any common units of the Partnership held by them for the fiscal quarter ended December 31, 1999, and (iv) a revision to the provisions related to priority allocations to properly match allocations of income to distributions of cash. 3 The general partner of the Partnership, KMGP, is responsible for the operation and day-to-day management of the Partnership and is an indirect, wholly-owned subsidiary of KMI. Certain of the directors and officers of KMI are also directors and officers of KMGP. 4 Item 5. Other Events. On January 20, 2000, the Partnership issued a press release announcing, among other things, the closing of the transaction referenced in Item 2 above. A portion of this press release is filed herewith as Exhibit 99.1 and is incorporated herein by reference. 5 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements. It is impractical to provide the financial statements required by Item 7 of this report on Form 8-K at the time of filing hereof. Such financial statements will be filed not later than April 4, 2000. (b) Pro Forma Financial Information. It is impractical to provide the pro forma financial information required by Item 7 of this report on Form 8-K at the time of filing hereof. Such pro forma financial information will be filed not later than April 4, 2000. (c) Exhibits. The following materials are filed as exhibits to this Current Report on Form 8-K. Exhibit Number Description 2.1 Contribution Agreement, dated as of December 30, 1999, by and among the Partnership, KMGP, KMI, NGPL and KNGG (incorporated by reference from Exhibit 99.1 to the Partnership's Current Report on Form 8-K filed January 14, 2000). 4.1 Amendment No. 1 to Second Amended and Restated Agreement of Limited Partnership of the Partnership dated as of January, 20, 2000, by KMGP in its individual capacity and as attorney-in- fact for the limited partners of the Partnership. 99.1 Portion of the Press Release of the Partnership issued January 20, 2000. 6 SIGNATURE 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. KINDER MORGAN ENERGY PARTNERS, L.P. By: KINDER MORGAN G.P., INC., its general partner By: /s/ Joseph Listengart ------------------------------ Joseph Listengart Vice President, General Counsel and Secretary Date: February 4, 2000 7 EXHIBIT INDEX Exhibit Number Description ------ ------------ 2.1 Contribution Agreement, dated as of December 30, 1999, by and among the Partnership, KMGP, KMI, NGPL and KNGG (incorporated by reference from Exhibit 99.1 to the Company's Current Report on Form 8-K filed January 14, 2000). 4.1 Amendment No. 1 to Second Amended and Restated Agreement of Limited Partnership of the Partnership dated as of January, 20, 2000, by KMGP in its individual capacity and as attorney-in- fact for the limited partners of the Partnership. 99.1 Portion of the Press Release of the Partnership issued January 20, 2000. EX-4.1 2 AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF KINDER MORGAN ENERGY PARTNERS, L.P. This Amendment No. 1 to Second Amended and Restated Agreement of Limited Partnership of Kinder Morgan Energy Partners, L.P. (this "Amendment") is made as of the 20th day of January, 2000, by Kinder Morgan G.P., Inc., a Delaware corporation (the "General Partner"), in its individual capacity and as attorney-in-fact for the Limited Partners of Kinder Morgan Energy Partners, L.P., in accordance with Article XV of the Partnership Agreement (as such capitalized terms are defined below). R E C I T A L S A. The General Partner is the sole general partner of Kinder Morgan Energy Partners, L.P., a Delaware limited partnership (the "Partnership") organized under a Second Amended and Restated Agreement of Limited Partnership effective as of February 14, 1997 (the "Partnership Agreement"). B. The General Partner and the Partnership entered into a Contribution Agreement dated December 30, 1999 (the "Contribution Agreement") among Kinder Morgan, Inc., a Kansas corporation ("KMI"), Natural Gas Pipeline Company of America, a Delaware corporation ("NGPL"), KN Gas Gathering, Inc., a Colorado corporation ("KN Gas"), the General Partner and the Partnership. C. The Contribution Agreement contemplates, among other things, the contribution (i) of all of KMI's equity interest in KN Interstate Gas Transmission Co., a Colorado corporation to be converted into a single-member Colorado limited liability company, (ii) of all of NGPL's equity interest in NGPL- Trailblazer Inc., a Delaware corporation to be converted into a single-member Delaware limited liability company, and (iii) of all of KN Gas' equity interest in Red Cedar Gathering Company, a Colorado general partnership, in exchange for the issuance by the Partnership to KMI, NGPL and KN Gas of an aggregate of 9,810,000 common units representing limited partnership units of the Partnership. D. Pursuant to the Contribution Agreement, the Partnership has agreed to incur debt in such amount and on such terms as may be acceptable to the Partnership (the "KMEP Debt") sufficient in amount to allow the Partnership to use the proceeds of the KMEP Debt to fund a distribution to KMI in the amount of $330,000,000 (the "Special Distribution") which shall be declared and paid to KMI upon its contribution pursuant to the Contribution Agreement. E. To effect the Special Distribution as contemplated by the Contribution Agreement, it is necessary to amend the Partnership Agreement as provided herein. F. Section 15.1 of the Partnership Agreement provides that the General Partner, as the general partner of Partnership, may amend the Partnership Agreement without the consent of any limited partner of the Partnership to reflect a change that, in the sole discretion of the General Partner, does not adversely affect the limited partners of the Partnership in any material respect. In addition, Section 15.1 of the Partnership Agreement provides that the General Partner, as the general partner of the Partnership, may amend the Partnership Agreement without the consent of any limited partner of the Partnership to reflect a change that is required to effect the intent of the provisions of the Partnership Agreement or is otherwise contemplated by the Partnership Agreement. G. The General Partner is authorized to execute and deliver this Amendment on behalf of the limited partners pursuant to Sections 15.1 and 1.4 of the Partnership Agreement. 2 AGREEMENT NOW, THEREFORE, the Partnership Agreement is hereby amended as follows: 1. Article II. The reference to "Enron" in the definition of "Conflicts and Audit Committee" in Article II of the Partnership Agreement is eliminated and replaced with "the General Partner." 2. Article II. The following sentence shall be added to the end of the definition of "Record Holder" in Article II of the Partnership Agreement: Solely for purposes of the distribution of Available Cash pursuant to Section 5.4 of this Agreement for the calendar quarter ended December 31, 1999, the holders of Common Units issued pursuant to the Contribution Agreement (as defined herein) shall not be treated as Record Holders and shall not be entitled to participate in such distribution. 3. Section 5.1(d)(iii). Section 5.1(d)(iii) of the Partnership Agreement shall be deleted and replaced with the following: (iii) Priority Allocations. (A) If the amount of cash or the Net Agreed Value of any property distributed (except cash or property distributed pursuant to Section 14.3 or 14.4) to any Limited Partner holding Common Units with respect to a taxable year is greater (on a per Unit basis) than the amount of cash or the Net Agreed Value of property distributed to the other Limited Partners holding Common Units (on a per Unit basis), then (1) each Limited Partner holding Common Units receiving such greater cash or property distribution shall be allocated gross income in an amount equal to the product of (aa) the amount by which the distribution (on a per Unit basis) to such Limited Partners holding Common Units exceeds the distribution (on a per Unit basis) to the Limited Partner holding Common Units receiving the smallest distribution and (bb) the number of Units owned by the Limited Partners holding Common Units receiving the greater distribution; and (2) the General Partner shall be allocated gross income in an aggregate amount equal to 1/99 of the sum of the amounts allocated in clause (1) above. (B) After the application of Section 5.1(d)(iii)(A), all or any portion of the remaining items of Partnership gross income or gain for the taxable period, if any, shall be allocated 100% to the General Partner, until the aggregate amount of such items allocated to the General Partner pursuant to this paragraph 5.1(d)(iii)(B) for the current taxable period and all previous taxable periods is equal to the cumulative amount of all Incentive Distributions made to the General Partner (or its assignee) from the Closing Date to a date 45 days after the end of the current taxable period. 4. Section 5.9. A new Section 5.9 is hereby added to the Partnership Agreement, to follow Section 5.8 and to read in full as follows: 5.9 Special Distribution. Notwithstanding anything to the contrary set forth in this Agreement, following the contribution by Kinder Morgan, Inc., a Kansas corporation ("KMI"), of all of its equity interest in Kinder Morgan Interstate Gas Transmission LLC, a Colorado limited liability company, as contemplated by the Contribution Agreement dated December 30, 1999 (the "Contribution Agreement"), among KMI, Natural Gas Pipeline Company of America, a Delaware corporation, KN Gas Gathering, Inc., a Colorado corporation, the General Partner and the Partnership, the Partnership shall distribute $330,000,000 in cash to KMI, without a corresponding distribution to the General Partner or the Limited Partners, as provided for in the Contribution Agreement. Notwithstanding anything to the contrary set forth in this Agreement, KMI shall not receive 3 an allocation of income (including gross income) or gain as a result of the distribution provided for in the preceding sentence. 5. Ratification. Except as expressly amended hereby, the Partnership Agreement is hereby ratified and confirmed, and shall continue in full force and effect. [remainder of page intentionally left blank] 4 IN WITNESS WHEREOF, the General Partner has executed and delivered this Amendment, in its individual capacity and as attorney-in-fact for the limited partners of the Partnership, in accordance with Section 15.1 of the Partnership Agreement, as of the date first above written. KINDER MORGAN G.P., INC., as General Partner By: /s/ David G. Dehaemers, Jr. -------------------------------- Name: David G. Dehaemers, Jr. ------------------------------ Title: Vice President ----------------------------- KINDER MORGAN G.P., INC., as Attorney-in-Fact for the limited partners By: /s/ David G. Dehaemers, Jr. ------------------------------- Name: David G. Dehaemers, Jr. ------------------------------ Title: Vice President ----------------------------- EX-99.1 3 [KINDER MORGAN ENERGY PARTNERS, L.P.] www.kindermorgan.com Larry Pierce Irene Twardowski Media Relations Investor Relations (303) 914-4751 (713) 844-9543 KINDER MORGAN ENERGY PARTNERS, L.P. NET INCOME INCREASES 20% FOR FOURTH QUARTER; UP 76% FOR 1999 Houston, Jan. 20, 2000 - Kinder Morgan Energy Partners, L.P. (NYSE:KMP) today reported fourth quarter 1999 net income of $45.6 million, or $0.63 per unit, as compared to fourth quarter 1998 net income of $37.8 million, or $0.55 per unit. The company's distribution to unitholders of $0.725 for the fourth quarter of 1999 (an annualized rate of $2.90) will be paid on Feb. 14, 2000 to unitholders of record as of Jan. 31, 2000. The company announced net income before extraordinary charges for early extinguishment of debt of $184.9 million for 1999, or $2.63 per unit, compared to $117.2 million, or $2.09 per unit, in 1998. After the extraordinary charges, 1999 net income was $182.3 million, or $2.57 per unit, compared to $103.6 million, or $1.75 per unit, the previous year. "We are delighted with our financial results for the fourth quarter and the year," said Richard D. Kinder, chairman and CEO of Kinder Morgan. "These strong results reflect solid operating performance from all of our business segments. We also continue to benefit from our lack of exposure to variations in commodity prices." The company's Pacific operations experienced another solid quarter, recording an 11 percent increase in net income compared to the fourth quarter of 1998. Mainline delivery volumes in the fourth quarter increased 6 percent over the same period a year ago. For the year, net income in this segment rose 30 percent and mainline delivery volumes increased 22 percent. These increases reflect higher demand for transportation of refined products in the West and a full year of earnings contributions from the Pacific operations, which the company only owned for 10 month in 1998. (more) 2 KMP Earnings Page 2 Mid-Continent operations reported a 21 percent increase in earnings for the fourth quarter compared to the same period in 1998, and a 57 percent increase for all of 1999. This reflects an increase in transmix income through the company's acquisition of assets from Primary Corp. and its increased ownership in Plantation Pipe Line Company. These gains were offset in part in the fourth quarter, however, by the loss of income following the sale of the company's 25 percent indirect interest in the Mt. Belvieu fractionator. Net income in the Bulk Terminal operations increased by 16 percent for the fourth quarter and 82 percent for the year, due primarily to the addition of the Pier IX and Shipyard River terminals in December of 1998, and higher throughput and revenues at existing terminals. Additionally, the board of directors of Kinder Morgan Energy Partners reaffirmed its previously announced intention to increase the company's distribution to unitholders for the first quarter of 2000 to no less than $0.775 per quarter, or $3.10 annually, based on the anticipated increase in cash available for distribution. "Our intent to increase the distribution to unitholders reflects the expected accretion resulting from the acquisition of more than $700 million of Kinder Morgan, Inc. assets," Kinder explained. "This transaction has now closed, effective Dec. 31, 1999. We anticipate the resulting distribution increase will be payable on May 12, 2000 to unitholders of record on April 30, 2000. Moving forward, we will continue to work diligently to grow cash distributions through revenue enhancements, accretive acquisitions and cost efficiencies." Assets transferred to Kinder Morgan Energy Partners included KN Interstate Gas Transmission Co., a 49 percent interest in Red Cedar Gathering Company and a 33 percent interest in Trailblazer Pipeline Company. As consideration for the assets, Kinder Morgan, Inc. received 9.81 million KMP common units and approximately $330 million in cash. In the fourth quarter, the company also acquired an additional 33 1/3 percent indirect interest in Trailblazer Pipeline Company, increasing its ownership stake in this natural gas pipeline system to 66 2/3 percent. (more) 3 KMP Earnings Page 3 Kinder Morgan Energy Partners, L. P., which has an enterprise value of approximately $3.7 billion, is the nation's largest pipeline master limited partnership. It owns and operates one of the largest product pipeline systems in the United States, serving customers in sixteen states with more than 5,000 miles of pipeline and over twenty associated terminals. Kinder Morgan also operates over 20 bulk terminal facilities which transload more than 40 million tons of coal, petroleum coke and other products annually. In addition, Kinder Morgan owns 51% of Plantation Pipe Line Company and 20% of Shell CO2 Company, Ltd. The general partner of Kinder Morgan Energy Partners, L. P. is owned by Kinder Morgan, Inc., one of the largest midstream energy companies in America, operating more than 30,000 miles of natural gas and product pipelines in 26 states. It also has significant retail distribution, marketing, gathering, electric generation and terminal assets. This news release includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Kinder Morgan believes that its expectations are based on reasonable assumptions, it can give no assurance that such assumptions will materialize. # # # -----END PRIVACY-ENHANCED MESSAGE-----