sv3za
As filed with the Securities and Exchange Commission on July
29, 2009
Registration
Nos. 333-159678
333-159678-01
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 2
to
Form S-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
TARGA RESOURCES PARTNERS
LP
TARGA RESOURCES PARTNERS
FINANCE CORPORATION
(Exact name of registrant as
specified in its charter)
|
|
|
Delaware
|
|
65-1295427
|
Delaware
|
|
32-0249658
|
(State or other jurisdiction
of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
1000 Louisiana,
Suite 4300
Houston, Texas 77002
(713) 584-1000
(Address, including zip code,
and telephone number,
including area code, of registrants principal executive
offices)
Rene R. Joyce
Chief Executive
Officer
1000 Louisiana,
Suite 4300
Houston, Texas 77002
(713) 584-1000
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
Copies to:
David P. Oelman
Christopher S. Collins
Vinson & Elkins
LLP
1001 Fannin Street,
Suite 2500
Houston, Texas 77002
(713) 758-2222
Approximate date of commencement of proposed sale to the
public: From time to time after the effective
date of this registration statement as determined by market
conditions and other factors.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following
box. o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box. þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following
box. o
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed
to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
|
|
|
|
|
|
|
Large accelerated
filer þ
|
|
Accelerated
filer o
|
|
Non-accelerated
filer o
(Do not check if a smaller
reporting company)
|
|
Smaller reporting
company o
|
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Securities
and Exchange Commission acting pursuant to said
Section 8(a), may determine.
PROSPECTUS
TARGA RESOURCES PARTNERS
LP
TARGA RESOURCES PARTNERS
FINANCE CORPORATION
Common Units
Debt Securities
We may offer and sell up to $500,000,000 in an aggregate initial
offering price of the common units, representing limited partner
interests of Targa Resources Partners LP, and, together with
Targa Resources Partners Finance Corporation, debt securities
described in this prospectus from time to time in one or more
classes or series and in amounts, at prices and on terms to be
determined by market conditions at the time of our offerings.
We may offer and sell these securities to or through one or more
underwriters, dealers and agents, or directly to purchasers, on
a continuous or delayed basis. This prospectus describes the
general terms of these common units and debt securities and the
general manner in which we will offer the common units and debt
securities. The specific terms of any common units and debt
securities we offer will be included in a supplement to this
prospectus. The prospectus supplement will also describe the
specific manner in which we will offer the common units and debt
securities.
Investing in our common units and the debt securities
involves risks. Limited partnerships are inherently different
from corporations. You should carefully consider the risk
factors described under Risk Factors beginning on
page 1 of this prospectus before you make an investment in
our securities.
Our common units are traded on The NASDAQ Stock Market LLC under
the symbol NGLS. We will provide information in the
prospectus supplement for the trading market, if any, for any
debt securities we may offer.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus
is ,
2009.
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
|
|
i
|
|
|
|
|
ii
|
|
|
|
|
iii
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
|
17
|
|
|
|
|
24
|
|
|
|
|
32
|
|
|
|
|
47
|
|
|
|
|
49
|
|
|
|
|
51
|
|
|
|
|
51
|
|
|
|
|
51
|
|
EX-23.1 |
In making your investment decision, you should rely only on
the information contained or incorporated by reference in this
prospectus. We have not authorized anyone to provide you with
any other information. If anyone provides you with different or
inconsistent information, you should not rely on it.
You should not assume that the information contained in this
prospectus is accurate as of any date other than the date on the
front cover of this prospectus. You should not assume that the
information contained in the documents incorporated by reference
in this prospectus is accurate as of any date other than the
respective dates of those documents. Our business, financial
condition, results of operations and prospects may have changed
since those dates.
ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement on
Form S-3
that we filed with the Securities and Exchange Commission, or
SEC, utilizing a shelf registration process or
continuous offering process. Under this shelf registration
process, we may, from time to time, sell up to $500,000,000 of
the securities described in this prospectus in one or more
offerings. Each time we offer securities, we will provide you
with this prospectus and a prospectus supplement that will
describe, among other things, the specific amounts and prices of
the securities being offered and the terms of the offering,
including, in the case of debt securities, the specific terms of
the securities. The prospectus supplement may also add to,
update or change information in this prospectus. Before you
invest in our securities, you should carefully read this
prospectus and any prospectus supplement and the additional
information described under the heading Where You Can Find
More Information. To the extent information in this
prospectus is inconsistent with information contained in a
prospectus supplement, you should rely on the information in the
prospectus supplement. You should read both this prospectus and
any prospectus supplement, together with additional information
described under the heading Where You Can Find More
Information, and any additional information you may need
to make your investment decision. All references in this
prospectus to we, us, the
Partnership and our refer to Targa
Resources Partners LP, together with its subsidiaries.
i
TARGA
RESOURCES PARTNERS LP
We are a growth-oriented Delaware limited partnership formed on
October 26, 2006 by Targa Resources, Inc.
(Targa), a leading provider of midstream natural gas
and NGL services in the United States, to own, operate, acquire
and develop a diversified portfolio of complementary midstream
energy assets. We are engaged in the business of gathering,
compressing, treating, processing and selling natural gas and
fractionating and selling NGLs and NGL products. We currently
operate in the Fort Worth Basin/Bend Arch in north Texas,
the Permian Basin of west Texas and in southwest Louisiana.
We intend to leverage our relationship with Targa over the
long-term to acquire and construct additional midstream energy
assets and to utilize the significant experience of Targas
management team to execute our growth strategy.
Targa Resources Partners Finance Corporation was incorporated
under the laws of the State of Delaware on May 23, 2008, is
our wholly owned subsidiary, and has no material assets or
liabilities. Its activities will be limited to co-issuing debt
securities and engaging in other activities incidental thereto.
Our principal executive offices are located at 1000 Louisiana
St., Suite 4300, Houston, Texas 77002, and our telephone
number at that location is
(713) 584-1000.
For additional information as to our business, properties and
financial condition, please refer to the documents cited in
Where You Can Find More Information.
ii
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Targa Resources Partners LPs (together with its
subsidiaries (we, us, our or
the Partnership)) reports, filings and other public
announcements may from time to time contain statements that do
not directly or exclusively relate to historical facts. Such
statements are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
You can typically identify forward-looking statements by the use
of forward-looking words, such as may,
could, project, believe,
anticipate, expect,
estimate, potential, plan,
forecast and other similar words.
All statements that are not statements of historical facts,
including statements regarding our future financial position,
business strategy, budgets, projected costs and plans and
objectives of management for future operations, are
forward-looking statements.
These forward-looking statements reflect our intentions, plans,
expectations, assumptions and beliefs about future events and
are subject to risks, uncertainties and other factors, many of
which are outside our control. Important factors that could
cause actual results to differ materially from the expectations
expressed or implied in the forward-looking statements include
known and unknown risks. Known risks and uncertainties include,
but are not limited to, the risks set forth in Risk
Factors as well as the following risks and uncertainties:
|
|
|
|
|
our ability to access the debt and equity markets, which will
depend on general market conditions and the credit ratings for
our debt obligations;
|
|
|
|
the amount of collateral required to be posted from time to time
in our transactions;
|
|
|
|
our success in risk management activities, including the use of
derivative financial instruments to hedge commodity and interest
rate risks;
|
|
|
|
the level of creditworthiness of counterparties to transactions;
|
|
|
|
changes in laws and regulations, particularly with regard to
taxes, safety and protection of the environment;
|
|
|
|
the timing and extent of changes in natural gas, natural gas
liquids (NGL) and other commodity prices, interest
rates and demand for our services;
|
|
|
|
weather and other natural phenomena;
|
|
|
|
industry changes, including the impact of consolidations and
changes in competition;
|
|
|
|
our ability to obtain necessary licenses, permits and other
approvals;
|
|
|
|
the level and success of natural gas drilling around our assets
and our success in connecting natural gas supplies to our
gathering and processing systems and NGL supplies to
Targas logistics and marketing facilities;
|
|
|
|
our ability to grow through acquisitions or internal growth
projects and the successful integration and future performance
of such assets;
|
|
|
|
general economic, market and business conditions; and
|
|
|
|
the risks described elsewhere in this prospectus.
|
Although we believe that the assumptions underlying our
forward-looking statements are reasonable, any of the
assumptions could be inaccurate, and, therefore, we cannot
assure you that the forward-looking statements included in this
prospectus will prove to be accurate. Some of these and other
risks and uncertainties that could cause actual results to
differ materially from such forward-looking statements are more
fully described under the heading Risk Factors in this
prospectus. Except as may be required by applicable law, we
undertake no obligation to publicly update or advise of any
change in any forward-looking statement, whether as a result of
new information, future events or otherwise.
Forward-looking statements contained in this prospectus and all
subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly
qualified in their entirety by this cautionary statement.
iii
RISK
FACTORS
An investment in our securities involves a high degree of risk.
You should carefully consider the risk factors and all of the
other information included in, or incorporated by reference
into, this prospectus in evaluating an investment in our
securities. If any of these risks were to occur, our business,
financial condition or results of operations could be adversely
affected. In that case, the trading price of our common units or
debt securities could decline and you could lose all or part of
your investment. When we offer and sell any securities pursuant
to a prospectus supplement, we may include additional risk
factors relevant to such securities in the prospectus supplement.
1
USE OF
PROCEEDS
Except as otherwise provided in the applicable prospectus
supplement, we will use the net proceeds we receive from the
sale of the securities for general partnership purposes, which
may include repayment of indebtedness, the acquisition of
businesses, other capital expenditures and additions to working
capital.
Any specific allocation of the net proceeds of an offering of
securities to a specific purpose will be determined at the time
of the offering and will be described in a prospectus supplement.
2
RATIO OF
EARNINGS TO FIXED CHARGES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Targa Resources Partners LP
|
|
|
Predecessor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Inception)
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
through
|
|
|
106-Day Period
|
|
|
|
March 31,
|
|
|
Years Ended December 31,
|
|
|
December 31,
|
|
|
Ended April 15,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2004
|
|
|
Ratio of earnings to fixed charges
|
|
|
(1
|
)
|
|
|
3.4
|
x
|
|
|
2.0
|
x
|
|
|
1.2
|
x
|
|
|
1.5
|
x
|
|
|
3.6
|
x
|
|
|
n/a
|
|
|
|
|
(1)
|
|
For the quarter ended
March 31, 2009, our ratio was less than 1:1. Additional
earnings of $1.8 million would have been needed to achieve
coverage of 1:1 for the quarter ended March 31, 2009.
|
For purposes of computing the ratios of earnings to fixed
charges, earnings consist of pre-tax income from continuing
operations before equity in (earnings) loss from unconsolidated
affiliates plus fixed charges, amortization of capitalized
interest and distributions from equity investees less
capitalized interest. Fixed charges consist of interest expensed
and capitalized and the estimated interest component of rent
expense.
3
DESCRIPTION
OF OUR COMMON UNITS
The
Common Units
The holders of our common units are entitled to participate in
partnership distributions and exercise the rights and privileges
available to limited partners under our partnership agreement.
For a description of the rights of holders of our common units
to partnership distributions, please see this section and
Cash Distribution Policy. For a description of the
rights and privileges of limited partners under our partnership
agreement, including voting rights, please see The
Partnership Agreement.
Transfer
Agent and Registrar
Duties. Computershare Investor Services, LLC
serves as registrar and transfer agent for our common units. We
pay all fees charged by the transfer agent for transfers of
common units except the following that must be paid by
unitholders:
|
|
|
|
|
surety bond premiums to replace lost or stolen certificates,
taxes and other governmental charges;
|
|
|
|
special charges for services requested by a common
unitholder; and
|
|
|
|
other similar fees or charges.
|
There is no charge to unitholders for disbursements of our cash
distributions. We have indemnified the transfer agent, its
agents and each of their stockholders, directors, officers and
employees against all claims and losses that may arise out of
acts performed or omitted for its activities in that capacity,
except for any liability due to any gross negligence or
intentional misconduct of the indemnified person or entity.
Resignation or Removal. The transfer agent may
resign, by notice to us, or be removed by us. The resignation or
removal of the transfer agent will become effective upon our
appointment of a successor transfer agent and registrar and its
acceptance of the appointment. If no successor has been
appointed and has accepted the appointment within 30 days
after notice of the resignation or removal, our general partner
may act as the transfer agent and registrar until a successor is
appointed.
Transfer
of Common Units
By transfer of common units in accordance with our partnership
agreement, each transferee of common units shall be admitted as
a limited partner with respect to the common units transferred
when such transfer and admission is reflected in our books and
records. Each transferee:
|
|
|
|
|
represents that the transferee has the capacity, power and
authority to become bound by our partnership agreement;
|
|
|
|
automatically agrees to be bound by the terms and conditions of,
and is deemed to have executed, our partnership
agreement; and
|
|
|
|
gives the consents and approvals contained in our partnership
agreement, such as the approval of all transactions and
agreements that we are entering into in connection with this
offering.
|
A transferee will become a substituted limited partner of our
partnership for the transferred common units automatically upon
the recording of the transfer on our books and records.
We may, at our discretion, treat the nominee holder of a common
unit as the absolute owner. In that case, the beneficial
holders rights are limited solely to those that it has
against the nominee holder as a result of any agreement between
the beneficial owner and the nominee holder.
Common units are securities and are transferable according to
the laws governing transfers of securities. In addition to other
rights acquired upon transfer, the transferor gives the
transferee the right to become a substituted limited partner in
our partnership for the transferred common units.
Until a common unit has been transferred on our books, we and
the transfer agent may treat the record holder of the unit as
the absolute owner for all purposes, except as otherwise
required by law or stock exchange regulations.
4
THE
PARTNERSHIP AGREEMENT
The following is a summary of the material provisions of our
partnership agreement.
We summarize the following provisions of our partnership
agreement elsewhere in this prospectus:
|
|
|
|
|
with regard to distributions of available cash, please see
Cash Distribution Policy;
|
|
|
|
with regard to the transfer of our common units, please see
Description of our Common Units Transfer of
Common Units; and
|
|
|
|
|
|
with regard to allocations of taxable income and taxable loss,
please see Material Income Tax Consequences.
|
Organization
and Duration
Our partnership was organized on October 23, 2006 and will
have a perpetual existence unless terminated pursuant to the
terms of our partnership agreement.
Purpose
Our purpose under the partnership agreement is limited to any
business activity that is approved by our general partner and
that lawfully may be conducted by a limited partnership
organized under Delaware law; provided, that our general partner
shall not cause us to engage, directly or indirectly, in any
business activity that the general partner determines would
cause us to be treated as an association taxable as a
corporation or otherwise taxable as an entity for federal income
tax purposes.
Power of
Attorney
Each limited partner, and each person who acquires a unit from a
unitholder, by accepting the common unit, automatically grants
to our general partner and, if appointed, a liquidator, a power
of attorney to, among other things, execute and file documents
required for our qualification, continuance or dissolution. The
power of attorney also grants our general partner the authority
to amend, and to make consents and waivers under, our
partnership agreement.
Cash
Distributions
Our partnership agreement specifies the manner in which we make
cash distributions to holders of our common units and other
partnership securities as well as to our general partner in
respect of its general partner interest and its incentive
distribution rights. For a description of these cash
distribution provisions, please see Cash Distribution
Policy.
Capital
Contributions
Unitholders are not obligated to make additional capital
contributions, except as described below under
Limited Liability.
Our general partner has the right, but not the obligation, to
contribute a proportionate amount of capital to us to maintain
its 2% general partner interest if we issue additional units.
Our general partners 2% interest, and the percentage of
our cash distributions to which it is entitled, will be
proportionately reduced if we issue additional units in the
future and our general partner does not contribute a
proportionate amount of capital to us to maintain its 2% general
partner interest. Our general partner will be entitled to make a
capital contribution in order to maintain its 2% general partner
interest in the form of the contribution to us of common units
based on the current market value of the contributed common
units.
5
Voting
Rights
The following is a summary of the unitholder vote required for
the matters specified below. Matters requiring the approval of a
unit majority require the approval of a majority of
our common units and Class B units, if any, voting as a
class.
In voting their common units and Class B units, our general
partner and its affiliates will have no fiduciary duty or
obligation whatsoever to us or the limited partners, including
any duty to act in good faith or in the best interests of us or
the limited partners.
|
|
|
Issuance of additional units |
|
No approval right |
|
Amendment of the partnership agreement |
|
Certain amendments may be made by the general partner without
the approval of the unitholders. Other amendments generally
require the approval of a unit majority. Please see
Amendment of the Partnership Agreement. |
|
Merger of our partnership or the sale of all or substantially
all of our assets |
|
Unit majority in certain circumstances. Please see
Merger, Consolidation, Conversion, Sale or
Other Disposition of Assets. |
|
Dissolution of our partnership |
|
Unit majority. Please see Termination and
Dissolution. |
|
Continuation of our business upon dissolution |
|
Unit majority. Please see Termination and
Dissolution. |
|
Withdrawal of the general partner |
|
Under most circumstances, the approval of a majority of our
common units, excluding common units held by our general partner
and its affiliates, is required for the withdrawal of our
general partner prior to December 31, 2016 in a manner that
would cause a dissolution of our partnership. Please see
Withdrawal or Removal of the General
Partner. |
|
Removal of the general partner |
|
Not less than
662/3%
of the outstanding units, voting as a single class, including
units held by our general partner and its affiliates. Please see
Withdrawal or Removal of the General
Partner. |
|
Transfer of the general partner interest |
|
Our general partner may transfer all, but not less than all, of
its general partner interest in us without a vote of our
unitholders to an affiliate or another person in connection with
its merger or consolidation with or into, or sale of all or
substantially all of its assets, to such person. The approval of
a majority of our common units, excluding common units held by
the general partner and its affiliates, is required in other
circumstances for a transfer of the general partner interest to
a third party prior to December 31, 2016. See
Transfer of General Partner Units. |
|
Transfer of incentive distribution rights |
|
Except for transfers to an affiliate or another person as part
of our general partners merger or consolidation, sale of
all or substantially all of its assets or the sale of all of the
ownership interests in such holder, the approval of a majority
of our common units, excluding common units held by the general
partner and its affiliates, is required in most circumstances
for a transfer of the |
6
|
|
|
|
|
incentive distribution rights to a third party prior to
December 31, 2016. Please see Transfer of
Incentive Distribution Rights. |
|
Transfer of ownership interests in our general partner |
|
No approval required at any time. Please see
Transfer of Ownership Interests in the General
Partner. |
Limited
Liability
Assuming that a limited partner does not participate in the
control of our business within the meaning of the Delaware Act
and that he otherwise acts in conformity with the provisions of
the partnership agreement, his liability under the Delaware Act
will be limited, subject to possible exceptions, to the amount
of capital he is obligated to contribute to us for his common
units plus his share of any undistributed profits and assets. If
it were determined, however, that the right, or exercise of the
right, by the limited partners as a group:
|
|
|
|
|
to remove or replace the general partner;
|
|
|
|
to approve some amendments to the partnership agreement; or
|
|
|
|
to take other action under the partnership agreement.
|
constituted participation in the control of our
business for the purposes of the Delaware Act, then the limited
partners could be held personally liable for our obligations
under the laws of Delaware, to the same extent as the general
partner. This liability would extend to persons who transact
business with us who reasonably believe that the limited partner
is a general partner. Neither the partnership agreement nor the
Delaware Act specifically provides for legal recourse against
the general partner if a limited partner were to lose limited
liability through any fault of the general partner. While this
does not mean that a limited partner could not seek legal
recourse, we know of no precedent for this type of a claim in
Delaware case law.
Under the Delaware Act, a limited partnership may not make a
distribution to a partner if, after the distribution, all
liabilities of the limited partnership, other than liabilities
to partners on account of their partnership interests and
liabilities for which the recourse of creditors is limited to
specific property of the partnership, would exceed the fair
value of the assets of the limited partnership. For the purpose
of determining the fair value of the assets of a limited
partnership, the Delaware Act provides that the fair value of
property subject to liability for which recourse of creditors is
limited shall be included in the assets of the limited
partnership only to the extent that the fair value of that
property exceeds the nonrecourse liability. The Delaware Act
provides that a limited partner who receives a distribution and
knew at the time of the distribution that the distribution was
in violation of the Delaware Act shall be liable to the limited
partnership for the amount of the distribution for three years.
Under the Delaware Act, a substituted limited partner of a
limited partnership is liable for the obligations of his
assignor to make contributions to the partnership, except that
such person is not obligated for liabilities unknown to him at
the time he became a limited partner and that could not be
ascertained from the partnership agreement.
Our subsidiaries conduct business in Texas and Louisiana,
although we may have subsidiaries that conduct business in other
states in the future. Maintenance of our limited liability as a
limited partner of Targa Resources Operating LP (the
Operating Partnership), may require compliance with
legal requirements in the jurisdictions in which the Operating
Partnership conducts business, including qualifying our
subsidiaries to do business there.
Limitations on the liability of limited partners for the
obligations of a limited partner have not been clearly
established in many jurisdictions. If, by virtue of our
partnership interest in the Operating Partnership or otherwise,
it were determined that we were conducting business in any state
without compliance with the applicable limited partnership or
limited liability company statute, or that the right or exercise
of the right by the limited partners as a group to remove or
replace the general partner, to approve some amendments to the
partnership agreement, or to take other action under the
partnership agreement constituted participation in the
control of our business for purposes of the statutes of
any relevant jurisdiction, then the limited partners could be
held personally liable for our obligations under the law of that
jurisdiction to the same extent as the general
7
partner under the circumstances. We will operate in a manner
that the general partner considers reasonable and necessary or
appropriate to preserve the limited liability of the limited
partners.
Issuance
of Additional Securities
Our partnership agreement authorizes us to issue an unlimited
number of additional partnership securities for the
consideration and on the terms and conditions determined by our
general partner without the approval of the unitholders.
It is possible that we will fund acquisitions through the
issuance of additional common units or other partnership
securities. Holders of any additional common units we issue will
be entitled to share equally with the then-existing holders of
common units in our distributions of available cash. In
addition, the issuance of additional common units or other
partnership securities may dilute the value of the interests of
the then-existing holders of common units in our net assets.
In accordance with Delaware law and the provisions of our
partnership agreement, we may also issue additional partnership
securities that, as determined by our general partner, may have
special voting rights to which our common units are not
entitled. In addition, our partnership agreement does not
prohibit the issuance by our subsidiaries of equity securities,
which may effectively rank senior to our common units.
Upon the issuance of additional partnership securities, our
general partner will be entitled, but not required, to make
additional capital contributions to the extent necessary to
maintain its 2% general partner interest in us. Our general
partners 2% interest in us will be reduced if we issue
additional units in the future (other than the issuance of units
issued in connection with a reset of the incentive distribution
target levels relating to our general partners incentive
distribution rights or the issuance of units upon conversion of
outstanding partnership securities) and our general partner does
not contribute a proportionate amount of capital to us to
maintain its 2% general partner interest. Moreover, our general
partner will have the right, which it may from time to time
assign in whole or in part to any of its affiliates, to purchase
common units or other partnership securities whenever, and on
the same terms that, we issue those securities to persons other
than our general partner and its affiliates, to the extent
necessary to maintain the percentage interest of the general
partner and its affiliates, including such interest represented
by common units that existed immediately prior to each issuance.
The holders of common units will not have preemptive rights to
acquire additional common units or other partnership securities.
Amendment
of the Partnership Agreement
General. Amendments to our partnership
agreement may be proposed only by or with the consent of our
general partner. However, our general partner will have no duty
or obligation to propose any amendment and may decline to do so
free of any fiduciary duty or obligation whatsoever to us or the
limited partners, including any duty to act in good faith or in
the best interests of us or the limited partners. In order to
adopt a proposed amendment, other than the amendments discussed
below, our general partner is required to seek written approval
of the holders of the number of units required to approve the
amendment or call a meeting of the limited partners to consider
and vote upon the proposed amendment. Except as described below,
an amendment must be approved by a unit majority.
Prohibited Amendments. No amendment may be
made that would:
|
|
|
|
|
enlarge the obligations of any limited partner without its
consent, unless approved by at least a majority of the type or
class of limited partner interests so affected; or
|
|
|
|
enlarge the obligations of, restrict in any way any action by or
rights of, or reduce in any way the amounts distributable,
reimbursable or otherwise payable by us to our general partner
or any of its affiliates without the consent of our general
partner, which consent may be given or withheld at its option.
|
8
The provision of our partnership agreement preventing the
amendments having the effects described in any of the clauses
above can be amended upon the approval of the holders of at
least 90% of the outstanding units voting together as a single
class (including units owned by our general partner and its
affiliates).
No Unitholder Approval. Our general partner
may generally make amendments to our partnership agreement
without the approval of any limited partner or assignee to
reflect:
|
|
|
|
|
a change in our name, the location of our principal place of our
business, our registered agent or our registered office;
|
|
|
|
the admission, substitution, withdrawal or removal of partners
in accordance with our partnership agreement;
|
|
|
|
a change that our general partner determines to be necessary or
appropriate to qualify or continue our qualification as a
limited partnership or a partnership in which the limited
partners have limited liability under the laws of any state or
to ensure that neither we nor the Operating Partnership nor any
of its subsidiaries will be treated as an association taxable as
a corporation or otherwise taxed as an entity for federal income
tax purposes;
|
|
|
|
a change in our fiscal year and related changes;
|
|
|
|
an amendment that is necessary, in the opinion of our counsel,
to prevent us or our general partner or the directors, officers,
agents or trustees of our general partner from in any manner
being subjected to the provisions of the Investment Company Act
of 1940, the Investment Advisors Act of 1940, or plan
asset regulations adopted under the Employee Retirement
Income Security Act of 1974, or ERISA, whether or not
substantially similar to plan asset regulations currently
applied or proposed;
|
|
|
|
an amendment that our general partner determines to be necessary
or appropriate for the authorization of additional partnership
securities or rights to acquire partnership securities,
including any amendment that our general partner determines is
necessary or appropriate in connection with:
|
|
|
|
|
|
the adjustments of the minimum quarterly distribution, first
target distribution, second target distribution and third target
distribution in connection with the reset of our general
partners incentive distribution rights as described under
Cash Distribution Policy General
Partners Right to Reset Incentive Distribution
Levels;
|
|
|
|
the implementation of the provisions relating to our general
partners right to reset its incentive distribution rights
in exchange for Class B units; or
|
|
|
|
any modification of the incentive distribution rights made in
connection with the issuance of additional partnership
securities or rights to acquire partnership securities, provided
that, any such modifications and related issuance of partnership
securities have received approval by a majority of the members
of the conflicts committee of our general partner;
|
|
|
|
|
|
any amendment expressly permitted in our partnership agreement
to be made by our general partner acting alone;
|
|
|
|
an amendment effected, necessitated or contemplated by a merger
agreement that has been approved under the terms of our
partnership agreement;
|
|
|
|
any amendment that our general partner determines to be
necessary or appropriate for the formation by us of, or our
investment in, any corporation, partnership or other entity, as
otherwise permitted by our partnership agreement;
|
|
|
|
conversions into, mergers with or conveyances to another limited
liability entity that is newly formed and has no assets,
liabilities or operations at the time of the conversion, merger
or conveyance other than those it receives by way of the
conversion, merger or conveyance; or
|
|
|
|
any other amendments substantially similar to any of the matters
described in the clauses above.
|
9
In addition, our general partner may make amendments to our
partnership agreement without the approval of any limited
partner if our general partner determines that those amendments:
|
|
|
|
|
do not adversely affect the limited partners (or any particular
class of limited partners) in any material respect;
|
|
|
|
are necessary or appropriate to satisfy any requirements,
conditions or guidelines contained in any opinion, directive,
order, ruling or regulation of any federal or state agency or
judicial authority or contained in any federal or state statute;
|
|
|
|
are necessary or appropriate to facilitate the trading of
limited partner interests or to comply with any rule,
regulation, guideline or requirement of any securities exchange
on which the limited partner interests are or will be listed for
trading;
|
|
|
|
are necessary or appropriate for any action taken by our general
partner relating to splits or combinations of units under the
provisions of our partnership agreement; or
|
|
|
|
are required to effect the intent expressed in this prospectus
or the intent of the provisions of our partnership agreement or
are otherwise contemplated by our partnership agreement.
|
Opinion of Counsel and Unitholder
Approval. For amendments of the type not
requiring unitholder approval, our general partner will not be
required to obtain an opinion of counsel that an amendment will
not result in a loss of limited liability to the limited
partners or result in our being treated as an association
taxable as a corporation or otherwise taxable as an entity for
federal income tax purposes in connection with any of the
amendments. No amendments to our partnership agreement other
than those described above under No Unitholder
Approval will become effective without the approval of
holders of at least 90% of the outstanding units voting as a
single class unless we first obtain an opinion of counsel to the
effect that the amendment will not affect the limited liability
under applicable law of any of our limited partners.
In addition to the above restrictions, any amendment that would
have a material adverse effect on the rights or preferences of
any type or class of outstanding units in relation to other
classes of units will require the approval of at least a
majority of the type or class of units so affected. Any
amendment that reduces the voting percentage required to take
any action is required to be approved by the affirmative vote of
limited partners whose aggregate outstanding units constitute
not less than the voting requirement sought to be reduced.
Merger,
Consolidation, Conversion, Sale or Other Disposition of
Assets
A merger, consolidation or conversion of us requires the prior
consent of our general partner. However, our general partner
will have no duty or obligation to consent to any merger,
consolidation or conversion and may decline to do so free of any
fiduciary duty or obligation whatsoever to us or the limited
partners, including any duty to act in good faith or in the best
interest of us or the limited partners.
In addition, the partnership agreement generally prohibits our
general partner without the prior approval of the holders of a
unit majority, from causing us to, among other things, sell,
exchange or otherwise dispose of all or substantially all of our
assets in a single transaction or a series of related
transactions, including by way of merger, consolidation or other
combination, or approving on our behalf the sale, exchange or
other disposition of all or substantially all of the assets of
our subsidiaries. Our general partner may, however, mortgage,
pledge, hypothecate or grant a security interest in all or
substantially all of our assets without that approval. Our
general partner may also sell all or substantially all of our
assets under a foreclosure or other realization upon those
encumbrances without that approval. Finally, our general partner
may consummate any merger without the prior approval of our
unitholders if we are the surviving entity in the transaction,
our general partner has received an opinion of counsel regarding
limited liability and tax matters, the transaction would not
result in a material amendment to the partnership agreement,
each of our units will be an identical unit of our partnership
following the transaction, and the partnership securities to be
issued do not exceed 20% of our outstanding partnership
securities immediately prior to the transaction.
10
If the conditions specified in the partnership agreement are
satisfied, our general partner may convert us or any of our
subsidiaries into a new limited liability entity or merge us or
any of our subsidiaries into, or convey all of our assets to, a
newly formed entity if the sole purpose of that conversion,
merger or conveyance is to effect a mere change in our legal
form into another limited liability entity, our general partner
has received an opinion of counsel regarding limited liability
and tax matters, and the governing instruments of the new entity
provide the limited partners and the general partner with the
same rights and obligations as contained in the partnership
agreement. The unitholders are not entitled to dissenters
rights of appraisal under the partnership agreement or
applicable Delaware law in the event of a conversion, merger or
consolidation, a sale of substantially all of our assets or any
other similar transaction or event.
Termination
and Dissolution
We will continue as a limited partnership until terminated under
our partnership agreement. We will dissolve upon:
|
|
|
|
|
the election of our general partner to dissolve us, if approved
by the holders of units representing a unit majority;
|
|
|
|
there being no limited partners, unless we are continued without
dissolution in accordance with applicable Delaware law;
|
|
|
|
the entry of a decree of judicial dissolution of our
partnership; or
|
|
|
|
the withdrawal or removal of our general partner or any other
event that results in its ceasing to be our general partner
other than by reason of a transfer of its general partner
interest in accordance with our partnership agreement or
withdrawal or removal following approval and admission of a
successor.
|
Upon a dissolution under the last clause above, the holders of a
unit majority may also elect, within specific time limitations,
to continue our business on the same terms and conditions
described in our partnership agreement by appointing as a
successor general partner an entity approved by the holders of
units representing a unit majority, subject to our receipt of an
opinion of counsel to the effect that:
|
|
|
|
|
the action would not result in the loss of limited liability of
any limited partner; and
|
|
|
|
neither our partnership, the Operating Partnership nor any of
our other subsidiaries would be treated as an association
taxable as a corporation or otherwise be taxable as an entity
for federal income tax purposes upon the exercise of that right
to continue.
|
Liquidation
and Distribution of Proceeds
Upon our dissolution, unless we are continued as a new limited
partnership, the liquidator authorized to wind up our affairs
will, acting with all of the powers of our general partner that
are necessary or appropriate to liquidate our assets and apply
the proceeds of the liquidation as described in Cash
Distribution Policy Distributions of Cash Upon
Liquidation. The liquidator may defer liquidation or
distribution of our assets for a reasonable period of time or
distribute assets to partners in kind if it determines that a
sale would be impractical or would cause undue loss to our
partners.
Withdrawal
or Removal of the General Partner
Except as described below, our general partner has agreed not to
withdraw voluntarily as our general partner prior to
December 31, 2016 without obtaining the approval of the
holders of at least a majority of the outstanding common units,
excluding common units held by the general partner and its
affiliates, and furnishing an opinion of counsel regarding
limited liability and tax matters. On or after December 31,
2016, our general partner may withdraw as general partner
without first obtaining approval of any unitholder by giving
90 days written notice, and that withdrawal will not
constitute a violation of our partnership agreement.
Notwithstanding the information above, our general partner may
withdraw without unitholder approval upon 90 days
notice to the limited partners if at least 50% of the
outstanding common units are held or controlled by one person
and its affiliates other than the general partner and its
affiliates. In addition, the partnership
11
agreement permits our general partner in some instances to sell
or otherwise transfer all of its general partner interest in us
without the approval of the unitholders. Please see
Transfer of General Partner Units and
Transfer of Incentive Distribution
Rights.
Upon withdrawal of our general partner under any circumstances,
other than as a result of a transfer by our general partner of
all or a part of its general partner interest in us, the holders
of a unit majority, voting as separate classes, may select a
successor to that withdrawing general partner. If a successor is
not elected, or is elected but an opinion of counsel regarding
limited liability and tax matters cannot be obtained, we will be
dissolved, wound up and liquidated, unless within a specified
period after that withdrawal, the holders of a unit majority
agree in writing to continue our business and to appoint a
successor general partner. Please see
Termination and Dissolution.
Our general partner may not be removed unless that removal is
approved by the vote of the holders of not less than
662/3%
of the outstanding units, voting together as a single class,
including units held by our general partner and its affiliates,
and we receive an opinion of counsel regarding limited liability
and tax matters. Any removal of our general partner is also
subject to the approval of a successor general partner by the
vote of the holders of a majority of the outstanding common
units and Class B units, if any, voting as separate
classes. The ownership of more than
331/3%of
the outstanding units by our general partner and its affiliates
would give them the practical ability to prevent our general
partners removal.
Our partnership agreement also provides that if our general
partner is removed as our general partner under circumstances
where cause does not exist and units held by the general partner
and its affiliates are not voted in favor of that removal our
general partner will have the right to convert its general
partner interest and its incentive distribution rights into
common units or to receive cash in exchange for those interests
based on the fair market value of those interests at that time.
In the event of removal of a general partner under circumstances
where cause exists or withdrawal of a general partner where that
withdrawal violates our partnership agreement, a successor
general partner will have the option to purchase the general
partner interest and incentive distribution rights of the
departing general partner for a cash payment equal to the fair
market value of those interests. Under all other circumstances
where a general partner withdraws or is removed by the limited
partners, the departing general partner will have the option to
require the successor general partner to purchase the general
partner interest of the departing general partner and its
incentive distribution rights for fair market value. In each
case, this fair market value will be determined by agreement
between the departing general partner and the successor general
partner. If no agreement is reached, an independent investment
banking firm or other independent expert selected by the
departing general partner and the successor general partner will
determine the fair market value. Or, if the departing general
partner and the successor general partner cannot agree upon an
expert, then an expert chosen by agreement of the experts
selected by each of them will determine the fair market value.
If the option described above is not exercised by either the
departing general partner or the successor general partner, the
departing general partner interest and its incentive
distribution rights will automatically convert into common units
equal to the fair market value of those interests as determined
by an investment banking firm or other independent expert
selected in the manner described in the preceding paragraph.
In addition, we are required to reimburse the departing general
partner for all amounts due the departing general partner,
including, without limitation, all employee-related liabilities,
including severance liabilities, incurred for the termination of
any employees employed by the departing general partner or its
affiliates for our benefit.
Transfer
of General Partner Units
Except for transfer by our general partner of all, but not less
than all, of its general partner units to:
|
|
|
|
|
an affiliate of our general partner (other than an
individual); or
|
|
|
|
another entity as part of the merger or consolidation of our
general partner with or into another entity or the transfer by
our general partner of all or substantially all of its assets to
another entity,
|
12
our general partner may not transfer all or any of its general
partner units to another person prior to December 31, 2016
without the approval of the holders of at least a majority of
the outstanding common units, excluding common units held by our
general partner and its affiliates. As a condition of this
transfer, the transferee must assume, among other things, the
rights and duties of our general partner, agree to be bound by
the provisions of our partnership agreement, and furnish an
opinion of counsel regarding limited liability and tax matters.
Our general partner and its affiliates may at any time, transfer
units to one or more persons, without unitholder approval.
Transfer
of Ownership Interests in the General Partner
At any time, Targa may sell or transfer all or part of their
membership interests in our general partner to an affiliate or
third party without the approval of our unitholders.
Transfer
of Incentive Distribution Rights
Our general partner or its affiliates or a subsequent holder may
transfer its incentive distribution rights to an affiliate of
the holder (other than an individual) or another entity as part
of the merger or consolidation of such holder with or into
another entity, the sale of all of the ownership interest in the
holder or the sale of all or substantially all of its assets to,
that entity without the prior approval of the unitholders. Prior
to December 31, 2016, other transfers of incentive
distribution rights will require the affirmative vote of holders
of a majority of the outstanding common units, excluding common
units held by our general partner and its affiliates. On or
after December 31, 2016, the incentive distribution rights
will be freely transferable.
Change of
Management Provisions
Our partnership agreement contains specific provisions that are
intended to discourage a person or group from attempting to
remove our general partner or otherwise change the management of
our general partner. If any person or group other than our
general partner and its affiliates acquires beneficial ownership
of 20% or more of any class of units, that person or group loses
voting rights on all of its units. This loss of voting rights
does not apply to any person or group that acquires the units
from our general partner or its affiliates and any transferees
of that person or group approved by our general partner or to
any person or group who acquires the units with the prior
approval of the board of directors of our general partner.
Our partnership agreement also provides that if our general
partner is removed as our general partner under circumstances
where cause does not exist and units held by our general partner
and its affiliates are not voted in favor of that removal our
general partner will have the right to convert its general
partner units and its incentive distribution rights into common
units or to receive cash in exchange for those interests based
on the fair market value of those interests at that time.
Limited
Call Right
If at any time our general partner and its affiliates own more
than 80% of the then-issued and outstanding limited partner
interests of any class, our general partner will have the right,
which it may assign in whole or in part to any of its affiliates
or to us, to acquire all, but not less than all, of the limited
partner interests of the class held by unaffiliated persons as
of a record date to be selected by our general partner, on at
least 10 but not more than 60 days notice. The purchase
price in the event of this purchase is the greater of:
|
|
|
|
|
the highest price paid by either of our general partner or any
of its affiliates for any limited partner interests of the class
purchased within the 90 days preceding the date on which
our general partner first mails notice of its election to
purchase those limited partner interests; and
|
|
|
|
the current market price as of the date three days before the
date the notice is mailed.
|
As a result of our general partners right to purchase
outstanding limited partner interests, a holder of limited
partner interests may have his limited partner interests
purchased at a price that may be lower than
13
market prices at various times prior to such purchase or lower
than a unitholder may anticipate the market price to be in the
future. The tax consequences to a unitholder of the exercise of
this call right are the same as a sale by that unitholder of his
common units in the market. Please see Material Income Tax
Consequences Disposition of Common Units.
Meetings;
Voting
Except as described below regarding a person or group owning 20%
or more of any class of units then outstanding, record holders
of units on the record date will be entitled to notice of, and
to vote at, meetings of our limited partners and to act upon
matters for which approvals may be solicited.
Our general partner does not anticipate that any meeting of
unitholders will be called in the foreseeable future. Any action
that is required or permitted to be taken by the unitholders may
be taken either at a meeting of the unitholders or without a
meeting if consents in writing describing the action so taken
are signed by holders of the number of units necessary to
authorize or take that action at a meeting. Meetings of the
unitholders may be called by our general partner or by
unitholders owning at least 20% of the outstanding units of the
class for which a meeting is proposed. Unitholders may vote
either in person or by proxy at meetings. The holders of a
majority of the outstanding units of the class or classes for
which a meeting has been called represented in person or by
proxy will constitute a quorum unless any action by the
unitholders requires approval by holders of a greater percentage
of the units, in which case the quorum will be the greater
percentage.
Each record holder of a unit has a vote according to his
percentage interest in us, although additional limited partner
interests having special voting rights could be issued. Please
see Issuance of Additional Securities.
However, if at any time any person or group, other than our
general partner and its affiliates, or a direct or subsequently
approved transferee of our general partner or its affiliates,
acquires, in the aggregate, beneficial ownership of 20% or more
of any class of units then outstanding, that person or group
will lose voting rights on all of its units and the units may
not be voted on any matter and will not be considered to be
outstanding when sending notices of a meeting of unitholders,
calculating required votes, determining the presence of a quorum
or for other similar purposes. Common units held in nominee or
street name account will be voted by the broker or other nominee
in accordance with the instruction of the beneficial owner
unless the arrangement between the beneficial owner and his
nominee provides otherwise.
Any notice, demand, request, report or proxy material required
or permitted to be given or made to record holders of common
units under our partnership agreement will be delivered to the
record holder by us or by the transfer agent.
Status as
Limited Partner
By transfer of common units in accordance with our partnership
agreement, each transferee of common units shall be admitted as
a limited partner with respect to the common units transferred
when such transfer and admission is reflected in our books and
records. Except as described under Limited
Liability, the common units will be fully paid, and
unitholders will not be required to make additional
contributions.
Non-Citizen
Assignees; Redemption
If we are or become subject to federal, state or local laws or
regulations that, in the reasonable determination of our general
partner, create a substantial risk of cancellation or forfeiture
of any property that we have an interest in because of the
nationality, citizenship or other related status of any limited
partner, we may redeem the units held by the limited partner at
their current market price. In order to avoid any cancellation
or forfeiture, our general partner may require each limited
partner to furnish information about his nationality,
citizenship or related status. If a limited partner fails to
furnish information about his nationality, citizenship or other
related status within 30 days after a request for the
information or our general partner determines after receipt of
the information that the limited partner is not an eligible
citizen, the limited partner may be treated as a non-citizen
assignee. A non-citizen assignee is entitled to an interest
equivalent to that of a limited partner for the right to share
in allocations and distributions from us, including liquidating
14
distributions. A non-citizen assignee does not have the right to
direct the voting of his units and may not receive distributions
in-kind upon our liquidation.
Indemnification
Under our partnership agreement, in most circumstances, we will
indemnify the following persons, to the fullest extent permitted
by law, from and against all losses, claims, damages or similar
events:
|
|
|
|
|
our general partner;
|
|
|
|
any departing general partner;
|
|
|
|
any person who is or was an affiliate of a general partner or
any departing general partner;
|
|
|
|
any person who is or was a director, officer, member, partner,
fiduciary or trustee of any entity set forth in the preceding
three bullet points;
|
|
|
|
any person who is or was serving as director, officer, member,
partner, fiduciary or trustee of another person at the request
of our general partner, any departing general partner, an
affiliate of our general partner or an affiliate of any
departing general partner; and
|
|
|
|
any person designated by our general partner.
|
Any indemnification under these provisions will only be out of
our assets. Unless it otherwise agrees, our general partner will
not be personally liable for, or have any obligation to
contribute or lend funds or assets to us to enable us to
effectuate, indemnification. We may purchase insurance against
liabilities asserted against and expenses incurred by persons
for our activities, regardless of whether we would have the
power to indemnify the person against liabilities under our
partnership agreement.
Reimbursement
of Expenses
Our partnership agreement requires us to reimburse our general
partner for all direct and indirect expenses it incurs or
payments it makes on our behalf and all other expenses allocable
to us or otherwise incurred by our general partner in connection
with operating our business. These expenses include salary,
bonus, incentive compensation and other amounts paid to persons
who perform services for us or on our behalf and expenses
allocated to our general partner by its affiliates. The general
partner is entitled to determine in good faith the expenses that
are allocable to us.
Books and
Reports
Our general partner is required to keep appropriate books of our
business at our principal offices. The books are maintained for
both tax and financial reporting purposes on an accrual basis.
For tax and fiscal reporting purposes, our fiscal year is the
calendar year.
We will furnish or make available to record holders of common
units, within 120 days after the close of each fiscal year,
an annual report containing audited financial statements and a
report on those financial statements by our independent public
accountants. Except for our fourth quarter, we will also furnish
or make available summary financial information within
90 days after the close of each quarter.
We will furnish each record holder of a unit with information
reasonably required for tax reporting purposes within
90 days after the close of each calendar year. This
information will be furnished in summary form so that some
complex calculations normally required of partners can be
avoided. Our ability to furnish this summary information to
unitholders will depend on the cooperation of unitholders in
supplying us with specific information. Every unitholder will
receive information to assist him in determining his federal and
state tax liability and filing his federal and state income tax
returns, regardless of whether he supplies us with information.
15
Right to
Inspect Our Books and Records
Our partnership agreement provides that a limited partner can,
for a purpose reasonably related to his interest as a limited
partner, upon reasonable written demand stating the purpose of
such demand and at his own expense, have furnished to him:
|
|
|
|
|
a current list of the name and last known address of each
partner;
|
|
|
|
a copy of our tax returns;
|
|
|
|
information as to the amount of cash, and a description and
statement of the agreed value of any other property or services,
contributed or to be contributed by each partner and the date on
which each partner became a partner;
|
|
|
|
copies of our partnership agreement, our certificate of limited
partnership, related amendments and powers of attorney under
which they have been executed;
|
|
|
|
information regarding the status of our business and financial
condition; and
|
|
|
|
any other information regarding our affairs as is just and
reasonable.
|
Our general partner may, and intends to, keep confidential from
the limited partners trade secrets or other information the
disclosure of which our general partner believes in good faith
is not in our best interests or that we are required by law or
by agreements with third parties to keep confidential.
Registration
Rights
Under our partnership agreement, we have agreed to register for
resale under the Securities Act and applicable state securities
laws any common units or other partnership securities proposed
to be sold by our general partner or any of its affiliates or
their assignees if an exemption from the registration
requirements is not otherwise available. These registration
rights continue for two years following any withdrawal or
removal of our general partner. We are obligated to pay all
expenses incidental to the registration, excluding underwriting
discounts and a structuring fee.
16
CASH
DISTRIBUTION POLICY
Distributions
of Available Cash
General. Our partnership agreement requires
that, within 45 days after the end of each quarter, we
distribute all of our available cash from operating surplus for
any quarter to unitholders of record on the applicable record
date in the following manner:
|
|
|
|
|
first, 98% to all unitholders, pro rata, and 2% to the general
partner, until we distribute for each outstanding unit an amount
equal to the minimum quarterly distribution for that
quarter; and
|
|
|
|
thereafter, in the manner described in General
Partner Interest and Incentive Distribution Rights below.
|
The preceding discussion is based on the assumptions that our
general partner maintains its 2% general partner interest and
that we do not issue additional classes of equity securities.
Definition of Available Cash. The term
available cash, for any quarter, means all cash and
cash equivalents on hand on the date of determination of
available cash for that quarter less the amount of cash reserves
established by our general partner to:
|
|
|
|
|
provide for the proper conduct of our business;
|
|
|
|
comply with applicable law, any of our debt instruments or other
agreements; or
|
|
|
|
provide funds for distributions to our unitholders and to our
general partner for any one or more of the next four quarters.
|
Minimum Quarterly Distribution. We will
distribute to the holders of common units on a quarterly basis
at least the minimum quarterly distribution to the extent we
have sufficient cash from our operations after establishment of
cash reserves and payment of fees and expenses, including
payments to our general partner. However, there is no guarantee
that we will pay the minimum quarterly distribution on the units
in any quarter. Even if our cash distribution policy is not
modified or revoked, the amount of distributions paid under our
policy and the decision to make any distribution is determined
by our general partner, taking into consideration the terms of
our partnership agreement. We will be prohibited from making any
distributions to unitholders if it would cause an event of
default, or an event of default is existing, under our credit
agreement.
General Partner Interest and Incentive Distribution
Rights. Our general partner is currently entitled
to 2% of all quarterly distributions that we make prior to our
liquidation. Our general partner has the right, but not the
obligation, to contribute a proportionate amount of capital to
us to maintain its current general partner interest. The general
partners 2% interest in these distributions may be reduced
if we issue additional units in the future and our general
partner does not contribute a proportionate amount of capital to
us to maintain its 2% general partner interest.
Our general partner also currently holds incentive distribution
rights that entitle it to receive increasing percentages, up to
a maximum of 50%, of the cash we distribute from operating
surplus (as defined below) in excess of $0.3881 per unit per
quarter. The maximum distribution of 50% includes distributions
paid to our general partner on its general partner interest and
assumes that our general partner maintains its general partner
interest at 2%. Please see General Partner
Interest and Incentive Distribution Rights for additional
information.
Operating
Surplus and Capital Surplus
General. All cash distributed to unitholders
will be characterized as either operating surplus or
capital surplus. Our partnership agreement requires
that we distribute available cash from operating surplus
differently than available cash from capital surplus.
17
Operating Surplus. Operating surplus consists
of:
|
|
|
|
|
an amount equal to four times the amount needed for any one
quarter for us to pay a distribution on all of our units
(including the general partner units) and the incentive
distribution rights at the same
per-unit
amount as was distributed in the immediately preceding quarter;
plus
|
|
|
|
all of our cash receipts, excluding cash from borrowings, sales
of equity and debt securities, sales or other dispositions of
assets outside the ordinary course of business, capital
contributions or corporate reorganizations or restructurings
(provided that cash receipts from the termination of a commodity
hedge or interest rate swap prior to its specified termination
date shall be included in operating surplus in equal quarterly
installments over the scheduled life of such commodity hedge or
interest rate swap); less
|
|
|
|
all of our operating expenditures, but excluding the repayment
of borrowings, and including maintenance capital expenditures;
less
|
|
|
|
the amount of cash reserves established by our general partner
to provide funds for future operating expenditures.
|
Maintenance capital expenditures represent capital expenditures
made to replace partially or fully depreciated assets, to
maintain the existing operating capacity of our assets and to
extend their useful lives, or other capital expenditures that
are incurred in maintaining existing system volumes and related
cash flows. Expansion capital expenditures represent capital
expenditures made to expand or to increase the efficiency of the
existing operating capacity of our assets or to expand the
operating capacity or revenues of existing or new assets,
whether through construction or acquisition. Costs for repairs
and minor renewals to maintain facilities in operating condition
and that do not extend the useful life of existing assets will
be treated as operating expenses as we incur them. Our
partnership agreement provides that our general partner
determines how to allocate a capital expenditure for the
acquisition or expansion of our assets between maintenance
capital expenditures and expansion capital expenditures.
Capital Surplus. Capital surplus generally
consists of:
|
|
|
|
|
borrowings;
|
|
|
|
sales of our equity and debt securities;
|
|
|
|
sales or other dispositions of assets for cash, other than
inventory, accounts receivable and other current assets sold in
the ordinary course of business or as part of normal retirement
or replacement of assets;
|
|
|
|
capital contributions received; and
|
|
|
|
corporate restructurings.
|
Characterization of Cash Distributions. Our
partnership agreement requires that we treat all available cash
distributed as coming from operating surplus until the sum of
all available cash distributed since we began operations equals
the operating surplus as of the most recent date of
determination of available cash. Our partnership agreement
requires that we treat any amount distributed in excess of
operating surplus, regardless of its source, as capital surplus.
As reflected above, operating surplus includes an amount equal
to four times the amount needed for any one quarter for us to
pay a distribution on all of our units (including the general
partner units) and the incentive distribution rights at the same
per-unit
amount as was distributed in the immediately preceding quarter.
This amount does not reflect actual cash on hand that is
available for distribution to our unitholders. Rather, it is a
provision that will enable us, if we choose, to distribute as
operating surplus up to this amount of cash we receive in the
future from non-operating sources, such as asset sales,
issuances of securities, and borrowings, that would otherwise be
distributed as capital surplus. We do not anticipate that we
will make any distributions from capital surplus.
18
General
Partner Interest and Incentive Distribution Rights
Our partnership agreement provides that our general partner is
entitled to 2% of all distributions that we make prior to our
liquidation as long as our general partner maintains its current
2% interest in us. Our general partner has the right, but not
the obligation, to contribute a proportionate amount of capital
to us to maintain its 2% general partner interest if we issue
additional units. Our general partners 2% interest, and
the percentage of our cash distributions to which it is
entitled, will be proportionately reduced if we issue additional
units in the future and our general partner does not contribute
a proportionate amount of capital to us in order to maintain its
2% general partner interest. Our general partner will be
entitled to make a capital contribution in order to maintain its
2% general partner interest in the form of the contribution to
us of common units that it may hold based on the current market
value of the contributed common units.
Incentive distribution rights represent the right to receive an
increasing percentage (13%, 23% and 48%) of quarterly
distributions of available cash from operating surplus after the
minimum quarterly distribution and the target distribution
levels have been achieved. Our general partner currently holds
the incentive distribution rights, but may transfer these rights
separately from its general partner interest, subject to
restrictions in the partnership agreement.
The following discussion assumes that the general partner
maintains its 2% general partner interest and continues to own
the incentive distribution rights.
If for any quarter we have distributed available cash from
operating surplus to the common unitholders in an amount equal
to the minimum quarterly distribution, then, our partnership
agreement requires that we distribute any additional available
cash from operating surplus for that quarter among the
unitholders and the general partner in the following manner:
|
|
|
|
|
first, 98% to all unitholders, pro rata, and 2% to the
general partner, until each unitholder receives a total of
$0.3881 per unit for that quarter (the first target
distribution);
|
|
|
|
second, 85% to all unitholders, pro rata, and 15% to the
general partner, until each unitholder receives a total of
$0.4219 per unit for that quarter (the second target
distribution);
|
|
|
|
third, 75% to all unitholders, pro rata, and 25% to the
general partner, until each unitholder receives a total of
$0.50625 per unit for that quarter (the third target
distribution); and
|
|
|
|
thereafter, 50% to all unitholders, pro rata, and 50% to
the general partner.
|
Percentage
Allocations of Available Cash from Operating Surplus
The following table illustrates the percentage allocations of
available cash from operating surplus between the unitholders
and our general partner based on the specified target
distribution levels. The amounts set forth under Marginal
Percentage Interest in Distributions are the percentage
interests of our general partner and the unitholders in any
available cash from operating surplus we distribute up to and
including the corresponding amount in the column Total
Quarterly Distribution Per Unit, until available cash from
operating surplus we distribute reaches the next target
distribution level, if any. The percentage interests shown for
the unitholders and the general partner for the minimum
quarterly distribution are also applicable to quarterly
distribution amounts that are less than the minimum quarterly
distribution. The percentage interests set forth below for our
general partner include its 2% general partner interest and
assume our general partner has
19
contributed any additional capital to maintain its 2% general
partner interest and has not transferred its incentive
distribution rights.
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Quarterly
|
|
Marginal Percentage Interest in Distributions
|
|
|
|
Distribution per Unit
|
|
|
|
|
General
|
|
|
|
Target Amount
|
|
Unitholders
|
|
|
Partner
|
|
|
Minimum Quarterly Distribution
|
|
$0.3375
|
|
|
98
|
%
|
|
|
2
|
%
|
First Target Distribution
|
|
up to $0.3881
|
|
|
98
|
%
|
|
|
2
|
%
|
Second Target Distribution
|
|
above $0.3881 up to $0.4219
|
|
|
85
|
%
|
|
|
15
|
%
|
Third Target Distribution
|
|
above $0.4219 up to $0.50625
|
|
|
75
|
%
|
|
|
25
|
%
|
Thereafter
|
|
above $0.50625
|
|
|
50
|
%
|
|
|
50
|
%
|
General
Partners Right to Reset Incentive Distribution
Levels
Our general partner, as the holder of our incentive distribution
rights, has the right under our partnership agreement to elect
to relinquish the right to receive incentive distribution
payments based on the initial cash target distribution levels
and to reset, at higher levels, the minimum quarterly
distribution amount and cash target distribution levels upon
which the incentive distribution payments to our general partner
would be set. Our general partners right to reset the
minimum quarterly distribution amount and the target
distribution levels upon which the incentive distributions
payable to our general partner are based may be exercised,
without approval of our unitholders or the conflicts committee
of our general partner, at any time when we have made cash
distributions to the holders of the incentive distribution
rights at the highest level of incentive distribution for each
of the prior four consecutive fiscal quarters. The reset minimum
quarterly distribution amount and target distribution levels
will be higher than the minimum quarterly distribution amount
and the target distribution levels prior to the reset such that
our general partner will not receive any incentive distributions
under the reset target distribution levels until cash
distributions per unit following this event increase as
described below. We anticipate that our general partner would
exercise this reset right in order to facilitate acquisitions or
internal growth projects that would otherwise not be
sufficiently accretive to cash distributions per common unit,
taking into account the existing levels of incentive
distribution payments being made to our general partner.
In connection with the resetting of the minimum quarterly
distribution amount and the target distribution levels and the
corresponding relinquishment by our general partner of incentive
distribution payments based on the target cash distributions
prior to the reset, our general partner will be entitled to
receive a number of newly issued Class B units based on a
predetermined formula described below that takes into account
the cash parity value of the average cash
distributions related to the incentive distribution rights
received by our general partner for the two quarters prior to
the reset event as compared to the average cash distributions
per common unit during this period.
The number of Class B units that our general partner would
be entitled to receive from us in connection with a resetting of
the minimum quarterly distribution amount and the target
distribution levels then in effect would be equal to
(x) the average amount of cash distributions received by
our general partner in respect of its incentive distribution
rights during the two consecutive fiscal quarters ended
immediately prior to the date of such reset election divided by
(y) the average of the amount of cash distributed per
common unit during each of these two quarters. Each Class B
unit will be convertible into one common unit at the election of
the holder of the Class B unit at any time following the
first anniversary of the issuance of these Class B units.
We will also issue an additional amount of general partner units
in order to maintain the general partners ownership
interest in us relative to the issuance of the Class B
units.
Following a reset election by our general partner, the minimum
quarterly distribution amount will be reset to an amount equal
to the average cash distribution amount per common unit for the
two fiscal quarters immediately preceding the reset election
(such amount is referred to as the reset minimum quarterly
20
distribution) and the target distribution levels will be
reset to be correspondingly higher such that we would distribute
all of our available cash from operating surplus for each
quarter thereafter as follows:
|
|
|
|
|
first, 98% to all unitholders, pro rata, and 2% to the
general partner, until each unitholder receives an amount equal
to 115% of the reset minimum quarterly distribution for that
quarter;
|
|
|
|
second, 85% to all unitholders, pro rata, and 15% to the
general partner, until each unitholder receives an amount per
unit equal to 125% of the reset minimum quarterly distribution
for that quarter;
|
|
|
|
third, 75% to all unitholders, pro rata, and 25% to the
general partner, until each unitholder receives an amount per
unit equal to 150% of the reset minimum quarterly distribution
for that quarter; and
|
|
|
|
thereafter, 50% to all unitholders, pro rata, and 50% to
the general partner.
|
Distributions
from Capital Surplus
How Distributions from Capital Surplus Will Be
Made. Our partnership agreement requires that we
make distributions of available cash from capital surplus, if
any, in the following manner:
|
|
|
|
|
first, 98% to all unitholders, pro rata, and 2% to the
general partner, until we distribute for each common unit an
amount of available cash from capital surplus equal to the
initial public offering price; and
|
|
|
|
thereafter, we will make all distributions of available
cash from capital surplus as if they were from operating surplus.
|
Effect of a Distribution from Capital
Surplus. Our partnership agreement treats a
distribution of capital surplus as the repayment of the initial
unit price from the initial public offering, which is a return
of capital. The initial public offering price less any
distributions of capital surplus per unit is referred to as the
unrecovered initial unit price. Each time a
distribution of capital surplus is made, the minimum quarterly
distribution and the target distribution levels will be reduced
in the same proportion as the corresponding reduction in the
unrecovered initial unit price. Because distributions of capital
surplus will reduce the minimum quarterly distribution, after
any of these distributions are made, it may be easier for the
general partner to receive incentive distributions. However, any
distribution of capital surplus before the unrecovered initial
unit price is reduced to zero cannot be applied to the payment
of the minimum quarterly distribution or any arrearages.
Once we distribute capital surplus on a unit in an amount equal
to the initial unit price, our partnership agreement specifies
that the minimum quarterly distribution and the target
distribution levels will be reduced to zero. Our partnership
agreement specifies that we then make all future distributions
from operating surplus, with 50% being paid to the holders of
units and 50% to the general partner. The percentage interests
shown for our general partner include its 2% general partner
interest and assume the general partner has not transferred the
incentive distribution rights.
Adjustment
to the Minimum Quarterly Distribution and Target Distribution
Levels
In addition to adjusting the minimum quarterly distribution and
target distribution levels to reflect a distribution of capital
surplus, if we combine our units into fewer units or subdivide
our units into a greater number of units, our partnership
agreement specifies that the following items will be
proportionately adjusted:
|
|
|
|
|
the minimum quarterly distribution;
|
|
|
|
target distribution levels; and
|
|
|
|
the unrecovered initial unit price.
|
For example, if a
two-for-one
split of our common units should occur, the minimum quarterly
distribution, the target distribution levels and the unrecovered
initial unit price would each be reduced to 50% of its initial
level. Our partnership agreement provides that we not make any
adjustment by reason of the issuance of additional units for
cash or property.
21
In addition, if legislation is enacted or if existing law is
modified or interpreted by a governmental taxing authority, so
that we become taxable as a corporation or otherwise subject to
taxation as an entity for federal, state or local income tax
purposes, our partnership agreement specifies that the general
partner may reduce the minimum quarterly distribution and the
target distribution levels for each quarter by multiplying each
distribution level by a fraction, the numerator of which is
available cash for that quarter and the denominator of which is
the sum of available cash for that quarter plus the general
partners estimate of our aggregate liability for the
quarter for such income taxes payable by reason of such
legislation or interpretation. To the extent that the actual tax
liability differs from the estimated tax liability for any
quarter, the difference will be accounted for in subsequent
quarters.
Distributions
of Cash Upon Liquidation
General. If we dissolve in accordance with the
partnership agreement, we will sell or otherwise dispose of our
assets in a process called liquidation. We will first apply the
proceeds of liquidation to the payment of our creditors. We will
distribute any remaining proceeds to the unitholders and the
general partner, in accordance with their capital account
balances, as adjusted to reflect any gain or loss upon the sale
or other disposition of our assets in liquidation.
The allocations of gain and loss upon liquidation are intended,
to the extent required, to permit common unitholders to receive
their unrecovered initial unit price plus the minimum quarterly
distribution for the quarter during which liquidation occurs.
However, there may not be sufficient gain upon our liquidation
to enable the holders of common units to fully recover all of
these amounts. Any further net gain recognized upon liquidation
will be allocated in a manner that takes into account the
incentive distribution rights of the general partner.
Manner of Adjustments for Gain. The manner of
the adjustment for gain is set forth in the partnership
agreement. We will allocate any gain to the partners in the
following manner:
|
|
|
|
|
first, to the general partner and the holders of units
who have negative balances in their capital accounts to the
extent of and in proportion to those negative balances;
|
|
|
|
second, 98% to the common unitholders, pro rata, and 2%
to the general partner, until the capital account for each
common unit is equal to the sum of: (1) the unrecovered
initial unit price; and (2) the amount of the minimum
quarterly distribution for the quarter during which our
liquidation occurs;
|
|
|
|
third, 98% to all unitholders, pro rata, and 2% to the
general partner, until we allocate under this paragraph an
amount per unit equal to: (1) the sum of the excess of the
first target distribution per unit over the minimum quarterly
distribution per unit for each quarter of our existence; less
(2) the cumulative amount per unit of any distributions of
available cash from operating surplus in excess of the minimum
quarterly distribution per unit that we distributed 98% to the
unitholders, pro rata, and 2% to the general partner, for each
quarter of our existence;
|
|
|
|
fourth, 85% to all unitholders, pro rata, and 15% to the
general partner, until we allocate under this paragraph an
amount per unit equal to: (1) the sum of the excess of the
second target distribution per unit over the first target
distribution per unit for each quarter of our existence; less
(2) the cumulative amount per unit of any distributions of
available cash from operating surplus in excess of the first
target distribution per unit that we distributed 85% to the
unitholders, pro rata, and 15% to the general partner for each
quarter of our existence;
|
|
|
|
fifth, 75% to all unitholders, pro rata, and 25% to the
general partner, until we allocate under this paragraph an
amount per unit equal to: (1) the sum of the excess of the
third target distribution per unit over the second target
distribution per unit for each quarter of our existence; less
(2) the cumulative amount per unit of any distributions of
available cash from operating surplus in excess of the second
target distribution per unit that we distributed 75% to the
unitholders, pro rata, and 25% to the general partner for each
quarter of our existence; and
|
|
|
|
thereafter, 50% to all unitholders, pro rata, and 50% to the
general partner.
|
22
The percentage interests set forth above for our general partner
include its 2% general partner interest and assume the general
partner has not transferred the incentive distribution rights.
Manner of Adjustments for Losses. We will
generally allocate any loss to the general partner and the
unitholders in the following manner:
|
|
|
|
|
first, 98% to the holders of common units in proportion
to the positive balances in their capital accounts and 2% to the
general partner, until the capital accounts of the common
unitholders have been reduced to zero; and
|
|
|
|
thereafter, 100% to the general partner.
|
Adjustments to Capital Accounts. Our
partnership agreement requires that we make adjustments to
capital accounts upon the issuance of additional units. In this
regard, our partnership agreement specifies that we allocate any
unrealized and, for tax purposes, unrecognized gain or loss
resulting from the adjustments to the unitholders and the
general partner in the same manner as we allocate gain or loss
upon liquidation. In the event that we make positive adjustments
to the capital accounts upon the issuance of additional units,
our partnership agreement requires that we allocate any later
negative adjustments to the capital accounts resulting from the
issuance of additional units or upon our liquidation in a manner
which results, to the extent possible, in the general
partners capital account balances equaling the amount
which they would have been if no earlier positive adjustments to
the capital accounts had been made.
23
DESCRIPTION
OF THE DEBT SECURITIES
General
The debt securities will be:
|
|
|
|
|
our direct general obligations;
|
|
|
|
either senior debt securities or subordinated debt
securities; and
|
|
|
|
issued under separate indentures among us and a trustee.
|
Targa Resources Partners LP may issue debt securities in one or
more series, and Targa Resources Partners Finance Corporation
may be a co-issuer of one or more series of debt securities.
Targa Resources Partners Finance Corporation was incorporated
under the laws of the State of Delaware on May 23, 2008, is
wholly owned by Targa Resources Partners LP, and has no material
assets or liabilities other than as a co-issuer of debt
securities. Its activities will be limited to co-issuing debt
securities and engaging in other activities incidental thereto.
When used in this section, Description of the Debt
Securities, the terms we, us,
our and issuers refer jointly to Targa
Resources Partners LP and Targa Resources Partners Finance
Corporation, and the terms Targa Resources Partners
LP and Targa Resources Partners Finance refer
strictly to Targa Resources Partners LP and Targa Resources
Partners Finance Corporation, respectively.
If we offer senior debt securities, we will issue them under a
senior indenture. If we issue subordinated debt securities, we
will issue them under a subordinated indenture. The trustee
under each indenture (the Trustee) will be named in
the applicable prospectus supplement. A form of each indenture
is filed as an exhibit to the registration statement of which
this prospectus is a part. We have not restated either indenture
in its entirety in this description. You should read the
relevant indenture because it, and not this description,
controls your rights as holders of the debt securities.
Capitalized terms used in the summary have the meanings
specified in the indentures.
Specific
Terms of Each Series of Debt Securities in the Prospectus
Supplement
A prospectus supplement and a supplemental indenture or
authorizing resolutions relating to any series of debt
securities being offered will include specific terms relating to
the offering. These terms will include some or all of the
following:
|
|
|
|
|
whether Targa Resources Partners Finance will be a co-issuer of
the debt securities;
|
|
|
|
whether the debt securities are senior or subordinated debt
securities;
|
|
|
|
the title of the debt securities;
|
|
|
|
the total principal amount of the debt securities;
|
|
|
|
the assets, if any, that are pledged as security for the payment
of the debt securities;
|
|
|
|
whether we will issue the debt securities in individual
certificates to each holder in registered form, or in the form
of temporary or permanent global securities held by a depository
on behalf of holders;
|
|
|
|
the prices at which we will issue the debt securities;
|
|
|
|
the portion of the principal amount that will be payable if the
maturity of the debt securities is accelerated;
|
|
|
|
the currency or currency unit in which the debt securities will
be payable, if not U.S. dollars;
|
|
|
|
the dates on which the principal of the debt securities will be
payable;
|
|
|
|
the interest rate that the debt securities will bear and the
interest payment dates for the debt securities;
|
|
|
|
any conversion or exchange provisions;
|
|
|
|
any optional redemption provisions;
|
24
|
|
|
|
|
any sinking fund or other provisions that would obligate us to
repurchase or otherwise redeem the debt securities;
|
|
|
|
any changes to or additional events of default or covenants; and
|
|
|
|
any other terms of the debt securities.
|
We may offer and sell debt securities, including original issue
discount debt securities, at a substantial discount below their
principal amount. The prospectus supplement will describe
special U.S. federal income tax and any other
considerations applicable to those securities. In addition, the
prospectus supplement may describe certain special
U.S. federal income tax or other considerations applicable
to any debt securities that are denominated in a currency other
than U.S. dollars.
Guarantees
None of our subsidiaries will guarantee our obligations under
the debt securities.
Consolidation,
Merger or Asset Sale
Each indenture will, in general, allow us to consolidate or
merge with or into another domestic entity. It will also allow
each issuer to sell, lease, transfer or otherwise dispose of all
or substantially all of its assets to another domestic entity.
If this happens, the remaining or acquiring entity must assume
all of the issuers responsibilities and liabilities under
the indenture including the payment of all amounts due on the
debt securities and performance of the issuers covenants
in the indenture.
However, each indenture will impose certain requirements with
respect to any consolidation or merger with or into an entity,
or any sale, lease, transfer or other disposition of all or
substantially all of an issuers assets, including:
|
|
|
|
|
the remaining or acquiring entity must be organized under the
laws of the United States, any state or the District of
Columbia; provided that Targa Resources Partners Finance may not
merge, amalgamate or consolidate with or into another entity
other than a corporation satisfying such requirement for so long
as Targa Resources Partners LP is not a corporation;
|
|
|
|
the remaining or acquiring entity must assume the issuers
obligations under the indenture; and
|
|
|
|
immediately after giving effect to the transaction, no Default
or Event of Default (as defined under Events
of Default and Remedies below) may exist.
|
The remaining or acquiring entity will be substituted for the
issuer in the indenture with the same effect as if it had been
an original party to the indenture, and, except in the case of a
lease of all or substantially all of its assets, the issuer will
be relieved from any further obligations under the indenture.
No
Protection in the Event of a Change of Control
Unless otherwise set forth in the prospectus supplement, the
debt securities will not contain any provisions that protect the
holders of the debt securities in the event of a change of
control of us or in the event of a highly leveraged transaction,
whether or not such transaction results in a change of control
of us.
Modification
of Indentures
We may supplement or amend an indenture if the holders of a
majority in aggregate principal amount of the outstanding debt
securities of all series issued under the indenture affected by
the supplement or amendment consent to it. Further, the holders
of a majority in aggregate principal amount of the outstanding
debt securities of any series may waive past defaults under the
indenture and compliance by us with our covenants with respect
to the debt securities of that series only. Those holders may
not, however, waive any default in any payment on any debt
security of that series or compliance with a provision that
cannot be
25
supplemented or amended without the consent of each holder
affected. Without the consent of each outstanding debt security
affected, no modification of the indenture or waiver may:
|
|
|
|
|
reduce the principal amount of debt securities whose holders
must consent to an amendment, supplement or waiver;
|
|
|
|
reduce the principal of or change the fixed maturity of any debt
security;
|
|
|
|
reduce or waive the premium payable upon redemption or alter or
waive the provisions with respect to the redemption of the debt
securities (except as may be permitted in the case of a
particular series of debt securities);
|
|
|
|
reduce the rate of or change the time for payment of interest on
any debt security;
|
|
|
|
waive a Default or an Event of Default in the payment of
principal of or premium, if any, or interest on the debt
securities (except a rescission of acceleration of the debt
securities by the holders of at least a majority in aggregate
principal amount of the debt securities and a waiver of the
payment default that resulted from such acceleration);
|
|
|
|
except as otherwise permitted under the indenture, release any
security that may have been granted with respect to the debt
securities;
|
|
|
|
make any debt security payable in currency other than that
stated in the debt securities;
|
|
|
|
in the case of any subordinated debt security, make any change
in the subordination provisions that adversely affects the
rights of any holder under those provisions;
|
|
|
|
make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of holders of debt
securities to receive payments of principal of or premium, if
any, or interest on the debt securities;
|
|
|
|
waive a redemption payment with respect to any debt security
(except as may be permitted in the case of a particular series
of debt securities); or
|
|
|
|
make any change in the preceding amendment, supplement and
waiver provisions (except to increase any percentage set forth
therein).
|
We may supplement or amend an indenture without the consent of
any holders of the debt securities in certain circumstances,
including:
|
|
|
|
|
to establish the form of terms of any series of debt securities;
|
|
|
|
to cure any ambiguity, defect or inconsistency;
|
|
|
|
to provide for uncertificated notes in addition to or in place
of certified notes;
|
|
|
|
to provide for the assumption of an issuers obligations to
holders of debt securities in the case of a merger or
consolidation or disposition of all or substantially all of such
issuers assets;
|
|
|
|
in the case of any subordinated debt security, to make any
change in the subordination provisions that limits or terminates
the benefits applicable to any holder of Senior Indebtedness of
Targa Resources Partners LP;
|
|
|
|
to make any changes that would provide any additional rights or
benefits to the holders of debt securities or that do not, taken
as a whole, adversely affect the rights under the indenture of
any holder of debt securities;
|
|
|
|
to comply with requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the
Trust Indenture Act;
|
|
|
|
to evidence or provide for the acceptance of appointment under
the indenture of a successor Trustee;
|
26
|
|
|
|
|
to add any additional Events of Default; or
|
|
|
|
to secure the debt securities.
|
Events of
Default and Remedies
Event of Default, when used in an indenture,
will mean any of the following with respect to the debt
securities of any series:
|
|
|
|
|
failure to pay when due the principal of or any premium on any
debt security of that series;
|
|
|
|
failure to pay, within 30 days of the due date, interest on
any debt security of that series;
|
|
|
|
failure to pay when due any sinking fund payment with respect to
any debt securities of that series;
|
|
|
|
failure on the part of the issuers to comply with the covenant
described under Consolidation, Merger or Asset
Sale;
|
|
|
|
failure to perform any other covenant in the indenture that
continues for 60 days after written notice is given to the
issuers;
|
|
|
|
certain events of bankruptcy, insolvency or reorganization of an
issuer; or
|
|
|
|
any other Event of Default provided under the terms of the debt
securities of that series.
|
An Event of Default for a particular series of debt securities
will not necessarily constitute an Event of Default for any
other series of debt securities issued under an indenture. The
Trustee may withhold notice to the holders of debt securities of
any default (except in the payment of principal, premium, if
any, or interest) if it considers such withholding of notice to
be in the best interests of the holders.
If an Event of Default described in the sixth bullet point above
occurs, the entire principal of, premium, if any, and accrued
interest on, all debt securities then outstanding will be due
and payable immediately, without any declaration or other act on
the part of the Trustee or any holders. If any other Event of
Default for any series of debt securities occurs and continues,
the Trustee or the holders of at least 25% in aggregate
principal amount of the debt securities of the series may
declare the entire principal of, and accrued interest on, all
the debt securities of that series to be due and payable
immediately. If this happens, subject to certain conditions, the
holders of a majority in the aggregate principal amount of the
debt securities of that series can rescind the declaration.
Other than its duties in case of a default, a Trustee is not
obligated to exercise any of its rights or powers under either
indenture at the request, order or direction of any holders,
unless the holders offer the Trustee reasonable security or
indemnity. If they provide this reasonable security or
indemnification, the holders of a majority in aggregate
principal amount of any series of debt securities may direct the
time, method and place of conducting any proceeding or any
remedy available to the Trustee, or exercising any power
conferred upon the Trustee, for that series of debt securities.
No Limit
on Amount of Debt Securities
Neither indenture will limit the amount of debt securities that
we may issue, unless we indicate otherwise in a prospectus
supplement. Each indenture will allow us to issue debt
securities of any series up to the aggregate principal amount
that we authorize.
Registration
of Notes
We will issue debt securities of a series only in registered
form, without coupons, unless otherwise indicated in the
prospectus supplement.
27
Minimum
Denominations
Unless the prospectus supplement states otherwise, the debt
securities will be issued only in principal amounts of $1,000
each or integral multiples of $1,000.
No
Personal Liability
None of the past, present or future partners, incorporators,
managers, members, directors, officers, employees, unitholders
or stockholders of either issuer or the general partner of Targa
Resources Partners LP will have any liability for the
obligations of the issuers under either indenture or the debt
securities or for any claim based on such obligations or their
creation. Each holder of debt securities by accepting a debt
security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the
debt securities. The waiver may not be effective under federal
securities laws, however, and it is the view of the SEC that
such a waiver is against public policy.
Payment
and Transfer
The Trustee will initially act as paying agent and registrar
under each indenture. The issuers may change the paying agent or
registrar without prior notice to the holders of debt
securities, and the issuers or any of their subsidiaries may act
as paying agent or registrar.
If a holder of debt securities has given wire transfer
instructions to the issuers, the issuers will make all payments
on the debt securities in accordance with those instructions.
All other payments on the debt securities will be made at the
corporate trust office of the Trustee, unless the issuers elect
to make interest payments by check mailed to the holders at
their addresses set forth in the debt security register.
The Trustee and any paying agent will repay to us upon request
any funds held by them for payments on the debt securities that
remain unclaimed for two years after the date upon which that
payment has become due. After payment to us, holders entitled to
the money must look to us for payment as general creditors.
Exchange,
Registration and Transfer
Debt securities of any series will be exchangeable for other
debt securities of the same series, the same total principal
amount and the same terms but in different authorized
denominations in accordance with the indenture. Holders may
present debt securities for exchange or registration of transfer
at the office of the registrar. The registrar will effect the
transfer or exchange when it is satisfied with the documents of
title and identity of the person making the request. We will not
charge a service charge for any registration of transfer or
exchange of the debt securities. We may, however, require the
payment of any tax or other governmental charge payable for that
registration.
We will not be required:
|
|
|
|
|
to issue, register the transfer of, or exchange debt securities
of a series either during a period beginning 15 business days
prior to the selection of debt securities of that series for
redemption and ending on the close of business on the day of
mailing of the relevant notice of redemption or repurchase, or
between a record date and the next succeeding interest payment
date; or
|
|
|
|
to register the transfer of or exchange any debt security called
for redemption or repurchase, except the unredeemed portion of
any debt security we are redeeming or repurchasing in part.
|
Provisions
Relating only to the Senior Debt Securities
The senior debt securities will rank equally in right of payment
with all of our other unsubordinated debt. The senior debt
securities will be effectively subordinated, however, to all of
our secured debt to the extent of the value of the collateral
for that debt. We will disclose the amount of our secured debt
in the prospectus supplement.
28
Provisions
Relating only to the Subordinated Debt Securities
Subordinated
Debt Securities Subordinated to Senior
Indebtedness
The subordinated debt securities will rank junior in right of
payment to all of the Senior Indebtedness of Targa Resources
Partners LP. Senior Indebtedness will be defined in
a supplemental indenture or authorizing resolutions respecting
any issuance of a series of subordinated debt securities, and
the definition will be set forth in the prospectus supplement.
Payment
Blockages
The subordinated indenture will provide that no payment of
principal, interest and any premium on the subordinated debt
securities may be made in the event:
|
|
|
|
|
we or our property is involved in any voluntary or involuntary
liquidation or bankruptcy;
|
|
|
|
we fail to pay the principal, interest, any premium or any other
amounts on any Senior Indebtedness of Targa Resources Partners
LP within any applicable grace period or the maturity of such
Senior Indebtedness is accelerated following any other default,
subject to certain limited exceptions set forth in the
subordinated indenture; or
|
|
|
|
any other default on any Senior Indebtedness of Targa Resources
Partners LP occurs that permits immediate acceleration of its
maturity, in which case a payment blockage on the subordinated
debt securities will be imposed for a maximum of 179 days
at any one time.
|
No
Limitation on Amount of Senior Debt
The subordinated indenture will not limit the amount of Senior
Indebtedness that Targa Resources Partners LP may incur, unless
otherwise indicated in the prospectus supplement.
Book
Entry, Delivery and Form
The debt securities of a particular series may be issued in
whole or in part in the form of one or more global certificates
that will be deposited with the Trustee as custodian for The
Depository Trust Company, New York, New York
(DTC) This means that we will not issue certificates
to each holder. Instead, one or more global debt securities will
be issued to DTC, who will keep a computerized record of its
participants (for example, your broker) whose clients have
purchased the debt securities. The participant will then keep a
record of its clients who purchased the debt securities. Unless
it is exchanged in whole or in part for a certificated debt
security, a global debt security may not be transferred, except
that DTC, its nominees and their successors may transfer a
global debt security as a whole to one another.
Beneficial interests in global debt securities will be shown on,
and transfers of global debt securities will be made only
through, records maintained by DTC and its participants.
DTC has provided us the following information: DTC is a
limited-purpose trust company organized under the New York
Banking Law, a banking organization within the
meaning of the New York Banking Law, a member of the United
States Federal Reserve System, a clearing
corporation within the meaning of the New York
Uniform Commercial Code and a clearing agency
registered under the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its
participants (Direct Participants) deposit with DTC.
DTC also records the settlement among Direct Participants of
securities transactions, such as transfers and pledges, in
deposited securities through computerized records for Direct
Participants accounts. This eliminates the need to
exchange certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations.
DTCs book-entry system is also used by other organizations
such as securities brokers and dealers, banks, trust companies
and clearing corporations that work through a Direct
Participant. The rules that apply to DTC and its participants
are on file with the SEC.
29
DTC is a wholly-owned subsidiary of The Depository
Trust & Clearing Corporation (DTCC). DTCC
is the holding company for DTC, National Securities Clearing
Corporation and Fixed Income Clearing Corporation, all of which
are registered clearing agencies. DTCC is owned by the users of
its regulated subsidiaries.
We will wire all payments on the global debt securities to
DTCs nominee. We and the Trustee will treat DTCs
nominee as the owner of the global debt securities for all
purposes. Accordingly, we, the Trustee and any paying agent will
have no direct responsibility or liability to pay amounts due on
the global debt securities to owners of beneficial interests in
the global debt securities.
It is DTCs current practice, upon receipt of any payment
on the global debt securities, to credit Direct
Participants accounts on the payment date according to
their respective holdings of beneficial interests in the global
debt securities as shown on DTCs records. In addition, it
is DTCs current practice to assign any consenting or
voting rights to Direct Participants whose accounts are credited
with debt securities on a record date, by using an omnibus
proxy. Payments by participants to owners of beneficial
interests in the global debt securities, and voting by
participants, will be governed by the customary practices
between the participants and owners of beneficial interests, as
is the case with debt securities held for the account of
customers registered in street name. However,
payments will be the responsibility of the participants and not
of DTC, the Trustee or us.
Debt securities represented by a global debt security will be
exchangeable for certificated debt securities with the same
terms in authorized denominations only if:
|
|
|
|
|
DTC notifies us that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered
under applicable law and in either event a successor depositary
is not appointed by us within 90 days; or
|
|
|
|
an Event of Default occurs and DTC notifies the Trustee of its
decision to exchange the global debt security for certificated
debt securities.
|
Satisfaction
and Discharge; Defeasance
Each indenture will be discharged and will cease to be of
further effect as to all outstanding debt securities of any
series issued thereunder, when:
(a) either:
(1) all outstanding debt securities of that series that
have been authenticated (except lost, stolen or destroyed debt
securities that have been replaced or paid and debt securities
for whose payment money has theretofore been deposited in trust
and thereafter repaid to us) have been delivered to the Trustee
for cancellation; or
(2) all outstanding debt securities of that series that
have not been delivered to the Trustee for cancellation have
become due and payable by reason of the giving of a notice of
redemption or otherwise or will become due and payable at their
stated maturity within one year or are to be called for
redemption within one year under arrangements satisfactory to
the Trustee and in any case we have irrevocably deposited or
caused to be irrevocably deposited with the Trustee as trust
funds in trust cash in U.S. dollars, non-callable
U.S. Government Obligations or a combination thereof, in
such amounts as will be sufficient, without consideration of any
reinvestment of interest, to pay and discharge the entire
indebtedness of such debt securities not delivered to the
Trustee for cancellation, for principal, premium, if any, and
accrued interest to the date of such deposit (in the case of
debt securities that have been due and payable) or the stated
maturity or redemption date;
(b) we have paid or caused to be paid all other sums
payable by us under the indenture; and
(c) we have delivered an officers certificate and an
opinion of counsel to the Trustee stating that all conditions
precedent to satisfaction and discharge have been satisfied.
The debt securities of a particular series will be subject to
legal or covenant defeasance to the extent, and upon the terms
and conditions, set forth in the prospectus supplement.
30
Governing
Law
Each indenture and all of the debt securities will be governed
by the laws of the State of New York.
The
Trustee
We will enter into the indentures with a Trustee that is
qualified to act under the Trust Indenture Act of 1939, as
amended, and with any other trustees chosen by us and appointed
in a supplemental indenture for a particular series of debt
securities. We may maintain a banking relationship in the
ordinary course of business with our trustee and one or more of
its affiliates.
Resignation
or Removal of Trustee
If the Trustee has or acquires a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee must either
eliminate its conflicting interest or resign, to the extent and
in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and the applicable indenture. Any
resignation will require the appointment of a successor trustee
under the applicable indenture in accordance with the terms and
conditions of such indenture.
The Trustee may resign or be removed by us with respect to one
or more series of debt securities and a successor Trustee may be
appointed to act with respect to any such series. The holders of
a majority in aggregate principal amount of the debt securities
of any series may remove the Trustee with respect to the debt
securities of such series.
Limitations
on Trustee if it is Our Creditor
Each indenture will contain certain limitations on the right of
the Trustee, in the event that it becomes a creditor of an
issuer, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such
claim as security or otherwise.
Annual
Trustee Report to Holders of Debt Securities
The Trustee is required to submit an annual report to the
holders of the debt securities regarding, among other things,
the Trustees eligibility to serve as such, the priority of
the Trustees claims regarding certain advances made by it,
and any action taken by the Trustee materially affecting the
debt securities.
Certificates
and Opinions to be Furnished to Trustee
Each indenture will provide 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
certain of our officers and an opinion of counsel (who may be
our counsel) stating that, in the opinion of the signers, all
conditions precedent to such action have been complied with
by us.
31
MATERIAL
INCOME TAX CONSEQUENCES
This section is a discussion of the material tax consequences
that may be relevant to prospective unitholders who are
individual citizens or residents of the United States and,
unless otherwise noted in the following discussion, is the
opinion of Vinson & Elkins L.L.P., counsel to our
general partner and us, insofar as it relates to legal
conclusions with respect to matters of United States federal
income tax law. This section is based upon current provisions of
the Internal Revenue Code of 1986, as amended (the
Internal Revenue Code), existing and proposed
Treasury regulations promulgated under the Internal Revenue Code
(the Treasury Regulations) and, current
administrative rulings and court decisions, all of which are
subject to change. Later changes in these authorities may cause
the tax consequences to vary substantially from the consequences
described below. Unless the context otherwise requires,
references in this section to us or we
are references to Targa Resources Partners LP and the Operating
Partnership.
The following discussion does not comment on all federal income
tax matters affecting us or the unitholders. Moreover, the
discussion focuses on unitholders who are individual citizens or
residents of the United States and has only limited application
to corporations, estates, trusts, nonresident aliens or other
unitholders subject to specialized tax treatment, such as
tax-exempt institutions, foreign persons, individual retirement
accounts (IRAs), real estate investment trusts (REITs) or mutual
funds. Accordingly, we urge each prospective unitholder to
consult, and depend on, his own tax advisor in analyzing the
federal, state, local and foreign tax consequences particular to
him of the ownership or disposition of common units.
We have requested a ruling from the IRS with respect to the
qualifying nature of the income earned as a result of a purchase
of our debt at a discount, upon which, if granted, we may rely
with respect to such income. There can be no assurance that the
IRS will provide such a favorable ruling. However, any income
earned as a result of a purchase of our debt at a discount plus
any other non-qualifying income we earned in 2008 is less than
10% of our total gross income. Other than this ruling request,
no ruling has been or will be requested from the Internal
Revenue Service (the IRS) regarding any matter
affecting us or prospective unitholders. Instead, we will rely
on opinions of Vinson & Elkins L.L.P. Unlike a ruling,
an opinion of counsel represents only that counsels best
legal judgment and does not bind the IRS or the courts.
Accordingly, the opinions and statements made herein may not be
sustained by a court if contested by the IRS. Any contest of
this sort with the IRS may materially and adversely impact the
market for our common units and the prices at which common units
trade. In addition, the costs of any contest with the IRS,
principally legal, accounting and related fees, will result in a
reduction in cash available for distribution to our unitholders
and our general partner and thus will be borne indirectly by our
unitholders and our general partner. Furthermore, the tax
treatment of us, or of an investment in us, may be significantly
modified by future legislative or administrative changes or
court decisions. Any modifications may or may not be
retroactively applied.
All statements as to matters of law and legal conclusions, but
not as to factual matters, contained in this section, unless
otherwise noted, are the opinion of Vinson & Elkins
L.L.P. and are based on the accuracy of the representations made
by us.
For the reasons described below, Vinson & Elkins
L.L.P. has not rendered an opinion with respect to the following
specific federal income tax issues: (1) the treatment of a
unitholder whose common units are loaned to a short seller to
cover a short sale of common units (please see
Tax Consequences of Unit Ownership
Treatment of Short Sales); (2) whether our monthly
convention for allocating taxable income and losses is permitted
by existing Treasury Regulations (please see
Disposition of Common Units
Allocations Between Transferors and Transferees); and
(3) whether our method for depreciating Section 743
adjustments is sustainable in certain cases (please see
Tax Consequences of Unit Ownership
Section 754 Election).
Partnership
Status
A partnership is not a taxable entity and incurs no federal
income tax liability. Instead, each partner of a partnership is
required to take into account his share of items of income,
gain, loss and deduction of the partnership in computing his
federal income tax liability, regardless of whether cash
distributions are made to him by the partnership. Distributions
by a partnership to a partner are generally not taxable to the
partnership
32
or to the partner unless the amount of cash distributed to him
is in excess of the partners adjusted basis in his
partnership interest.
Section 7704 of the Internal Revenue Code provides that
publicly traded partnerships will, as a general rule, be taxed
as corporations. However, an exception, referred to as the
Qualifying Income Exception, exists with respect to
publicly traded partnerships of which 90% or more of the gross
income for every taxable year consists of qualifying
income. Qualifying income includes income and gains
derived from the transportation, storage, processing and
marketing of crude oil, natural gas and products thereof. Other
types of qualifying income include interest (other than from a
financial business), dividends, gains from the sale of real
property and gains from the sale or other disposition of capital
assets held for the production of income that otherwise
constitutes qualifying income. We estimate that less than 6% of
our current gross income is not qualifying income; however, this
estimate could change from time to time. Based upon and subject
to this estimate, the factual representations made by us and the
general partner and a review of the applicable legal
authorities, Vinson & Elkins L.L.P. is of the opinion
that at least 90% of our current gross income constitutes
qualifying income. The portion of our income that is qualifying
income may change from time to time.
We have requested a ruling from the IRS with respect to the
qualifying nature of the income earned as a result of a purchase
of our debt at a discount, upon which, if granted, we may rely
with respect to such income. There can be no assurance that the
IRS will provide such a favorable ruling. However, any income
earned as a result of a purchase of our debt at a discount plus
any other non-qualifying income we earned in 2008 is less than
10% of our total gross income. Other than this ruling request,
no ruling has been or will be sought from the IRS and the IRS
has made no determination as to our status or the status of the
Operating Partnership for federal income tax purposes or whether
our operations generate qualifying income under
Section 7704 of the Internal Revenue Code. Instead, we will
rely on the opinion of Vinson & Elkins L.L.P. on such
matters. It is the opinion of Vinson & Elkins L.L.P.
that, based upon the Internal Revenue Code, its regulations,
published revenue rulings and court decisions and the
representations described below, we will be classified as a
partnership and the Operating Partnership will be disregarded as
an entity separate from us for federal income tax purposes.
In rendering its opinion, Vinson & Elkins L.L.P. has
relied on factual representations made by us and our general
partner. The representations made by us and our general partner
upon which Vinson & Elkins L.L.P. has relied are:
(a) Neither we nor the Operating Partnership has elected or
will elect to be treated as a corporation;
(b) For each taxable year, more than 90% of our gross
income has been and will be income that Vinson &
Elkins L.L.P. has opined or will opine is qualifying
income within the meaning of Section 7704(d) of the
Internal Revenue Code; and
(c) Each hedging transaction that we treat as resulting in
qualifying income has been and will be appropriately identified
as a hedging transaction pursuant to applicable Treasury
Regulations, and has been and will be associated with oil, gas,
or products thereof that are held or to be held by us in
activities that Vinson & Elkins L.L.P. has opined or
will opine result in qualifying income.
We believe that these representations have been true in the past
and expect that these representations will be true in the future.
If we fail to meet the Qualifying Income Exception, other than a
failure that is determined by the IRS to be inadvertent and that
is cured within a reasonable time after discovery (in which case
the IRS may also require us to make adjustments with respect to
our unitholders or pay other amounts), we will be treated as if
we had transferred all of our assets, subject to liabilities, to
a newly formed corporation, on the first day of the year in
which we fail to meet the Qualifying Income Exception, in return
for stock in that corporation, and then distributed that stock
to the unitholders in liquidation of their interests in us. This
deemed contribution and liquidation should be tax-free to
unitholders and us so long as we, at that time, do not have
liabilities in excess of the tax basis of our assets.
Thereafter, we would be treated as a corporation for federal
income tax purposes.
33
If we were treated as an association taxable as a corporation in
any taxable year, either as a result of a failure to meet the
Qualifying Income Exception or otherwise, our items of income,
gain, loss and deduction would be reflected only on our tax
return rather than being passed through to the unitholders, and
our net income would be taxed to us at corporate rates. In
addition, any distribution made to a unitholder would be treated
as either taxable dividend income, to the extent of our current
or accumulated earnings and profits, or, in the absence of
earnings and profits, a nontaxable return of capital, to the
extent of the unitholders tax basis in his common units,
or taxable capital gain, after the unitholders tax basis
in his common units is reduced to zero. Accordingly, taxation as
a corporation would result in a material reduction in a
unitholders cash flow and after-tax return and thus would
likely result in a substantial reduction of the value of the
units.
The discussion below is based on Vinson & Elkins
L.L.P.s opinion that we will be classified as a
partnership for federal income tax purposes.
Limited
Partner Status
Unitholders who have become limited partners of Targa Resources
Partners LP will be treated as partners of Targa Resources
Partners LP for federal income tax purposes. Also, unitholders
whose common units are held in street name or by a nominee and
who have the right to direct the nominee in the exercise of all
substantive rights attendant to the ownership of their common
units will be treated as partners of Targa Resources Partners LP
for federal income tax purposes.
A beneficial owner of common units whose units have been
transferred to a short seller to complete a short sale would
appear to lose his status as a partner with respect to those
units for federal income tax purposes. Please see
Tax Consequences of Unit Ownership
Treatment of Short Sales.
Income, gain, deductions or losses would not appear to be
reportable by a unitholder who is not a partner for federal
income tax purposes, and any cash distributions received by a
unitholder who is not a partner for federal income tax purposes
would therefore appear to be fully taxable as ordinary income.
These holders are urged to consult their own tax advisors with
respect to their tax consequences of holding common units in
Targa Resources Partners LP.
The references to unitholders in the discussion that
follows are to persons who are treated as partners in Targa
Resources Partners LP for federal income tax purposes.
Tax
Consequences of Unit Ownership
Flow-Through of Taxable Income. We will not
pay any federal income tax. Instead, each unitholder will be
required to report on his income tax return his share of our
income, gains, losses and deductions without regard to whether
corresponding cash distributions are received by him.
Consequently, we may allocate income to a unitholder even if he
has not received a cash distribution. Each unitholder will be
required to include in income his allocable share of our income,
gains, losses and deductions for our taxable year ending with or
within his taxable year. Our taxable year ends on
December 31.
Treatment of Distributions. Distributions by
us to a unitholder generally will not be taxable to the
unitholder for federal income tax purposes, except to the extent
the amount of any such cash distribution exceeds his tax basis
in his common units immediately before the distribution. Our
cash distributions in excess of a unitholders tax basis
generally will be considered to be gain from the sale or
exchange of our common units, taxable in accordance with the
rules described under Disposition of Common
Units. Any reduction in a unitholders share of our
liabilities for which no partner, including the general partner,
bears the economic risk of loss, known as nonrecourse
liabilities, will be treated as a distribution by us of
cash to that unitholder. To the extent our distributions cause a
unitholders at risk amount to be less than
zero at the end of any taxable year, he must recapture any
losses deducted in previous years. Please see
Limitations on Deductibility of Losses.
A decrease in a unitholders percentage interest in us
because of our issuance of additional common units will decrease
his share of our nonrecourse liabilities, and thus will result
in a corresponding deemed distribution of cash. This deemed
distribution may constitute a non-pro rata distribution. A
non-pro rata
34
distribution of money or property may result in ordinary income
to a unitholder, regardless of his tax basis in his common
units, if the distribution reduces the unitholders share
of our unrealized receivables, including
depreciation recapture,
and/or
substantially appreciated inventory items, both as
defined in the Internal Revenue Code, and collectively,
Section 751 Assets. To that extent, he will be
treated as having been distributed his proportionate share of
the Section 751 Assets and then having exchanged those
assets with us in return for the non-pro rata portion of the
actual distribution made to him. This latter deemed exchange
will generally result in the unitholders realization of
ordinary income, which will equal the excess of (1) the
non-pro rata portion of that distribution over (2) the
unitholders tax basis (generally zero) for the share of
Section 751 Assets deemed relinquished in the exchange.
Basis of Common Units. A unitholders
initial tax basis for his common units will be the amount he
paid for our common units plus his share of our nonrecourse
liabilities. That basis will be increased by his share of our
income and by any increases in his share of our nonrecourse
liabilities. That basis will be decreased, but not below zero,
by distributions from us, by the unitholders share of our
losses, by any decreases in his share of our nonrecourse
liabilities and by his share of our expenditures that are not
deductible in computing taxable income and are not required to
be capitalized. A unitholder will have no share of our debt that
is recourse to our general partner, but will have a share,
generally based on his share of profits, of our nonrecourse
liabilities. Please see Disposition of Common
Units Recognition of Gain or Loss.
Limitations on Deductibility of Losses. The
deduction by a unitholder of his share of our losses will be
limited to the tax basis in his units and, in the case of an
individual unitholder, estate, trust, or corporate unitholder
(if more than 50% of the value of the corporate
unitholders stock is owned directly or indirectly by or
for five or fewer individuals or some tax-exempt organizations),
to the amount for which the unitholder is considered to be
at risk with respect to our activities, if that is
less than his tax basis. A common unitholder subject to these
limitations must recapture losses deducted in previous years to
the extent that distributions cause his at-risk amount to be
less than zero at the end of any taxable year. Losses disallowed
to a unitholder or recaptured as a result of these limitations
will carry forward and will be allowable as a deduction to the
extent that his at-risk amount is subsequently increased,
provided such losses do not exceed such common unitholders
tax basis in his common units. Upon the taxable disposition of a
unit, any gain recognized by a unitholder can be offset by
losses that were previously suspended by the at-risk limitation
but may not be offset by losses suspended by the basis
limitation. Any loss previously suspended by the at-risk
limitation in excess of that gain would no longer be utilizable.
In general, a unitholder will be at risk to the extent of the
tax basis of his units, excluding any portion of that basis
attributable to his share of our nonrecourse liabilities,
reduced by (i) any portion of that basis representing
amounts otherwise protected against loss because of a guarantee,
stop loss agreement or other similar arrangement and
(ii) any amount of money he borrows to acquire or hold his
units, if the lender of those borrowed funds owns an interest in
us, is related to the unitholder or can look only to the units
for repayment. A unitholders at-risk amount will increase
or decrease as the tax basis of the unitholders units
increases or decreases, other than tax basis increases or
decreases attributable to increases or decreases in his share of
our nonrecourse liabilities.
In addition to the basis and at-risk limitations on the
deductibility of losses, the passive loss limitations generally
provide that individuals, estates, trusts and some closely-held
corporations and personal service corporations can deduct losses
from passive activities, which are generally trade or business
activities in which the taxpayer does not materially
participate, only to the extent of the taxpayers income
from those passive activities. The passive loss limitations are
applied separately with respect to each publicly traded
partnership. Consequently, any passive losses we generate will
only be available to offset our passive income generated in the
future and will not be available to offset income from other
passive activities or investments, including our investments or
investments in other publicly traded partnerships, or salary or
active business income. Passive losses that are not deductible
because they exceed a unitholders share of income we
generate may be deducted in full when he disposes of his entire
investment in us in a fully taxable transaction with an
unrelated party. The passive loss limitations are applied after
other applicable limitations on deductions, including the
at-risk rules and the basis limitation.
35
A unitholders share of our net income may be offset by any
of our suspended passive losses, but it may not be offset by any
other current or carryover losses from other passive activities,
including those attributable to other publicly traded
partnerships.
Limitations on Interest Deductions. The
deductibility of a non-corporate taxpayers
investment interest expense is generally limited to
the amount of that taxpayers net investment
income. Investment interest expense includes:
|
|
|
|
|
interest on indebtedness properly allocable to property held for
investment;
|
|
|
|
our interest expense attributed to portfolio income; and
|
|
|
|
the portion of interest expense incurred to purchase or carry an
interest in a passive activity to the extent attributable to
portfolio income.
|
The computation of a unitholders investment interest
expense will take into account interest on any margin account
borrowing or other loan incurred to purchase or carry a unit.
Net investment income includes gross income from property held
for investment and amounts treated as portfolio income under the
passive loss rules, less deductible expenses, other than
interest, directly connected with the production of investment
income, but generally does not include gains attributable to the
disposition of property held for investment or qualified
dividend income. The IRS has indicated that the net passive
income earned by a publicly traded partnership will be treated
as investment income to its unitholders. In addition, the
unitholders share of our portfolio income will be treated
as investment income.
Entity-Level Collections. If we are
required or elect under applicable law to pay any federal,
state, local or foreign income tax on behalf of any unitholder
or our general partner or any former unitholder, we are
authorized to pay those taxes from our funds. That payment, if
made, will be treated as a distribution of cash to the partner
on whose behalf the payment was made. If the payment is made on
behalf of a person whose identity cannot be determined, we are
authorized to treat the payment as a distribution to all current
unitholders. We are authorized to amend our partnership
agreement in the manner necessary to maintain uniformity of
intrinsic tax characteristics of units and to adjust later
distributions, so that after giving effect to these
distributions, the priority and characterization of
distributions otherwise applicable under our partnership
agreement is maintained as nearly as is practicable. Payments by
us as described above could give rise to an overpayment of tax
on behalf of an individual partner in which event the partner
would be required to file a claim in order to obtain a credit or
refund.
Allocation of Income, Gain, Loss and
Deduction. In general, if we have a net profit,
our items of income, gain, loss and deduction will be allocated
among our general partner and the unitholders in accordance with
their percentage interests in us. At any time that incentive
distributions are made to our general partner, gross income will
be allocated to the recipients to the extent of these
distributions. If we have a net loss, that loss will be
allocated first to the general partner and the unitholders in
accordance with their percentage interests in us to the extent
of their positive capital accounts and, second, to the general
partner.
Specified items of our income, gain, loss and deduction will be
allocated to account for (i) any difference between the tax
basis and fair market value of our assets at the time of an
offering and (ii) any difference between the tax basis and
fair market value of any property contributed to us that exists
at the time of such contribution, together, referred to in this
discussion as the Contributed Property. The effect
of these allocations, referred to as Section 704(c)
Allocations, to a unitholder purchasing common units from us in
an offering will be essentially the same as if the tax bases of
our assets were equal to their fair market value at the time of
such offering. In the event we issue additional common units or
engage in certain other transactions in the future, we will make
reverse Section 704(c) Allocations, similar to
the Section 704(c) Allocations described above, to all
holders of partnership interests immediately prior to such
issuance or other transactions to account for the difference
between the book basis for purposes of maintaining
capital accounts and the fair market value of all property held
by us at the time of such issuance or future transaction. In
addition, items of recapture income will be allocated to the
extent possible to the partner who was allocated the deduction
giving rise to the treatment of that gain as recapture income in
order to minimize the recognition of ordinary income by some
unitholders. Finally, although we do not expect that our
operations will result in
36
the creation of negative capital accounts, if negative capital
accounts nevertheless result, items of our income and gain will
be allocated in an amount and manner as is needed to eliminate
the negative balance as quickly as possible.
An allocation of items of our income, gain, loss or deduction,
other than an allocation required by the Internal Revenue Code
to eliminate the difference between a partners
book capital account, credited with the fair market
value of Contributed Property, and tax capital
account, credited with the tax basis of Contributed Property,
referred to in this discussion as the Book-Tax
Disparity, will generally be given effect for federal
income tax purposes in determining a partners share of an
item of income, gain, loss or deduction only if the allocation
has substantial economic effect. In any other case, a
partners share of an item will be determined on the basis
of his interest in us, which will be determined by taking into
account all the facts and circumstances, including:
|
|
|
|
|
his relative contributions to us;
|
|
|
|
the interests of all the partners in profits and losses;
|
|
|
|
the interest of all the partners in cash flow; and
|
|
|
|
the rights of all the partners to distributions of capital upon
liquidation.
|
Vinson & Elkins L.L.P. is of the opinion that, with
the exception of the issues described in
Section 754 Election and
Disposition of Common Units
Allocations Between Transferors and Transferees,
allocations under our partnership agreement will be given effect
for federal income tax purposes in determining a partners
share of an item of income, gain, loss or deduction.
Treatment of Short Sales. A unitholder whose
units are loaned to a short seller to cover a short
sale of units may be considered as having disposed of those
units. If so, he would no longer be treated for tax purposes as
a partner with respect to those units during the period of the
loan and may recognize gain or loss from the disposition. As a
result, during this period:
|
|
|
|
|
any of our income, gain, loss or deduction with respect to those
units would not be reportable by the unitholder;
|
|
|
|
any cash distributions received by the unitholder as to those
units would be fully taxable; and
|
|
|
|
all of these distributions would appear to be ordinary income.
|
Vinson & Elkins L.L.P. has not rendered an opinion
regarding the tax treatment of a unitholder whose common units
are loaned to a short seller to cover a short sale of common
units because there is no direct or indirect authority on the
issue related to partnership interests and without such
authority a legal opinion cannot be issued; therefore,
unitholders desiring to assure their status as partners and
avoid the risk of gain recognition from a loan to a short seller
are urged to modify any applicable brokerage account agreements
to prohibit their brokers from borrowing and loaning their
units. The IRS has announced that it is actively studying issues
relating to the tax treatment of short sales of partnership
interests. Please also read Disposition of
Common Units Recognition of Gain or Loss.
Alternative Minimum Tax. Each unitholder will
be required to take into account his distributive share of any
items of our income, gain, loss or deduction for purposes of the
alternative minimum tax. The current minimum tax rate for
noncorporate taxpayers is 26% on the first $175,000 of
alternative minimum taxable income in excess of the exemption
amount and 28% on any additional alternative minimum taxable
income. Prospective unitholders are urged to consult with their
tax advisors as to the impact of an investment in units on their
liability for the alternative minimum tax.
Tax Rates. Under current law, the highest
marginal U.S. federal income tax rate applicable to
ordinary income of individuals is 35% and the highest marginal
U.S. federal income tax rate applicable to long-term
capital gains (generally, capital gains on certain assets held
for more than 12 months) of individuals is 15%. However,
absent new legislation extending the current rates, beginning
January 1, 2011, the highest marginal U.S. federal
income tax rate applicable to ordinary income and long-term
capital gains of individuals will
37
increase to 39.6% and 20%, respectively. Moreover, these rates
are subject to change by new legislation at any time.
Section 754 Election. We have made the
election permitted by Section 754 of the Internal Revenue
Code. That election is irrevocable without the consent of the
IRS. The election will generally permit us to adjust a common
unit purchasers tax basis in our assets (inside
basis) under Section 743(b) of the Internal Revenue
Code to reflect his purchase price. This election does not apply
to a person who purchases common units directly from us. The
Section 743(b) adjustment belongs to the purchaser and not
to other unitholders. For purposes of this discussion, a
unitholders inside basis in our assets will be considered
to have two components: (1) his share of our tax basis in
our assets (common basis) and (2) his
Section 743(b) adjustment to that basis.
Where the remedial allocation method is adopted (which we have
generally adopted as to all of our properties), the Treasury
Regulations under Section 743 of the Internal Revenue Code
require a portion of the Section 743(b) adjustment that is
attributable to recovery property under Section 168 of the
Internal Revenue Code whose book basis is in excess of its tax
basis to be depreciated over the remaining cost recovery period
for the Section 704(c) built in gain. Under Treasury
Regulation Section 1.167(c)-1(a)(6),
a Section 743(b) adjustment attributable to property
subject to depreciation under Section 167 of the Internal
Revenue Code, rather than cost recovery deductions under
Section 168, is generally required to be depreciated using
either the straight-line method or the 150% declining balance
method. If we elect a method other than the remedial method, the
depreciation and amortization methods and useful lives
associated with the Section 743(b) adjustment, therefore,
may differ from the methods and useful lives generally used to
depreciate the inside basis in such properties. Under our
partnership agreement, the general partner is authorized to take
a position to preserve the uniformity of units even if that
position is not consistent with these and any other Treasury
Regulations. If we elect a method other than the remedial method
with respect to a goodwill property, the common basis of such
property is not amortizable. Please see
Uniformity of Units.
Although Vinson & Elkins L.L.P. is unable to opine as
to the validity of this approach because there is no direct or
indirect controlling authority on this issue, we intend to
depreciate the portion of a Section 743(b) adjustment
attributable to unrealized appreciation in the value of
Contributed Property, to the extent of any unamortized Book-Tax
Disparity, using a rate of depreciation or amortization derived
from the depreciation or amortization method and useful life
applied to the propertys unamortized Book-Tax Disparity,
or treat that portion as
non-amortizable
to the extent attributable to property which is not amortizable.
This method is consistent with the methods employed by other
publicly traded partnerships but is arguably inconsistent with
Treasury
Regulation Section 1.167(c)-1(a)(6),
which is not expected to directly apply to a material portion of
our assets. To the extent this Section 743(b) adjustment is
attributable to appreciation in value in excess of the
unamortized Book-Tax Disparity, we will apply the rules
described in the Treasury Regulations and legislative history.
If we determine that this position cannot reasonably be taken,
we may take a depreciation or amortization position under which
all purchasers acquiring units in the same month would receive
depreciation or amortization, whether attributable to common
basis or a Section 743(b) adjustment, based upon the same
applicable rate as if they had purchased a direct interest in
our assets. This kind of aggregate approach may result in lower
annual depreciation or amortization deductions than would
otherwise be allowable to some unitholders. Please see
Uniformity of Units. A unitholders
tax basis for his common units is reduced by his share of our
deductions (whether or not such deductions were claimed on an
individuals income tax return) so that any position we
take that understates deductions will overstate the common
unitholders basis in his common units, which may cause the
unitholder to understate gain or overstate loss on any sale of
such units. Please see Disposition of Common
Units Recognition of Gain or Loss. The IRS may
challenge our position with respect to depreciating or
amortizing the Section 743(b) adjustment we take to
preserve the uniformity of the units. If such a challenge were
sustained, the gain from the sale of units might be increased
without the benefit of additional deductions.
A Section 754 election is advantageous if the
transferees tax basis in his units is higher than the
units share of the aggregate tax basis of our assets
immediately prior to the transfer. In that case, as a result of
the election, the transferee would have, among other items, a
greater amount of depreciation deductions and his share of any
gain or loss on a sale of our assets would be less. Conversely,
a Section 754 election is
38
disadvantageous if the transferees tax basis in his units
is lower than those units share of the aggregate tax basis
of our assets immediately prior to the transfer. Thus, the fair
market value of the units may be affected either favorably or
unfavorably by the election. A basis adjustment is required
regardless of whether a Section 754 election is made in the
case of a transfer of an interest in us if we have a substantial
built-in loss immediately after the transfer, or if we
distribute property and have a substantial basis reduction.
Generally a built-in loss or a basis reduction is substantial if
it exceeds $250,000.
The calculations involved in the Section 754 election are
complex and will be made on the basis of assumptions as to the
value of our assets and other matters. For example, the
allocation of the Section 743(b) adjustment among our
assets must be made in accordance with the Internal Revenue
Code. The IRS could seek to reallocate some or all of any
Section 743(b) adjustment allocated by us to our tangible
assets to goodwill instead. Goodwill, as an intangible asset, is
generally nonamortizable or amortizable over a longer period of
time or under a less accelerated method than our tangible
assets. We cannot assure you that the determinations we make
will not be successfully challenged by the IRS and that the
deductions resulting from them will not be reduced or disallowed
altogether. Should the IRS require a different basis adjustment
to be made, and should, in our opinion, the expense of
compliance exceed the benefit of the election, we may seek
permission from the IRS to revoke our Section 754 election.
If permission is granted, a subsequent purchaser of units may be
allocated more income than he would have been allocated had the
election not been revoked.
Tax
Treatment of Operations
Accounting Method and Taxable Year. We use the
year ending December 31 as our taxable year and the accrual
method of accounting for federal income tax purposes. Each
unitholder will be required to include in income his share of
our income, gain, loss and deduction for our taxable year ending
within or with his taxable year. In addition, a unitholder who
has a taxable year ending on a date other than December 31 and
who disposes of all of his units following the close of our
taxable year but before the close of his taxable year must
include his share of our income, gain, loss and deduction in
income for his taxable year, with the result that he will be
required to include in income for his taxable year his share of
more than one year of our income, gain, loss and deduction.
Please see Disposition of Common
Units Allocations Between Transferors and
Transferees.
Tax Basis, Depreciation and Amortization. The
tax basis of our assets will be used for purposes of computing
depreciation and cost recovery deductions and, ultimately, gain
or loss on the disposition of these assets. The federal income
tax burden associated with the difference between the fair
market value of our assets and their tax basis immediately prior
to an offering will be borne by our unitholders holding
interests in us prior to any such offering. Please see
Tax Consequences of Unit Ownership
Allocation of Income, Gain, Loss and Deduction.
To the extent allowable, we may elect to use the depreciation
and cost recovery methods that will result in the largest
deductions being taken in the early years after assets subject
to these allowances are placed in service. We may not be
entitled to amortization deductions with respect to certain
goodwill conveyed to us in future transactions or held at the
time of any future offering. Property we subsequently acquire or
construct may be depreciated using accelerated methods permitted
by the Internal Revenue Code.
If we dispose of depreciable property by sale, foreclosure or
otherwise, all or a portion of any gain, determined by reference
to the amount of depreciation previously deducted and the nature
of the property, may be subject to the recapture rules and taxed
as ordinary income rather than capital gain. Similarly, a
unitholder who has taken cost recovery or depreciation
deductions with respect to property we own will likely be
required to recapture some or all of those deductions as
ordinary income upon a sale of his interest in us. Please see
Tax Consequences of Unit Ownership
Allocation of Income, Gain, Loss and Deduction and
Disposition of Common Units
Recognition of Gain or Loss.
The costs we incur in selling our units (called
syndication expenses) must be capitalized and cannot
be deducted currently, ratably or upon our termination. There
are uncertainties regarding the classification of costs as
organization expenses, which may be amortized by us, and as
syndication expenses, which may not be
39
amortized by us. The underwriting discounts and commissions we
incur will be treated as syndication expenses.
Valuation and Tax Basis of Our Properties. The
federal income tax consequences of the ownership and disposition
of units will depend in part on our estimates of the relative
fair market values, and the initial tax bases, of our assets.
Although we may from time to time consult with professional
appraisers regarding valuation matters, we will make many of the
relative fair market value estimates ourselves. These estimates
and determinations of basis are subject to challenge and will
not be binding on the IRS or the courts. If the estimates of
fair market value or basis are later found to be incorrect, the
character and amount of items of income, gain, loss or
deductions previously reported by unitholders might change, and
unitholders might be required to adjust their tax liability for
prior years and incur interest and penalties with respect to
those adjustments.
Disposition
of Common Units
Recognition of Gain or Loss. Gain or loss will
be recognized on a sale of units equal to the difference between
the amount realized and the unitholders tax basis for the
units sold. A unitholders amount realized will be measured
by the sum of the cash or the fair market value of other
property received by him plus his share of our nonrecourse
liabilities. Because the amount realized includes a
unitholders share of our nonrecourse liabilities, the gain
recognized on the sale of units could result in a tax liability
in excess of any cash received from the sale.
Prior distributions from us in excess of cumulative net taxable
income for a common unit that decreased a unitholders tax
basis in that common unit will, in effect, become taxable income
if the common unit is sold at a price greater than the
unitholders tax basis in that common unit, even if the
price received is less than his original cost.
Except as noted below, gain or loss recognized by a unitholder,
other than a dealer in units, on the sale or
exchange of a unit will generally be taxable as capital gain or
loss. Capital gain recognized by an individual on the sale of
units held for more than twelve months will generally be taxed
at a maximum U.S. federal income tax rate of 15% through
December 31, 2010 and 20% thereafter (absent new
legislation extending or adjusting the current rate). However, a
portion, which will likely be substantial, of this gain or loss
will be separately computed and taxed as ordinary income or loss
under Section 751 of the Internal Revenue Code to the
extent attributable to assets giving rise to depreciation
recapture or other unrealized receivables or to
inventory items we own. The term unrealized
receivables includes potential recapture items, including
depreciation recapture. Ordinary income attributable to
unrealized receivables, inventory items and depreciation
recapture may exceed net taxable gain realized upon the sale of
a unit and may be recognized even if there is a net taxable loss
realized on the sale of a unit. Thus, a unitholder may recognize
both ordinary income and a capital loss upon a sale of units.
Net capital losses may offset capital gains and no more than
$3,000 of ordinary income, in the case of individuals, and may
only be used to offset capital gains in the case of corporations.
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 tax basis for all those
interests. Upon a sale or other disposition of less than all of
those interests, a portion of that tax basis must be allocated
to the interests sold using an equitable
apportionment method, which generally means that the tax
basis allocated to the interest sold equals an amount that bears
the same relation to the partners tax basis in his entire
interest in the partnership as the value of the interest sold
bears to the value of the partners entire interest in the
partnership. Treasury Regulations under Section 1223 of the
Internal Revenue Code allow a selling unitholder who can
identify 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 discussed
above, a common 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 Treasury Regulations, he may
designate specific common units sold for purposes of determining
the holding period of units transferred. A unitholder electing
to use the actual holding period of common units transferred
must consistently use that identification method for all
subsequent sales or
40
exchanges of common units. A unitholder considering the purchase
of additional units or a sale of common units purchased in
separate transactions is urged to consult his tax advisor as to
the possible consequences of this ruling and application of the
Treasury Regulations.
Specific provisions of the Internal Revenue Code affect the
taxation of some financial products and securities, including
partnership interests, by treating a taxpayer as having sold an
appreciated partnership interest, one in which gain
would be recognized if it were sold, assigned or terminated at
its fair market value, if the taxpayer or related persons
enter(s) into:
|
|
|
|
|
a short sale;
|
|
|
|
an offsetting notional principal contract; or
|
|
|
|
a futures or forward contract with respect to the partnership
interest or substantially identical property.
|
Moreover, if a taxpayer has previously entered into a short
sale, an offsetting notional principal contract or a futures or
forward contract with respect to the partnership interest, the
taxpayer will be treated as having sold that position if the
taxpayer or a related person then acquires the partnership
interest or substantially identical property. The Secretary of
the Treasury is also authorized to issue regulations that treat
a taxpayer that enters into transactions or positions that have
substantially the same effect as the preceding transactions as
having constructively sold the financial position.
Allocations Between Transferors and
Transferees. In general, our taxable income and
losses will be determined annually, will be prorated on a
monthly basis and will be subsequently apportioned among the
unitholders in proportion to the number of units owned by each
of them as of the opening of the applicable exchange on the
first business day of the month, which we refer to in this
prospectus as the Allocation Date. However, gain or
loss realized on a sale or other disposition of our assets other
than in the ordinary course of business will be allocated among
the unitholders on the Allocation Date in the month in which
that gain or loss is recognized. As a result, a unitholder
transferring units may be allocated income, gain, loss and
deduction realized after the date of transfer.
Although simplifying conventions are contemplated by the
Internal Revenue Code and most publicly traded partnerships use
similar simplifying conventions, the use of this method may not
be permitted under existing Treasury Regulations. Accordingly,
Vinson & Elkins L.L.P. is unable to opine on the
validity of this method of allocating income and deductions
between transferor and transferee unitholders. If this method is
not allowed under the Treasury Regulations, or only applies to
transfers of less than all of the unitholders interest,
our taxable income or losses might be reallocated among the
unitholders. We are authorized to revise our method of
allocation between transferor and transferee unitholders, as
well as unitholders whose interests vary during a taxable year,
to conform to a method permitted under future Treasury
Regulations.
A unitholder who owns units at any time during a quarter and who
disposes of them prior to the record date set for a cash
distribution for that quarter will be allocated items of our
income, gain, loss and deductions attributable to that quarter
but will not be entitled to receive that cash distribution.
Notification Requirements. A unitholder who
sells any of his units is generally required to notify us in
writing of that sale within 30 days after the sale (or, if
earlier, January 15 of the year following the sale). A purchaser
of units who purchases units from another unitholder is also
generally required to notify us in writing of that purchase
within 30 days after the purchase. Upon receiving such
notifications, we are required to notify the IRS of that
transaction and to furnish specified information to the
transferor and transferee. Failure to notify us of a purchase
may, in some cases, lead to the imposition of penalties.
However, these reporting requirements do not apply to a sale by
an individual who is a citizen of the United States and who
effects the sale or exchange through a broker who will satisfy
such requirements.
Constructive Termination. We will be
considered to have been terminated for tax purposes if there are
sales or exchanges which, in the aggregate, constitute 50% or
more of the total interests in our capital and profits within a
twelve-month period. For purposes of measuring whether the 50%
threshold is reached, multiple sales of the same interest are
counted only once. A constructive termination results in the
closing of our taxable year for all unitholders. In the case of
a unitholder reporting on a taxable year other than a fiscal
41
year ending December 31, the closing of our taxable year
may result in more than twelve months of our taxable income or
loss being includable in his taxable income for the year of
termination. A constructive termination occurring on a date
other than December 31 will result in us filing two tax returns
(and common unitholders receiving two Schedules K-1) for one
fiscal year and the cost of the preparation of these returns
will be borne by all common unitholders. We would be required to
make new tax elections after a termination, including a new
election under Section 754 of the Internal Revenue Code,
and a termination would result in a deferral of our deductions
for depreciation. A termination could also result in penalties
if we were unable to determine that the termination had
occurred. Moreover, a termination might either accelerate the
application of, or subject us to, any tax legislation enacted
before the termination.
Uniformity
of Units
Because we cannot match transferors and transferees of units, we
must maintain uniformity of the economic and tax characteristics
of the units to a purchaser of these units. In the absence of
uniformity, we may be unable to completely comply with a number
of federal income tax requirements, both statutory and
regulatory. A lack of uniformity can result from a literal
application of Treasury
Regulation Section 1.167(c)-1(a)(6).
Any non-uniformity could have a negative impact on the value of
the units. Please see Tax Consequences of Unit
Ownership Section 754 Election.
We intend to depreciate the portion of a Section 743(b)
adjustment attributable to unrealized appreciation in the value
of Contributed Property, to the extent of any unamortized
Book-Tax Disparity, using a rate of depreciation or amortization
derived from the depreciation or amortization method and useful
life applied to the propertys unamortized Book-Tax
Disparity, or treat that portion as nonamortizable, to the
extent attributable to property the common basis of which is not
amortizable, consistent with the regulations under
Section 743 of the Internal Revenue Code, even though that
position may be inconsistent with Treasury
Regulation Section 1.167(c)-1(a)(6),
which is not expected to directly apply to a material portion of
our assets. Please see Tax Consequences of
Unit Ownership Section 754 Election. To
the extent that the Section 743(b) adjustment is
attributable to appreciation in value in excess of the
unamortized Book-Tax Disparity, we will apply the rules
described in the Treasury Regulations and legislative history.
If we determine that this position cannot reasonably be taken,
we may adopt a depreciation and amortization position under
which all purchasers acquiring units in the same month would
receive depreciation and amortization deductions, whether
attributable to a common basis or Section 743(b)
adjustment, based upon the same applicable methods and lives as
if they had purchased a direct interest in our property. If this
position is adopted, it may result in lower annual depreciation
and amortization deductions than would otherwise be allowable to
some unitholders and risk the loss of depreciation and
amortization deductions not taken in the year that these
deductions are otherwise allowable. This position will not be
adopted if we determine that the loss of depreciation and
amortization deductions will have a material adverse effect on
the unitholders. If we choose not to utilize this aggregate
method, we may use any other reasonable depreciation and
amortization method to preserve the uniformity of the intrinsic
tax characteristics of any units that would not have a material
adverse effect on the unitholders. The IRS may challenge any
method of depreciating the Section 743(b) adjustment
described in this paragraph. If this challenge were sustained,
the uniformity of units might be affected, and the gain from the
sale of units might be increased without the benefit of
additional deductions. Please see Disposition
of Common Units Recognition of Gain or Loss.
Tax-Exempt
Organizations and Other Investors
Ownership of units by employee benefit plans, other tax-exempt
organizations, non-resident aliens, foreign corporations and
other
non-U.S. persons
raises issues unique to those investors and, as described below,
may have substantially adverse tax consequences to them. If you
are a tax-exempt entity or a
non-U.S. person,
you should consult your tax advisor before investing in our
common units.
Employee benefit plans and most other organizations exempt from
federal income tax, including individual retirement accounts and
other retirement plans, are subject to federal income tax on
unrelated business taxable income. Virtually all of our income
allocated to a unitholder that is a tax-exempt organization will
be unrelated business taxable income and will be taxable
to it.
42
Non-resident aliens and foreign corporations, trusts or estates
that own units will be considered to be engaged in business in
the United States because of the ownership of units. As a
consequence, they will be required to file federal tax returns
to report their share of our income, gain, loss or deduction and
pay federal income tax at regular rates on their share of our
net income or gain. Moreover, under rules applicable to publicly
traded partnerships, we will withhold at the highest applicable
effective tax rate from cash distributions made quarterly to
non-U.S. unitholders.
Each
non-U.S. unitholder
must obtain a taxpayer identification number from the IRS and
submit that number to our transfer agent on a
Form W-8BEN
or applicable substitute form in order to obtain credit for
these withholding taxes. A change in applicable law may require
us to change these procedures.
In addition, because a foreign corporation that owns units will
be treated as engaged in a United States trade or business, that
corporation may be subject to the United States branch profits
tax at a rate of 30%, in addition to regular federal income tax,
on its share of our income and gain, as adjusted for changes in
the foreign corporations U.S. net equity,
which are effectively connected with the conduct of a United
States trade or business. That tax may be reduced or eliminated
by an income tax treaty between the United States and the
country in which the foreign corporate unitholder is a
qualified resident. In addition, this type of
unitholder is subject to special information reporting
requirements under Section 6038C of the Internal Revenue
Code.
A foreign unitholder who sells or otherwise disposes of a common
unit will be subject to U.S. federal income tax on gain
realized from the sale or disposition of that unit to the extent
the gain is effectively connected with a U.S. trade or
business of the foreign unitholder. Under a ruling published by
the IRS, interpreting the scope of effectively connected
income, a foreign unitholder would be considered to be
engaged in a trade or business in the U.S. by virtue of the
U.S. activities of the partnership, and part or all of that
unitholders gain would be effectively connected with that
unitholders indirect U.S. trade or business.
Moreover, under the Foreign Investment in Real Property Tax Act,
a foreign common unitholder generally will be subject to
U.S. federal income tax upon the sale or disposition of a
common unit if (i) he owned (directly or constructively
applying certain attribution rules) more than 5% of our common
units at any time during the five-year period ending on the date
of such disposition and (ii) 50% or more of the fair market
value of all of our assets consisted of U.S. real property
interests at any time during the shorter of the period during
which such unitholder held the common units or the
5-year
period ending on the date of disposition. Currently, more than
50% of our assets consist of U.S. real property interests
and we do not expect that to change in the foreseeable future.
Therefore, foreign unitholders may be subject to federal income
tax on gain from the sale or disposition of their units.
Administrative
Matters
Information Returns and Audit Procedures. We
intend to furnish to each unitholder, within 90 days after
the close of each calendar year, specific tax information,
including a
Schedule K-1,
which describes his share of our income, gain, loss and
deduction for our preceding taxable year. In preparing this
information, which will not be reviewed by counsel, we will take
various accounting and reporting positions, some of which have
been mentioned earlier, to determine each unitholders
share of income, gain, loss and deduction. We cannot assure you
that those positions will in all cases yield a result that
conforms to the requirements of the Internal Revenue Code,
Treasury Regulations or administrative interpretations of the
IRS. Neither we nor Vinson & Elkins L.L.P. can assure
prospective unitholders that the IRS will not successfully
contend in court that those positions are impermissible. Any
challenge by the IRS could negatively affect the value of the
units.
The IRS may audit our federal income tax information returns.
Adjustments resulting from an IRS audit may require each
unitholder to adjust a prior years tax liability, and
possibly may result in an audit of his return. Any audit of a
unitholders return could result in adjustments not related
to our returns as well as those related to our returns.
Partnerships generally are treated as separate entities for
purposes of federal tax audits, judicial review of
administrative adjustments by the IRS and tax settlement
proceedings. The tax treatment of partnership items of income,
gain, loss and deduction are determined in a partnership
proceeding rather than in separate
43
proceedings with the partners. The Internal Revenue Code
requires that one partner be designated as the Tax Matters
Partner for these purposes. Our partnership agreement
names our general partner as our Tax Matters Partner.
The Tax Matters Partner has made and will make some elections on
our behalf and on behalf of unitholders. In addition, the Tax
Matters Partner can extend the statute of limitations for
assessment of tax deficiencies against unitholders for items in
our returns. The Tax Matters Partner may bind a unitholder with
less than a 1% profits interest in us to a settlement with the
IRS unless that unitholder elects, by filing a statement with
the IRS, not to give that authority to the Tax Matters Partner.
The Tax Matters Partner may seek judicial review, by which all
the unitholders are bound, of a final partnership administrative
adjustment and, if the Tax Matters Partner fails to seek
judicial review, judicial review may be sought by any unitholder
having at least a 1% interest in profits or by any group of
unitholders having in the aggregate at least a 5% interest in
profits. However, only one action for judicial review will go
forward, and each unitholder with an interest in the outcome may
participate.
A unitholder must file a statement with the IRS identifying the
treatment of any item on his federal income tax return that is
not consistent with the treatment of the item on our return.
Intentional or negligent disregard of this consistency
requirement may subject a unitholder to substantial penalties.
Nominee Reporting. Persons who hold an
interest in us as a nominee for another person are required to
furnish to us:
|
|
|
|
|
the name, address and taxpayer identification number of the
beneficial owner and the nominee;
|
|
|
|
whether the beneficial owner is:
|
|
|
|
|
|
a person that is not a United States person;
|
|
|
|
a foreign government, an international organization or any
wholly owned agency or instrumentality of either of the
foregoing; or
|
|
|
|
a tax-exempt entity;
|
|
|
|
|
|
the amount and description of units held, acquired or
transferred for the beneficial owner; and
|
|
|
|
specific information including the dates of acquisitions and
transfers, means of acquisitions and transfers, and acquisition
cost for purchases, as well as the amount of net proceeds from
sales.
|
Brokers and financial institutions are required to furnish
additional information, including whether they are United States
persons and specific information on units they acquire, hold or
transfer for their own account. A penalty of $50 per failure, up
to a maximum of $100,000 per calendar year, is imposed by the
Internal Revenue Code for failure to report that information to
us. The nominee is required to supply the beneficial owner of
the units with the information furnished to us.
Accuracy-Related Penalties. An additional tax
equal to 20% of the amount of any portion of an underpayment of
tax that is attributable to one or more specified causes,
including negligence or disregard of rules or regulations,
substantial understatements of income tax and substantial
valuation misstatements, is imposed by the Internal Revenue
Code. No penalty will be imposed, however, for any portion of an
underpayment if it is shown that there was a reasonable cause
for that portion and that the taxpayer acted in good faith
regarding that portion.
For individuals, a substantial understatement of income tax in
any taxable year exists if the amount of the understatement
exceeds the greater of 10% of the tax required to be shown on
the return for the taxable year or $5,000 ($10,000 for most
corporations). The amount of any understatement subject to
penalty generally is reduced if any portion is attributable to a
position adopted on the return:
|
|
|
|
|
for which there is, or was, substantial
authority; or
|
|
|
|
as to which there is a reasonable basis and the pertinent facts
of that position are disclosed on the return.
|
44
If any item of income, gain, loss or deduction included in the
distributive shares of unitholders might result in that kind of
an understatement of income for which no
substantial authority exists, we must disclose the
pertinent facts on our return. In addition, we will make a
reasonable effort to furnish sufficient information for
unitholders to make adequate disclosure on their returns and to
take other actions as may be appropriate to permit unitholders
to avoid liability for this penalty. More stringent rules apply
to tax shelters, which we do not believe includes us
or any of our investments, plans or arrangements.
A substantial valuation misstatement exists if the value of any
property, or the adjusted basis of any property, claimed on a
tax return is 150% or more of the amount determined to be the
correct amount of the valuation or adjusted basis. No penalty is
imposed unless the portion of the underpayment attributable to a
substantial valuation misstatement exceeds $5,000 ($10,000 for
most corporations). If the valuation claimed on a return is 200%
or more than the correct valuation, the penalty imposed
increases to 40%. We do not anticipate making any valuation
misstatements.
Reportable Transactions. If we were to engage
in a reportable transaction, we (and possibly you
and others) would be required to make a detailed disclosure of
the transaction to the IRS. A transaction may be a reportable
transaction based upon any of several factors, including the
fact that it is a type of tax avoidance transaction publicly
identified by the IRS as a listed transaction or
that it produces certain kinds of losses for partnerships,
individuals, S corporations, and trusts in excess of
$2 million in any single year, or $4 million in any
combination of six successive tax years. Our participation in a
reportable transaction could increase the likelihood that our
federal income tax information return (and possibly your tax
return) would be audited by the IRS. Please see
Information Returns and Audit Procedures.
Moreover, if we were to participate in a reportable transaction
with a significant purpose to avoid or evade tax, or in any
listed transaction, you may be subject to the following
provisions of the American Jobs Creation Act of 2004:
|
|
|
|
|
accuracy-related penalties with a broader scope, significantly
narrower exceptions, and potentially greater amounts than
described above at Accuracy-Related
Penalties;
|
|
|
|
for those persons otherwise entitled to deduct interest on
federal tax deficiencies, nondeductibility of interest on any
resulting tax liability; and
|
|
|
|
in the case of a listed transaction, an extended statute of
limitations.
|
We do not expect to engage in any reportable
transactions.
State,
Local, Foreign and Other Tax Consequences
In addition to federal income taxes, you may be subject to other
taxes, such as state, local and foreign income taxes,
unincorporated business taxes, and estate, inheritance or
intangible taxes that may be imposed by the various
jurisdictions in which we do business or own property or in
which you are a resident. Although an analysis of those various
taxes is not presented here, each prospective unitholder should
consider their potential impact on his investment in us. We
currently own property and do business in Texas and Louisiana.
Currently, Texas does not impose a personal income tax on
individuals but Louisiana does. Moreover, both states impose
entity level taxes on corporations and other entities. Current
law may change. Moreover, we may also own property or do
business in other jurisdictions in the future. Although you may
not be required to file a return and pay taxes in some
jurisdictions because your income from that jurisdiction falls
below the filing and payment requirement, you might be required
to file income tax returns and to pay income taxes in other
jurisdictions in which we do business or own property, now or in
the future, and may be subject to penalties for failure to
comply with those requirements. In some jurisdictions, tax
losses may not produce a tax benefit in the year incurred and
may not be available to offset income in subsequent taxable
years. Some jurisdictions may require us, or we may elect, to
withhold a percentage of income from amounts to be distributed
to a unitholder who is not a resident of the jurisdiction.
Withholding, the amount of which may be greater or less than a
particular unitholders income tax liability to the
jurisdiction, generally does not relieve a nonresident
unitholder from the obligation to file an income tax return.
Amounts withheld will be treated as if distributed to
unitholders for purposes of determining the amounts distributed
by us. Please see Tax Consequences of
45
Unit Ownership Entity-Level Collections.
Based on current law and our estimate of our future operations,
the general partner anticipates that any amounts required to be
withheld will not be material.
It is the responsibility of each unitholder to investigate the
legal and tax consequences, under the laws of pertinent
jurisdictions, of his investment in us. Accordingly, each
prospective unitholder is urged to consult, and depend upon, his
tax counsel or other advisor with regard to those matters.
Further, it is the responsibility of each unitholder to file all
state, local and foreign, as well as United States federal tax
returns, that may be required of him. Vinson & Elkins
L.L.P. has not rendered an opinion on the state, local or
foreign tax consequences of an investment in us.
Tax
Consequences of Ownership of Debt Securities
A description of the material federal income tax consequences of
the acquisition, ownership and disposition of debt securities
will be set forth on the prospectus supplement relating to the
offering of debt securities.
46
INVESTMENT
IN TARGA RESOURCES PARTNERS LP BY EMPLOYEE BENEFIT
PLANS
An investment in us by an employee benefit plan is subject to
additional considerations because the investments of these plans
are subject to the fiduciary responsibility provisions of ERISA
and the prohibited transaction provisions of ERISA and the
Internal Revenue Code. For these purposes the term
employee benefit plan includes, but is not limited
to, qualified pension, profit-sharing, and stock bonus plans,
certain Keogh plans, certain simplified employee pension plans,
and tax deferred annuities or IRAs established or maintained by
an employer or employee organization. Among other things,
consideration should be given to:
|
|
|
|
|
whether the investment is prudent under
Section 404(a)(1)(B) of ERISA;
|
|
|
|
whether in making the investment, that plan will satisfy the
diversification requirements of Section 404(a)(1)(C) of
ERISA;
|
|
|
|
whether the investment is permitted under the terms of the
applicable documents governing the plan;
|
|
|
|
whether the investment will constitute a prohibited
transaction under Section 406 of ERISA and
Section 4975 of the Internal Revenue Code (see below);
|
|
|
|
whether in making the investment, that plan will be considered
to hold as plan assets (1) only the investment in our
partnership units or (2) an undivided interest in our
underlying assets (see below); and
|
|
|
|
|
|
whether the investment will result in recognition of unrelated
business taxable income by the plan and, if so, the potential
after-tax investment return. Please see Material Income
Tax Consequences Tax-Exempt Organizations and Other
Investors.
|
The person with investment discretion with respect to the assets
of an employee benefit plan, often called a fiduciary, should
determine whether an investment in us is authorized by the
appropriate governing instrument and is a proper investment for
the plan.
Section 406 of ERISA and Section 4975 of the Internal
Revenue Code prohibit employee benefit plans, and also IRAs and
certain other types of accounts that are not considered part of
an ERISA employee benefit plan, from engaging in specified
prohibited transactions involving plan
assets with parties that are parties in
interest under ERISA or disqualified persons
under the Internal Revenue Code with respect to the plan.
In addition to considering whether the purchase of common units
is a prohibited transaction, a fiduciary of an employee benefit
plan should consider whether the plan will, by investing in us,
be deemed to own an undivided interest in our assets, with the
result that our general partner would become an ERISA fiduciary
of the investing plan and that our operations would be subject
to the regulatory restrictions of ERISA, including its
prohibited transaction rules, as well as the prohibited
transaction rules of the Internal Revenue Code.
The Department of Labor regulations provide guidance with
respect to whether the assets of an entity in which employee
benefit plans acquire equity interests would be deemed
plan assets under some circumstances. Under these
regulations, an entitys assets generally would not be
considered to be plan assets if, among other things:
(a) the equity interests acquired by employee benefit plans
are publicly offered securities i.e., the equity
interests are part of a class of securities that is widely held
by 100 or more investors independent of the issuer and each
other, are freely transferable (as defined in the
Department of Labor regulations), and are either registered
under certain provisions of the federal securities laws or sold
to the plan as part of a public offering under certain
conditions;
(b) the entity is an operating
company, i.e., it is primarily engaged in the
production or sale of a product or service other than the
investment of capital either directly or through a
majority-owned subsidiary or subsidiaries; or
47
(c) there is no significant investment by benefit plan
investors, which is defined to mean that immediately after the
most recent acquisition by a plan of any equity interest in the
entity, less than 25% of the value of each class of equity
interest (disregarding interests held by our general partner,
its affiliates, and some other persons) is held by the employee
benefit plans referred to above, IRAs and certain other plans
and accounts not subject to ERISA (including governmental
plans), and entities whose underlying assets include plan assets
by reason of a plans investment in the entity.
Our assets should not be considered plan assets
under these regulations because it is expected that any
investment in us by an employee benefit plan will satisfy the
requirements in (a) above.
Plan fiduciaries contemplating a purchase of our common units
should consult with their own counsel regarding the consequences
under ERISA and the Internal Revenue Code in light of the
serious penalties imposed on persons who engage in prohibited
transactions or other ERISA violations.
48
PLAN OF
DISTRIBUTION
Under this prospectus, we intend to offer our securities to the
public:
|
|
|
|
|
through one or more broker-dealers;
|
|
|
|
through underwriters; or
|
|
|
|
directly to investors.
|
We will fix a price or prices of our securities at:
|
|
|
|
|
market prices prevailing at the time of any sale under this
registration statement;
|
|
|
|
prices related to market prices; or
|
|
|
|
negotiated prices.
|
We may change the price of the securities offered from time to
time.
We will pay or allow distributors or sellers
commissions that will not exceed those customary in the types of
transactions involved. Broker-dealers may act as agents or may
purchase securities as principal and thereafter resell the
securities from time to time:
|
|
|
|
|
in or through one or more transactions (which may involve cross
transactions and block trades) or distributions;
|
|
|
|
on The NASDAQ Stock Market LLC;
|
|
|
|
in the over-the-counter market; or
|
|
|
|
in private transactions.
|
Broker-dealers or underwriters may receive compensation in the
form of underwriting discounts or commissions and may receive
commissions from purchasers of the securities for whom they may
act as agents. If any broker-dealer purchases the securities as
principal, it may effect resales of the securities from time to
time to or through other broker-dealers, and other
broker-dealers may receive compensation in the form of
concessions or commissions from the purchasers of securities for
whom they may act as agents.
To the extent required, the names of the specific managing
underwriter or underwriters, if any, as well as other important
information, will be set forth in prospectus supplements. In
that event, the discounts and commissions we will allow or pay
to the underwriters, if any, and the discounts and commissions
the underwriters may allow or pay to dealers or agents, if any,
will be set forth in, or may be calculated from, the prospectus
supplements. Any underwriters, brokers, dealers and agents who
participate in any sale of the securities may also engage in
transactions with, or perform services for, us or our affiliates
in the ordinary course of their businesses. We may indemnify
underwriters, brokers, dealers and agents against specific
liabilities, including liabilities under the Securities Act.
Offers to purchase securities may be solicited directly by us
and the sale thereof may be made by us directly to institutional
investors or others, who may be deemed to be underwriters within
the meaning of the Securities Act of 1933 with respect to any
resale thereof. The terms of any such sales will be described in
the prospectus supplement relating thereto.
We may offer our units into an existing trading market on the
terms described in the prospectus supplement relating thereto.
Underwriters and dealers who may participate in any
at-the-market offerings will be described in the prospectus
supplement relating thereto.
The aggregate maximum compensation the underwriters will receive
in connection with the sale of any securities under this
prospectus and the registration statement of which it forms a
part will not exceed 10% of the gross proceeds from the sale.
49
Because FINRA views our common units as interests in a direct
participation program, any offering of common units under the
registration statement of which this prospectus forms a part
will be made in compliance with Rule 2810 of the NASD
Conduct Rules.
To the extent required, this prospectus may be amended or
supplemented from time to time to describe a specific plan of
distribution. The place and time of delivery for the securities
in respect of which this prospectus is delivered will be set
forth in the accompanying prospectus supplement.
In connection with offerings under this shelf registration and
in compliance with applicable law, underwriters, brokers or
dealers may engage in transactions which stabilize or maintain
the market price of the securities at levels above those which
might otherwise prevail in the open market. Specifically,
underwriters, brokers or dealers may over-allot in connection
with offerings, creating a short position in the securities for
their own accounts. For the purpose of covering a syndicate
short position or stabilizing the price of the securities, the
underwriters, brokers or dealers may place bids for the
securities or effect purchases of the securities in the open
market. Finally, the underwriters may impose a penalty whereby
selling concessions allowed to syndicate members or other
brokers or dealers for distribution of the securities in
offerings may be reclaimed by the syndicate if the syndicate
repurchases previously distributed securities in transactions to
cover short positions, in stabilization transactions or
otherwise. These activities may stabilize, maintain or otherwise
affect the market price of the securities, which may be higher
than the price that might otherwise prevail in the open market,
and, if commenced, may be discontinued at any time.
Certain of the underwriters and their affiliates may be
customers of, may engage in transactions with and may perform
services for us or our affiliates in the ordinary course of
business.
A prospectus and accompanying prospectus supplement in
electronic form may be made available on the websites maintained
by the underwriters. The underwriters may agree to allocate a
number of securities for sale to their online brokerage account
holders. Such allocations of securities for internet
distributions will be made on the same basis as other
allocations. In addition, securities may be sold by the
underwriters to securities dealers who resell securities to
online brokerage account holders.
50
LEGAL
MATTERS
The validity of the securities offered in this prospectus will
be passed upon for us by Vinson & Elkins L.L.P.,
Houston, Texas. Vinson & Elkins L.L.P. will also
render an opinion on the material federal income tax
consequences regarding the securities. If certain legal matters
in connection with an offering of the securities made by this
prospectus and a related prospectus supplement are passed on by
counsel for the underwriters of such offering, that counsel will
be named in the applicable prospectus supplement related to that
offering.
EXPERTS
The financial statements and managements assessment of the
effectiveness of internal control over financial reporting
(which is included in Managements Report on Internal
Control over Financial Reporting) incorporated in this
Prospectus by reference to the Annual Report on
Form 10-K
of Targa Resources Partners LP for the year ended
December 31, 2008, the balance sheet of Targa Resources GP
LLC as of December 31, 2008 included as Exhibit 99.1
of Targa Resources Partners LPs Current Report on
Form 8-K
dated June 1, 2009 and the combined financial statements of
the Downstream Assets of Targa Resources, Inc. for the year
ended December 31, 2008 included as Exhibit 99.2 of
Targa Resources Partners LPs Current Report on
Form 8-K
dated July 29, 2009 have been so incorporated in reliance
on the reports (which reports contain explanatory paragraphs
relating to the Partnership, General Partners and the
Downstream Assets of Targa Resources, Inc.s significant
transactions with related parties) of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
WHERE YOU
CAN FIND MORE INFORMATION
We have filed a registration statement with the SEC under the
Securities Act of 1933 that registers the securities offered by
this prospectus. The registration statement, including the
attached exhibits, contains additional relevant information
about us. The rules and regulations of the SEC allow us to omit
some information included in the registration statement from
this prospectus.
In addition, we file annual, quarterly and other reports and
other information with the SEC. You may read and copy any
document we file at the SECs public reference room at
100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at
1-800-732-0330
for further information on the operation of the SECs
public reference room. Our SEC filings are available on the
SECs web site at
http://www.sec.gov.
We also make available free of charge on our website, at
http://www.targaresources.com,
all materials that we file electronically with the SEC,
including our annual report on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
Section 16 reports and amendments to these reports as soon
as reasonably practicable after such materials are
electronically filed with, or furnished to, the SEC.
We incorporate by reference information into this
prospectus, which means that we disclose important information
to you by referring you to another document filed separately
with the SEC. The information incorporated by reference is
deemed to be part of this prospectus, except for any information
superseded by information contained expressly in this
prospectus, and the information we file later with the SEC will
automatically supersede this information. You should not assume
that the information in this prospectus is current as of any
date other than the date on the front page of this prospectus.
We incorporate by reference the documents listed below and any
future filings we make with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934
(excluding any information furnished pursuant to 2.02 or 7.01 on
any current report on
Form 8-K),
including all such documents we may file with the SEC after the
date of the initial registration statement and prior to the
effectiveness of the registration statement, until all offerings
under this registration statement are completed:
|
|
|
|
|
our annual report on
Form 10-K
for the year ended December 31, 2008;
|
|
|
|
our quarterly report on
Form 10-Q
for the quarter ended March 31, 2009;
|
51
|
|
|
|
|
our current reports on
Form 8-K
filed January 28, 2009, May 21, 2009, June 1,
2009, June 2, 2009, June 29, 2009, July 6, 2009
and July 29, 2009; and
|
|
|
|
|
|
the description of our common units in our registration
statement on
Form 8-A
(File
No. 001-33303)
filed pursuant to the Securities Exchange Act of 1934 on
February 8, 2007.
|
As of January 1, 2009, the Partnership adopted the
provisions of
EITF 07-4,
Application of the Two-Class Method under FASB
Statement No. 128 to Master Limited Partnerships,
which requires retrospective application. The consolidated
financial statements included in the Partnerships Annual
Report on
Form 10-K
for the year ended December 31, 2008 have not been revised
retrospectively to reflect the adoption of
EITF 07-4
as management has determined that the impact of adoption of
EITF 07-4
is not material to such consolidated financial statements.
You may obtain any of the documents incorporated by reference in
this prospectus from the SEC through the SECs website at
the address provided above. You also may request a copy of any
document incorporated by reference in this prospectus (including
exhibits to those documents specifically incorporated by
reference in this document), at no cost, by visiting our
internet website at www.targaresources.com, or by writing or
calling us at the following address:
Targa Resources Partners LP
1000 Louisiana St., Suite 4300
Houston, Texas 77002
Attention: Investor Relations
Telephone:
(713) 584-1000
52
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
Item 14.
|
Other
Expenses of Issuance and Distribution
|
Set forth below are the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities registered
hereby. With the exception of the Securities and Exchange
Commission registration fee, the amounts set forth below are
estimates:
|
|
|
|
|
Securities and Exchange Commission registration fee
|
|
$
|
27,900
|
|
Legal fees and expenses
|
|
|
50,000
|
|
Accounting fees and expenses
|
|
|
50,000
|
|
Printing and engraving expenses
|
|
|
5,000
|
|
Miscellaneous
|
|
|
1,300
|
|
|
|
|
|
|
Total
|
|
$
|
134,200
|
|
|
|
|
|
|
|
|
Item 15.
|
Indemnification
of Directors and Officers
|
Section 17-108
of the Delaware Revised Uniform Limited Partnership Act empowers
a Delaware limited partnership to indemnify and hold harmless
any partner or other persons from and against any and all claims
and demands whatsoever. The partnership agreement of Targa
Resources Partners LP provides that the partnership will, to the
fullest extent permitted by law but subject to the limitations
expressly provided therein, indemnify and hold harmless its
general partner, any Departing General Partner (as defined
therein), any person who is or was an affiliate of the general
partner or any Departing General Partner, any person who is or
was a member, partner, officer, director, fiduciary or trustee
of the general partner, any Departing General Partner, any Group
Member (as defined therein) or any affiliate of the general
partner, any Departing General Partner or any Group Member, or
any person who is or was serving at the request of the general
partner or any affiliate of the general partner, or any
Departing General Partner or any affiliate of any Departing
General Partner as an officer, director, member, partner,
fiduciary or trustee of another person, or any person that the
general partner designates as a Partnership Indemnitee for
purposes of the partnership agreement (each, a Partnership
Indemnitee) from and against any and all losses, claims,
damages, liabilities (joint or several), expenses (including
legal fees and expenses), judgments, fines, penalties, interest,
settlements or other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Partnership
Indemnitee may be involved, or is threatened to be involved, as
a party or otherwise, by reason of its status as a Partnership
Indemnitee, provided that the Partnership Indemnitee shall not
be indemnified and held harmless if there has been a final and
non-appealable judgment entered by a court of competent
jurisdiction determining that, in respect of the matter for
which the Partnership Indemnitee is seeking indemnification, the
Partnership Indemnitee acted in bad faith or engaged in fraud,
willful misconduct or, in the case of a criminal matter, acted
with knowledge that the Partnership Indemnitees conduct
was unlawful. This indemnification would under certain
circumstances include indemnification for liabilities under the
Securities Act. To the fullest extent permitted by law, expenses
(including legal fees and expenses) incurred by a Partnership
Indemnitee who is indemnified pursuant to the partnership
agreement in defending any claim, demand, action, suit or
proceeding shall, from time to time, be advanced by the
partnership prior to a determination that the Partnership
Indemnitee is not entitled to be indemnified upon receipt by the
partnership of any undertaking by or on behalf of the
Partnership Indemnitee to repay such amount if it shall be
determined that the Partnership Indemnitee is not entitled to be
indemnified under the partnership agreement. Any indemnification
under these provisions will be only out of the assets of the
partnership.
Targa Resources Partners LP is authorized to purchase (or to
reimburse its general partner or its affiliates for the costs
of) insurance against liabilities asserted against and expenses
incurred by its general partner, its affiliates and such other
persons as its general partner may determine and described in
the paragraph above in connection with their activities, whether
or not they would have the power to indemnify such person
against
II-1
such liabilities under the provisions described in the
paragraphs above. Targa Resources Partners LPs general
partner has purchased insurance covering its officers and
directors against liabilities asserted and expenses incurred in
connection with their activities as officers and directors of
the general partner or any of its direct or indirect
subsidiaries.
Targa Resources Partners LP and Targa Resources GP LLC have
entered into Indemnification Agreements (each, an
Indemnification Agreement) with each independent
director of Targa Resources GP LLC (each, an
Indemnitee). Each Indemnification Agreement provides
that each of the Partnership and Targa Resources GP LLC will
indemnify and hold harmless each Indemnitee against Expenses (as
defined in the Indemnification Agreement) to the fullest extent
permitted or authorized by law, including the Delaware Revised
Uniform Limited Partnership Act and the Delaware Limited
Liability Company Act in effect on the date of the agreement or
as such laws may be amended to provide more advantageous rights
to the Indemnitee. If such indemnification is unavailable as a
result of a court decision and if the Partnership or Targa
Resources GP LLC is jointly liable in the proceeding with the
Indemnitee, the Partnership and Targa Resources GP LLC will
contribute funds to the Indemnitee for his Expenses in
proportion to relative benefit and fault of the Partnership or
Targa Resources GP LLC on the one hand and Indemnitee on the
other in the transaction giving rise to the proceeding.
Each Indemnification Agreement also provides that each of the
Partnership and Targa Resources GP LLC will indemnify and hold
harmless the Indemnitee against Expenses incurred for actions
taken as a director or officer of the Partnership or Targa
Resources GP LLC, or for serving at the request of the
Partnership or Targa Resources GP LLC as a director or officer
or another position at another corporation or enterprise, as the
case may be, but only if no final and non-appealable judgment
has been entered by a court determining that, in respect of the
matter for which the Indemnitee is seeking indemnification, the
Indemnitee acted in bad faith or engaged in fraud or willful
misconduct or, in the case of a criminal proceeding, the
Indemnitee acted with knowledge that the Indemnitees
conduct was unlawful. The Indemnification Agreement also
provides that the Partnership and Targa Resources GP LLC must
advance payment of certain Expenses to the Indemnitee, including
fees of counsel, subject to receipt of an undertaking from the
Indemnitee to return such advance if it is ultimately determined
that the Indemnitee is not entitled to indemnification.
Targa Resources Investments Inc. (Targa
Investments), the indirect parent of Targa Resources, Inc.
(Targa), has entered into Indemnification Agreements
(each, a Targa Investments Indemnification
Agreement) with each director and officer of Targa,
including Messrs. Joyce, Perkins, Heim, McParland, Johnson,
Whalen, Chung, Kagan, Joung and Hwang (each, an
Indemnitee). Each Targa Investments Indemnification
Agreement provides that Targa Investments will indemnify and
hold harmless each Indemnitee for Expenses (as defined in the
Targa Investments Indemnification Agreement) to the fullest
extent permitted or authorized by law in effect on the date of
the agreement or as it may be amended to provide more
advantageous rights to the Indemnitee. If such indemnification
is unavailable as a result of a court decision and if Targa
Investments and the Indemnitee are jointly liable in the
proceeding, Targa Investments will contribute funds to the
Indemnitee for his Expenses in proportion to relative benefit
and fault of Targa Investments and Indemnitee in the transaction
giving rise to the proceeding.
Each Targa Investments Indemnification Agreement also provides
that Targa Investments will indemnify the Indemnitee for
monetary damages for actions taken as a director or officer of
Targa Investments, or for serving at Targa Investments
request as a director or officer or another position at another
corporation or enterprise, as the case may be but only if
(i) the Indemnitee acted in good faith and, in the case of
conduct in his official capacity, in a manner he reasonably
believed to be in the best interests of Targa Investments and,
in all other cases, not opposed to the best interests of Targa
Investments and (ii) in the case of a criminal proceeding,
the Indemnitee must have had no reasonable cause to believe that
his conduct was unlawful. The Targa Investments Indemnification
Agreement also provides that Targa Investments must advance
payment of certain Expenses to the Indemnitee, including fees of
counsel, subject to receipt of an undertaking from the
Indemnitee to return such advance if it is it is ultimately
determined that the Indemnitee is not entitled to
indemnification.
II-2
|
|
Item 16.
|
Exhibits
and Financial Statement Schedules
|
(a) Exhibits
The following documents are filed as exhibits to this
registration:
|
|
|
|
|
|
|
|
1
|
.1***
|
|
|
|
Form of Underwriting Agreement
|
|
4
|
.1
|
|
|
|
Certificate of Limited Partnership of Targa Resources Partners
LP (incorporated by reference to Exhibit 3.2 to Targa Resources
Partners LPs Registration Statement on Form S-1 filed
November 16, 2006 (File No. 333-138747))
|
|
4
|
.2
|
|
|
|
Certificate of Formation of Targa Resources GP LLC (incorporated
by reference to Exhibit 3.3 to Targa Resources Partners
LPs Registration Statement on Form S-1 filed January 19,
2007 (File No. 333-138747))
|
|
4
|
.3
|
|
|
|
Agreement of Limited Partnership of Targa Resources Partners LP
(incorporated by reference to Exhibit 3.3 to Targa Resources
Partners LPs Annual Report on Form 10-K filed April 2,
2007 (File No. 001-33303))
|
|
4
|
.4
|
|
|
|
First Amended and Restated Agreement of Limited Partnership of
Targa Resources Partners LP (incorporated by reference to
Exhibit 3.1 to Targa Resources Partners LPs current report
on Form 8-K filed February 16, 2007 (File No. 001-33303))
|
|
4
|
.5
|
|
|
|
Amendment No. 1 to First Amended and Restated Agreement of
Limited Partnership of Targa Resources Partners LP (incorporated
by reference to Exhibit 3.5 to Targa Resources Partners
LPs Quarterly Report on Form 10-Q filed May 14, 2008 (File
No. 001-33303))
|
|
4
|
.6
|
|
|
|
Limited Liability Company Agreement of Targa Resources GP LLC
(incorporated by reference to Exhibit 3.4 to Targa Resources
Partners LPs Registration Statement on Form S-1 filed
January 19, 2007 (File No. 333-138747))
|
|
4
|
.7
|
|
|
|
Specimen Unit Certificate representing common units
(incorporated by reference to Exhibit 4.1 to Targa Resources
Partners LPs Annual Report on Form 10-K filed April 2,
2007 (File No. 001-33303))
|
|
4
|
.8**
|
|
|
|
Certificate of Incorporation of Targa Resources Partners Finance
Corporation
|
|
4
|
.9**
|
|
|
|
Bylaws of Targa Resources Partners Finance Corporation
|
|
4
|
.10**
|
|
|
|
Form of Senior Indenture
|
|
4
|
.11**
|
|
|
|
Form of Subordinated Indenture
|
|
4
|
.12***
|
|
|
|
Form of Debt Securities
|
|
5
|
.1**
|
|
|
|
Opinion of Vinson & Elkins L.L.P. as to the legality of the
securities registered hereby
|
|
8
|
.1**
|
|
|
|
Opinion of Vinson & Elkins L.L.P. as to tax matters
|
|
12
|
.1**
|
|
|
|
Statement Regarding Computation of Ratios
|
|
23
|
.1*
|
|
|
|
Consent of PricewaterhouseCoopers LLP
|
|
23
|
.2**
|
|
|
|
Consent of Vinson & Elkins L.L.P. (contained in Exhibits
5.1 and 8.1)
|
|
24
|
.1**
|
|
|
|
Powers of Attorney
|
|
25
|
.1**
|
|
|
|
Form T-1 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of the Trustee under the Senior
Indenture
|
|
25
|
.2**
|
|
|
|
Form T-1 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of the Trustee under the
Subordinated Indenture
|
|
|
|
*** |
|
To be filed as an exhibit to a report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of
1934 or in a post-effective amendment to this registration
statement. |
II-3
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the
effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii)
above do not apply if the registration statement is on
Form S-3
and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with
or furnished to the Securities and Exchange Commission by the
registrant pursuant to section 13 or section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement, or is contained in a
form of prospectus filed pursuant to Rule 424(b) that is
part of the registration statement.
2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
4. That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser:
(i) Each prospectus filed by the registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration
statement; and
(ii) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by
section 10(a) of the Securities Act of 1933 shall be deemed
to be part of and included in the registration statement as of
the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however, that no statement
made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will,
as to a purchaser
II-4
with a time of contract of sale prior to such effective date,
supersede or modify any statement that was made in the
registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such effective date.
5. That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in
the initial distribution of the securities, the undersigned
registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered
or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser.
6. For purposes of determining any liability under the
Securities Act of 1933, each filing of the registrants
annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plans
annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
7. To file an application for the purpose of determining
the eligibility of the trustee under subsection (a) of
Section 310 of the Trust Indenture Act
(Act) in accordance with the rules and regulations
prescribed by the Securities and Exchange Commission under
Section 305(b)(2) of the Act.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the provisions set forth in response to Item 15, or
otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, in the State of Texas on
July 29, 2009.
TARGA RESOURCES PARTNERS LP
|
|
|
|
By:
|
TARGA RESOURCES GP LLC,
|
its General Partner
|
|
|
|
By:
|
/s/ Jeffrey
J. McParland
|
Name: Jeffrey J. McParland
Title: Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated on the dates indicated:
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
*
Rene
R. Joyce
|
|
Chief Executive Officer and Director (Principal Executive
Officer)
|
|
July 29, 2009
|
|
|
|
|
|
/s/ Jeffrey
J. McParland
Jeffrey
J. McParland
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
July 29, 2009
|
|
|
|
|
|
*
John
Robert Sparger
|
|
Senior Vice President and Chief
Accounting Officer
(Principal Accounting Officer)
|
|
July 29, 2009
|
|
|
|
|
|
*
James
W. Whalen
|
|
Director
|
|
July 29, 2009
|
|
|
|
|
|
*
Peter
R. Kagan
|
|
Director
|
|
July 29, 2009
|
|
|
|
|
|
*
Chansoo
Joung
|
|
Director
|
|
July 29, 2009
|
|
|
|
|
|
*
Barry
R. Pearl
|
|
Director
|
|
July 29, 2009
|
II-6
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
*
Robert
B. Evans
|
|
Director
|
|
July 29, 2009
|
|
|
|
|
|
*
William
D. Sullivan
|
|
Director
|
|
July 29, 2009
|
|
|
|
|
|
*
By: /s/ Jeffrey
J. McParland
Jeffrey
J. McParland
Attorney-in-Fact
|
|
|
|
|
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, in the State of Texas on
July 29, 2009.
TARGA RESOURCES PARTNERS FINANCE
CORPORATION
|
|
|
|
By:
|
/s/ Jeffrey
J. McParland
|
Name: Jeffrey J. McParland
Title: Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated on the dates indicated:
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
*
Rene
R. Joyce
|
|
Chief Executive Officer and Director (Principal Executive
Officer)
|
|
July 29, 2009
|
|
|
|
|
|
/s/ Jeffrey
J. McParland
Jeffrey
J. McParland
|
|
Executive Vice President, Chief
Financial Officer and Director
(Principal Financial Officer)
|
|
July 29, 2009
|
|
|
|
|
|
*
John
Robert Sparger
|
|
Senior Vice President and Chief
Accounting Officer
(Principal Accounting Officer)
|
|
July 29, 2009
|
|
|
|
|
|
*
By: /s/ Jeffrey
J. McParland
Jeffrey
J. McParland
Attorney-in-Fact
|
|
|
|
|
II-8
INDEX TO
EXHIBITS
|
|
|
|
|
|
|
|
1
|
.1***
|
|
|
|
Form of Underwriting Agreement
|
|
4
|
.1
|
|
|
|
Certificate of Limited Partnership of Targa Resources Partners
LP (incorporated by reference to Exhibit 3.2 to Targa Resources
Partners LPs Registration Statement on Form S-1 filed
November 16, 2006 (File No. 333-138747))
|
|
4
|
.2
|
|
|
|
Certificate of Formation of Targa Resources GP LLC (incorporated
by reference to Exhibit 3.3 to Targa Resources Partners
LPs Registration Statement on Form S-1 filed January 19,
2007 (File No. 333-138747))
|
|
4
|
.3
|
|
|
|
Agreement of Limited Partnership of Targa Resources Partners LP
(incorporated by reference to Exhibit 3.3 to Targa Resources
Partners LPs Annual Report on Form 10-K filed April 2,
2007 (File No. 001-33303))
|
|
4
|
.4
|
|
|
|
First Amended and Restated Agreement of Limited Partnership of
Targa Resources Partners LP (incorporated by reference to
Exhibit 3.1 to Targa Resources Partners LPs current report
on Form 8-K filed February 16, 2007 (File No. 001-33303))
|
|
4
|
.5
|
|
|
|
Amendment No. 1 to First Amended and Restated Agreement of
Limited Partnership of Targa Resources Partners LP (incorporated
by reference to Exhibit 3.5 to Targa Resources Partners
LPs Quarterly Report on Form 10-Q filed May 14, 2008 (File
No. 001-33303))
|
|
4
|
.6
|
|
|
|
Limited Liability Company Agreement of Targa Resources GP LLC
(incorporated by reference to Exhibit 3.4 to Targa Resources
Partners LPs Registration Statement on Form S-1 filed
January 19, 2007 (File No. 333-138747))
|
|
4
|
.7
|
|
|
|
Specimen Unit Certificate representing common units
(incorporated by reference to Exhibit 4.1 to Targa Resources
Partners LPs Annual Report on Form 10-K filed April 2,
2007 (File No. 001-33303))
|
|
4
|
.8**
|
|
|
|
Certificate of Incorporation of Targa Resources Partners Finance
Corporation
|
|
4
|
.9**
|
|
|
|
Bylaws of Targa Resources Partners Finance Corporation
|
|
4
|
.10**
|
|
|
|
Form of Senior Indenture
|
|
4
|
.11**
|
|
|
|
Form of Subordinated Indenture
|
|
4
|
.12***
|
|
|
|
Form of Debt Securities
|
|
5
|
.1**
|
|
|
|
Opinion of Vinson & Elkins L.L.P. as to the legality of the
securities registered hereby
|
|
8
|
.1**
|
|
|
|
Opinion of Vinson & Elkins L.L.P. as to tax matters
|
|
12
|
.1**
|
|
|
|
Statement Regarding Computation of Ratios
|
|
23
|
.1*
|
|
|
|
Consent of PricewaterhouseCoopers LLP
|
|
23
|
.2**
|
|
|
|
Consent of Vinson & Elkins L.L.P. (contained in Exhibits
5.1 and 8.1)
|
|
24
|
.1**
|
|
|
|
Powers of Attorney
|
|
25
|
.1**
|
|
|
|
Form T-1 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of the Trustee under the Senior
Indenture
|
|
25
|
.2**
|
|
|
|
Form T-1 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of the Trustee under the
Subordinated Indenture
|
|
|
|
*** |
|
To be filed as an exhibit to a report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of
1934 or in a post-effective amendment to this registration
statement. |
exv23w1
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Amendment No. 2 to the Registration
Statement on Form S-3 (No. 333-159678) of our report dated February 25, 2009 relating to the
financial statements of Targa Resources Partners LP, and the effectiveness of internal control over
financial reporting, which appears in Targa Resources Partners LPs Annual Report on Form 10-K for
the year ended December 31, 2008. We also consent to the incorporation by reference of our report
dated March 31, 2009, except for the effects of the adoption of FASB Statement No. 160 discussed in
Note 2, as to which the date is June 1, 2009, relating to the balance sheet of Targa Resources GP
LLC, which appears in Targa Resources Partners LPs Current Report on Form 8-K dated June 1, 2009.
We also consent to the incorporation by reference of our report dated July 24, 2009 relating to the
combined financial statements of the Downstream Assets of Targa Resources, Inc., which appears in
Targa Resources Partners LPs Current Report on Form 8-K dated July 29, 2009. We also consent to
the reference to us under the heading Experts in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
July 29, 2009