PAA Raises Funds Via Notes Issue

Plains All American Pipeline, L.P. (PAA - Analyst Report) commenced the public offering of $400 million aggregate amount of 3.95% Senior Notes due Sept 15, 2015. The notes will be the unsecured senior obligations of Plains All American and guaranteed unconditionally by its certain subsidiaries.
 
The Partnership anticipates receiving net proceeds (after expenses) of approximately $396.5 million from the offering. It intends to use the proceeds to repay outstanding borrowings under credit facilities and for general purposes. The Partnership has the advantage to re-borrow amounts paid under credit facilities to fund its expansion programs, future acquisitions, or reduction in outstanding 6.25% Senior Notes due 2015.
 
Plains All American Pipeline targets to maintain a general credit profile with an average long-term debt-to-total capitalization ratio of around 50%, long-term debt-to-adjusted EBITDA multiple of approximately 3.5x, total debt-to-total capitalization ratio of about 60%, and adjusted EBITDA-to-interest coverage multiple of roughly 3.3x. Currently, the Partnership’s senior unsecured notes are rated BBB- (stable outlook) by Standard & Poor’s Ratings Services and Baa3 (Stable outlook) by Moody’s Investors Service. Both ratings are considered investment grade ratings.
 
Ending the first quarter of 2010, Plains All American Pipeline’s total debt (short and long term) was approximately $5.0 billion, including long-term debt of $4.1 billion. Total debt-to book capitalization ratio was 55% and long-term debt to book capitalization ratio was 50%.
 
Delaware-based limited partnership, Plains All American Pipeline, L.P. is one of the largest midstream crude oil companies in North America. The partnership has extensive network of pipeline transportation, terminalling, storage and gathering assets in key oil-producing basins and transportation corridors, and at major market hubs in the United States and Canada.
 
Prime competitors of the Partnership include Enterprise Products Partners LP (EPD - Analyst Report), Sunoco Logistics Partners L.P. (SXL - Analyst Report), and TransMontaigne Inc. (privately held). We currently maintain our Neutral recommendation, which is supported by Zacks Rank of # 3 (Hold).

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