ITEM 1.01
Entry into a Material Definitive Agreement.
On December 27, 2016, Plains GP Holdings, L.P. (the
Partnership
) entered into an Equity Distribution Agreement (the
Agreement
) with Wells Fargo Securities, LLC, Barclays Capital Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, BMO Capital Markets Corp., BNP Paribas Securities Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., DNB Markets, Inc., Fifth Third Securities, Inc., J.P. Morgan Securities LLC, Jefferies LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, MUFG Securities Americas Inc., Mizuho Securities USA Inc., Morgan Stanley & Co. LLC, Raymond James & Associates, Inc., Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc. and UBS Securities LLC (each a
Manager
and collectively the
Managers
). Pursuant to the terms of the Agreement, the Partnership may sell from time to time through the Managers, as the Partnerships sales agents, Class A shares representing limited partner interests having an aggregate offering price of up to $500,000,000 (the
Shares
). Sales of the Shares, if any, will be made by means of ordinary brokers transactions on the New York Stock Exchange at market prices, in block transactions or as otherwise agreed by the Partnership and the Managers.
Pursuant to that certain Omnibus Agreement dated as of November 15, 2016 (the
Omnibus Agreement
), by and among the Partnership, PAA GP Holdings LLC, Plains AAP, L.P. (
AAP
), PAA GP LLC and Plains All American Pipeline, L.P. (
PAA
), the Partnership has agreed to use the net proceeds from any public or private offering and sale of Class A shares, including the net proceeds of this offering, after deducting the sales agents commissions and offering expenses, to purchase from AAP a number of AAP Class A units equal to the number of Class A shares sold in such offering at a price equal to the net proceeds from such offering. The Omnibus Agreement also provides that immediately following such purchase and sale, AAP will use the net proceeds it receives from such sale of AAP Class A units to the Partnership to purchase from PAA an equivalent number of common units of PAA.
PAA intends to use the net proceeds it receives from the sale of such common units to AAP for general partnership purposes, which may include, among other things, repayment of indebtedness, acquisitions, capital expenditures and additions to working capital. Amounts repaid under PAAs credit facilities or commercial paper program may be reborrowed to fund its ongoing expansion capital program, future acquisitions and investments or for general partnership purposes
Under the terms of the Agreement, the Partnership may also sell Shares from time to time to any Manager as principal for its own account at a price to be agreed upon at the time of sale. Any sale of Shares to a Manager as principal would be pursuant to the terms of a separate terms agreement between the Partnership and such Manager.
The Shares will be issued pursuant to the Partnerships existing effective shelf registration statement on Form S-3 (Registration No. 333-214964).
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, a copy of which is filed herewith as Exhibit 1.1 and is incorporated by reference herein. Legal opinions relating to the Shares are filed herewith as Exhibits 5.1 and 8.1.