OXY Nabs 10% Interest in PAA's General Partner
Plains All American Pipeline, LP
Wednesday, July 02, 2008
Plains All American Pipeline, L.P. has announced that a wholly owned subsidiary of Occidental Petroleum Corporation has entered into definitive agreements to acquire an aggregate 10% equity interest in the general partner of PAA directly from the existing owners. Closing is expected to occur within the next 30 to 45 days and is subject to certain customary closing conditions. The purchase price was not disclosed.
“OXY is a well respected, large and financially strong energy industry participant and we believe their investment in PAA’s general partner is an attractive transaction for PAA,” said Greg L. Armstrong, Chairman and CEO of Plains All American. “Over the next several years, we look forward to exploring potential mutually beneficial opportunities with regard to the respective midstream activities of PAA and OXY. In addition, to align OXY’s ownership interests with those of PAA’s limited partners and help fund PAA’s continued growth, OXY has committed to invest in common units in conjunction with PAA’s future capital raising efforts.”
Armstrong stated that all of the current general partner owners will continue to be owners following the closing of the transactions. The sale of certain of the interests is subject to receipt of approvals by lenders to one of the owners. However, to facilitate the certainty of the transaction, other owners have agreed to sell additional interests such that OXY will acquire an aggregate 10% equity interest, even if such lender approvals are not obtained. In either event, the current control positions with respect to the general partner will not be affected as a result of this transaction.
Armstrong noted that OXY will have observer rights with respect to the board of directors of PAA’s general partner and, under certain circumstances involving changes in PAA’s upper-level management, will receive the right to designate an additional director to the board. No near-term change to the board of directors is expected as a result of the transaction.