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| *Note: A securities rating is not a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time. |
The issuers have filed a registration statement (including a prospectus) with the SEC for the
offering to which this communication relates. Before you invest, you should read the prospectus in
that registration statement and other documents the issuers have filed with the SEC for more
complete information about the issuers and this offering. You may get these documents for free by
visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuers, any underwriter or
any dealer participating in the offering will arrange to send you the prospectus if you request it
by calling Citigroup Global Markets Inc. at 1-877-858-5407, SunTrust Robinson Humphrey, Inc. at
1-800-685-4786, UBS Securities LLC at 1-877-827-6444, ext. 561-3884 or Wells Fargo Securities, LLC
at 1-800-326-5897.
Use of Proceeds
We expect
the net proceeds of this offering to be approximately $494 million after deducting the
underwriters’ discounts and commissions and our estimated offering expenses. We expect to use the
net proceeds from this offering to repay outstanding borrowings under our credit facilities, a
portion of which will have been incurred to fund the cash requirements of the PNGS Acquisition
(which will include repayment of all of PNGS’s debt). Amounts repaid under our credit facilities
may be reborrowed for general partnership purposes, including providing partial funding for the
potential redemption of our outstanding 7.13% senior notes due 2014.
Pro Forma Ratio of Earnings to Fixed Charges
Giving effect to our public offering of $500 million of senior notes in July 2009 and the
application of the net proceeds therefrom, the repayment of $175 million of 4.75% senior notes upon
maturity in August 2009 and this offering and the application of the net proceeds therefrom, as of
the beginning of each pro forma period presented, our ratio of earnings to fixed charges would have
been as follows:
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Pro Forma |
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Year ended |
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Six months ended |
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December 31, 2008 |
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June 30, 2009 |
Ratio of Earnings to
Fixed
Charges(1)
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2.48x
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3.20x |
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Includes interest costs attributable to borrowings for inventory stored in
a contango market of $15 million for the pro forma year ended December 31,
2008 and $2 million for the pro forma six months ended
June 30, 2009. |
Revised Capitalization Disclosure
In the “As Adjusted for this Offering” column of the capitalization table on page S-12 of the
preliminary prospectus supplement, Cash and cash equivalents is $7 million, Hedged inventory
facility is $436 million, Working capital borrowings is
$3 million, Other is $2 million, Total short-term debt is
$441 million, Long-term debt under credit facilities and
other is $11 million, 7.13% Senior notes due 2014 is $250 million, Senior Notes offered
hereby is $500 million, Unamortized premium/(discount), net is
$(9) million, Total
long-term debt is $4,402 million
and Total capitalization is
$8,200 million. Amounts repaid under our credit facilities may be reborrowed for general partnership purposes,
including providing partial funding for the potential redemption of our outstanding 7.13% senior
notes due 2014.
As of June 30, 2009, on a pro forma basis as described under “Capitalization,” and as further
adjusted to give effect to this offering and the application of the net proceeds therefrom as
described under “Use of proceeds,” the Notes and the guarantees would have been effectively
subordinated to $0.4 billion of short-term secured indebtedness.