Obligation Buckeye Associates 3.95% ( US118230AQ44 ) en USD

Buckeye Associates

100 % ▲

Etas-Unis

US118230AQ44 ( en USD )

3.95% par an ( paiement semestriel )

01/12/2026

Prospectus brochure de l'obligation Buckeye Partners US118230AQ44 en USD 3.95%, échéance 01/12/2026

2 000 USD

600 000 000 USD

118230AQ4

BB ( Spéculatif )

B1 ( Très spéculatif )

01/12/2025 ( Dans 34 jours )

Buckeye Partners est une société américaine de transport et de stockage de produits énergétiques, opérant un réseau d'oléoducs, de terminaux et d'autres infrastructures énergétiques.

L'Obligation émise par Buckeye Associates ( Etas-Unis ) , en USD, avec le code ISIN US118230AQ44, paye un coupon de 3.95% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 01/12/2026

L'Obligation émise par Buckeye Associates ( Etas-Unis ) , en USD, avec le code ISIN US118230AQ44, a été notée B1 ( Très spéculatif ) par l'agence de notation Moody's.

L'Obligation émise par Buckeye Associates ( Etas-Unis ) , en USD, avec le code ISIN US118230AQ44, a été notée BB ( Spéculatif ) par l'agence de notation Standard & Poor's ( S&P ).

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TABLE OF CONTENTS
TABLE OF CONTENTS
Table of Contents
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-200443
CALCULATION OF REGISTRATION FEE

Proposed maximum
aggregate
Amount of
Title of each class of securities to be registered

offering price

registration fee1

Debt Securities

$600,000,000

$69,540

1
The filing fee, calculated in accordance with Rule 457(r), has been transmitted to the SEC in connection with the securities offered from
Registration Statement File No. 333-200443 by means of this prospectus supplement.
Table of Contents
Prospectus supplement
(To Prospectus dated November 21, 2014)
$600,000,000
Buckeye Partners, L.P.
3.950% Notes due 2026
We are offering $600.0 million of our 3.950% notes due 2026 (the "Notes"). We will pay interest on the Notes on June 1 and December 1 of each year,
commencing on June 1, 2017. The Notes will mature on December 1, 2026 unless redeemed prior to maturity. The Notes will be issued only in
minimum denominations of $2,000 and integral multiples of $1,000.
We intend to use the net proceeds from this offering to fund a portion of the purchase price of the VTTI Acquisition (as defined herein). If the pending
VTTI Acquisition is not consummated, or the SPA (as defined herein) is terminated, in each case, prior to July 1, 2017, we will be required to redeem
all of the Notes then outstanding at 101% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the date of
redemption. See "Description of Notes--Special Mandatory Redemption" in this prospectus supplement.
We have the option to redeem the Notes, in whole or in part, at any time or from time to time, prior to their maturity at the applicable redemption price
described in this prospectus supplement. See "Description of Notes--Optional Redemption" in this prospectus supplement.
The Notes will be our senior unsecured obligations, will rank equally in right of payment with all of our existing and future unsubordinated debt and
will rank senior in right of payment to all of our existing and future subordinated debt. The Notes will be structurally junior to all existing and future
debt and other liabilities of our subsidiaries, including our operating subsidiaries.
The Notes are a new issue of securities with no established trading market. We do not intend to apply for listing of the Notes on any securities exchange
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or for inclusion of the Notes in any automated quotation system.
Investing in the Notes involves risks. See "Risk Factors" beginning on page S-8 of this prospectus supplement and on
page 3 of the accompanying base prospectus.
Per

Note

Total

Price to the public1

99.644%$
597,864,000
Underwriting discount

0.650%$
3,900,000
Proceeds to Buckeye Partners, L.P. (before expenses)1

98.994%$
593,964,000
1
Plus accrued interest from November 7, 2016, if settlement occurs after that date.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying base prospectus are truthful or complete. Any representation to the contrary is a criminal offense.
The Notes will be ready for delivery in book-entry form only through the facilities of The Depository Trust Company for the accounts of its
participants, including Euroclear Bank SA/NV, as operator of the Euroclear System and Clearstream Banking, société anonyme, on or about
November 7, 2016.
Joint Book-Running Managers
Barclays
J.P. Morgan

SunTrust Robinson Humphrey
Wells Fargo Securities

BNP PARIBAS

Deutsche Bank Securities
PNC Capital Markets LLC
SMBC Nikko
Co-Managers
BB&T Capital Markets

Morgan Stanley

Prospectus Supplement dated October 27, 2016
Table of Contents
TABLE OF CONTENTS
Prospectus Supplement

Page

Summary
S-1
The Offering
S-6
Risk Factors
S-8
Use of Proceeds
S-14
Capitalization
S-15
Description of Notes
S-16
Description of Other Indebtedness
S-30
Certain U.S. Federal Income Tax Considerations
S-31
Underwriting
S-37
Legal Matters
S-41
Experts
S-41
Forward-Looking Statements
S-41
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Where You Can Find More Information
S-41
Base Prospectus

Page

About this Prospectus

1
Buckeye Partners, L.P.

1
Where You Can Find More Information

1
Information We Incorporate by Reference

2
Risk Factors

3
Forward-Looking Statements

4
Ratio of Earnings to Fixed Charges

5
Use of Proceeds

6
Description of the Limited Partnership Units

7
How We Make Cash Distributions

8
The Partnership Agreement

9
Description of Debt Securities

18
Material Tax Consequences

29
Legal Matters

41
Experts

41
This document is in two parts. The first part is the prospectus supplement, which describes our business and the specific terms of this
offering. The second part is the accompanying base prospectus, which gives more general information, some of which may not apply to this
offering. Generally, when we refer only to the "prospectus," we are referring to both parts combined. If information in this prospectus
supplement conflicts with information in the accompanying base prospectus, you should rely on the information in this prospectus supplement.
You should rely only on the information contained in or incorporated by reference in this prospectus supplement, the accompanying base
prospectus and any free writing prospectus prepared by us or on our behalf. We have not, and the underwriters have not, authorized anyone to
provide you with different information. We are not, and the underwriters are not, making an offer of the Notes in any jurisdiction where the
offer is not permitted. You should not assume that the information contained in this prospectus supplement, the accompanying base prospectus
or the information we have previously filed with the Securities and Exchange Commission that is incorporated by reference herein is accurate
as of any date other than its respective date. Our business, financial condition, results of operations and prospects may have changed since
those respective dates.
S-i
Table of Contents
SUMMARY
You should carefully read this entire prospectus supplement, the accompanying base prospectus and the documents incorporated by reference
herein and therein to understand fully the terms of the Notes, as well as the tax and other considerations that are important in making your investment
decision.
For purposes of this prospectus supplement, unless otherwise indicated, the terms "us," "we," "our," the "Partnership" and similar terms refer to
Buckeye Partners, L.P., together with our subsidiaries.
Buckeye Partners, L.P.
About the Partnership
We are a publicly traded Delaware master limited partnership that owns and operates a diversified network of integrated assets providing midstream
logistic solutions, primarily consisting of the transportation, storage and marketing of liquid petroleum products. The original Buckeye Pipe Line
Company was founded in 1886 as part of the Standard Oil Company ("Standard Oil") and became a publicly owned, independent company after the
dissolution of Standard Oil in 1911. Expansion into petroleum products transportation after World War II and subsequent acquisitions thereafter
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ultimately led to Buckeye Pipe Line Company becoming a leading independent common carrier pipeline. In 1964, Buckeye Pipe Line Company was
acquired by a subsidiary of the Pennsylvania Railroad, which later became the Penn Central Corporation. In 1986, Buckeye Pipe Line Company was
reorganized into a master limited partnership, Buckeye Partners, L.P. Buckeye GP LLC is our general partner.
We are one of the largest independent liquid petroleum products pipeline operators in the United States ("U.S.") in terms of volumes delivered,
with approximately 6,000 miles of pipeline. We also use our service expertise to operate and/or maintain third-party pipelines and perform certain
engineering and construction services for our customers. Additionally, we are one of the largest independent terminalling and storage operators in the
U.S. in terms of capacity available for service. Our terminal network comprises more than 120 liquid petroleum products terminals with aggregate
storage capacity of over 110 million barrels across our portfolio of pipelines, inland terminals and marine terminals located primarily in the East Coast
and Gulf Coast regions of the U.S. and in the Caribbean. Our network of marine terminals enables us to facilitate global flows of crude oil and refined
petroleum products, offering our customers connectivity between supply areas and market centers through some of the world's most important bulk
storage and blending hubs. Our flagship marine terminal in The Bahamas is one of the largest marine crude oil and refined petroleum products storage
facilities in the world and provides an array of logistics and blending services for the global flow of petroleum products. Our expansion into the Gulf
Coast has added another regional hub with world-class marine terminalling, storage and processing capabilities. We are also a wholesale distributor of
refined petroleum products in areas served by our pipelines and terminals.
Recent Developments
Financial Results for the Third Quarter of 2016 (unaudited)
Our income from continuing operations for the third quarter of 2016 was $160.3 million compared to income from continuing operations for the
third quarter of 2015 of $99.9 million. Income from continuing operations attributable to our unitholders was $1.19 per diluted unit for the third quarter
of 2016 compared to $0.78 per diluted unit for the third quarter of 2015. The diluted weighted average number of units outstanding in the third quarter
of 2016 was 131.9 million compared to 128.9 million in the third quarter of 2015.
Adjusted EBITDA (as defined below) from continuing operations for the third quarter of 2016 was $271.6 million compared to $204.2 million for
the third quarter of 2015. Distributable cash flow (as defined below) from continuing operations for the third quarter of 2016 was $194.0 million
compared
S-1
Table of Contents
to $135.6 million for the third quarter of 2015. Our distribution coverage of 1.2 times, representing $32.2 million of cash flow in excess of distributions
for the quarter.
We also declared a cash distribution of $1.2250 per limited partner unit ("LP unit") for the quarter ended September 30, 2016. The distribution will
be payable on November 22, 2016 to unitholders of record on November 15, 2016. This cash distribution represents a 4.3 percent increase over the
$1.1750 per LP unit distribution declared for the third quarter of 2015.
Key drivers of our third quarter results were: (i) a full quarter of operations at our Buckeye Texas Partners facility in Corpus Christi, Texas, along
with additional storage capacity in service and improved rates at our Caribbean and New York hubs in our Global Marine Terminals segment;
(ii) favorable market conditions that led to increased utilization of products storage and improved transportation and throughput revenues across our
pipeline and terminal system as well as a $14 million payment resulting from a customer's exercise of an early buy-out of a crude-by-rail storage
services contract in our Domestic Pipelines & Terminals segment; and (iii) taking advantage of current market conditions to accelerate incremental
gains through effective inventory management in our Merchant Services segment.
Adjusted EBITDA and distributable cash flow are measures not defined by U.S. generally accepted accounting principles. Adjusted EBITDA is the
primary measure used by our senior management, including our chief executive officer, to (i) evaluate our consolidated operating performance and the
operating performance of our business segments, (ii) allocate resources and capital to business segments, (iii) evaluate the viability of proposed projects,
and (iv) determine overall rates of return on alternative investment opportunities. We use distributable cash flow as a performance metric to compare
cash generating performance of Buckeye from period to period and to compare the cash generating performance for specific periods to the cash
distributions (if any) that are expected to be paid to our unitholders. Distributable cash flow is not intended to be a liquidity measure. Adjusted
EBITDA and distributable cash flow eliminate (i) non-cash expenses, including, but not limited to, depreciation and amortization expense resulting
from the significant capital investments we make in our businesses and from intangible assets recognized in business combinations, (ii) charges for
obligations expected to be settled with the issuance of equity instruments, and (iii) items that are not indicative of our core operating performance
results and business outlook.
We believe that investors benefit from having access to the same financial measures that we use and that these measures are useful to investors
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because they aid in comparing our operating performance with that of other companies with similar operations. The Adjusted EBITDA and distributable
cash flow data presented by us may not be comparable to similarly titled measures at other companies because these items may be defined differently by
other companies. The following table reconciles income from continuing operations to Adjusted EBITDA and distributable cash flow.
S-2
Table of Contents
Three Months Ended
Nine Months Ended

September 30,

September 30,

2016

2015

2016

2015

(In thousands, except coverage ratio)

(Unaudited)

Income from continuing operations
$ 160,270 $
99,947 $
439,746 $
303,294
Less: Net (income) loss attributable to noncontrolling interests
(3,896)
93
(11,803)
794
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Income from continuing operations attributable to Buckeye
Partners, L.P.
156,374 100,040
427,943
304,088
Add: Interest and debt expense

48,476
43,413
144,093
127,097
Income tax expense

308
240
896
720
Depreciation and amortization1

63,472
54,830
188,220
164,204
Non-cash unit-based compensation expense

8,853
6,597
22,912
17,578
Acquisition and transition expense2

309
82
479
2,942
Litigation contingency accrual3

--
1,729
--
15,229
Less: Amortization of unfavorable storage contracts4

(443)
(2,767)
(5,979)
(8,303)
Gains on property damage recoveries5

(5,700)
--
(5,700)
--
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Adjusted EBITDA from continuing operations
$ 271,649 $ 204,164 $
772,864 $
623,555
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Less: Interest and debt expense, excluding amortization of
deferred financing costs, debt discounts and other

(44,268)
(39,197)
(131,465)
(114,450)
Income tax expense, excluding non-cash taxes

(308)
(240)
(896)
(720)
Maintenance capital expenditures6

(33,094)
(29,129)
(84,541)
(72,143)
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Distributable cash flow from continuing operations
$ 193,979 $ 135,598 $
555,962 $
436,242
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
? ?
?
? ?
?
? ?
?
? ?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Distributions for coverage ratio7
$ 161,755 $ 152,037 $
478,869 $
448,612
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
? ?
?
? ?
?
? ?
?
? ?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Coverage ratio from continuing operations

1.20
0.89
1.16
0.97
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
? ?
?
? ?
?
? ?
?
? ?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
1
Includes 100% of the depreciation and amortization expense of $18.5 million and $12.2 million for Buckeye Texas Partners LLC
for the three months ended September 30, 2016 and 2015, respectively, and $52.5 million and $34.7 million for the nine months
ended September 30, 2016 and 2015, respectively.
2
Acquisition and transition expense consists of transaction costs, costs for transitional employees, and other employee and third-
party costs related to the integration of acquired assets.
3
Represents reductions in revenue related to settlement of a FERC proceeding.
4
Represents amortization of the negative fair value allocated to certain unfavorable storage contracts acquired in connection with
the Buckeye Bahamas Hub Limited acquisition.
5
Represents recoveries of property damages caused by third parties, primarily related to an allusion with a ship dock at our
terminal located in Pennsauken, New Jersey.
6
Represents expenditures that maintain the operating, safety and/or earnings capacity of our existing assets.
7
Represents cash distributions declared for LP units outstanding as of each respective period. Amount for 2016 reflects actual
cash distributions paid on LP units for the quarters ended March 31, 2016 and June 30, 2016 and estimated cash distributions
for LP Units for the quarter ended September 30, 2016 based on LP units outstanding as of September 30, 2016.
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S-3
Table of Contents
VTTI Acquisition and October Equity Offering
On October 24, 2016, we entered into a share purchase agreement (the "SPA") with VIP Terminals Finance B.V. (the "Seller") to acquire 50% of
the outstanding share capital of VIP Terminals Holding B.V. ("VIP Holdings"), which owns all of the outstanding share capital of VTTI B.V. ("VTTI"),
for approximately $1.15 billion (the "VTTI Acquisition"). VTTI will be indirectly jointly owned with Vitol B.V. ("Vitol") and Vitol Investment
Partnership Limited. In connection with the closing of the VTTI Acquisition, we will also enter into a shareholders' agreement with the Seller which
will govern the parties' respective rights with respect to the governance and operation of VTTI and its subsidiaries.
VTTI is based in the Netherlands and is an independent provider of storage and terminalling services for refined products, liquid petroleum gas and
crude oil. VTTI has investments in joint ventures and wholly owned subsidiaries throughout the world and indirectly holds an approximate 46% limited
partner interest, a 2% general partner interest and incentive distribution rights in VTTI Energy Partners LP, a publicly traded master limited partnership.
The purchase price for the VTTI Acquisition is subject to customary adjustments at closing, including for certain distributions and other payments
made by VTTI and its subsidiaries to the Seller and its affiliates from December 31, 2015 through the closing of the VTTI Acquisition. The VTTI
Acquisition is expected to close in early January 2017, subject to the receipt of certain regulatory approvals, including the expiration of any waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR"). We expect to use the net proceeds from this offering to
fund a portion of the purchase price for the VTTI Acquisition. Please read "Use of Proceeds" in this prospectus supplement. If the VTTI Acquisition is
not consummated, or the SPA is terminated, in each case, prior to July 1, 2017, we will be required to redeem all of the Notes then outstanding at 101%
of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the date of redemption. See "Description of Notes--Special
Mandatory Redemption" in this prospectus supplement.
On October 28, 2016, we expect to complete a public offering of 7,750,000 LP units pursuant to an effective shelf registration statement, which
priced at $66.05 per unit (the "October Equity Offering"). The underwriters have exercised their full option to purchase an additional 1,162,500 LP
units, which is also expected to close on October 28, 2016. We estimate that the October Equity Offering, including the underwriters' exercise of their
option to purchase additional LP units, will result in total gross proceeds of approximately $588.7 million (before deducting underwriting discounts and
commissions and estimated offering expenses).
We expect to use the net proceeds from the October Equity Offering to fund a portion of the purchase price for the VTTI Acquisition. Pending such
use, the net proceeds of the October Equity Offering will be used to reduce the indebtedness outstanding under our revolving credit facility and for
general partnership purposes. We expect to use the net proceeds from the exercise of the underwriters' option to purchase additional LP units to reduce
indebtedness outstanding under our revolving credit facility and for general partnership purposes. If the VTTI Acquisition is not consummated, we
intend to use the net proceeds to repay borrowings outstanding under our revolving credit facility and for general partnership purposes.
Business Strategy
Our primary business objective is to provide stable and sustainable cash distributions to our unitholders, while maintaining a relatively low
investment risk profile. The key elements of our strategy are to:
·
Operate in a safe and environmentally responsible manner;
S-4
Table of Contents
·
Maximize utilization of our assets at the lowest cost per unit;
·
Maintain stable long-term customer relationships;
·
Optimize, expand and diversify our portfolio of energy assets through accretive acquisitions and organic growth projects; and
·
Maintain a solid, conservative financial position and an investment-grade credit rating.
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We intend to achieve our strategy by:
·
Acquiring, building and operating high quality, strategically-located assets;
·
Maintaining and enhancing the integrity of our pipelines, terminals and storage assets;
·
Pursuing strategic cash flow-accretive acquisitions that:
·
Complement our existing footprint;
·
Provide geographic, product and/or asset class diversity; and
·
Leverage existing management capabilities and infrastructure;
·
Seeking to acquire or develop other energy-related assets that enable us to leverage our asset base, knowledge base and skill sets;
·
Valuing the effort, teamwork and innovation of our employees; and
·
Providing superior customer service.
Executive Offices
Our principal executive offices are located at One Greenway Plaza, Suite 600, Houston, Texas 77046, and our telephone number is (832) 615-
8600.
S-5
Table of Contents
THE OFFERING
Issuer
Buckeye Partners, L.P.

Securities offered
We are offering $600.0 million of our 3.950% notes due 2026.

Interest payment dates
Interest will be payable semi-annually in arrears on June 1 and December 1
of each year, beginning on June 1, 2017.

Maturity date
Unless redeemed prior to maturity, the Notes will mature on December 1,
2026.

Ranking
The Notes will be:

· our senior unsecured obligations, ranking equally in right of payment with
all of our existing and future unsubordinated debt;

· non-recourse to our general partner;

· senior in right of payment to all of our existing and future subordinated
debt;

· effectively junior to any of our existing and future secured debt to the
extent of the collateral securing such debt; and
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· structurally junior to all existing and future debt and other liabilities of our
subsidiaries, including our operating subsidiaries.

Covenants
The Notes will be issued under an indenture with U.S. Bank National
Association (successor to SunTrust Bank), as trustee, which contains
covenants for your benefit. These covenants restrict our ability, with certain
exceptions, to:

· incur debt secured by liens;

· engage in sale/leaseback transactions; or

· merge or consolidate with another entity or sell substantially all of our
assets to another entity.

Use of proceeds
We estimate that we will receive net proceeds from this offering of
approximately $592.6 million (after deducting the underwriting discount and
estimated offering expenses payable by us). We expect to use the net
proceeds from this offering to fund a portion of the purchase price for the
VTTI Acquisition. Please read "Use of Proceeds" in this prospectus
supplement.

Optional redemption
At our option, the Notes may be redeemed, in whole or in part at any time
and from time to time, at our option at the applicable redemption price set
forth under the heading "Description of Notes--Optional Redemption" in this
prospectus supplement.
S-6
Table of Contents
Special mandatory redemption
If the VTTI Acquisition is not consummated, or the SPA is terminated, in
each case, prior to July 1, 2017, we will be required to redeem all of the
Notes then outstanding at 101% of the principal amount of the Notes, plus
accrued and unpaid interest to, but excluding, the date of redemption. See
"Description of Notes--Special Mandatory Redemption" in this prospectus
supplement.

Further issuances
We may create and issue additional notes ranking equally and ratably with
the Notes offered by this prospectus supplement in all respects, so that such
additional notes will be consolidated and form a single series with the Notes
offered by this prospectus supplement and will have the same terms as to
status, redemption or otherwise (except for the issue date, public offering
price, the first interest payment date, if applicable, and under certain
circumstances, the date from which interest thereon will begin to accrue).
Ratio of Earnings to Fixed Charges
The ratio of earnings to fixed charges for each of the periods indicated below is as follows:

Six

months

Years ended December 31,

ended
June 30,

2011

2012

2013

2014

2015

2016

Ratio of earnings to fixed charges
3.04x 2.65x 3.31x 2.65x 3.06x
3.58x
These computations include us and our operating subsidiaries and are based on the historical results of Buckeye Partners, L.P. For these ratios,
"earnings" means the sum of the following:
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·
income from continuing operations before taxes (excluding income attributable to noncontrolling interests);
·
plus equity income less than distributions, or less equity income greater than distributions, as applicable; and
·
less capitalized interest, excluding amortization of capitalized interest.
The term "fixed charges" means the sum of the following:
·
interest and debt expense;
·
plus equity income less than distributions, or less equity income greater than distributions, as applicable;
·
plus capitalized interest; and
·
plus a portion of rentals representing an interest factor.
S-7
Table of Contents
RISK FACTORS
You should carefully consider the risk factors described below, the risk factors beginning on page 17 of our Annual Report on Form 10-K for the
year ended December 31, 2015 and the risk factors relating to our business under the caption "Risk Factors" beginning on page 3 of the accompanying
base prospectus before making an investment decision. These risks are not the only ones we face. Additional risks not presently known to us or that we
currently deem immaterial may also impair our business operations. Our business, financial condition or results of operations could be materially
adversely affected by any of these risks. You should consider carefully these risk factors together with all of the other information included in this
prospectus supplement, the accompanying base prospectus and the documents incorporated by reference herein and therein before investing in the
Notes.
Risks Related to the VTTI Acquisition
The VTTI Acquisition may not be consummated.
The VTTI Acquisition is expected to close in early January 2017 and is subject to the receipt of certain regulatory approvals, including the
expiration of any waiting periods under HSR. Subject to the terms of the SPA, from and after the date of execution of the SPA, we have agreed to use
our best endeavors to take all steps necessary to obtain the necessary regulatory consents, approvals or authorizations as soon as possible. If we do not
obtain the required regulatory approvals on or prior to January 24, 2017 (as such date may be extended for up to three months by the Seller), the SPA
will terminate. If any other closing conditions are not satisfied or waived, or if the SPA is otherwise terminated in accordance with its terms, then the
VTTI Acquisition will not be consummated. If the closing of the VTTI Acquisition is substantially delayed or does not occur at all, or if the terms of the
VTTI Acquisition are required to be modified substantially due to regulatory concerns, we may not realize the anticipated benefits of the VTTI
Acquisition fully or at all.
If the VTTI Acquisition is not consummated, or the SPA is terminated, in each case, prior to July 1, 2017, we will be required to redeem all of the
Notes then outstanding at 101% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the date of redemption. See
"Description of Notes--Special Mandatory Redemption" in this prospectus supplement.
If the closing of the VTTI Acquisition does not occur prior to July 1, 2017, we will be required to redeem the Notes. If we are required to
redeem the Notes, you may not obtain your expected return on the Notes.
If the VTTI Acquisition is not consummated, or the SPA is terminated, in each case, prior to July 1, 2017, we will be required to redeem all of the
Notes at a redemption price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the date of
redemption. If your Notes are redeemed, you may not obtain your expected return on the Notes and may not be able to reinvest the proceeds from a
special mandatory redemption in an investment that results in a comparable return. Your decision to invest in the Notes is made at the time of the
offering of the Notes. Changes in our business or financial condition, or certain of the terms of the SPA between the closing of this offering and the
closing of the VTTI Acquisition, will have no effect on your rights as a purchaser of the Notes.
We are not obligated to place the net proceeds of the offering of the Notes in escrow prior to the closing of the VTTI Acquisition and, as a
result, we may not be able to repurchase the Notes upon a special mandatory redemption.
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We are not obligated to place the net proceeds of the offering of the Notes in escrow prior to the closing of the VTTI Acquisition or to provide a
security interest in those proceeds, and the indenture governing the Notes imposes no other restrictions on our use of these proceeds during that time.
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Accordingly, the source of funds for any redemption of Notes upon a special mandatory redemption would be the proceeds that we have voluntarily
retained or other sources of liquidity, including available cash, borrowings, sales of assets or sales of equity. We may not be able to satisfy our
obligation to redeem the Notes because we may not have sufficient financial resources to pay the aggregate redemption price on the Notes. Our failure
to redeem the Notes as required under the indenture governing the Notes would result in a default under the indenture, which could result in defaults
under our and our subsidiaries' other debt agreements and have material adverse consequences for us and the holders of the Notes. In addition, our
ability to redeem the Notes for cash may be limited by law or the terms of other agreements relating to our indebtedness outstanding at the time.
Following the closing of the VTTI Acquisition, we will indirectly own a 50% interest in VTTI and will have limited ability to influence
significant business decisions affecting VTTI without also receiving the consent of the Seller.
Following the closing of the VTTI Acquisition, we will indirectly own a 50% interest in VTTI through our interest in VIP Holdings. The Seller will
own the remaining 50% interest in VIP Holdings, and accordingly neither we nor the Seller will control VTTI. We and the Seller will each be entitled to
appoint two directors to the board of directors of VTTI, and certain actions by VTTI and its subsidiaries (collectively, the "VTTI Entities") will be
subject to approval by both the Seller and us, including the approval of:
·
VTTI's annual budget and business plan;
·
any adoption or amendment of a VTTI Entity's distribution policy;
·
capital calls by VIP Holdings;
·
any merger, consolidation or equity issuance by a VTTI Entity; and
·
asset acquisitions, sales or dropdowns, entry into new contracts and incurrence of unbudgeted debt or capital expenditures in excess of
specified amounts.
Differences in views among the owners of VTTI could result in delayed decisions or in failures to agree on significant matters, potentially
adversely affecting the business and results of operations or prospects of VTTI and, in turn, the amount of cash from operations distributed to us.
In addition, we will not control the day-to-day operations of VTTI. Our lack of control over VTTI's day-to-day operations and the associated costs
of operations could result in our receiving lower cash distributions than we anticipate which could reduce our cash flow available for distribution to our
unitholders and payment on the Notes and our other debt obligations.
If the VTTI Acquisition is not successful or the VTTI Entities do not perform as expected, our future financial performance may be negatively
impacted.
If the VTTI Acquisition is consummated, we may be exposed to additional risks, including the risk that regulatory approval is obtained subject to
conditions that are not anticipated, risks associated with our ability to issue debt and equity to fund the purchase price and litigation risk. If such risks or
other anticipated or unanticipated liabilities were to materialize, any desired benefits of the VTTI Acquisition may not be fully realized, if at all, and our
future financial performance may be negatively impacted.
In addition, the VTTI Acquisition may result in other difficulties including, among other things:
·
diversion of management's attention from other business concerns;
·
integrating internal controls and managing regulatory compliance and corporate governance matters;
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·
maintaining an effective system of internal controls related to the VTTI Entities;
·
an increase in our indebtedness; and
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