As filed with the Securities and Exchange Commission on June 16, 2004
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Buckeye Partners, L.P.
|
Delaware
(State or other jurisdiction of incorporation or organization) |
23-2432497
(I.R.S. Employer Identification Number) |
5002 Buckeye Road
P. O. Box 368
Emmaus, Pennsylvania 18049
(484) 232-4000
(Address, including zip code, and telephone number, including area code,
of registrant’s principal executive offices)
Stephen C. Muther, Esquire
Senior Vice President, Administration,
General Counsel and Secretary
Buckeye Pipe Line Company LLC
5 Radnor Corporate Center, Suite 500
100 Matsonford Road
Radnor, PA 19087
(484) 232-4000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
with a copy to:
Howard L. Meyers, Esquire
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
(215) 963-5000
Approximate date of commencement of the proposed sale to the public: From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: [x]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ] ______
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ] ______
If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with
Section 8(a)
of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section
8(a)
, may determine.
To appear in left hand margin of cover:
The information in this prospectus is not complete and may be changed or
supplemented. We cannot sell any of the securities described in this
prospectus until the registration statement that we have filed to cover the
securities has become effective under the rules of the Securities and Exchange
Commission. This prospectus is not an offer to sell the securities, nor is it
a solicitation of an offer to buy the securities, in any state where an offer
or sale of the securities is not permitted.
Subject to completion,
dated June 16, 2004
Prospectus
$750,000,000
Buckeye Partners, L.P.
Limited Partnership Units
We, Buckeye Partners, L.P., may offer limited partnership units and debt
securities from time to time. This prospectus describes the general terms of,
and the general manner in which we will offer, these securities. The specific
terms of any securities we offer will be included in a supplement to this
prospectus. The prospectus supplement will also describe the specific manner
in which we will offer the securities.
Our limited partnership units are listed on the New York Stock Exchange
under the symbol “BPL.”
You should carefully consider the risk factors beginning on page 4 of this
prospectus before you make an investment in our securities.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is , 2004
Proposed Maximum
Title of Each Class of Securities to be
Amount
Aggregate Offering
Amount of
Registered
to be Registered(1)
Price (2)
Registration Fee
—
—
—
—
—
—
$
750,000,000
$
750,000,000
$
95,025
(1)
An indeterminate principal amount or number of limited partnership units
and debt securities may be issued from time to time at indeterminate
prices, with an aggregate offering price not to exceed $750,000,000.
(2)
Estimated solely for the purpose of calculating the registration fee,
which is calculated in accordance with Rule 457(o) of the rules and
regulations under the Securities Act of 1933, as amended. Rule 457(o)
permits the registration fee to be calculated on the basis of the maximum
offering price of all of the securities listed and, therefore, the table
does not specify by each class information as to the amount to be
registered or the proposed maximum offering price per security.
(3)
If any debt securities are issued at an original issue discount, then the
offering price of those debt securities shall be in an amount that will
result in an aggregate initial offering price not to exceed
$750,000,000,
less the dollar amount of any registered securities previously issued.
Table of Contents
Table of Contents
Debt Securities
Table of Contents
TABLE OF CONTENTS
THE PARTNERSHIP
We provide pipeline transportation service for refined petroleum products.
We own and operate one of the largest independent refined petroleum products
pipeline systems in the United States in terms of volumes delivered, with
approximately 3,800 miles of pipeline serving 12 states. We also operate,
through wholly owned subsidiaries, approximately 1,400 miles of pipeline under
agreements with major oil and chemical companies, as well as 15 refined
petroleum products terminals in Illinois, Indiana, Michigan, New York, Ohio and
Pennsylvania.
We are a Delaware limited partnership formed in 1986. Limited partnership
interests in the Partnership are represented by publicly traded limited
partnership units and the limited partners are unitholders.
Our sole general partner and the sole general partner and manager of each
of the operating partnerships is Buckeye Pipe Line Company LLC, a Delaware
limited liability company. Buckeye Pipe Line Company owns approximately a 1%
general partnership interest in each of our operating partnerships and in the
Partnership, for an effective 2% interest in the Partnership.
On May 4, 2004, the owners of Glenmoor LLC, the ultimate parent company of
Buckeye Pipe Line Company, sold Glenmoor to BPL Acquisition L.P., a
majority of the equity of which is
owned by Carlyle/Riverstone Global Energy and Power Fund II, L.P., or the
“Carlyle/Riverstone Fund”. In connection with the sale, Buckeye Pipe Line
Company was converted from a corporation to a limited liability company in
accordance with Delaware law.
Each
of the Partnership, our general partner, Glenmoor and BPL Acquisition
is a legally distinct entity with its own assets, debts, obligations
and liabilities. The Partnership is not liable for the separate
debts, obligations or liabilities of our general partner, Glenmoor or
BPL Acquisition and has not pledged its assets to secure any such
debts, obligations or liabilities.
The Carlyle/Riverstone Fund also owns, through affiliates, an interest in
Magellan Midstream Holdings, L.P., which owns the general partner interest and
approximately 26.3% limited partnership interest in Magellan Midstream
Partners, L.P., or “Magellan Partners”, a publicly-owned
limited partnership that was
formerly known as Williams Energy Partners, L.P. The co-general partners of
the Carlyle/Riverstone Fund are Riverstone Holdings, or
“Riverstone”, and The Carlyle Group, or “Carlyle”.
Riverstone, a New York-based energy and power focused private equity firm
founded in 2000, has approximately $1.5 billion under management. Riverstone
conducts buyout and growth capital investments in the midstream, upstream,
power and oil field service sectors of the energy industry. To date,
Riverstone has committed approximately $800 million to 10 investments across
each of these four sectors. The Carlyle Group is a global private equity firm
with $18.3 billion under management. Carlyle invests in buyouts, venture,
real estate and leveraged finance in North America, Europe and
Asia. Since 1987, Carlyle has invested $10.8 billion of equity
in 317
transactions and employs more than 500 people in 14 countries.
Although neither the Partnership nor Magellan Partners have extensive
operations in the geographic areas primarily served by the other entity, the
Partnership will compete directly with Magellan Partners and perhaps other
entities in which the Carlyle/Riverstone Fund, Carlyle or Riverstone have an
interest for acquisition opportunities throughout the United States and
potentially will compete with Magellan Partners and these other entities for
new business or extensions of the existing services provided by our operating
partnerships. Moreover, the Partnership, on one hand, and Magellan
Partners or other entities in which the Carlyle/Riverstone Fund,
Carlyle or Riverstone have an interest, on the other hand, may
contract with one another for the purchase and sale of goods or
services. As a result of these actual and potential conflicts of interest,
the board of directors of our general partner has adopted a conflicts of interest policy and related procedures and has required directors
who are affiliated with the Carlyle/Riverstone Fund, Riverstone or Carlyle to
adopt appropriate procedures to protect the Partnership’s proprietary and
confidential information. When any director becomes aware of an actual or
potential conflict of interest, that director is required to disclose such
conflict to the board of directors promptly and the board will determine what
actions, if any, should be taken to protect the interests of the Partnership.
In certain circumstances, a director will be required to recuse himself from
the board’s deliberations and any vote on any matter that is the subject of
such actual or potential conflict of interest. The conflict of interest policy
and procedures are administered by the audit committee of the board of
directors of our general partner, acting pursuant to their authority under
Section 7.9 of the Partnership’s limited partnership agreement.
Our principal executive offices are located at 5002 Buckeye Road, P. O.
Box 368, Emmaus, Pennsylvania, telephone (484) 232-4000. Our website may be
accessed at www.buckeye.com. Neither the contents of our website, nor of any
other website that may be accessed from our website, are incorporated in this
prospectus.
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Page
Number
2
3
4
12
13
13
14
16
27
38
39
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Table of Contents
Table of Contents
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read our SEC filings over the Internet at the
SEC’s website at www.sec.gov. You may also read and copy documents at the SEC’s
public reference room located at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room.
We also provide information to the New York Stock Exchange because our
limited partnership units are traded on the New York Stock Exchange. You may
obtain reports and other information at the offices of the New York Stock
Exchange at 20 Broad Street, New York, New York 10002.
The SEC allows us to “incorporate by reference” the information we file
with them, which means that we can disclose to you important information
contained in other documents filed with the SEC by referring you to those
documents. The information incorporated by reference is an important part of
this prospectus. Information we later file with the SEC will automatically
update and supersede this information. We incorporate by reference the
documents listed below:
If information in incorporated documents conflicts with information in
this prospectus you should rely on the most recent information. If information
in an incorporated document conflicts with information in another incorporated
document, you should rely on the most recent incorporated document.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
You should rely only on the information contained or incorporated by
reference in this prospectus and any accompanying prospectus supplement. We
have not authorized anyone to provide you with information different from that
contained in this prospectus and the accompanying prospectus supplement. We are
offering to sell the securities, and seeking offers to buy the securities, only
in jurisdictions where offers and sales are permitted. The information
contained in this prospectus and in any accompanying prospectus supplement is
accurate only as of the date of this prospectus and the date of the
accompanying prospectus supplement, regardless of the time of delivery of this
prospectus and any accompanying prospectus supplement or any sales of the
securities. In this prospectus and any accompanying prospectus supplement, the
terms “Partnership,” “we,” “us” and “our” refer to Buckeye Partners, L.P.
3
•
our annual report on Form 10-K, as amended, for the year ended December 31, 2003;
•
our quarterly report on Form 10-Q for the quarter ended March 31, 2004;
•
our current report on Form 8-K filed on May 4, 2004 (other
than the information furnished under Item 9 of such Form 8-K and the
related exhibit).
•
all documents that we file under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 between the date of
this prospectus and the termination of the Registration Statement.
5002 Buckeye Road
P. O. Box 368
Emmaus, Pennsylvania
(484) 232-4000
Attention: Investor Relations
Table of Contents
RISK FACTORS
Before you invest in our securities, you should be aware that there are
various risks in such an investment, including those described below. You
should consider carefully these risk factors together with all of the other
information included in this prospectus, any prospectus supplement and the
documents we have incorporated by reference in this document before purchasing
our securities.
Risks Inherent to our Business
Changes in petroleum demand and distribution may adversely affect our
business
Demand for the service provided by our operating partnerships depends upon
the demand for petroleum products in the regions served. Prevailing economic
conditions, price and weather affect the demand for petroleum products. Changes
in transportation and travel patterns in the areas served by our pipelines also
affect the demand for petroleum products because a substantial portion of the
refined petroleum products transported by our pipelines is ultimately used as
fuel for motor vehicles and aircraft. If these factors result in a decline in
demand for petroleum products, the business of our operating partnerships would
be particularly susceptible to adverse effects because they operate without the
benefit of either exclusive franchises from government entities or long term
contracts.
Energy conservation, changing sources of supply, structural changes in the
oil industry and new energy technologies also could adversely affect our
business. We cannot predict or control the effect of each of these factors on
us or our operating partnerships.
Our operating partnership’s rate structure is subject to regulation and
change by the Federal Energy Regulatory Commission
Buckeye Pipe Line Company, L.P., one of our operating partnerships, is an
interstate common carrier regulated by the Federal Energy Regulatory
Commission, or FERC, under the Interstate Commerce Act and the Department of
Energy Organization Act. Buckeye Pipe Line Company, L.P. presently is
authorized to charge rates set by market forces, subject to limitations, rather
than by reference to costs historically incurred by the pipeline, in 15 regions
and metropolitan areas.
The Buckeye program is an exception to the generic oil pipeline
regulations the FERC issued under the Energy Policy Act of 1992. The generic
rules rely primarily on an index methodology that allows a pipeline to change
its rates in accordance with an index that the FERC believes reflects cost
changes appropriate for application to pipeline rates. In the alternative, a
pipeline is allowed to charge market-based rates if the pipeline establishes
that it does not possess significant market power in a particular market.
The Buckeye rate program was reevaluated by the FERC in July 2000, and was
allowed to continue with no material changes. We cannot predict the impact, if
any, that a change in the FERC’s method of regulating Buckeye Pipe Line
Company, L.P. would have on our operations, financial condition or results of
operations.
Our partnership status may be a disadvantage to us in calculating cost of
service for rate-making purposes
In a 1995 decision involving an unrelated oil pipeline limited
partnership, the FERC partially disallowed the inclusion of income taxes in
that partnership’s cost of service. In another FERC proceeding involving a
different oil pipeline limited partnership, the FERC held that the oil pipeline
limited partnership may not claim an income tax allowance for income
attributable to non-corporate limited partners, both individuals and other
entities. Because corporations are taxpaying entities, income taxes are
generally allowed to be included as a corporate cost-of-service. While we
currently do not use the cost-of-service methodology to support our rates,
these decisions might adversely affect us should we elect in the future to use
the cost-of-service methodology or should we be required to use that
methodology to defend our rates if challenged by our customers. This could put
us at a competitive disadvantage.
Environmental regulation may impose significant costs and liabilities on
us
4
Our operating partnerships are subject to federal, state and local laws
and regulations relating to the protection of the environment. Risks of
substantial environmental-related liabilities are inherent in pipeline
operations, and we cannot assure you that the operating partnerships will not
incur material environmental liabilities. Additionally, our costs could
increase significantly and we could face substantial liabilities, if, among
other developments:
Existing or future state or federal government regulations banning or
restricting the use of MTBE in gasoline and requiring the use of ultra
low-sulfur diesel fuel could adversely affect our results of operations,
thereby reducing our ability to make distributions to unitholders or service
our debt obligations
Our pipelines transport gasoline containing MTBE, an oxygenate used
extensively to reduce motor vehicle tailpipe emissions. In response to concerns
about MTBE’s adverse impact on ground or surface water, many states, including
New York and Connecticut, have banned or restricted the use of MTBE in
gasoline. Other states are considering bans or restrictions on MTBE or opting
out of the EPA’s reformulated gasoline program, either of which events would
reduce the use of MTBE. The phase-out of MTBE may result in a reduction in
gasoline volumes delivered by our pipelines. We are unable to quantify the
amount by which our transportation volumes might be affected by the phase-out
of MTBE. In addition, new requirements for the use of ultra low-sulfur diesel
fuel, which will be phased in commencing in 2006 through 2010, could require
significant capital expenditures at certain locations in order to permit our
facilities to handle this new product grade. At this time we are unable to
predict the timing or amount of capital or operating expenditures that would be
required to enable us to transport and store ultra low-sulfur diesel fuel.
Department of Transportation regulations may impose significant costs and
liabilities on us
The operating partnerships’ pipeline operations are subject to regulation
by the Department of Transportation. These regulations require, among other
things, that pipeline operators engage in a regular program of pipeline
integrity testing to assess, evaluate, repair and validate the integrity of
their pipelines, which, in the event of a leak or failure, could affect
populated areas, unusually sensitive environmental areas, or commercially
navigable waterways. In response to these regulations, the operating
partnerships conduct pipeline integrity tests on an ongoing and regular basis.
Depending on the results of these integrity tests, the operating partnerships
could incur significant and unexpected capital and operating expenditures, not
accounted for in anticipated capital or operating budgets, in order to repair
such pipelines to ensure their continued safe and reliable operation.
Terrorist attacks could adversely affect our business
Since the attacks of September 11, 2001, the United States government has
issued warnings that energy assets, specifically our nation’s pipeline
infrastructure, may be the future target of terrorist organizations. These
developments have subjected our operations to increased risks. Any future
terrorist attack on our facilities, those of our customers and, in some cases,
those of other pipelines, refineries or terminals, could have a material
adverse effect on our business.
Our operations are subject to operational hazards and unforeseen
interruptions for which we may not be adequately insured
Our operations are subject to operational hazards and unforeseen
interruptions such as natural disasters, adverse weather, accidents, fires,
explosions, hazardous materials releases, and other events beyond our control.
These events might result in a loss of equipment or life, injury, or extensive
property damage, as well as an interruption in our operations. Our operating
partnerships operations are currently covered by property, casualty, workers’
compensation and environmental insurance policies. In the future, however, we
may not be able to maintain or obtain insurance of the type and amount desired
at reasonable rates. As a result of market conditions, premiums and deductibles
for certain insurance policies have increased substantially, and could escalate
further. In
5
some instances, certain insurance could become unavailable or available
only for reduced amounts of coverage. For example, insurance carriers are now
requiring broad exclusions for losses due to war risk and terrorist acts. If we
were to incur a significant liability for which we were not fully insured, it
could have a material adverse effect on our financial position, thereby
reducing our ability to make distributions to unitholders, or payments to debt
holders.
Competition could adversely affect our operating results
Generally, pipelines are the lowest cost method for long-haul overland
movement of refined petroleum products. Therefore, our most significant
competitors for large volume shipments are other existing pipelines, many of
which are owned and operated by major integrated oil companies. In addition,
new pipelines (including pipeline segments that connect with existing pipeline
systems) could be built to effectively compete with us in particular locations.
We compete with marine transportation in some areas. Tankers and barges on
the Great Lakes account for some of the volume to certain Michigan, Ohio and
upstate New York locations during the approximately eight non-winter months of
the year. Barges are presently a competitive factor for deliveries to the New
York City area, the Pittsburgh area, Connecticut and Ohio.
Trucks competitively deliver product in a number of areas that we serve.
While their costs may not be competitive for longer hauls or large volume
shipments, trucks compete effectively for incremental and marginal volumes in
many areas that we serve. The availability of truck transportation places a
significant competitive constraint on our ability to increase our operating
partnerships’ tariff rates.
Privately arranged exchanges of product between marketers in different
locations are an increasing but non-quantified form of competition. Generally,
these exchanges reduce both parties’ costs by eliminating or reducing
transportation charges. In addition, consolidation among refiners and marketers
that has accelerated in recent years has altered distribution patterns,
reducing demand for transportation services in some markets and increasing them
in other markets.
We are a holding company and depend entirely on our operating
partnerships’ distributions to service our debt obligations and pay cash
distributions to our unitholders
We are a holding company with no material operations. If we do not receive
cash distributions from our operating partnerships, we will not be able to meet
our debt service obligations or to make cash distributions to our unitholders.
Among other things, this would adversely affect the market price of our limited
partnership units. We are currently bound by the terms of a revolving credit
facility which prohibits us from making distributions to our unitholders if a
default under the credit facility exists at the time of the distribution or
would result from the distribution. Our operating partnerships may from time to
time incur additional indebtedness under agreements that contain restrictions
which could further limit each operating partnership’s ability to make
distributions to us.
Potential future acquisitions and expansions, if any, may affect our
business by substantially increasing the level of our indebtedness and
contingent liabilities and increasing our risks of being unable to effectively
integrate these new operations
From time to time, we evaluate and acquire assets and businesses that we
believe complement our existing assets and businesses. Acquisitions may require
substantial capital or the incurrence of substantial indebtedness. If we
consummate any future acquisitions, our capitalization and results of
operations may change significantly, and you will not have the opportunity to
evaluate the economic, financial and other relevant information that we will
consider in determining the application of these funds and other resources.
Acquisitions and business expansions involve numerous risks, including
difficulties in the assimilation of the assets and operations of the acquired
businesses, inefficiencies and difficulties that arise because of unfamiliarity
with new assets and the businesses associated with them and new geographic
areas and the diversion of management’s attention from other business concerns.
Further, unexpected costs and challenges may arise whenever businesses with
different operations or management are combined, and we may experience
unanticipated delays in realizing the benefits of an acquisition. Following an
acquisition, we may discover previously unknown liabilities
6
associated with the acquired business for which we have no recourse under
applicable indemnification provisions.
Any debt securities will be junior to our operating partnerships’ debt
The debt securities will be issued by the Partnership and will be
structurally subordinated to the claims of our operating partnerships’
creditors. Holders of the debt securities will not be creditors of our
operating partnerships. The claims to the assets of our operating partnerships
derive from our own partnership interests in those operating partnerships.
Claims of our operating partnerships’ creditors will generally have priority as
to the assets of our operating partnerships over our own partnership interest
claims and will therefore have priority over the holders of our debt, including
the debt securities. Our operating partnerships’ creditors may include:
Risks Relating to Partnership Structure
We may sell additional limited partnership units, diluting existing
interests of unitholders
Our partnership agreement allows us to issue additional limited
partnership units and certain other equity securities without unitholder
approval. There is no limit on the total number of limited partnership units
and other equity securities we may issue. When we issue additional limited
partnership units or other equity securities, the proportionate partnership
interest of our existing unitholders will decrease. The issuance could
negatively affect the amount of cash distributed to unitholders and the market
price of the limited partnership units. Issuance of additional units will also
diminish the relative voting strength of the previously outstanding units.
Our general partner and its affiliates may have conflicts with our
partnership
The directors and officers of the general partner and its affiliates have
fiduciary duties to manage the general partner in a manner that is beneficial
to its sole member. At the same time, the general partner has fiduciary duties
to manage our partnership in a manner that is beneficial to our partnership.
Therefore, the general partner’s duties to us may conflict with the duties of
its officers and directors to its sole member.
Such conflicts may arise from, among others, the following factors:
Specifically, our general partner is owned by an affiliate of the
Carlyle/Riverstone Fund, which also owns, through affiliates, an interest in
the general partner of Magellan Partners. Although neither the Partnership nor
Magellan Partners have extensive operations in the geographic areas primarily
served by the other entity, the Partnership will compete directly with Magellan
Partners and perhaps other entities in which the Carlyle/Riverstone Fund,
Riverstone or Carlyle have an interest for acquisition opportunities throughout
the United States and
7
potentially will compete with Magellan Partners and these other entities
for new business or extensions of the existing services provided by our
operating partnerships, creating actual and potential conflicts of interest
between the Partnership and affiliates of our general partner.
Unitholders have limited voting rights and control of management
Our general partner manages and controls our activities and the activities
of our operating partnerships. Unitholders have no right to elect the general
partner or the directors of the general partner on an annual or other ongoing
basis. However, if the general partner resigns or is removed, its successor
must be elected by holders of a majority of the limited partnership units.
Unitholders may remove the general partner only by a vote of the holders of at
least 80% of the limited partnership units and only after receiving state
regulatory approvals required for the transfer of control of a public utility.
As a result, unitholders will have limited influence on matters affecting our
operations, and third parties may find it difficult to gain control of us or
influence our actions.
Our partnership agreement limits the liability of our general partner
Our general partner owes fiduciary duties to our unitholders. Provisions
of our partnership agreement and the partnership agreements for each of the
operating partnerships, however, contain language limiting the liability of the
general partner to the unitholders for actions or omissions taken in good faith
which do not involve gross negligence or willful misconduct. In addition, the
partnership agreements grant broad rights of indemnification to the general
partner and its directors, officers, employees and affiliates.
Unitholders may not have limited liability in some circumstances
The limitations on the liability of holders of limited partnership
interests for the obligations of a limited partnership have not been clearly
established in some states. If it were determined that we had been conducting
business in any state without compliance with the applicable limited
partnership statute, or that the unitholders as a group took any action
pursuant to our partnership agreement that constituted participation in the
“control” of our business, then the unitholders could be held liable under some
circumstances for our obligations to the same extent as a general partner.
Under applicable state law, our general partner has unlimited liability
for our obligations, including our debts and environmental liabilities, if any,
except for our contractual obligations that are expressly made without recourse
to the general partner.
In addition, Section 17-607 of the Delaware Revised Uniform Limited
Partnership Act provides that under some circumstances a unitholder may be
liable to us for the amount of a distribution for a period of three years from
the date of the distribution.
Tax Risks to Unitholders
The IRS could treat us as a corporation for tax purposes or changes in law
could subject us to entity-level taxation, which would substantially reduce the
cash available for distribution to holders of limited partnership units.
The availability to a unitholder of the federal income tax benefits of an
investment in the limited partnership units depends, in large part, on our
classification as a partnership for federal income tax purposes. No ruling from
the Internal Revenue Service (the “IRS”) as to this status has been or is
expected to be requested. We are instead relying on the opinion of Morgan,
Lewis & Bockius LLP, which is not binding on the IRS.
If we were classified as a corporation for federal income tax purposes, we
would be required to pay tax on our income at corporate tax rates (currently a
35% federal rate), and distributions received by the unitholders would
generally be taxed a second time as corporate distributions. Because a tax
would be imposed upon us as an entity, the cash available for distribution to
the unitholders would be substantially reduced. Treatment of us as a
corporation would cause a material reduction in the anticipated cash flow and
after-tax return to the unitholders, likely causing a substantial reduction in
the value of the limited partnership units.
8
The law could be changed so as to cause us to be treated as a corporation for
federal income tax purposes or otherwise to be subject to entity-level
taxation. Further, because of widespread state budget deficits, several states
are evaluating ways to subject partnerships to entity-level taxation through
the imposition of state income, franchise or other forms of taxation. If any
state were to impose a tax upon us, the cash available for distribution to you
would be reduced.
A successful IRS contest of the federal income tax positions that we take may
adversely affect the market for limited partnership units.
We have not requested a ruling from the IRS with respect to our classification
as a partnership for federal income tax purposes, the classification of any of
the revenue from our operations as “qualifying income” under Section 7704 of
the Internal Revenue Code, or any other matter affecting us. Accordingly, the
IRS may adopt positions that differ from the conclusions expressed in this
prospectus or the positions taken by us. It may be necessary to resort to
administrative or court proceedings in an effort to sustain some or all of such
conclusions or the positions taken by us. A court may not concur with some or
all of our positions. Any contest with the IRS may materially and adversely
impact the market for the limited partnership units and the prices at which
they trade. In addition, the costs of any contest with the IRS will be borne
directly or indirectly by the unitholders and our general partner.
Holders of limited partnership units may be required to pay taxes even if they
do not receive any cash distributions.
A unitholder will be required to pay federal income taxes and, in some cases,
state and local income taxes on the unitholder’s allocable share of our income,
even if the unitholder receives no cash distributions from us. We cannot
guarantee that a unitholder will receive cash distributions equal to the
unitholder’s allocable share of our taxable income or even the tax liability to
the unitholder resulting from that income. Further, a unitholder may incur a
tax liability, in excess of the amount of cash received, upon the sale of the
unitholder’s limited partnership units.
Ownership of limited partnership units may have adverse tax consequences for
tax-exempt organizations and certain other investors.
Investment in limited partnership units by certain tax-exempt entities,
regulated investment companies and foreign persons raises issues unique to
them. For example, virtually all of our taxable income allocated to
organizations exempt from federal income tax, including individual retirement
accounts and other retirement plans, will be unrelated business taxable income
and thus will be taxable to the unitholder. Very little of our income will be
qualifying income to a regulated investment company. Distributions to foreign
persons will be reduced by withholding taxes.
There are limits on the deductibility of losses that may adversely affect
holders of limited partnership units.
In the case of taxpayers subject to the passive loss rules (generally,
individuals and closely-held corporations), any losses generated by us will
only be available to offset our future income and cannot be used to offset
income from other activities, including other passive activities or
investments. Unused losses may be deducted when the unitholder disposes of the
unitholder’s entire investment in us in a fully taxable transaction with an
unrelated party. A unitholder’s share of our net passive income may be offset
by unused losses from us carried over from prior years, but not by losses from
other passive activities, including losses from other publicly traded
partnerships.
Our tax shelter registration could increase the risk of a potential audit by
the IRS.
We are registered with the IRS as a “tax shelter.” The IRS has issued to us the
following tax shelter registration number: 86280000273. Issuance of the
registration number does not indicate that an investment in us or the claimed
tax benefits have been reviewed, examined or approved by the IRS. We cannot
guarantee that we will not be audited by the IRS or that tax adjustments will
not be made. The rights of a unitholder owning less than a 1% profits interest
in us to participate in the income tax audit process are very limited. Further,
any adjustments in our tax returns will lead to adjustments in the unitholders’
tax returns and may lead to audits of unitholders’ tax returns and adjustments
of items unrelated to us. Each unitholder would bear the cost of any expenses
incurred in connection with an examination of the unitholder’s personal tax
return.
9
Recently enacted regulations may require disclosure of an investment in the
limited partnership units as a reportable transaction.
Recently issued final regulations require taxpayers to report certain
information on IRS Form 8886 if they participate in a “reportable transaction.”
A transaction may be a reportable transaction based upon any of several
factors, including the existence of book-tax differences common to financial
transactions, one or more of which may be present with respect to your
investment in our limited partnership units. The IRS has issued a list of items
that are excepted from these disclosure requirements. You should consult your
own tax advisors concerning the application of any of these factors to your
investment in our limited partnership units. Congress is considering
legislative proposals that, if enacted, would impose significant penalties for
failure to comply with these disclosure requirements. The new regulations also
impose obligations on “material advisors,” that include any person who makes or
provides any written or oral statement to a registered “tax shelter” in
connection with a transaction, and receives or expects to receive certain fees
with respect to a transaction. As described in “Material Tax Considerations of
Unitholders—Administrative Matters—Registration as a Tax Shelter,” we have
registered as a tax shelter, and, thus, one of our material advisors will be
required to maintain a list of specific information, including your name and
tax identification number, and to furnish this information to the IRS upon
request. Investors should consult their own tax advisors concerning any
possible disclosure obligation with respect to their investment and should be
aware that we and our material advisors intend to comply with the list and
disclosure requirements.
Tax gain or loss on disposition of limited partnership units could be different
than expected.
A unitholder who sells limited partnership units will recognize the gain or
loss equal to the difference between the amount realized, including the
unitholder’s share of our nonrecourse liabilities, and the unitholder’s
adjusted tax basis in the limited partnership units. Prior distributions in
excess of cumulative net taxable income allocated for a limited partnership
unit which decreased a unitholder’s tax basis in that limited partnership unit
will, in effect, become taxable income if the limited partnership unit is sold
at a price greater than the unitholder’s tax basis in that limited partnership
unit, even if the price is less than the unit’s original cost. A portion of the
amount realized, whether or not representing gain, may be ordinary income.
Furthermore, should the IRS successfully contest some conventions used by us, a
unitholder could recognize more gain on the sale of limited partnership units
than would be the case under those conventions, without the benefit of
decreased income in prior years.
The reporting of partnership tax information is complicated and subject to
audits.
We will furnish each unitholder with a Substitute Schedule K-1 that sets forth
the unitholder’s share of our income, gains, losses and deductions. In
preparing these schedules, we will use various accounting and reporting
conventions and adopt various depreciation and amortization methods. We cannot
guarantee that these schedules will yield a result that conforms to statutory
or regulatory requirements or to administrative pronouncements of the IRS.
Further, our tax return may be audited, which could result in an audit of a
unitholder’s individual tax return and increased liabilities for taxes because
of adjustments resulting from the audit.
There is a possibility of loss of tax benefits relating to nonconformity of
limited partnership units and nonconforming depreciation conventions.
Because we cannot match transferors and transferees of limited partnership
units, uniformity of the tax characteristics of the limited partnership units
to a purchaser of limited partnership units of the same class must be
maintained. To maintain uniformity and for other reasons, we have adopted
certain depreciation and amortization conventions which we believe conform to
Treasury Regulations under Section 743(b) of the Internal Revenue Code. A
successful challenge to those conventions by the IRS could adversely affect the
amount of tax benefits available to a purchaser of limited partnership units
and could have a negative impact on the value of the limited partnership units.
10
Holders of limited partnership units will likely be subject to state, local and
other taxes in states where holders of limited partnership units live or as a
result of an investment in the limited partnership units.
In addition to United States federal income taxes, unitholders will likely be
subject to other taxes, such as state and local taxes, unincorporated business
taxes and estate, inheritance or intangible taxes that are imposed by the
various jurisdictions in which the unitholder resides or in which we do
business or own property. A unitholder will likely be required to file state
and local income tax returns and pay state and local income taxes in some or
all of the various jurisdictions in which we do business or own property and
may be subject to penalties for failure to comply with those requirements. It
is the responsibility of each unitholder to file all applicable United States
federal, state, local and foreign tax returns. Morgan, Lewis & Bockius LLP has
not rendered an opinion on the tax consequences of an investment in us other
than with regard to the United States federal income tax consequences.
Holders of limited partnership units may have negative tax consequences if we
default on our debt or sell assets.
If we default on any of our debt, the lenders will have the right to sue us for
non-payment. This could cause an investment loss and negative tax consequences
for unitholders through the realization of taxable income by unitholders
without a corresponding cash distribution. Likewise, if we were to dispose of
assets and realize a taxable gain while there is substantial debt outstanding
and proceeds of the sale were applied to the debt, our unitholders could have
increased taxable income without a corresponding cash distribution.
11
Table of Contents
•
environmental laws, regulations and enforcement policies
become more rigorous; or
•
claims for property damage or personal injury resulting from
the operations of the operating partnerships are filed.
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•
general creditors;
•
trade creditors;
•
secured creditors;
•
taxing authorities; and
•
creditors holding guarantees.
•
decisions by our general partner regarding the amount and
timing of our cash expenditures, borrowings and issuances of
additional limited partnership units or other securities can affect
the amount of incentive compensation payments we make to our general
partner;
•
under our partnership agreement we reimburse the general
partner for the costs of managing and operating the partnership; and
•
under our partnership agreement, it is not a breach of our
general partner’s fiduciary duties for affiliates of our general
partner to engage in activities that compete with us.
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FORWARD-LOOKING STATEMENTS
Some information in this prospectus or any prospectus supplement may
contain forward-looking statements. Such statements use forward-looking words
such as “anticipate,” “continue,” “estimate,” “expect,” “may,” “will,” or other
similar words. These statements discuss future expectations or contain
projections. Specific factors which could cause actual results to differ from
those in the forward-looking statements, include:
When considering forward-looking statements, you should keep in mind the
risk factors referred to elsewhere in this prospectus. The events described in
our risk factors could cause our actual results to differ materially from those
contained in any forward-looking statement. You should consider the above
information when reading any forward-looking statements in:
12
•
price trends and overall demand for refined petroleum products in the United States in general and in our service areas in
particular (economic activity, weather, alternative energy sources, conservation and technological advances may affect
price trends and demands);
•
changes, if any, in laws and regulations, including, among others, safety, tax and accounting matters or Federal Energy
Regulatory Commission regulation of our tariff rates;
•
liability for environmental claims;
•
security issues affecting our assets, including, among others, potential damage to our assets caused by acts of war or
terrorism;
•
unanticipated capital expenditures and operating expenses to repair or replace our assets;
•
availability and cost of insurance on our assets and operations;
•
our ability to successfully identify and complete strategic acquisitions and make cost saving changes in operations;
•
expansion in the operations of our competitors;
•
our ability to integrate any acquired operations into our existing operations;
•
shut-downs or cutbacks at major refineries that use our services;
•
deterioration in our labor relations;
•
changes in real property tax assessments;
•
disruptions to the air travel system; and
•
interest rate fluctuations and other capital market conditions.
•
this prospectus;
•
documents incorporated in this prospectus by reference;
•
reports that we file with the SEC;
•
our press releases; or
•
oral statements made by us or any of our officers or other persons acting on our behalf.
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USE OF PROCEEDS
We will use the net proceeds from the sale of the securities for general business purposes, including debt repayment, future acquisitions, capital expenditures and working capital. We may change the potential uses of the net proceeds in a prospectus supplement.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated
is as follows:
Twelve Months Ended
Three Months Ended
December 31,
March 31,
1999
2000
2001
2002
2003
2003
2004
3.86
4.07
3.79
2.15
3.78
4.23
These computations include us and our operating partnerships and subsidiaries. For these ratios, “earnings” is the amount resulting from adding the following items:
| • | pre-tax income from continuing operations; | |||
| • | portion of rents representative of the interest factor; and | |||
| • | interest on indebtedness. | |||
The term “fixed charges” means the sum of the following:
| • | interest on indebtedness; | |||
| • | capitalized interest; and | |||
| • | a portion of rents representative of the interest factor. | |||
13
DESCRIPTION OF LIMITED PARTNERSHIP UNITS
As of May 31, 2004, there were issued and outstanding 28,739,246 limited
partnership units representing an aggregate 99% limited partnership interest in
Buckeye Partners, L.P. The limited partnership units and the 243,914 general
partnership units generally participate pro rata in our income, gains, losses,
deductions, credits and distributions, subject to the Incentive Compensation
Agreement described below.
Buckeye Partners, L.P. currently has a unit option and distribution
equivalent plan which authorizes the granting of options to purchase up to
720,000 limited partnership units to selected employees of Buckeye Pipe Line
Services Company. As of May 31, 2004, there were 258,900 limited partnership
units issuable upon the exercise of options granted under this plan.
Liquidation
In the event of a liquidation, dissolution and winding up of the
Partnership, the limited partnership units, along with the general partnership
units, will be entitled to receive pro rata, to the extent of positive balances
in their respective capital accounts, any assets remaining after satisfaction
of our liabilities and establishment of reasonable reserves.
Voting
Each holder of limited partnership units is entitled to one vote for each
limited partnership unit on all matters submitted to a vote of the unitholders.
Incentive Compensation
The Incentive Compensation Agreement between us and our general partner
provides that if a quarterly cash distribution exceeds a target of $0.325 per
limited partnership unit, we will pay the general partner, for each outstanding
limited partnership unit, incentive compensation equal to:
The general partner is also entitled to incentive compensation for special
cash distributions exceeding a target special distribution amount per limited
partnership unit. The target special distribution amount generally means the
amount which, together with all amounts distributed per limited partnership
unit prior to the special distribution compounded quarterly at 13% per annum,
would equal $10.00, the initial public offering price of the limited
partnership units split two-for-one, compounded quarterly at 13% per annum from
the date of the closing of the initial public offering in December 1986. No
special cash distributions have ever been paid by the Partnership.
14
Without the consent of two-thirds interest of the limited partners, the
general partner may not amend the Incentive Compensation Agreement in any
material respect unless the amendment, in the good faith opinion of the general
partner, does not adversely affect the limited partners in any material
respect.
No Preemptive Rights
No person is entitled to preemptive rights in respect of issuances of
securities by Buckeye Partners, L.P.
Transfer Agent and Registrar
The transfer agent and registrar for the limited partnership units is
EquiServe, First Chicago Trust Division. You may contact them at the following
address: 525 Washington Boulevard, Jersey City, New Jersey 07310.
15
DESCRIPTION OF DEBT SECURITIES
The debt securities will be our direct unsecured general obligations and
will be issued under an Indenture, dated July 10, 2003, as supplemented,
between us and SunTrust Bank, as trustee, and a supplemental indenture thereto.
This Indenture, as supplemented by any supplemental indentures relating to debt
securities to be issued hereunder, is referred to herein as the Indenture, and
SunTrust Bank, as trustee, is referred to herein as the Trustee.
The debt securities will be governed by the provisions of the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended. We and the Trustee have entered into supplements to the
Indenture, and may enter into future supplements to the Indenture from time to
time. We have summarized selected provisions of the Indenture below. The
Indenture has been incorporated by reference as an exhibit to the registration
statement of which this prospectus is a part. You should read the Indenture for
provisions that may be important to you, because the Indenture, and not this
description, govern your rights as a holder of debt securities. In the summary
below, we have included references to section numbers of the Indenture so that
you can easily locate these provisions. Capitalized terms used in the summary
have the meanings specified in the Indenture.
Specific Terms of Each Series of Debt Securities in the Prospectus Supplement
A prospectus supplement and a supplemental indenture relating to any
series of debt securities being offered will include specific terms relating to
the offering. These terms will include some or all of the following:
No Limitation on Amount of Debt Securities
The Indenture does not limit the amount of debt securities that may be
issued. The Indenture allows debt securities to be issued up to any principal
amount that may be authorized by us and may be in any currency or currency unit
designated by us.
Registration of Notes
Debt securities of a series may be issued in certificated or global form.
(Sections 2.01 & 2.02)
16
Denominations
The prospectus supplement for each issuance of debt securities will state
whether the securities will be issued in amounts other than $1,000 each or
multiples thereof.
No Personal Liability of General Partner
Our general partner and its directors, officers, employees and sole member
will not have any liability for our obligations under the Indenture or the debt
securities. Each holder of debt securities by accepting a debt security waives
and releases our general partner and its directors, officers, employees and
sole member from all such liability. (Section 1.15) The waiver and release are
part of the consideration for the issuance of the debt securities.
Consolidation, Merger or Sale
We will only consolidate or merge with or into any other partnership or
corporation or sell, lease or transfer all or substantially all of our assets
according to the terms and conditions of the Indenture, which includes the
following requirements:
The remaining or acquiring partnership or corporation will be substituted
for us in the Indenture with the same effect as if it had been an original
party to the Indenture. Thereafter, the successor may exercise our rights and
powers under the Indenture, in our name or in its own name. Any act or
proceeding required or permitted to be done by our Board of Directors or any of
our officers may be done by the board of directors or officers of the
successor. If we sell or transfer all or substantially all of our assets, we
will be released from all of our liabilities and obligations under the
Indenture and under the debt securities. (Sections 8.01 & 8.02)
Modification of the Indenture
Under the Indenture, generally, our rights and obligations and the rights
of the holders may be modified with the consent of the holders of a majority in
aggregate principal amount of the outstanding debt securities of each series
affected by the modification. No modification of the principal or interest
payment terms, and no modification reducing the percentage required for
modifications, is effective against any holder without its consent. Buckeye
Partners, L.P. and the Trustee may amend the Indenture without the consent of
any holder of the debt securities to make technical changes, such as:
Events of Default
“Event of Default” when used in an Indenture, will mean any of the following:
17
An Event of Default for a particular series of debt securities does not
necessarily constitute an Event of Default for any other series of debt
securities issued under the Indenture. The Trustee may withhold notice to the
holders of debt securities of any default (except in the payment of principal
or interest) if it considers such withholding of notice to be in the interests
of the holders. (Section 6.02)
If an Event of Default for any series of debt securities occurs and
continues, the Trustee or the holders of not less than 25% in aggregate
principal amount of the debt securities outstanding of that series may declare
the entire principal of and accrued and unpaid interest, if any, on all the
debt securities of that series to be due and payable immediately. If this
happens, subject to specific conditions, the holders of a majority of the
aggregate principal amount of the debt securities of that series can void the
declaration. (Section 5.02)
Other than its duties in case of a default, a Trustee is not obligated to
exercise any of its rights or powers under the Indenture at the request, order
or direction of any holders, unless the holders offer the Trustee indemnity or
security satisfactory to the Trustee. (Section 6.01) If they provide this
satisfactory indemnification or security, the holders of a majority in
principal amount of any series of debt securities may direct the time, method
and place of conducting any proceeding or any remedy available to the Trustee,
or exercising any power conferred upon the Trustee, for any series of debt
securities unless contrary to law. (Section 5.12)
Limitations on Liens
The Indenture provides that the Partnership will not, nor will it permit
any Restricted Subsidiary (as defined below) to, create, assume, incur or
suffer to exist any lien upon any Principal Property (as defined below) or upon
any shares of capital stock of any Restricted Subsidiary (if such Restricted
Subsidiary is a corporation) owning or leasing any Principal Property, whether
owned or leased on the date of the Indenture or thereafter acquired, to secure
any debt of the Partnership or any other person (other than the debt securities
issued thereunder), without in any such case making effective provision whereby
all of the debt securities outstanding thereunder shall be secured equally and
ratably with, or prior to, such debt so long as such debt shall be so secured.
The following are excluded from this restriction:
18
Notwithstanding the foregoing, under the Indenture, the Partnership may,
and may permit any Restricted Subsidiary to, create, assume, incur, or suffer
to exist any lien upon any Principal Property to secure debt of the Partnership
or any person other than the debt securities, that is not excepted by clauses
(1) through (9), inclusive, above without securing the debt securities issued
under the Indenture, provided that the aggregate principal amount of all debt
then outstanding secured by such lien and all similar liens, together with all
net sale proceeds from Sale-Leaseback Transactions, excluding Sale-Leaseback
Transactions permitted by clauses (1) through (4), inclusive, of the first
paragraph of the restriction on sale-leasebacks covenant described below, does
not exceed 10% of Consolidated Net Tangible Assets (as defined below). (Section
10.06)
“Consolidated Net Tangible Assets” means, at any date of determination,
the total amount of assets after deducting therefrom:
and
19
“Issue Date” means with respect to any series of debt securities issued
under either Indenture the date on which debt securities of that series are
initially issued under that Indenture.
“Permitted Liens” means:
20
“Material Adverse Effect” means:
21
“Person” means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, other
entity, unincorporated organization or government or any agency or political
subdivision thereof.
“Principal Property” means, whether owned or leased on the date of the
Indenture or thereafter acquired:
“Restricted Subsidiary” shall mean the subsidiaries of the Partnership
identified on Exhibit A of the Indenture as well as any Subsidiary of the
Partnership formed after the date of the Indenture that has not been designated
by the Board of Directors, at its creation or acquisition, as an Unrestricted
Subsidiary (as defined below). The Partnership may thereafter redesignate an
Unrestricted Subsidiary as a Restricted Subsidiary and it will thereafter be a
Restricted Subsidiary; provided, that such Restricted Subsidiary may not
thereafter be redesignated as an Unrestricted Subsidiary, and provided,
further, that no Subsidiary may be designated as an Unrestricted Subsidiary at
any time other than at its creation or acquisition.
“Sale-Leaseback Transaction” means the sale or transfer by the Partnership
or any Subsidiary of any Principal Property to a Person (other than the
Partnership or a Subsidiary) and the taking back by the Partnership or any
Subsidiary, as the case may be, of a lease of such Principal Property.
“Subsidiary” means, with respect to any Person:
“Unrestricted Subsidiary” shall mean the subsidiaries of the Partnership
identified on Exhibit A of the
22
Indenture as well as any Subsidiary of the Partnership formed after the date of
the Indenture that has been designated by the Board of Directors as an
“Unrestricted Subsidiary” at the time of its creation or acquisition; provided
that no Debt or other obligation of such Unrestricted Subsidiary may be assumed
or guaranteed by the Partnership or any Restricted Subsidiary, nor may any
asset of the Partnership or any Restricted Subsidiary, directly or indirectly,
contingently or otherwise, become encumbered or otherwise subject to the
satisfaction thereof.
Limitations on Sale-Leasebacks
. The Indenture provides that the
Partnership will not, and will not permit any Subsidiary to, engage in a
Sale-Leaseback Transaction, unless:
Notwithstanding the foregoing, under the Indenture the Partnership may,
and may permit any Subsidiary to, effect any Sale-Leaseback Transaction that is
not excepted by clauses (1) through (4), inclusive, of the above paragraph,
provided that the Attributable Indebtedness from such Sale-Leaseback
Transaction, together with the aggregate principal amount of then outstanding
debt (other than the debt securities) secured by liens upon Principal
Properties not excepted by clauses (1) through (9), inclusive, of the first
paragraph of the limitation on liens covenant described above, do not exceed
10% of the Consolidated Net Tangible Assets. (Section 10.07)
“Attributable Indebtedness,” when used with respect to any Sale-Leaseback
Transaction, means, as at the time of determination, the present value,
discounted at the rate set forth or implicit in the terms of the lease included
in such transaction of the total obligations of the lessee for rental payments,
other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items that do not constitute payments for property rights
during the remaining term of the lease included in such Sale-Leaseback
Transaction including any period for which such lease has been extended. In the
case of any lease that is terminable by the lessee upon the payment of a
penalty or other termination payment, such amount shall be the lesser of the
amount determined assuming termination upon the first date such lease may be
terminated, in which case the amount shall also include the amount of the
penalty or termination payment, but no rent shall be considered as required to
be paid under such lease subsequent to the first date upon which it may be so
terminated, or the amount determined assuming no such termination.
“Funded Debt” means all debt maturing one year or more from the date of
the creation thereof, all debt directly or indirectly renewable or extendible,
at the option of the debtor, by its terms or by the terms of any instrument or
agreement relating thereto, to a date one year or more from the date of the
creation thereof, and all debt under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more.
“Pari Passu Debt” means any Funded Debt of the Partnership, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Funded Debt, the instrument creating or
23
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Funded Debt shall be subordinated in right of payment to the
debt securities.
Payment and Transfer
Principal, interest and any premium on fully registered securities will be
paid at designated places. Payment will be made by check mailed to the persons
in whose names the debt securities are registered on days specified in the
Indenture or any prospectus supplement. Other forms of payment relating to the
debt securities will be paid at a place designated by us and specified in a
prospectus supplement. (Section 3.07)
Fully registered securities may be transferred or exchanged at the
corporate trust office of the Trustee or at any other office or agency
maintained by us for such purposes, without the payment of any service charge
except for any tax or governmental charge. (Section 3.05)
Discharging Our Obligations
We may choose to either discharge our obligations on the debt securities
of any series in a legal defeasance, or to release ourselves from our covenant
restrictions on the debt securities of any series in a covenant defeasance. We
may do so at any time after we deposit with the Trustee sufficient cash or
government securities to pay the principal, interest, any premium and any other
sums due to the stated maturity date or a redemption date of the debt
securities of the series. If we choose the legal defeasance option, the holders
of the debt securities of the series will not be entitled to the benefits of
the Indenture except for registration of transfer and exchange of debt
securities, replacement of lost, stolen, destroyed or mutilated debt
securities, conversion or exchange of debt securities, sinking fund payments
and receipt of principal and interest on the original stated due dates or
specified redemption dates. (Section 13.02)
We may discharge our obligations under the Indenture or release ourselves
from covenant restrictions only if, in addition to making the deposit with the
Trustee, we meet some specific requirements. Among other things:
Book Entry, Delivery and Form
The debt securities of a series may be issued in whole or in part in the
form of one or more global certificates that will be deposited with a
depositary identified in a prospectus supplement.
Unless otherwise stated in any prospectus supplement, The Depository Trust
Company, New York, New York, or DTC, will act as depositary. Book-entry notes
of a series will be issued in the form of a global note that will be deposited
with DTC. This means that we will not issue certificates to each holder. One
global note will be issued to DTC who will keep a computerized record of its
participants (for example, your broker) whose clients have purchased the notes.
The participant will then keep a record of its clients who purchased the notes.
Unless it is exchanged in whole or in part for a certificate note, a global
note may not be transferred; except that DTC, its nominees and their successors
may transfer a global note as a whole to one another.
Beneficial interests in global notes will be shown on, and transfers of
global notes will be made only through, records maintained by DTC and its
participants.
24
DTC has provided us the following information: DTC is a limited-purpose
trust company organized under the New York Banking Law, a “banking
organization” within the meaning of the New York Banking Law, a member of the
United States Federal Reserve System, a “clearing corporation” within the
meaning of the New York Uniform Commercial Code and a “clearing agency”
registered under the provisions of Section 17A of the Securities Exchange Act
of 1934. DTC holds securities that its participants (“Direct Participants”)
deposit with DTC. DTC also records the settlement among Direct Participants of
securities transactions, such as transfers and pledges, in deposited securities
through computerized records for Direct Participant’s accounts. This eliminates
the need to exchange certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations.
According to DTC, the foregoing information with respect to DTC has been
provided to the financial community for informational purposes only and is not
intended to serve as a representation, warranty or contract modification of any
kind.
DTC’s book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
Direct Participant. The rules that apply to DTC and its participants are on
file with the SEC.
DTC is owned by a number of its Direct Participants and by the New York
Stock Exchange, Inc., The American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc.
We will wire principal and interest payments to DTC’s nominee. We and the
Trustee will treat DTC’s nominee as the owner of the global notes for all
purposes. Accordingly, we, the Trustee and any paying agent will have no direct
responsibility or liability to pay amounts due on the global notes to owners of
beneficial interests in the global notes.
It is DTC’s current practice, upon receipt of any payment of principal or
interest, to credit Direct Participants’ accounts on the payment date according
to their respective holdings of beneficial interests in the global notes as
shown on DTC’s records. In addition, it is DTC’s current practice to assign any
consenting or voting rights to Direct Participants whose accounts are credited
with notes on a record date, by using an omnibus proxy. Payments by
participants to owners of beneficial interests in the global notes, and voting
by participants, will be governed by the customary practices between the
participants and owners of beneficial interests, as is the case with notes held
for the account of customers registered in “street name.” However, payments
will be the responsibility of the participants and not of DTC, the Trustee or
us.
Notes represented by a global note will be exchangeable for certificate
notes with the same terms in authorized denominations only if:
The Trustee
Resignation or Removal of Trustee
. Under the Indenture and the Trust
Indenture Act of 1939, as amended, governing Trustee conflicts of interest, any
uncured Event of Default with respect to any series of debt securities will
force the Trustee to resign as trustee under the Indenture. Any resignation
will require the appointment of a successor trustee under the applicable
Indenture in accordance with its terms and conditions.
The Trustee may resign or be removed by us with respect to one or more
series of debt securities and a successor trustee may be appointed to act with
respect to any such series. The holders of a majority in aggregate principal
amount of the debt securities of any series may remove the Trustee with respect
to the debt securities of such series. (Section 6.10)
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Limitations on Trustee if it is Our Creditor
. The Indenture contains
limitations on the right of the Trustee thereunder, in the event that it
becomes a creditor of the Partnership, to obtain payment of claims in some
cases, or to realize on property received in respect of any such claim as
security or otherwise. (Section 6.13)
Certificates to Be Furnished to Trustee
. The Indenture provides that, in
addition to other certificates that may be specifically required by other
provisions of the Indenture, every application by us for action by the Trustee
shall be accompanied by an officers’ certificate stating that, in the opinion
of the signers, all conditions precedent to such action have been complied
with. (Section 1.02)
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MATERIAL TAX CONSIDERATIONS
This section is a summary of material tax considerations that may be
relevant to prospective unitholders. This section and the opinions of Morgan,
Lewis & Bockius LLP, our tax counsel, that are set out herein are based upon
the Internal Revenue Code of 1986, as amended, the regulations promulgated
thereunder and administrative rulings and court decisions, all as currently in
effect and all of which are subject to change. Subsequent changes in such
authorities may cause the tax consequences to vary substantially from the
consequences described below.
No attempt has been made in the following discussion to comment on all
federal income tax matters affecting us or the unitholders. Moreover, the
discussion focuses on unitholders who are individuals and who are citizens or
residents of the United States, and has only limited application to
corporations, estates, trusts, non-resident aliens or other unitholders subject
to specialized tax treatment, such as tax-exempt institutions, foreign persons,
individual retirement accounts, real estate investment trusts or mutual funds.
Accordingly, each prospective unitholder should consult, and should depend on,
the unitholder’s own tax advisor in analyzing the federal, state, local and
foreign tax consequences of the ownership or disposition of the limited
partnership units.
Legal Opinions and Advice
Our tax counsel is of the opinion, subject to the qualifications set forth
in the discussion that follows, that for federal income tax purposes (i) each
of Buckeye Partners and the operating partnerships will be treated as a
partnership and (ii) owners of limited partnership units, with certain
exceptions as described in “Partner Status” below, will be treated as partners
of Buckeye Partners. In addition, all statements as to matters of law contained
in this section are the opinion of Morgan, Lewis & Bockius LLP, unless such
statements are made by us or others.
An opinion of counsel represents only that particular counsel’s best legal
judgment and does not bind the IRS or the courts. No assurance can be provided
that the opinions and statements set forth herein would be sustained by a court
if contested by the IRS. Any such contest with the IRS may materially and
adversely impact the market for the limited partnership units and the prices at
which limited partnership units trade even if we prevail. In addition, the
costs of any contest with the IRS will be borne directly or indirectly by the
unitholders and our general partner. Furthermore, no assurance is given that
the federal income tax consequences of an investment in us will not be
significantly modified by future legislative or administrative changes or court
decisions. Any such modification may have retroactive effect.
We have not requested, and do not expect to request, a ruling from the IRS
with respect to our classification as a partnership for federal income tax
purposes or with respect to any other matter affecting us or holders of our
limited partnership units.
Partnership Status
A partnership is not a taxable entity and incurs no federal income tax
liability. Instead, each partner is required to take into account the partner’s
proportionate share of the items of income, gain, loss and deduction of the
partnership in computing such partner’s federal income tax liability,
regardless of whether distributions are made. Distributions of cash by a
partnership to a partner are generally not taxable unless the amount of cash
distributed to a partner is in excess of the partner’s tax basis in the
partner’s partnership interest.
Morgan, Lewis & Bockius LLP is of the opinion that each of we and the
operating partnerships has been and will be classified as a partnership for
federal income tax purposes, provided that:
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Buckeye Partners believes that such assumptions have been true in the past
and expects that such assumptions will be true in the future.
Section 7704 of the Internal Revenue Code provides that publicly traded
partnerships will, as a general rule, be taxed as corporations. However, an
exception exists with respect to publicly traded partnerships of which 90% or
more of the gross income for every taxable year consists of “qualifying
income,” as described in clause (3) above. If we fail to meet this qualifying
income exception in any taxable year, other than a failure that is determined
by the IRS to be inadvertent and which is cured within a reasonable time after
discovery, we will be treated as if we transferred all of our assets (subject
to liabilities) to a newly formed corporation, as of the first day of such
taxable year, in return for stock in that corporation, and as if we then
distributed that stock to our partners in liquidation of their interests in us.
This contribution and liquidation should be tax-free to our partners and to us,
so long as we do not have liabilities at that time in excess of the tax basis
of our assets. Thereafter, we would be treated as a corporation for federal
income tax purposes.
If we or any of the operating partnerships were treated as a corporation
in any taxable year, either as a result of a failure to meet the qualifying
income exception or otherwise, our net income would be subject to tax at
corporate rates. In addition, any distribution we made to a unitholder would
be treated as taxable dividend income to the extent of our current or
accumulated earnings and profits, then, in the absence of earnings and profits,
would be treated as a nontaxable return of capital to the extent of the
unitholder’s tax basis in the unitholder’s limited partnership units, and then
would be treated as taxable capital gain after the unitholder’s tax basis in
the limited partnership units had been reduced to zero. Accordingly, treatment
of us or any of our operating partnerships as a corporation would result in a
material reduction in a unitholder’s cash flow and after-tax return and thus
would likely result in a substantial reduction of the value of the limited
partnership units.
The discussion below is based on the assumption that we and the operating
partnerships will be classified as a partnership for federal income tax
purposes.
Tax Treatment of Unitholders
Partner Status
Unitholders who have become our limited partners will be treated as our
partners for federal income tax purposes. Assignees who have executed and
delivered transfer applications, and are awaiting admission as limited
partners, and unitholders whose limited partnership units are held in street
name or by a nominee and who have the right to direct the nominee in the
exercise of the rights attendant to the ownership of their limited partnership
units, will be treated as our partners for federal income tax purposes. Because
there is no direct authority addressing assignees of limited partnership units
who are entitled to execute and deliver transfer applications but who fail to
do so, such assignees may not be treated as our partners for federal income tax
purposes. Further, assignees of limited partnership units who are entitled to
execute and deliver transfer applications but fail to do so may not receive
some federal income tax information or reports furnished to record holders of
limited partnership units. No part of our income, gain, deductions or losses
is reportable by a unitholder who is not a partner for federal income tax
purposes, and any distributions received by such a unitholder should therefore
be fully taxable as ordinary income. These holders should consult their own tax
advisors with respect to their status as our partners for federal income tax
purposes.
An owner of limited partnership units whose limited partnership units have
been transferred to a short seller to complete a short sale would appear to
lose the status as a partner with respect to such limited partnership units for
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federal income tax purposes and may recognize gain or loss on such transfer. If
such a person is not a partner, no part of our income, gain, deduction or loss
with respect to those limited partnership units would be reportable by that
person, any payments received by that person in lieu of cash distributions with
respect to those limited partnership units would be fully taxable and all of
such payments would appear to be treated as ordinary income. Unitholders
desiring to assure their status as partners should modify any applicable
brokerage account agreements to prohibit their brokers from borrowing their
limited partnership units.
In the following portions of this section, the word “unitholder” refers to
a holder of our limited partnership units who is one of our partners.
Allocation of Partnership Income, Gain, Loss and Deduction
In general, our items of income, gain, loss and deduction will be
allocated among the general partner and the unitholders in accordance with
their respective percentage interests in us.
Certain items of our income, gain, loss or deduction will be allocated as
required or permitted by Section 704(c) of the Internal Revenue Code to account
for the difference between the tax basis and fair market value of property
heretofore contributed to us. Allocations may also be made to account for the
difference between the fair market value of our assets and their tax basis at
the time of any offering made pursuant to this prospectus.
In addition, certain items of recapture income which we recognize on the
sale of any of our assets will be allocated to the extent provided in
regulations, which generally require such depreciation recapture to be
allocated to the partner who (or whose predecessor in interest) was allocated
the deduction giving rise to the treatment of such gain as recapture income.
Alternative Minimum Tax
Each unitholder will be required to take into account the unitholder’s
share of our items of income, gain, loss or deduction for purposes of the
alternative minimum tax. A portion of our depreciation deductions may be
treated as an item of tax preference for this purpose. A unitholder’s
alternative minimum taxable income derived from us may be higher than the
unitholder’s share of our net income because we may use accelerated methods of
depreciation for federal income tax purposes. Prospective unitholders should
consult their tax advisors as to the impact of an investment in limited
partnership units on their liability for the alternative minimum tax.
Treatment of Distributions by Buckeye Partners
Our distributions to a unitholder generally will not be taxable to the
unitholder for federal income tax purposes to the extent of the tax basis the
unitholder has in the unitholder’s limited partnership units immediately before
the distribution. Our cash distributions in excess of a unitholder’s tax basis
generally will be gain from the sale or exchange of the limited partnership
units, taxable in accordance with the rules described under “Disposition of
Limited Partnership Units,” below. Any reduction in a unitholder’s share of our
liabilities for which no partner, including the general partner, bears the
economic risk of loss (“nonrecourse liabilities”) will be treated as a
distribution of cash to that unitholder. In particular, our issuance of
additional limited partnership units (including, for example, as a result of
this offering) may decrease each unitholder’s share of our nonrecourse
liabilities, resulting in a deemed cash distribution.
A non-pro rata distribution of money or property may result in ordinary
income to a unitholder if such distribution reduces the unitholder’s share of
our “unrealized receivables,” including depreciation recapture, or
substantially appreciated “inventory items,” both as defined in Section 751 of
the Internal Revenue Code (collectively, “Section 751 assets”). In that event,
the unitholder will be treated as having received as a distribution the portion
of the Section 751 assets that used to be allocated to such partner and as
having exchanged such portion of our assets with us in return for the non-pro
rata portion of the actual distribution made to the unitholder. This latter
deemed exchange will generally result in the unitholder’s realization of
ordinary income, the amount of which is the excess of (1) the non-pro rata
portion of such distribution over (2) the unitholder’s tax basis for the share
of such Section 751 assets deemed relinquished in the exchange.
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Basis of Limited Partnership Units
A unitholder will have an initial tax basis for the unitholder’s limited
partnership units equal to the amount the unitholder paid for the limited
partnership units, plus the unitholder’s share of our nonrecourse liabilities.
The unitholder’s basis will be increased by the unitholder’s share of our
income and by any increase in the unitholder’s share of our nonrecourse
liabilities. The unitholder’s basis will be decreased, but not below zero, by
the unitholder’s share of our distributions, by the unitholder’s share of our
losses, by any decrease in the unitholder’s share of our nonrecourse
liabilities and by the unitholder’s share of our expenditures that are not
deductible in computing our taxable income and are not required to be
capitalized.
Limitations on Deductibility of Buckeye Partners’ Losses
The deduction by a unitholder of that unitholder’s share of our losses
will be limited to the amount of that unitholder’s tax basis in the limited
partnership units and, in the case of an individual unitholder or a corporate
unitholder who is subject to the “at risk” rules, to the amount for which the
unitholder is considered to be “at risk” with respect to our activities, if
that is less than the unitholder’s tax basis. A unitholder must recapture
losses deducted in previous years to the extent that our distributions cause
the unitholder’s at risk amount to be less than zero at the end of any taxable
year. Losses disallowed to a unitholder or recaptured as a result of these
limitations will carry forward and will be allowable to the extent that the
unitholder’s tax basis or at risk amount, whichever is the limiting factor,
subsequently increases. Upon the taxable disposition of a limited partnership
unit, any gain recognized by a unitholder can be offset by losses that were
previously suspended by the at risk limitation but may not be offset by losses
suspended by the basis limitation.
In general, a unitholder will be at risk to the extent of the unitholder’s
tax basis in the unitholder’s limited partnership units, excluding any portion
of that basis attributable to the unitholder’s share of our nonrecourse
liabilities, reduced by any amount of money the unitholder borrows to acquire
or hold the unitholder’s limited partnership units if the lender of such
borrowed funds owns an interest in us, is related to such a person or can look
only to limited partnership units for repayment. A unitholder’s at risk amount
will increase or decrease as the tax basis of the unitholder’s limited
partnership units increases or decreases, other than tax basis increases or
decreases attributable to increases or decreases in the unitholder’s share of
our nonrecourse liabilities.
The passive loss limitations generally provide that individuals, estates,
trusts, certain closely-held corporations and personal service corporations can
deduct losses from passive activities, which include any trade or business
activity in which the taxpayer does not materially participate, only to the
extent of the taxpayer’s income from those passive activities. Moreover, the
passive loss limitations are applied separately with respect to each publicly
traded partnership. Consequently, any passive losses generated by us will be
available to our partners who are subject to the passive loss rules only to
offset future passive income generated by us and, in particular, will not be
available to offset income from other passive activities, investments or
salary. Passive losses that are not deductible because they exceed a
unitholder’s share of our income may be deducted in full when the unitholder
disposes of the unitholder’s entire investment in us in a fully taxable
transaction to an unrelated party. The passive activity loss rules are applied
after other applicable limitations on deductions such as the at risk rules and
the basis limitation.
Limitations on Interest Deductions
The deductibility of a non-corporate taxpayer’s “investment interest
expense” is generally limited to the amount of such taxpayer’s “net investment
income.” The IRS has announced that Treasury Regulations will be issued to
characterize net passive income from a publicly traded partnership as
investment income for purposes of the limitations on the deductibility of
investment interest. In addition, a unitholder’s share of our portfolio income
will be treated as investment income. Investment interest expense includes (i)
interest on indebtedness properly allocable to property held for investment,
(ii) our interest expense attributed to portfolio income, and (iii) the portion
of interest expense incurred to purchase or carry an interest in a passive
activity to the extent attributable to portfolio income. The computation of a
unitholder’s investment interest expense will take into account interest on any
margin account borrowing or other loan incurred to purchase or carry a limited
partnership unit. Net investment income includes gross income from property
held for investment and amounts treated as portfolio income pursuant to the
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passive loss rules less deductible expenses, other than interest, directly
connected with the production of investment income and certain gains
attributable to the disposition of property held for investment.
Tax Treatment of Operations
Accounting Method and Taxable Year
We currently use the calendar year as our taxable year and we have adopted
the accrual method of accounting for federal income tax purposes. Each
unitholder will be required to include in income the unitholder’s share of our
income, gain, loss and deduction for each of our taxable years that ends within
or with each of the unitholder’s taxable years. In addition, a unitholder who
disposes of all of the unitholder’s limited partnership units following the
close of our taxable year but before the close of the unitholder’s taxable year
must include the unitholder’s share of our income, gain, loss and deduction in
income for the unitholder’s taxable year with the result that the unitholder
will be required to report in income for the unitholder’s taxable year the
unitholder’s share for more than one year of our income, gain, loss and
deduction.
Initial Tax Basis, Depreciation, Amortization and Certain Nondeductible
Items
We use the adjusted tax basis of our various assets for purposes of
computing depreciation and cost recovery deductions and gain or loss on any
disposition of such assets. If we dispose of depreciable property, all or a
portion of any gain may be subject to the recapture rules and taxed as ordinary
income rather than capital gain.
The costs incurred in promoting the issuance of limited partnership units
(i.e., syndication expenses) must be capitalized and cannot be deducted by us
currently, ratably or upon our termination. Uncertainties exist regarding the
classification of costs as organization expenses, which may be amortized, and
syndication expenses, which may not be amortized, but underwriting discounts
and commissions are treated as syndication costs.
Section 754 Election
We have made the election permitted by Section 754 of the Internal Revenue
Code, which permits us to adjust the tax basis of our assets as to each
purchaser of our limited partnership units pursuant to Section 743(b) of the
Internal Revenue Code to reflect the purchaser’s purchase price. The Section
743(b) adjustment is intended to provide a purchaser with the equivalent of an
adjusted tax basis in the purchaser’s share of our assets equal to the value of
such share that is indicated by the amount that the purchaser paid for the
limited partnership units.
A Section 754 election is advantageous if the transferee’s tax basis in
the transferee’s limited partnership units is higher than such limited
partnership units’ share of the aggregate tax basis of our assets immediately
prior to the transfer because the transferee would have, as a result of the
election, a higher tax basis in the transferee’s share of our assets.
Conversely, a Section 754 election is disadvantageous if the transferee’s tax
basis in the transferee’s limited partnership units is lower than such limited
partnership units’ share of the aggregate tax basis of our assets immediately
prior to the transfer. The Section 754 election is irrevocable without the
consent of the IRS.
We intend to compute the effect of the Section 743(b) adjustment so as to
preserve our ability to determine the tax attributes of a limited partnership
unit from its date of purchase and the amount paid therefor. In that regard, we
have adopted depreciation and amortization conventions that we believe conform
to Treasury regulations under Section 743(b) of the Internal Revenue Code.
The calculations involved in the Section 754 election are complex and are
made by us on the basis of certain assumptions as to the value of our assets
and other matters. There is no assurance that the determinations made by us
will prevail if challenged by the IRS and that the deductions resulting from
them will not be reduced or disallowed altogether.
Valuation of Buckeye Partners’ Property and Basis of Properties
The federal income tax consequences of the ownership and disposition of
limited partnership units will depend in part on our estimates of the fair
market values and our determinations of the adjusted tax basis of our
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assets. Although we may from time to time consult with professional appraisers
with respect to valuation matters, we will make many of the fair market value
estimates ourselves. These estimates and determinations are subject to
challenge and will not be binding on the IRS or the courts. If such estimates
or determinations of basis are subsequently found to be incorrect, the
character and amount of items of income, gain, loss or deductions previously
reported by unitholders might change, and unitholders might be required to
adjust their tax liability for prior years and might incur interest and
penalties with respect to these adjustments.
Entity-Level Collections
If we are required or elect under applicable law to pay any federal,
state, local or foreign income tax on behalf of any partner, we are authorized
to pay those taxes from our funds. Such payment, if made, will be treated as a
distribution of cash to the partner on whose behalf the payment was made. If
the payment is made on behalf of a person whose identity cannot be determined,
we are authorized to treat the payment as a distribution to all current
unitholders.
Disposition of Limited Partnership Units
Recognition of Gain or Loss
A unitholder will recognize gain or loss on a sale of limited partnership
units equal to the difference between the amount realized and the unitholder’s
tax basis in the limited partnership units sold. A unitholder’s amount realized
is measured by the sum of the cash and the fair market value of other property
received plus the unitholder’s share of our nonrecourse liabilities. Because
the amount realized includes a unitholder’s share of our nonrecourse
liabilities, the gain recognized on the sale of limited partnership units could
result in a tax liability in excess of any cash received from such sale.
Gain or loss recognized by a unitholder, other than a “dealer” in limited
partnership units, on the sale or exchange of a limited partnership unit will
generally be a capital gain or loss. Capital gain recognized by an individual
on the sale of limited partnership units held for more than one year will
generally be taxed at a maximum rate of 15% (such rate to be increased to 20%
for taxable years beginning after December 31, 2008). A portion of this gain or
loss (which could be substantial), however, will be separately computed and
will be classified as ordinary income or loss under Section 751 of the Internal
Revenue Code to the extent attributable to assets giving rise to depreciation
recapture or other unrealized receivables or to inventory items owned by us.
Ordinary income attributable to unrealized receivables, inventory items and
depreciation recapture may exceed net taxable gain realized upon the sale of
the limited partnership units and will be recognized even if there is a net
taxable loss realized on the sale of the limited partnership units. Thus, a
unitholder may recognize both ordinary income and a capital loss upon a
disposition of limited partnership units. Net capital loss may offset capital
gains and no more than $3,000 ($1,500 in the case of a married individual
filing a separate return) of ordinary income in the case of individuals and may
only be used to offset capital gain in the case of corporations.
The IRS has ruled that a partner who acquires interests in a partnership
in separate transactions must combine those interests and maintain a single
adjusted tax basis. Upon a sale or other disposition of less than all of such
interests, a portion of that tax basis must be allocated to the interests sold
based upon relative fair market values. On the other hand, a selling unitholder
who can identify limited partnership units transferred with an ascertainable
holding period may elect to use the actual holding period of the limited
partnership units transferred. A unitholder electing to use the actual holding
period of limited partnership units transferred must consistently use that
identification method for all later sales or exchanges of limited partnership
units.
Certain provisions of the Internal Revenue Code treat a taxpayer as having
sold an “appreciated” partnership interest, one in which gain would be
recognized if it were sold or assigned at its fair market value, if the
taxpayer or a related person enters into (i) a short sale, (ii) an offsetting
notional principal contract or (iii) a futures or forward contract with respect
to the partnership interest or substantially identical property. Moreover, if a
taxpayer has previously entered into a short sale, an offsetting notional
principal contract or a futures or forward contract with respect to a
partnership interest, the taxpayer will be treated as having sold such position
if the taxpayer or a related person acquires the partnership interest or
substantially similar property. The Secretary of the
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Treasury is also authorized to issue regulations that treat a taxpayer that
enters into transactions or positions that have substantially the same effect
as the preceding transactions as having constructively sold the financial
position.
Allocations Between Transferors and Transferees
In general, we will prorate our annual taxable income and losses on a
monthly basis and such income and losses as so prorated will be subsequently
apportioned among the unitholders in proportion to the number of limited
partnership units owned by each of them as of the opening of the principal
national securities exchange on which the limited partnership units are then
traded on the first business day of the month. However, gain or loss realized
on a sale or other disposition of our assets other than in the ordinary course
of business will be allocated among the unitholders as of such date for the
month in which that gain or loss is recognized. As a result, a unitholder
transferring limited partnership units in the open market may be allocated
income, gain, loss and deduction accrued after the date of transfer.
If this method is not allowed under the Treasury Regulations, or only
applies to transfers of less than all of the unitholder’s interest, our taxable
income or losses might be reallocated among the unitholders. We are authorized
to revise our method of allocation between transferors and transferees, as well
as among partners whose interests otherwise vary during a taxable period, to
conform to a method permitted under future Treasury Regulations.
Notification Requirements
A unitholder who sells or exchanges limited partnership units is required
to notify us in writing of that sale or exchange within 30 days after the sale
or exchange. We are required to notify the IRS of that transaction and to
furnish certain information to the transferor and transferee. However, these
reporting requirements do not apply with respect to a sale by an individual who
is a citizen of the United States and who effects the sale or exchange through
a broker. Additionally, a transferor and a transferee of a limited partnership
unit will be required to furnish statements to the IRS, filed with their income
tax returns for the taxable year in which the sale or exchange occurred, that
set forth the amount of the consideration paid or received for the limited
partnership unit. Failure to satisfy these reporting obligations may lead to
the imposition of substantial penalties.
Constructive Termination
Buckeye Partners will be considered terminated if there is a sale or
exchange of 50% or more of the total interests in our capital and profits
within a 12-month period. Any such termination would result in the closing of
our taxable year for all unitholders. In the case of a unitholder reporting on
a taxable year that does not end with our taxable year, the closing of our
taxable year may result in more than 12 months of our taxable income or loss
being includable in that unitholder’s taxable income for the year of
termination. New tax elections required to be made by us, including a new
election under Section 754 of the Internal Revenue Code, must be made
subsequent to a termination and a termination could result in a deferral of our
deductions for depreciation. A termination could also result in penalties if we
were unable to determine that the termination had occurred. Moreover, a
termination might either accelerate the application of, or subject us to, any
tax legislation enacted prior to the termination.
Uniformity of Units
Because we cannot match transferors and transferees of limited partnership
units, we must maintain uniformity of the economic and tax characteristics of
the units for holders of these units. To maintain uniformity and for other
reasons, we have adopted certain depreciation and amortization conventions
which we believe conform to Treasury Regulations under Section 743(b) of the
Internal Revenue Code. A successful challenge to those conventions by the IRS
could adversely affect the amount of tax benefits available to holders of
limited partnership units and could have a negative impact on the value of the
limited partnership units.
Tax-Exempt Organizations and Certain Other Investors
Ownership of limited partnership units by employee benefit plans, other
tax-exempt organizations, non-resident aliens, foreign corporations, other
foreign persons and regulated investment companies raises issues unique
33
to such
persons and, as described below, may have substantially adverse tax
consequences. Employee benefit plans
and most other organizations exempt from federal income tax, including
individual retirement accounts and other retirement plans, are subject to
federal income tax on unrelated business taxable income. Much of the taxable
income derived by such an organization from the ownership of a limited
partnership unit will be unrelated business taxable income, and thus will be
taxable to such a unitholder.
A regulated investment company, or “mutual fund,” is required to derive
90% or more of its gross income from interest, dividends, gains from the sale
of stocks or securities or foreign currency or certain related sources. We
anticipate that no significant amount of our gross income will include that
type of income.
Non-resident aliens and foreign corporations, trusts or estates which hold
limited partnership units will be considered to be engaged in business in the
United States on account of ownership of limited partnership units. As a
consequence they will be required to file federal tax returns in respect of
their share of our income, gain, loss, or deduction and pay federal income tax
at regular rates on any net income or gain. Generally, a partnership is
required to pay a withholding tax on the portion of the partnership’s income
which is effectively connected with the conduct of a United States trade or
business and which is allocable to the foreign partners, regardless of whether
any actual distributions have been made to such partners. However, under rules
applicable to publicly traded partnerships, we will withhold taxes at the
highest marginal rate applicable to individuals on actual cash distributions
made to foreign unitholders. Each foreign unitholder must obtain a taxpayer
identification number from the IRS and submit that number to our transfer
agent, EquiServe, First Chicago Trust Division, in order to obtain credit for
the taxes withheld. A change in applicable law may require us to change these
procedures.
Because a foreign corporation that owns limited partnership units will be
treated as engaged in a United States trade or business, such a corporation
will also be subject to United States branch profits tax at a rate of 30% (or
any applicable lower treaty rate) of the portion of any reduction in the
foreign corporation’s “U.S. net equity” which is the result of our activities.
In addition, such a unitholder is subject to special information reporting
requirements under Section 6038C of the Internal Revenue Code.
Under a ruling by the IRS, gain recognized by a foreign unitholder who
sells or otherwise disposes of a limited partnership unit will be subject to
federal income tax as effectively connected with a United States trade or
business of the foreign unitholder in whole or in part. Apart from the ruling,
a foreign unitholder would not be taxed upon the disposition of a limited
partnership unit if that foreign unitholder has held 5% or less in value of the
limited partnership units at all times during the 5-year period ending on the
date of the disposition and if the limited partnership units are regularly
traded on an established securities market at the time of the disposition.
Administrative Matters
Information Returns and Audit Procedures
We intend to furnish to each unitholder, within 90 days after the close of
each calendar year, certain tax information, including a Substitute Schedule
K-1, that sets forth such unitholder’s share of our income, gain, loss and
deduction for our preceding taxable year. In preparing this information, which
will generally not be reviewed by counsel, we will use various tax accounting
and reporting conventions. We cannot assure prospective unitholders that the
IRS will not successfully contend in court that such tax accounting and
reporting conventions are impermissible. Any such challenge by the IRS could
negatively affect the value of the limited partnership units.
The IRS may audit our federal income tax information returns. Adjustments
resulting from any such audit may require each unitholder to adjust a prior
year’s tax liability, and possibly may result in an audit of the unitholder’s
own return. Any audit of a unitholder’s return could result in adjustments not
related to our returns as well as those related to our returns. Partnerships
generally are treated as separate entities for purposes of federal tax audits,
judicial review of administrative adjustments by the IRS and tax settlement
proceedings. The tax treatment of partnership items of income, gain, loss and
deduction is determined in a partnership proceeding rather than in separate
proceedings with the partners. The Internal Revenue Code provides for one
partner to be designated as the “tax matters partner” for these purposes. Our
partnership agreement appoints our general partner as our tax matters partner.
34
The tax matters partner will make certain elections on our behalf and on
behalf of the unitholders and can extend the statute of limitations for
assessment of tax deficiencies against unitholders with respect to items in our
returns. The tax matters partner may bind a unitholder with less than a 1%
profits interest in us to a settlement with the IRS unless that unitholder
elects, by filing a statement with the IRS, not to give such authority to the
tax matters partner. The tax matters partner may seek judicial review, by which
all of the unitholders are bound, of a final partnership administrative
adjustment and, if the tax matters partner fails to seek judicial review, such
review may be sought by any unitholder having at least a 1% interest in our
profits and by unitholders having in the aggregate at least a 5% profits
interest. However, only one action for judicial review will go forward, and
each unitholder with an interest in the outcome may participate. However, if we
elect to be treated as a large partnership, which we do not intend to do, a
unitholder will not have a right to participate in settlement conferences with
the IRS or to seek a refund.
A unitholder must file a statement with the IRS identifying the treatment
of any item on the unitholder’s federal income tax return that is not
consistent with the treatment of the item on our return. Intentional or
negligent disregard of the consistency requirement may subject a unitholder to
substantial penalties.
Nominee Reporting
Persons who hold an interest in us as a nominee for another person are
required to furnish to us the following information: (a) the name, address and
taxpayer identification number of the beneficial owner and the nominee; (b)
whether the beneficial owner is (i) a person that is not a United States
person, (ii) a foreign government, an international organization or any
wholly-owned agency or instrumentality of either of the foregoing, or (iii) a
tax-exempt entity; (c) the amount and description of limited partnership units
held, acquired or transferred for the beneficial owner; and (d) certain
information including the dates of acquisitions and transfers, means of
acquisitions and transfers, and acquisition cost for purchases, as well as the
amount of net proceeds from sales. Brokers and financial institutions are
required to furnish additional information, including whether they are United
States persons and certain information on limited partnership units that they
acquire, hold or transfer for their own account. A penalty of $50 per failure,
up to a maximum of $100,000 per calendar year, is imposed by the Internal
Revenue Code for failure to report such information to us. The nominee is
required to supply the beneficial owner of the limited partnership units with
the information furnished to us.
Registration as a Tax Shelter
The Internal Revenue Code requires that “tax shelters” be registered with
the Secretary of the Treasury. Although we may not be subject to the
registration requirement on the basis that we do not constitute a tax shelter,
our general partner has registered us as a tax shelter with the Secretary of
the Treasury in light of the substantial penalties which might be imposed if
registration is required and not undertaken. The IRS has issued to us the
following tax shelter registration number: 86280000273. ISSUANCE OF THE
REGISTRATION NUMBER DOES NOT INDICATE THAT AN INVESTMENT IN US OR THE CLAIMED
TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE IRS. We must
furnish the registration number to the unitholders, and a unitholder who sells
or otherwise transfers a limited partnership unit in a subsequent transaction
must furnish the registration number to the transferee. The penalty for failure
of the transferor of a limited partnership unit to furnish the registration
number to the transferee is $100 for each such failure. The unitholders must
disclose our tax shelter registration number on Form 8271 to be attached to the
tax return on which any deduction, loss or other benefit generated by us is
claimed or our income is included. A unitholder who fails to disclose the tax
shelter registration number on the unitholder’s return, without reasonable
cause for that failure, will be subject to a $250 penalty for each failure.
Recently issued final regulations require taxpayers to report certain
information on IRS Form 8886 if they participate in a “reportable transaction.”
A transaction may be a reportable transaction based upon any of several
factors, including the existence of book-tax differences common to financial
transactions, one or more of which may be present with respect to your
investment in our limited partnership units. The IRS has issued a list of
items that are excepted from these disclosure requirements. You should consult
your own tax advisors concerning the application of any of these factors to
your investment in our limited partnership units. Congress is considering
legislative proposals that, if enacted, would impose significant penalties for
failure to comply with these disclosure requirements. The new regulations also
impose obligations on “material advisors,” that include any person who
35
makes or provides any written or oral statement to a registered “tax shelter”
in connection with a transaction, and receives or expects to receive certain
fees with respect to a transaction. As described above, we have registered as
a tax shelter, and, thus, one of our material advisors will be required to
maintain a list of specific information, including your name and tax
identification number, and to furnish this information to the IRS upon request.
Investors should consult their own tax advisors concerning any possible
disclosure obligation with respect to their investment and should be aware that
we and our material advisors intend to comply with the list and disclosure
requirements.
Accuracy-Related Penalties
An additional tax equal to 20% of the amount of any portion of an
underpayment of tax that is attributable to one or more specified causes,
including negligence or disregard of rules or regulations, substantial
understatements of income tax and substantial valuation misstatements, is
imposed by the Internal Revenue Code. No penalty will be imposed, however, with
respect to any portion of an underpayment if it is shown that there was a
reasonable cause for that portion and that the taxpayer acted in good faith
with respect to that portion.
A substantial understatement of income tax in any taxable year exists if
the amount of the understatement exceeds the greater of 10% of the tax required
to be shown on the return for the taxable year or $5,000 ($10,000 for most
corporations). The amount of any understatement subject to penalty generally is
reduced if any portion is attributable to a position adopted on the return (i)
with respect to which there is, or was, “substantial authority” or (ii) as to
which there is a reasonable basis and the pertinent facts of such position are
disclosed on the return.
More stringent rules apply to “tax shelters,” a term that in this context
does not appear to include us. If any item of our income, gain, loss or
deduction included as a share of our income by a unitholder might result in
such an “understatement” of income for which no “substantial authority” exists,
we must disclose the pertinent facts on our return. In addition, we will make a
reasonable effort to furnish sufficient information for unitholders to make
adequate disclosure on their returns to avoid liability for this penalty.
A substantial valuation misstatement exists if the value of any property,
or the adjusted basis of any property, claimed on a tax return is 200% or more
of the amount determined to be the correct amount of such valuation or adjusted
basis. No penalty is imposed unless the portion of the underpayment
attributable to a substantial valuation misstatement exceeds $5,000 ($10,000
for most corporations). If the valuation claimed on a return is 400% or more
than the correct valuation, the penalty imposed increases to 40%.
State, Local and Other Tax Considerations
In addition to federal income taxes, a unitholder will be subject to other
taxes, such as state and local income taxes, unincorporated business taxes, and
estate, inheritance or intangible taxes that may be imposed by the various
jurisdictions in which such unitholder resides or in which we do business or
own property. Although an analysis of those various taxes is not presented
here, each prospective unitholder should consider their potential impact on
such unitholder’s investment in us. We currently conduct business in 14 states
including California, Connecticut, Florida, Illinois, Indiana, Louisiana,
Massachusetts, Michigan, Nevada, New Jersey, New York, Ohio, Pennsylvania and
Texas. A unitholder will be required to file state income tax returns and to
pay state income taxes in some or all of the states in which we do business or
own property and may be subject to penalties for failure to comply with those
requirements. In certain states, tax losses may not produce a tax benefit in
the year incurred and also may not be available to offset income in subsequent
taxable years. Some of the states may require that we, or we may elect to,
withhold a percentage of income from amounts to be distributed to a unitholder
who is not a resident of the state. Our withholding of an amount, which may be
greater or less than a particular unitholder’s income tax liability to the
state, generally does not relieve the non-resident unitholder from the
obligation to file an income tax return. Any amount that is withheld will be
treated as distributed to unitholders. Based on current law and our estimate of
future operations, we anticipate that any amounts required to be withheld will
not be material.
It is the responsibility of each unitholder to investigate the legal and
tax consequences of the unitholder’s investment in us under the laws of
pertinent states and localities. Accordingly, each prospective unitholder
should consult, and must depend upon, the unitholder’s own tax counsel or other
advisor with regard to those matters. Further, it is the responsibility of each
unitholder to file all state, local and foreign, as
36
well as U.S. federal, tax returns that may be required of such unitholder.
Morgan, Lewis & Bockius LLP has not rendered an opinion on the state, local or
foreign tax consequences of an investment in us.
Tax Consequences of Ownership of Debt Securities
Because the terms and corresponding tax consequences of various debt
issuances may differ significantly, descriptions of the material federal income
tax consequences of the acquisition, ownership and disposition of debt
securities will be set forth in the prospectus supplement relating to the
offering of any such debt securities.
37
PLAN OF DISTRIBUTION
We may sell the securities being offered hereby:
We, or agents designated by us, may directly solicit, from time to time,
offers to purchase the securities. Any such agent may be deemed to be an
underwriter as that term is defined in the Securities Act of 1933, as amended.
We will name the agents involved in the offer or sale of the securities and
describe any commissions payable by us to these agents in the prospectus
supplement. Unless otherwise indicated in the prospectus supplement, these
agents will be acting on a best efforts basis for the period of their
appointment. The agents may be entitled under agreements which may be entered
into with us to indemnification by us against specific civil liabilities,
including liabilities under the Securities Act. The agents may also be our
customers or may engage in transactions with or perform services for us in the
ordinary course of business.
If any underwriters are utilized in the sale of the securities in respect
of which this prospectus is delivered, we will enter into an underwriting
agreement with those underwriters at the time of sale to them. The names of
these underwriters and the terms of the transaction will be set forth in the
prospectus supplement, which will be used by the underwriters to make resales
of the securities in respect of which this prospectus is delivered to the
public. The underwriters may be entitled, under the relevant underwriting
agreement, to indemnification by us against specific liabilities, including
liabilities under the Securities Act. The underwriters may also be our
customers or may engage in transactions with or perform services for us in the
ordinary course of business.
If a dealer is utilized in the sale of the securities in respect of which
this prospectus is delivered, we will sell those securities to the dealer, as
principal. The dealer may then resell those securities to the public at varying
prices to be determined by the dealer at the time of resale. Dealers may be
entitled to indemnification by us against specific liabilities, including
liabilities under the Securities Act. The dealers may also be our customers or
may engage in transactions with, or perform services for us in the ordinary
course of business.
The place and time of delivery for the securities in respect of which this
prospectus is delivered are set forth in the accompanying prospectus
supplement.
38
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us
by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania. Any underwriters
will be advised about other issues relating to any offering by their own legal
counsel.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from the Partnership’s Annual Report on Form 10-K for the year ended
December 31, 2003 have been audited by Deloitte & Touche
LLP, an independent
registered public accounting firm, as stated in their report (which report on
the consolidated financial statements expresses an unqualified opinion and
includes an explanatory paragraph as to the Partnership’s change in method of
accounting for goodwill and other intangible assets to conform to Statement of
Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,”
effective January 1, 2002), which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
39
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses set forth below relate solely to the preparation and filing
of this Registration Statement, and the Partnership will incur additional
expenses in connection with any offering of the securities registered hereunder
(all such expenses will be borne by the Partnership):
Item 15. Indemnification of Directors and Officers
The amended and restated partnership agreement of Buckeye Partners, L.P.
and the amended and restated agreements of limited partnership of the operating
partnerships (the “Operating Partnership Agreements,” and together with the
Partnership Agreement, the “Partnership Agreements”) provide that the
Partnership or Operating Partnership, as the case may be, will indemnify (to
the extent permitted by applicable law) certain persons (each, an “Indemnitee”)
against expenses (including legal fees and expenses), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such Indemnitee
in connection with any threatened, pending or completed claim, demand, action,
suit or proceeding to which the Indemnitee is or was an actual or threatened
party and which relates to the Partnership Agreements or the property,
business, affairs or management of Buckeye Partners, L.P. or any operating
partnership. This indemnity is available only if the Indemnitee acted in good
faith and the action or omission which is the basis of such claim, demand,
action, suit or proceeding does not involve the gross negligence or willful
misconduct of such Indemnitee. Indemnitees include the general partner, any
affiliate of the general partner, any person who is or was a director, officer,
employee or agent of the general partner or any affiliate, or any person who is
or was serving at the request of the general partner or any such affiliate as a
director, officer, partner, trustee, employee or agent of another person.
Expenses subject to indemnity will be paid by the applicable partnership to the
Indemnitee in advance, subject to receipt of an undertaking by or on behalf of
the Indemnitee to repay such amount if it is ultimately determined by a court
of competent jurisdiction that the Indemnitee is not entitled to
indemnification. Buckeye Partners, L.P. maintains a liability insurance policy
on behalf of the Indemnitees.
Section 145 of the Delaware General Corporation Law sets forth the extent
to which a person is a director or officer of a Delaware corporation or serves
at the request of Delaware corporation as a director, officer, employee or
agent of any other enterprise may be indemnified against any liabilities they
may incur in their capacity as such. Article IX of the operating agreement of
the general partner of Buckeye Partners, L.P. provides for the indemnification
of directors and officers of the general partner and such directors and
officers who serve at the request of the general partner as directors,
officers, employees or agents of any other enterprise against certain
liabilities under certain circumstances.
Item 16. Exhibits
The exhibits filed as part of this Registration Statement are as follows:
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraph (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the end of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to its Certificate of Incorporation, its Bylaws, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Radnor, Commonwealth of Pennsylvania, on the
16th day of June, 2004.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
EACH PERSON IN SO SIGNING ALSO MAKES, CONSTITUTES AND APPOINTS STEVEN C. RAMSEY
AND STEPHEN C. MUTHER, AND EACH OF THEM ACTING ALONE, HIS OR HER TRUE AND
LAWFUL ATTORNEY-IN-FACT, WITH FULL POWER OF SUBSTITUTION, TO EXECUTE AND CAUSE
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, ANY AND ALL AMENDMENTS
AND POST- EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT, AND ANY
ADDITIONAL RELATED REGISTRATION STATEMENT FILED PURSUANT TO RULE 462(B) UNDER
THE SECURITIES ACT OF 1933, WITH EXHIBITS THERETO AND OTHER DOCUMENTS IN
CONNECTION THEREWITH, AND HEREBY RATIFIES AND CONFIRMS ALL THAT SAID
ATTORNEY-IN-FACT OR HIS OR HER SUBSTITUTE OR SUBSTITUTES MAY DO OR CAUSE TO BE
DONE BY VIRTUE HEREOF.
(1)
15% of the amount, if any, by which the quarterly
distribution per limited partnership unit exceeds $0.325 but is not
more than $0.35, plus
(2)
25% of the amount, if any, by which the quarterly
distribution per limited partnership unit exceeds $0.35 but is not
more than $0.375, plus
(3)
30% of the amount, if any, by which the quarterly
distribution per limited partnership unit exceeds $0.375 but is not
more than $0.40, plus
(4)
35% of the amount, if any, by which the quarterly
distribution per limited partnership unit exceeds $0.40 but is not
more than $0.425, plus
(5)
40% of the amount, if any, by which the quarterly
distribution per limited partnership unit exceeds $0.425 but is not
more than $0.525, plus
(6)
45% of the amount, if any, by which the quarterly
distribution per limited partnership unit exceeds $0.525.
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•
the form and title of the debt securities;
•
the total principal amount of the debt securities;
•
the portion of the principal amount which will be payable if
the maturity of the debt securities is accelerated;
•
any right we may have to defer payments of interest by
extending the dates payments are due and whether interest on those
deferred amounts will be payable as well;
•
the dates on which the principal of the debt securities will
be payable;
•
the interest rate which the debt securities will bear and the
interest payment dates for the debt securities;
•
any optional redemption provisions;
•
any sinking fund or other provisions that would obligate us
to repurchase or otherwise redeem the debt securities;
•
any changes to or additional Events of Default or covenants; and
•
any other terms of the debt securities.
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•
the remaining or acquiring partnership or corporation is
organized under the laws of the United States, any state or the
District of Columbia;
•
the remaining or acquiring partnership or corporation assumes
our obligations under the Indenture; and
•
immediately after giving effect to the transaction no Event
of Default exists.
•
correcting errors;
•
providing for a successor trustee;
•
qualifying the Indenture under the Trust Indenture Act; or
•
adding provisions relating to a particular series of debt securities. (Sections 9.01 & 9.02)
•
failure to pay the principal of or any premium on any debt security when due;
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•
failure to pay interest on any debt security for 30 days;
•
failure to perform any other covenant in the Indenture that
continues for 90 days after being given written notice;
•
failure to pay when due principal of or interest on debt
greater than $100 million of the Partnership or any Subsidiary or
acceleration of such debt;
•
specific events in bankruptcy, insolvency or reorganization of the Partnership or its subsidiaries; or
•
any other Event of Default included in the Indenture or a supplemental indenture. (Section 5.01)
(1)
Permitted Liens (as defined below);
(2)
any lien upon any property or assets created at the time of
acquisition of such property or assets by the Partnership or any
Restricted Subsidiary or within one year after such time to secure
all or a portion of the purchase price for such property or assets
or debt incurred to finance such purchase price, whether such debt
was incurred prior to, at the time of or within one year after the
date of such acquisition;
(3)
any lien upon any property or assets to secure all or part of
the cost of construction, development, repair or improvements
thereon or to secure debt incurred prior to, at the time of, or
within one year after completion of such construction, development,
repair or improvements or the commencement of full operations
thereof (whichever is later), to provide funds for any such purpose;
(4)
any lien upon any property or assets existing thereon at the
time of the acquisition thereof by the
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Partnership or any Restricted Subsidiary (whether or not the
obligations secured thereby are assumed by the Partnership or any
Restricted Subsidiary); provided, however, that such lien only
encumbers the property or assets so acquired;
(5)
any lien upon any property or assets of a person existing
thereon at the time such person becomes a Restricted Subsidiary by
acquisition, merger or otherwise; provided, however, that such lien
only encumbers the property or assets of such person at the time
such person becomes a Restricted Subsidiary;
(6)
any lien upon any property or assets of the Partnership or
any Restricted Subsidiary in existence on the Issue Date (as defined
below) or provided for pursuant to agreements existing on the Issue
Date;
(7)
liens imposed by law or order as a result of any proceeding
before any court or regulatory body that is being contested in good
faith, and liens which secure a judgment or other court-ordered
award or settlement in an aggregate amount not in excess of $1
million as to which the Partnership or the applicable Restricted
Subsidiary has not exhausted its appellate rights;
(8)
liens arising in connection with Sale-Leaseback Transactions
(as defined below) permitted under the Indenture as described below;
(9)
any extension, renewal, refinancing, refunding or
replacement, or successive extensions, renewals, refinancings,
refundings or replacements of liens, in whole or in part, referred
to in clauses (1) through (7) above; provided, however, that any
such extension, renewal, refinancing, refunding or replacement lien
shall be limited to the property or assets covered by the lien
extended, renewed, refinanced, refunded or replaced and that the
obligations secured by any such extension,renewal, refinancing,
refunding or replacement lien shall be in an amount not greater than
the amount of the obligations secured by the lien extended, renewed,
refinanced, refunded or replaced and any expenses of the Partnership
and its Restricted Subsidiaries (including any premium) incurred in
connection with such extension, renewal, refinancing, refunding or
replacement; or
(10)
any lien resulting from the deposit of moneys or evidence of
indebtedness in trust for the purpose of defeasing debt of the
Partnership or any Restricted Subsidiary.
(1)
all current liabilities excluding:
•
any current liabilities that by their terms are
extendible or renewable at the option of the obligor thereon
to a time more than 12 months after the time as of which the
amount thereof is being computed; and
•
current maturities of long-term debt.
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(2)
the value, net of any applicable reserves, of all goodwill,
trade names, trademarks, patents and other like intangible assets,
all as set forth, on the consolidated balance sheet of the
Partnership and its consolidated subsidiaries for the Partnership’s
most recently completed fiscal quarter, prepared in accordance with
generally accepted accounting principles.
(1)
liens upon rights-of-way for pipeline purposes;
(2)
any statutory or governmental lien or lien arising by
operation of law, or any mechanics’, repairmen’s, materialmen’s,
suppliers’, carriers’, landlords’, warehousemen’s or similar lien
incurred in the ordinary course of business which is not yet due or
which is being contested in good faith by appropriate proceedings
and any undetermined lien which is incidental to construction,
development, improvement or repair;
(3)
the right reserved to, or vested in, any municipality or
public authority by the terms of any right, power, franchise, grant,
license, permit or by any provision of law, to purchase or recapture
or to designate a purchaser of, any property;
(4)
liens of taxes and assessments which are:
•
for the then current year,
•
not at the time delinquent, or
•
delinquent but the validity of which is being
contested at the time by the Partnership or any Restricted
Subsidiary in good faith;
(5)
liens of, or to secure performance of, leases, other than
capital leases;
(6)
any lien upon, or deposits of, any assets in favor of any
surety company or clerk of court for the purpose of obtaining
indemnity or stay of judicial proceedings;
(7)
any lien upon property or assets acquired or sold by the
Partnership or any Restricted Subsidiary resulting from the exercise
of any rights arising out of defaults on receivables;
(8)
any lien incurred in the ordinary course of business in
connection with workmen’s compensation, unemployment insurance,
temporary disability, social security, retiree health or similar
laws or regulations or to secure obligations imposed by statute or
governmental regulations;
(9)
any lien in favor of the Partnership or any Restricted
Subsidiary;
(10)
any lien in favor of the United States of America or any
state thereof, or any department, agency or instrumentality or
political subdivision of the United States of America or any state
thereof, to secure partial, progress, advance, or other payments
pursuant to any contract or statute, or any debt incurred by the
Partnership or any Restricted Subsidiary for the purpose of
financing all or any part of the purchase price of, or the cost of
constructing, developing, repairing or improving, the property or
assets subject to such lien;
(11)
any lien securing industrial development, pollution control
or similar revenue bonds;
(12)
any lien securing debt of the Partnership or any Restricted
Subsidiary, all or a portion of the net proceeds of which are used,
substantially concurrent with the funding thereof (and for purposes
of
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determining such “substantial concurrence,” taking into
consideration, among other things, required notices to be given to
holders of outstanding securities under the Indenture (including
the debt securities) in connection with such refunding, refinancing
or repurchase, and the required corresponding durations thereof),
to refinance, refund or repurchase all outstanding securities under
the Indenture (including the debt securities), including the amount
of all accrued interest thereon and reasonable fees and expenses
and premium, if any, incurred by the Partnership or any Restricted
Subsidiary in connection therewith;
(13)
liens in favor of any Person (as defined below) to secure
obligations under the provisions of any letters of credit, bank
guarantees, bonds or surety obligations required or requested by any
governmental authority in connection with any contract or statute;
(14)
any lien upon or deposits of any assets to secure performance
of bids, trade contracts, leases or statutory obligations;
(15)
any lien or privilege vested in any grantor, lessor or
licensor or permittor for rent or other charges due or for any other
obligations or acts to be performed, the payment of which rent or
other charges or performance of which other obligations or acts is
required under leases, easements, rights-of-way, leases, licenses;
franchises, privileges, grants or permits, so long as payment of
such rent or the performance of such other obligations or acts is
not delinquent or the requirement for such payment or performance is
being contested in good faith by appropriate proceedings;
(16)
defects and irregularities in the titles to any property
which do not have a Material Adverse Effect (as defined below);
(17)
easements, exceptions or reservations in any property of the
Partnership or any of its Restricted Subsidiaries granted or
reserved for the purpose of pipelines, roads, the removal of oil,
gas, coal or other minerals, and other like purposes for the joint
or common use of real property, facilities and equipment, which do
not have a Material Adverse Effect;
(18)
rights reserved to or vested in any grantor, lessor,
licensor, municipality or public authority to control or regulate
any property of the Partnership or any of its Restricted
Subsidiaries or to use any such property; provided, that the
Partnership or such Restricted Subsidiary shall not be in default in
respect of any material obligation (except that the Partnership or
such Restricted Subsidiary may be contesting any such obligation in
good faith) to such grantor, lessor, licensor, municipality or
public authority; and provided, further, that such control,
regulation or use will not have a Material Adverse Effect;
(19)
any obligations or duties to any municipality or public
authority with respect to any lease, easement, right-of-way,
license, franchise, privilege, permit or grant; or
(20)
liens or burdens imposed by any law or governmental
regulation, including, without limitation, those imposed by
environmental and zoning laws, ordinances, and regulations;
provided, in each case, the Partnership or any of its Restricted
Subsidiaries is not in default in any material obligation (except
that the Partnership or such Restricted Subsidiary may be contesting
any such obligation in good faith) to such Person in respect of such
property; provided, further, that the existence of such liens and
burdens do not have a Material Adverse Effect.
(1)
an impairment of the operation by the Partnership and its
Restricted Subsidiaries of the pipeline systems of the Partnership
and its Restricted Subsidiaries which materially adversely affects
the manner in which such pipeline systems, taken as a whole, have
been operated by the Partnership and its Restricted Subsidiaries
(whether due to damage to, or a defect in the right, title or
interest of the Partnership or any of its Restricted Subsidiaries in
and to, any of the assets constituting such pipeline system or for
any other reason);
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(2)
a material decline in the financial condition or results of
operations or business prospects of the Partnership and its
Restricted Subsidiaries, taken as a whole: or
(3)
an inability of the Partnership to make timely payments of
principal and interest on the Securities, in each case as a result
(whether or not simultaneous) of the occurrence of one or more
events and/or the materialization or failure to materialize of one
or more conditions and/or the taking of or failure to take one or
more actions described in this Indenture by reference to a Material
Adverse Effect.
(1)
any pipeline assets of the Partnership or any Subsidiary,
including any related facilities employed in the transportation,
distribution, storage or marketing of refined petroleum products,
that are located in the United States of America or any territory or
political subdivision thereof; and
(2)
any processing or manufacturing plant or terminal owned or
leased by the Partnership or any Subsidiary that is located in the
United States or any territory or political subdivision thereof,
except, in the case of either of the foregoing clauses (1) or (2):
•
any such assets consisting of inventories,
furniture, office fixtures and equipment, including data
processing equipment, vehicles and equipment used on, or
useful with, vehicles, and
•
any such assets, plant or terminal which, in the
good faith opinion of the Board of Directors, is not material
in relation to the activities of the Partnership or of the
Partnership and its Subsidiaries (as defined below), taken as
a whole.
(1)
any corporation, association or other business entity of
which more than 50% of the total voting power of shares of equity
interests entitled, without regard to the occurrence of any
contingency, to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries
of such Person or combination thereof; or
(2)
in the case of a partnership, more than 50% of the partners’
equity interests, considering all partners’ equity interests as a
single class is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries
of such Person or combination thereof.
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(1)
such Sale-Leaseback Transaction occurs within one year from
the date of completion of the acquisition of the Principal Property
subject thereto or the date of the completion of construction,
development or substantial repair or improvement, or commencement of
full operations on such Principal Property, whichever is later;
(2)
the Sale-Leaseback Transaction involves a lease for a period,
including renewals, of not more than three years;
(3)
the Attributable Indebtedness (as defined below) from that
Sale-Leaseback transaction is an amount equal to or less than the
amount the Partnership or such Subsidiary would be allowed to incur
as debt secured by a lien on the Principal Property subject thereto
without equally and ratably securing the debt securities; or
(4)
the Partnership or such Subsidiary, within a one-year period
after such Sale-Leaseback Transaction, applies or causes to be
applied an amount not less than the net sale proceeds from such
Sale-Leaseback Transaction to (A) the prepayment, repayment,
redemption, reduction or retirement of any Pari Passu Debt (as
defined below) of the Partnership or any Subsidiary, or (B) the
expenditure or expenditures for Principal Property used or to be
used in the ordinary course of business of the Partnership or its
Subsidiaries.
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•
we must deliver an opinion of our legal counsel that the
discharge will not result in holders having to recognize taxable
income or loss or subject them to different tax treatment. In the
case of legal defeasance, this opinion must be based on either an
IRS letter ruling or change in federal tax law;
•
we may not have a default on the debt securities discharged on the date of deposit;
•
the discharge may not violate any of our agreements; and
•
the discharge may not result in our becoming an investment
company in violation of the Investment Company Act of 1940. (Section
13.03)
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•
DTC notifies us that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered under
applicable law and a successor depositary is not appointed by us
within 90 days; or
•
we determine not to require all of the notes of a series to
be represented by a global note and notify the Trustee of our
decision.
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(1)
Neither we nor the operating partnerships have elected or
will elect to be treated as a corporation;
(2)
We and the operating partnerships have been and will be
operated in accordance with (i) all applicable partnership statutes
and (ii) the partnership agreement or operating partnership
agreement (whichever is applicable);
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(3)
For each of our taxable years from and after our formation,
90% or more of our gross income has been and will be derived (i)
from the exploration, development, production, processing, refining,
transportation or marketing of any mineral or natural resource,
including oil, gas or products thereof, or (ii) from other items of
“qualifying income” within the meaning of Section 7704(d) of the
Internal Revenue Code;
(4)
We would not be a regulated investment company as described
in Section 851(a) of the Internal Revenue Code if we were a domestic
corporation.
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•
directly to purchasers;
•
through agents;
•
through underwriters; and
•
through dealers.
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Exhibit Number
Description
3.1
Amended and Restated Agreement of Limited Partnership of Buckeye Partners,
L.P. (Incorporated by reference to Exhibit 3.1 to the Partnership’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2002)
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Exhibit Number
Description
3.2
Certificate of Amendment to Amended and Restated Certificate of Limited
Partnership of the Partnership, dated as of April 26, 2002. (Incorporated by
reference to Exhibit 3.2 to the Partnership’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002)
3.3
Certificate of Amendment to Amended and Restated Certificate of Limited
Partnership of the Partnership, dated as of June 1, 2004, effective as of June 3, 2004
4.1
Specimen Limited Partnership Unit Certificate of the Partnership
4.2
Indenture, dated as of July 10, 2003, between Buckeye Partners, L.P. and
SunTrust Bank, as Trustee (Incorporated by reference to Exhibit 4.1 of the
Partnership’s Registration Statement on Form S-4, Registration Number
333-108969, filed with the Commission on September 19, 2003)
4.3
First Supplemental Indenture, dated as of July 10, 2003, between Buckeye
Partners, L.P. and SunTrust Bank, as Trustee (Incorporated by reference to
Exhibit 4.2 of the Partnership’s Registration Statement on Form S-4,
Registration Number 333-108969, filed with the Commission on September 19,
2003)
4.4
Second Supplemental Indenture, dated as of August 19, 2003, between Buckeye
Partners, L.P. and SunTrust Bank, as Trustee (Incorporated by reference to
Exhibit 4.3 of the Partnership’s Registration Statement on Form S-4,
Registration Number 333-108969, filed with the Commission on September 19,
2003)
5.1
Opinion of Morgan, Lewis & Bockius LLP regarding legality of securities being
registered
8.1
Opinion of Morgan, Lewis & Bockius LLP regarding tax matters
12.1
Statement of computation of ratio of earnings to fixed charges
23.1
Consent of Morgan, Lewis & Bockius LLP (included in its opinions filed as
Exhibits 5.1 and 8.1)
23.2
Consent of Deloitte & Touche, LLP
24.1
Power of Attorney (included on signature pages to this Registration Statement)
25.1
Form T-1 Statement of Eligibility and Qualification (Incorporated by
reference to Exhibit 25.1 to the Partnership’s Registration Statement on Form
S-3, Registration Number 333-102531, filed with the Commission on January 15,
2003 )
*
Filed herewith
**
Incorporated by reference
+
To be filed by amendment
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BUCKEYE PARTNERS, L.P.
By:
Buckeye Pipe Line Company LLC,
as General Partner
By:
WILLIAM H. SHEA, JR.
William H. Shea, Jr.
President and
Chief Executive Officer
Name
Title
Date
Director
June 16, 2004
Director
June 16, 2004
Director
June 16, 2004
Director
June 16, 2004
Director
June 16, 2004
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Name
Title
Date
Director
June 16, 2004
Senior Vice President-Finance and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
June 16, 2004
President, Chief Executive
Officer and Director (Principal
Executive Officer)
June 16, 2004
Director
June 16, 2004
Director
June 16, 2004
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Exhibit Number
Description
3.1
Amended and Restated Agreement of Limited Partnership of Buckeye Partners,
L.P. (Incorporated by reference to Exhibit 3.1 to the Partnership’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2002)
3.2
Certificate of Amendment to Amended and Restated Certificate of Limited
Partnership of the Partnership, dated as of April 26, 2002. (Incorporated by
reference to Exhibit 3.2 to the Partnership’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002)
3.3
Certificate of Amendment to Amended and Restated Certificate of Limited
Partnership of the Partnership, dated as of June 1, 2004, effective as of June 3, 2004
4.1
Specimen Limited Partnership Unit Certificate of the Partnership
4.2
Indenture, dated as of July 10, 2003, between Buckeye Partners, L.P. and
SunTrust Bank, as Trustee (Incorporated by reference to Exhibit 4.1 of the
Partnership’s Registration Statement on Form S-4, Registration Number
333-108969, filed with the Commission on September 19, 2003)
4.3
First Supplemental Indenture, dated as of July 10, 2003, between Buckeye
Partners, L.P. and SunTrust Bank, as Trustee (Incorporated by reference to
Exhibit 4.2 of the Partnership’s Registration Statement on Form S-4,
Registration Number 333-108969, filed with the Commission on September 19,
2003)
4.4
Second Supplemental Indenture, dated as of August 19, 2003, between Buckeye
Partners, L.P. and SunTrust Bank, as Trustee (Incorporated by reference to
Exhibit 4.3 of the Partnership’s Registration Statement on Form S-4,
Registration Number 333-108969, filed with the Commission on September 19,
2003)
5.1
Opinion of Morgan, Lewis & Bockius LLP regarding legality of securities being
registered
8.1
Opinion of Morgan, Lewis & Bockius LLP regarding tax matters
12.1
Statement of computation of ratio of earnings to fixed charges
23.1
Consent of Morgan, Lewis & Bockius LLP (included in its opinions filed as
Exhibits 5.1 and 8.1)
23.2
Consent of Deloitte & Touche, LLP
24.1
Power of Attorney (included on signature pages to this Registration Statement)
25.1
Form T-1 Statement of Eligibility and Qualification (Incorporated by
reference to Exhibit 25.1 to the Partnership’s Registration Statement on Form
S-3, Registration Number 333-102531, filed with the Commission on January 15,
2003 )
*
Filed herewith
**
Incorporated by reference
+
To be filed by amendment
Exhibit 3.3
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF LIMITED PARTNERSHIP
OF
BUCKEYE PARTNERS, L.P.
The undersigned, desiring to amend the Amended and Restated Certificate of
Limited Partnership of Buckeye Partners, L.P. pursuant to the provisions of
Section 17-202 of the Revised Uniform Limited Partnership Act of the State of
Delaware, does hereby certify as follows:
FIRST: The name of the Limited Partnership is Buckeye Partners, L.P.
SECOND: Article 4 of the Amended and Restated Certificate of Limited Partnership shall be amended to read in its entirety as follows:
"General Partner. The name and the business address of the sole general partner of the Partnership is Buckeye Pipe Line Company LLC, a Delaware limited liability company, 5002 Buckeye Road, Emmaus, PA 18049."
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment to Amended and Restated Certificate of Limited Partnership on this 1st day of June, 2004.
BUCKEYE PIPE LINE COMPANY LLC
a Delaware limited liability company, as
sole general partner
By: /s/ Stephen C. Muther
----------------------------------
Name: Stephen C. Muther
Title: Senior Vice President -
Administration, General Counsel
and Secretary
|
.
.
.
Exhibit 12.1
BUCKEYE PARTNERS, L.P.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
DOLLARS IN THOUSANDS
YEARS ENDED DECEMBER 31,
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
EARNINGS:
Income from continuing operations $ 71,101 $ 64,467 $ 69,402 $ 71,902 $ 30,154
Less: capitalized interest (1,031) (1,157) (1,102) (2,083) (464)
-------- -------- -------- -------- --------
Total earnings 70,070 63,310 68,300 69,819 29,690
-------- -------- -------- -------- --------
FIXED CHARGES:
Interest expense 16,854 18,690 18,882 20,527 22,758
Capitalized interest 1,031 1,157 1,102 2,083 464
Portion of rentals representing an interest factor 2,535 2,327 2,297 2,428 2,608
-------- -------- -------- -------- --------
Total fixed charges 20,420 22,174 22,281 25,038 25,830
-------- -------- -------- -------- --------
EARNINGS AVAILABLE FOR FIXED CHARGES 90,490 85,484 90,581 94,857 55,520
======== ======== ======== ======== ========
RATIO OF EARNINGS TO FIXED CHARGES 4.43 3.86 4.07 3.79 2.15
======== ======== ======== ======== ========
THREE MONTHS ENDED
MARCH 31,
2003 2004
-------- --------
EARNINGS:
Income from continuing operations $ 16,727 $ 20,101
Less: capitalized interest (47) (81)
-------- --------
Total earnings 16,680 20,020
-------- --------
FIXED CHARGES:
Interest expense 5,232 5,345
Capitalized interest 47 81
Portion of rentals representing an interest factor 727 774
-------- --------
Total fixed charges 6,006 6,200
-------- --------
EARNINGS AVAILABLE FOR FIXED CHARGES 22,686 26,220
======== ========
RATIO OF EARNINGS TO FIXED CHARGES 3.78 4.23
======== ========
|
EXHIBIT 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Registration Statement of Buckeye Partners, L.P. on Form S-3 of our report dated March 11, 2004, which report on the consolidated financial statements expresses an unqualified opinion and includes an explanatory paragraph as to the Partnership's change in method of accounting for goodwill and other intangible assets to conform to Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," effective January 1, 2002, appearing in the Annual Report on Form 10-K of Buckeye Partners, L.P. for the year ended December 31, 2003, and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement.
Deloitte & Touche, LLP
Philadelphia, Pennsylvania
June 16, 2004