Enterprise Products Partners L.P.

SEC Filings

10-Q
GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 11/12/1996
Entire Document
 
<PAGE>   10

            LEVIATHAN GAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
                                  (unaudited)

issue costs related to the Flextrend Credit Facility totaled $2.5 million, all
of which was capitalized in connection with drilling activities in progress
during the period.

The Partnership Credit Facility, as amended and restated on March 26, 1996, is
a revolving and term credit facility with a syndicate of commercial banks
providing for up to $220.0 million of available credit in the form of a $145.0
million revolving credit facility and a $75.0 million term loan facility.  The
revolving credit facility has an initial maturity of three years, which
maturity can be extended in one-year increments, but not beyond March 31, 2001.
The $75.0 million term loan facility has a final maturity of March 31, 2001.
The first principal payment, in an amount of $2.0 million, is due on December
31, 1996. Subsequent payments are to be made quarterly in the amount of $4.3
million.  The proceeds of the term loan were used to repay all of the
indebtedness incurred under the Flextrend Credit Facility and to repay a
portion of the debt outstanding under the former revolving credit facility.
All amounts advanced under the revolving credit facility and the term loan
facility will accrue interest at a variable rate selected by the Partnership
and determined by reference to the reserve-adjusted London interbank offer
rate, the average certificate of deposit rate or the prime rate.  The current
average interest rate on both the revolving credit and term loans is 6.4% per
annum.  A commitment fee is charged on the unused and available to be borrowed
portion of the revolving credit facility.  This fee varies between 0.25% and
0.375% per annum and is currently 0.375% per annum.  All amounts due under the
Partnership Credit Facility are guaranteed by Leviathan and each of the
Partnership's subsidiaries, and are secured by Leviathan's 1% general partner
interest in the Partnership, all of Leviathan's and the Partnership's equity
interests in the subsidiaries and most of the equipment, negotiable instruments
and inventory and other personal property of the Partnership's subsidiaries.
The Partnership incurred additional debt issue costs related to the amended and
restated credit facility of $1.5 million which have been capitalized and are
being amortized over the five-year remaining life of the credit facility.  As
of September 30, 1996, borrowings totaled $75.0 million under the term facility
and $138.0 million under the revolving credit facility.  For the nine months
ended September 30, 1996, interest expense related to the Partnership Credit
Facility totaled $2.0 million, which included commitment fees and amortization
of debt issue costs of $0.5 million. Additional interest expense and
amortization of debt issue costs related to the Partnership Credit Facility of
$8.7 million was capitalized in connection with construction projects and
drilling activities in progress during the period. As of November 12, 1996,
borrowings totaled $75.0 million under the term facility and $141.5 million
under the revolving credit facility.  There are no letters of credit currently
outstanding under the revolving credit facility.

Note 6 - Related Party Transactions:

Management fees.  For the nine months ended September 30, 1996, Leviathan
charged the Partnership $4.7 million pursuant to the Partnership Agreement
which provides for reimbursement of expenses Leviathan incurs as general
partner of the Partnership, including reimbursement of expenses incurred by
DeepTech in providing management services to Leviathan and the Partnership.  In
addition, the management agreement requires a payment by Leviathan to
compensate DeepTech for certain tax liabilities resulting from, among other
things, additional taxable income allocated to Leviathan due to (i) the
issuance of additional Preference Units (including the sale of the Preference
Units by the Partnership pursuant to the secondary offering) and (ii) the
investment of such proceeds in additional acquisitions or construction
projects.  During the nine months ended September 30, 1996, Leviathan charged
the Partnership $1.1 million to compensate DeepTech for additional taxable
income allocated to Leviathan.  The management agreement has an initial term
expiring on June 30, 1997, and may thereafter be terminated on 90 days' notice
by either party.

Transportation and platform access agreements.  Tatham Offshore was obligated
to make demand charge payments to the Partnership pursuant to certain
transportation agreements.  Under these agreements, the Partnership was
entitled to receive demand charges of $8.1 million in 1996, $6.0 million in
1997, $3.0 million in 1998 and $0.7 million in 1999.  In addition to the demand
charges, Tatham Offshore is obligated





                                       10