Enterprise Products Partners L.P.

SEC Filings

10-Q
GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 08/09/2004
Entire Document
 
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  INDUSTRIAL DEVELOPMENT REVENUE BONDS
 
     In April 2004, we reduced the sales tax assessable by the State of
Mississippi related to our Petal natural gas storage expansion and pipeline
project completed in September 2002 by completing that project's qualification
for tax incentives available under the Mississippi Business Finance Act (MBFA).
To complete the qualification, Petal Gas Storage, L.L.C. (Petal), our indirect,
wholly-owned subsidiary, borrowed $52 million from the Mississippi Business
Finance Corporation (MBFC) pursuant to a loan agreement between Petal and the
MBFC. On the same date, the MBFC issued $52 million in Industrial Development
Revenue Bonds to GulfTerra Field Services, L.L.C., our direct, wholly-owned
subsidiary. The loan agreement and the Industrial Development Revenue Bonds have
identical interest rates of 6.25% and maturities of fifteen years. The bonds and
tax exemptions are authorized under the MBFA. Petal may repay the loan agreement
without penalty, and thus cause the Industrial Development Revenue Bonds to be
redeemed, any time after one year from their date of issue. We have netted the
loan amount and the bond amount of $52 million and the interest payable and
interest receivable amount of $0.6 million on our balance sheet as of June 30,
2004. We have also netted the interest expense and interest income amount of
$0.6 million on our income statements for the quarter and six months ended June
30, 2004. Our presentation of the Industrial Development Revenue Bonds is
reflected in accordance with the provisions of FIN No. 39, Offsetting of Amounts
Related to Certain Contracts, and SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, since we have
the ability and intent to offset these items.
 
  OTHER CREDIT FACILITIES
 
  Poseidon
 
     Poseidon Oil Pipeline Company, L.L.C., an unconsolidated affiliate in which
we have a 36 percent joint venture ownership interest, was party to a $185
million credit agreement, under which it had $123 million outstanding at
December 31, 2003. In January 2004, Poseidon amended its credit agreement and
decreased the availability to $170 million. The amended facility matures in
January 2008. The outstanding balance from the previous facility was transferred
to the new facility. The interest rates Poseidon is charged on balances
outstanding under its credit facility are variable and depend on its ratio of
total debt to earnings before interest, taxes, depreciation and amortization.
This credit agreement is secured by substantially all of Poseidon's assets. As
of June 30, 2004, Poseidon had $111 million outstanding with an average interest
rate of 3.47%.
 
     Poseidon's credit agreement contains covenants such as restrictions on debt
levels, liens, mergers, the sales of assets and dividends and requirements to
maintain certain financial ratios.
 
     In January 2002, Poseidon entered into a two-year interest rate swap
agreement to fix the variable LIBOR based interest rate on $75 million of the
$123 million outstanding at 3.49% through January 2004. This interest rate swap
expired on January 9, 2004.
 
  Deepwater Gateway
 
     Deepwater Gateway, an unconsolidated affiliate in which we have a 50
percent joint venture interest and that constructed the Marco Polo tension leg
platform (TLP), obtained a $155 million project finance loan from a group of
commercial lenders to finance a substantial portion of the cost to construct the
Marco Polo TLP and related facilities. Construction of the Marco Polo TLP was
completed during the first quarter of 2004, and in June 2004, Deepwater Gateway
converted the project finance loan into a term loan with a final maturity date
of June 2009. The term loan is payable in twenty equal quarterly installments of
$5.5 million beginning September 30, 2004, and the remaining outstanding
principal of $45 million is due on the maturity date in June 2009. Interest
rates are variable and the loan is collateralized by substantially all of
Deepwater Gateway's assets. If Deepwater Gateway defaults on its payment
obligations under the term loan, we would be required to pay to the lenders all
distributions we or any of our subsidiaries have received from Deepwater Gateway
up to $22.5 million. As of June 30, 2004, Deepwater Gateway had $155 million
outstanding under the term loan at an average interest rate of 3.15% and had not
paid us or any of our subsidiaries any distributions.
 
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