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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                        LIQUIDITY AND CAPITAL RESOURCES
 
     Our principal requirements for cash, other than our routine operating
costs, are for capital expenditures, debt service, business acquisitions and
distributions to our partners. We plan to fund our short-term cash needs,
including operating costs, maintenance capital expenditures and cash
distributions to our partners, from cash generated from our operating activities
and borrowings under our credit facility. Capital expenditures we expect to
benefit us over longer time periods, including our organic growth projects and
business acquisitions, we plan to fund through a variety of sources (either
separately or in combination), which include issuing additional common units,
borrowing under commercial bank credit facilities, issuing public or private
placement debt and other financing transactions. We plan to fund our debt
service requirements through a combination of refinancing arrangements and cash
generated from our operating activities. Our merger agreement with Enterprise
limits our ability to raise additional capital and incur additional indebtedness
prior to the closing of the merger without Enterprise's approval; however, we
believe that these limitations will not affect our liquidity.
 
CAPITAL RESOURCES
 
SERIES F CONVERTIBLE UNITS
 
     In connection with a public offering in May 2003, we issued 80 Series F
convertible units convertible into a maximum of 8,329,679 common units and
comprised of two separate detachable units. The Series F1 units are convertible
into up to $80 million of common units anytime after August 12, 2003, and until
the date we merge with Enterprise (subject to other defined extension rights).
The Series F2 units are convertible into up to $40 million of common units prior
to March 30, 2005 (subject to defined extension rights). The price at which the
Series F convertible units may be converted to common units is equal to the
lesser (i) of the prevailing price (as defined below), if the prevailing price
is equal to or greater than $35.75, or (ii) the prevailing price minus the
product of 50 percent of the positive difference, if any, of $35.75 minus the
prevailing price. The prevailing price is equal to the lesser of (i) the average
closing price of our common units for the 60 business days ending on and
including the fourth business day prior to our receiving notice from the holder
of the Series F convertible units of their intent to convert them into common
units, (ii) the average closing price of our common units for the first seven
business days of the 60 day period included in (i); or (iii) the average closing
price of our common units for the last seven business days of the 60 day period
included in (i). The price at which the Series F convertible units could have
been converted to common units, assuming we had received a conversion notice on
June 30, 2004 and August 5, 2004, was $38.47 and $37.10 per common unit. Holders
of Series F convertible units are not entitled to vote or to receive
distributions. The value of the Series F convertible units was $2.6 million as
of June 30, 2004, and is included in partners' capital as a component of common
units capital.
 
     In August 2003, we amended the terms of the Series F convertible units to
permit the holder to elect a "cashless" exercise -- that is, an exercise where
the holder gives up common units with a value equal to the exercise price rather
than paying the exercise price in cash. If the holder so elects, we have the
option to settle the net position by issuing common units or, if the settlement
price per unit is above $26 per unit, paying the holder an amount of cash equal
to the market price of the net number of units. These amendments had no effect
on the classification of the Series F convertible units on the balance sheet at
June 30, 2004 and December 31, 2003.
 
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