operations. As a result, we expect that we will rely upon external financing sources, which could include debt
and common unit issuances, to fund our acquisition and expansion capital expenditures.
We expect to fund future capital expenditures with funds generated from our operations, borrowings under
our credit facility, issuance of long-term debt and the issuance of additional partnership units. If these sources
are not sufficient, we will reduce our discretionary spending.
Cash Distributions to Unitholders
— Our partnership agreement requires that, within 45 days after the
end of each quarter, we distribute all Available Cash, as defined in the partnership agreement. We made cash
distributions to our unitholders and general partner, including payment to our general partner related to our
incentive distribution rights, of $132.4 million, $101.9 million and $85.3 million during 2011, 2010 and 2009,
respectively. We intend to continue making quarterly distribution payments to our unitholders and general
partner to the extent we have sufficient cash from operations after the establishment of reserves.
Description of the Credit Agreement
— On November 10, 2011, we entered into a Credit Agreement
providing for a $1.0 billion revolving credit facility that matures November 10, 2016. The Credit Agreement
replaced the Prior Credit Agreement, which had a total borrowing capacity of $850.0 million and would have
matured on June 21, 2012. As of December 31, 2011, the outstanding balance on the revolving credit facility
was $497.0 million resulting in unused revolver capacity of $501.9 million, of which approximately $279.5
million was available for general working capital purposes.
Our obligations under the revolving credit facility are unsecured. The unused portion of the revolving
credit facility may be used for letters of credit. At December 31, 2011 and 2010, we had outstanding letters of
credit issued under the Credit Agreement and Prior Credit Agreement of $1.1 million and $32.1 million,
respectively.
We may prepay all loans at any time without penalty, subject to the reimbursement of lender breakage
costs in the case of prepayment of London Interbank Offered Rate, or LIBOR, borrowings. Indebtedness under
the revolving credit facility bears interest at either: (1) LIBOR, plus an applicable margin ranging from 0.85%
to 1.65% depending on our credit rating; or (2) the higher of Wells Fargo Bank’s prime rate plus an applicable
margin ranging from 0% to 0.65% depending on our credit rating, the Federal Funds rate plus 0.50% or the
LIBOR Market Index rate plus 1%. As of December 31, 2011, the weighted-average interest rate on the $497.0
million of borrowings outstanding under the revolving credit facility was 1.69% per annum, excluding the
impact of interest swaps. The revolving credit facility incurs an annual facility fee of 0.15% to 0.35%
depending on our credit rating. This fee is paid on drawn and undrawn portions of the revolving credit facility.
The Credit Agreement requires us to maintain a leverage ratio (the ratio of our consolidated indebtedness
to our consolidated EBITDA, in each case as is defined by the Credit Agreement) of not more than 5.0 to 1.0,
and on a temporary basis for not more than three consecutive quarters (including the quarter in which such
acquisition is consummated) following the consummation of asset acquisitions in the midstream energy
business of not more than 5.5 to 1.0.
Description of the Term Loan Agreement
— On January 3, 2012, we entered into a 2-year Term Loan
Agreement with Wells Fargo Bank, National Association, SunTrust Bank and The Bank of Tokyo-Mitsubishi
UFJ, Ltd. as lenders. We borrowed $135.0 million under the term loan on January 3, 2012, which was used to
fund the acquisition of the remaining 49.9% interest in East Texas.
The term loan will mature on January 3, 2014. The proceeds of any subsequent indebtedness issued with a
maturity date after January 3, 2014 must be used to prepay the term loan. Indebtedness under the term loan bears
interest at either: (1) LIBOR, plus an applicable margin ranging from 1.0% to 1.75% depending on our credit
rating; or (2) the higher of Wells Fargo Bank’s prime rate plus an applicable margin ranging from 0% to 0.75%
depending on our credit rating, the Federal Funds rate plus 0.50% or the LIBOR Market Index rate plus 1%.
The Term Loan Agreement requires us to maintain a leverage ratio (the ratio of our consolidated
indebtedness to our consolidated EBITDA, in each case as is defined by the Term Loan Agreement) of not
more than 5.0 to 1.0, and on a temporary basis for not more than three consecutive quarters (including the
quarter in which such acquisition is consummated) following the consummation of asset acquisitions in the
midstream energy business of not more than 5.5 to 1.0.
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