Changes in interest rates may adversely impact our ability to issue additional equity or incur debt, as well
as the ability of exploration and production companies to finance new drilling programs around our
systems.
Interest rates on future credit facilities and debt offerings could be higher than current levels, causing our
financing costs to increase. As with other yield-oriented securities, our unit price is impacted by the level of our
cash distributions and implied distribution yield. The distribution yield is often used by investors to compare
and rank related yield-oriented securities for investment decision-making purposes. Therefore, changes in
interest rates, either positive or negative, may affect the yield requirements of investors who invest in our units,
and a rising interest rate environment could impair our ability to issue additional equity or incur debt to make
acquisitions, for other purposes. Increased interest costs could also inhibit the financing of new capital drilling
programs by exploration and production companies served by our systems.
We have a holding company structure in which our subsidiaries conduct our operations and own our
operating assets.
The partnership is a holding company, and our subsidiaries conduct all of our operations and own all of
our operating assets. We do not have significant assets other than equity in our subsidiaries and equity
investees. As a result, our ability to make required payments on our notes depends on the performance of our
subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us
may be restricted by, among other things, credit instruments, applicable state business organization laws and
other laws and regulations. If our subsidiaries are prevented from distributing funds to us, we may be unable to
pay all the principal and interest on the notes when due.
Our outstanding notes are senior unsecured obligations of our operating subsidiary, DCP Midstream
Operating, LP, or DCP Operating, and are not guaranteed by any of our subsidiaries. As a result, our
notes are effectively junior to DCP Operating’s existing and future secured debt and to all debt and other
liabilities of its subsidiaries.
Our 3.25% Senior Notes Due 2015, or our notes, are senior unsecured obligations of our indirect wholly-
owned subsidiary, DCP Operating, and rank equally in right of payment with all of its other existing and future
senior unsecured debt. All of our operating assets are owned by our subsidiaries, and none of these subsidiaries
guarantee DCP Operating’s obligations with respect to the notes. Creditors of DCP Operating’s subsidiaries
may have claims with respect to the assets of those subsidiaries that rank effectively senior to the notes. In the
event of any distribution or payment of assets of such subsidiaries in any dissolution, winding up, liquidation,
reorganization or bankruptcy proceeding, the claims of those creditors would be satisfied prior to making any
such distribution or payment to DCP Operating in respect of its direct or indirect equity interests in such
subsidiaries. Consequently, after satisfaction of the claims of such creditors, there may be little or no amounts
left available to make payments in respect of our notes. As of December 31, 2011, DCP Operating’s
subsidiaries had no debt for borrowed money owing to any unaffiliated third parties. However, such
subsidiaries are not prohibited under the indenture governing the notes from incurring indebtedness in the
future.
In addition, because our notes and our guarantee of our notes are unsecured, holders of any secured
indebtedness of us would have claims with respect to the assets constituting collateral for such indebtedness
that are senior to the claims of the holders of our notes. Currently, we do not have any secured indebtedness.
Although the indenture governing our notes places some limitations on our ability to create liens securing debt,
there are significant exceptions to these limitations that will allow us to secure significant amounts of
indebtedness without equally and ratably securing the notes. If we incur secured indebtedness and such
indebtedness is either accelerated or becomes subject to a bankruptcy, liquidation or reorganization, our assets
would be used to satisfy obligations with respect to the indebtedness secured thereby before any payment could
be made on our notes. Consequently, any such secured indebtedness would effectively be senior to our notes
and our guarantee of our notes, to the extent of the value of the collateral securing the secured indebtedness. In
that event, noteholders may not be able to recover all the principal or interest due under our notes.
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