Secondary Offering Weighs on Plains All American (PAA)

Plains All American Pipeline, L.P. (NYSE: PAA) is joining the ranks of companies raising capital. The company has commenced on a 5 million unit secondary offering of representing limited partner interests.

Barclays Capital, BofA Merrill Lynch, Citigroup, J.P. Morgan, UBS Investment Bank and Wells Fargo Securities will are the joint book-running managers.  Plains All American also intends to grant the underwriters a 30-day option to purchase up to 750,000 additional common units to cover over-allotments.

As far as the use of funds, the net proceeds of the offering will be used to fund a portion of the proposed acquisition of BP Canada Energy Company.  It was also noted, “Pending the application of the net proceeds to fund the BP NGL Acquisition, the Partnership intends to repay all borrowings outstanding under the PAA credit facilities and use the balance for general partnership purposes. If the BP NGL Acquisition is not consummated for any reason, the Partnership will use the net proceeds for general partnership purposes, including future acquisitions and capital program expenditures.”

Shares are indicated down 3.2% at $79.70 versus a 52-week range of $54.90 to $84.48.