Partners' Equity | Partners’ Equity The Partnership Agreement requires that, within 60 days after the end of each quarter, the Partnership distribute all of its available cash (as defined in the Partnership Agreement) to unitholders of record on the applicable record date. The Partnership paid or has authorized payment of the following cash distributions to common and subordinated unitholders during 2016 and 2017 (in millions, except for per unit amounts): Quarter Ended Record Date Payment Date Per Unit Distribution Total Cash Distribution June 30, 2017 (1) August 22, 2017 August 29, 2017 $ 0.318 $ 138 March 31, 2017 May 23, 2017 May 30, 2017 $ 0.318 $ 137 December 31, 2016 February 21, 2017 February 28, 2017 $ 0.318 $ 137 September 30, 2016 November 14, 2016 November 22, 2016 $ 0.318 $ 134 June 30, 2016 August 16, 2016 August 23, 2016 $ 0.318 $ 134 March 31, 2016 May 6, 2016 May 13, 2016 $ 0.318 $ 134 December 31, 2015 February 2, 2016 February 12, 2016 $ 0.318 $ 134 _____________________ (1) The board of directors of Enable GP declared this $0.318 per common unit cash distribution on July 31, 2017 , to be paid on August 29, 2017 , to common and subordinated unitholders of record at the close of business on August 22, 2017 . The Partnership paid or has authorized payment of the following cash distributions to holders of the Series A Preferred Units during 2016 and 2017 (in millions, except for per unit amounts): Quarter Ended Record Date Payment Date Per Unit Distribution Total Cash Distribution June 30, 2017 (1) July 31, 2017 August 14, 2017 $ 0.625 $ 9 March 31, 2017 May 2, 2017 May 12, 2017 $ 0.625 $ 9 December 31, 2016 February 10, 2017 February 15, 2017 $ 0.625 $ 9 September 30, 2016 November 1, 2016 November 14, 2016 $ 0.625 $ 9 June 30, 2016 August 2, 2016 August 12, 2016 $ 0.625 $ 9 March 31, 2016 (2) May 6, 2016 May 13, 2016 $ 0.2917 $ 4 _____________________ (1) The board of directors of Enable GP declared a $0.625 per Series A Preferred Unit cash distribution on July 31, 2017 , to be paid on August 14, 2017 , to Series A Preferred unitholders of record at the close of business on July 31, 2017 . (2) The prorated quarterly distribution for the Series A Preferred Units is for a partial period beginning on February 18, 2016, and ending on March 31, 2016, which equates to $0.625 per unit on a full-quarter basis or $2.50 per unit on an annualized basis. General Partner Interest and Incentive Distribution Rights Enable GP owns a non-economic general partner interest in the Partnership and thus will not be entitled to distributions that the Partnership makes prior to the liquidation of the Partnership in respect of such general partner interest. Enable GP currently holds incentive distribution rights that entitle it to receive increasing percentages, up to a maximum of 50.0% , of the cash the Partnership distributes from operating surplus (as defined in the Partnership Agreement) in excess of $0.330625 per unit per quarter. The maximum distribution of 50.0% does not include any distributions that Enable GP or its affiliates may receive on common units or subordinated units that they own. Subordinated Units General As of June 30, 2017 , all subordinated units are held by CenterPoint Energy and OGE Energy. These units are considered subordinated because for a period of time, defined by the Partnership Agreement as the subordination period, the subordinated units will not be entitled to receive any distributions until the common units have received distributions of available cash each quarter from operating surplus in an amount equal to the minimum quarterly distribution, plus any arrearages on minimum quarterly distributions on the common units from prior quarters. In addition, the subordinated units are not entitled to arrearages on minimum quarterly distributions. On the expiration of the subordination period, the subordinated units will convert to common units on a one-for-one basis. Subordination Period The subordination period began on the closing date of the IPO and expires on the first to occur of the following dates: (1) the first business day following the distribution of available cash in respect of any quarter beginning with the quarter ending June 30, 2017 that the following tests are met: (a) distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equal or exceed $1.15 per unit (the annualized minimum quarterly distribution) for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date; (b) the adjusted operating surplus generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum $1.15 (the annualized minimum quarterly distribution) on all of the common units and subordinated units outstanding during those periods on a fully diluted weighted average basis; and (c) there are no arrearages in the payment of the minimum quarterly distributions on the common units or (2) the first business day following the distribution of available cash in respect of any quarter beginning with the quarter ending June 30, 2015 that the following tests are met: (a) distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equal to or exceeding $1.725 per unit ( 150% of the annualized minimum quarterly distribution) for the four consecutive quarter period immediately preceding that date; (b) the adjusted operating surplus generated during the four consecutive quarter period immediately preceding that date equaled or exceed $1.725 per unit ( 150% of the annualized minimum quarterly distribution) on all of the common units and subordinated units outstanding during that period on a fully diluted weighted average basis plus the corresponding incentive distribution rights; and (c) there are no arrearages in the payment of the minimum quarterly distributions on the common units. Expiration of Subordination Period The Partnership expects that the financial tests required for conversion of all subordinated units will have been met, the subordination period will end and all subordinated units will convert into common units on the first business day following the payment of the cash distribution for common and subordinated units for the second quarter of 2017. Accordingly, the 207,855,430 outstanding subordinated units will convert into common units on a one -for-one basis on August 30, 2017. At conversion, holders of common units resulting from the conversion of subordinated units will have all the rights and obligations of unitholders holding all other common units, including the right to receive pro rata distributions made with respect to common units. The conversion of the subordinated units will not change the aggregate amount of outstanding units, and the Partnership does not anticipate that the conversion of the subordinated units will impact the amount of cash available for distribution by the Partnership. Series A Preferred Units On February 18, 2016, the Partnership completed the private placement of 14,520,000 Series A Preferred Units representing limited partner interests in the Partnership for a cash purchase price of $25.00 per Series A Preferred Unit, resulting in proceeds of $362 million , net of issuance costs. The Partnership incurred approximately $1 million of expenses related to the offering, which is shown as an offset to the proceeds. In connection with the closing of the private placement, the Partnership redeemed approximately $363 million of notes scheduled to mature in 2017 payable to a wholly-owned subsidiary of CenterPoint Energy. Pursuant to the Partnership Agreement , the Series A Preferred Units: • rank senior to the Partnership’s common units with respect to the payment of distributions and distribution of assets upon liquidation, dissolution and winding up; • have no stated maturity; • are not subject to any sinking fund; and • will remain outstanding indefinitely unless repurchased or redeemed by the Partnership or converted into its common units in connection with a change of control. Holders of the Series A Preferred Units receive a quarterly cash distribution on a non-cumulative basis if and when declared by the General Partner, and subject to certain adjustments, equal to an annual rate of: 10% on the stated liquidation preference of $25.00 from the date of original issue to, but not including, the five year anniversary of the original issue date; and thereafter a percentage of the stated liquidation preference equal to the sum of the three-month LIBOR plus 8.5% . At any time on or after five years after the original issue date, the Partnership may redeem the Series A Preferred Units, in whole or in part, from any source of funds legally available for such purpose, by paying $25.50 per unit plus an amount equal to all accumulated and unpaid distributions thereon to the date of redemption, whether or not declared. In addition, the Partnership (or a third-party with its prior written consent) may redeem the Series A Preferred Units following certain changes in the methodology employed by ratings agencies, changes of control or fundamental transactions as set forth in the Partnership Agreement . If, upon a change of control or certain fundamental transactions, the Partnership (or a third-party with its prior written consent) does not exercise this option, then the holders of the Series A Preferred Units have the option to convert the Series A Preferred Units into a number of common units per Series A Preferred Unit as set forth in the Partnership Agreement . The Series A Preferred Units are also required to be redeemed in certain circumstances if they are not eligible for trading on the New York Stock Exchange. Holders of Series A Preferred Units have no voting rights except for limited voting rights with respect to potential amendments to the Partnership Agreement that have a material adverse effect on the existing terms of the Series A Preferred Units, the issuance by the Partnership of certain securities, approval of certain fundamental transactions and as required by law. Upon the transfer of any Series A Preferred Unit to a non-affiliate of CenterPoint Energy, the Series A Preferred Units will automatically convert into a new series of preferred units (the Series B Preferred Units) on the later of the date of transfer and the second anniversary of the date of issue. The Series B Preferred Units will have the same terms as the Series A Preferred Units except that unpaid distributions on the Series B Preferred Units will accrue on a cumulative basis until paid. On February 18, 2016, the Partnership entered into a registration rights agreement with CenterPoint Energy, pursuant to which, among other things, the Partnership gave CenterPoint Energy certain rights to require the Partnership to file and maintain a registration statement with respect to the resale of the Series A Preferred Units and any other series of preferred units or common units representing limited partner interests in the Partnership that are issuable upon conversion of the Series A Preferred Units. ATM Program On May 12, 2017, the Partnership entered into an ATM Equity Offering Sales Agreement in connection with an at-the-market program (the “ATM Program”). Pursuant to the ATM Program, the Partnership may issue and sell common units having an aggregate offering price of up to $200 million, by sales methods and at prices determined by market conditions and other factors at the time of our offerings. The Partnership has no obligation to sell any common units under the ATM Program and the Partnership may suspend sales under the ATM Program at any time. For the three and six months ended June 30, 2017, the Partnership sold an aggregate of 18,500 common units under the ATM Program, which generated proceeds of approximately $303,000 (net of approximately $3,000 of commissions). The Partnership incurred approximately $345,000 of expenses associated with the filing of the registration statements for the ATM Program. The proceeds were used for general partnership purposes. 2016 Equity Issuance On November 29, 2016, the Partnership closed a public offering of 10,000,000 common units at a price to the public of $14.00 per common unit. In connection with the offering, the Partnership, the underwriters and an affiliate of ArcLight entered into an underwriting agreement that provided an option for the underwriters to purchase up to an additional 1,500,000 common units, with 75,719 common units to be sold by the Partnership and 1,424,281 to be sold by the affiliate of ArcLight. The underwriters exercised the option to purchase all of the additional common units, and the Partnership received proceeds (net of underwriting discounts, structuring fees and offering expenses) of $137 million from the offering. |