Mail Stop 3561
September 15, 2005
W. Douglas Field
Boardwalk Pipeline Partners, LP
3800 Frederica Street
Owensboro, Kentucky 42301
Re: Boardwalk Pipeline Partners, LP
Registration Statement on Form S-1
Filed August 16, 2005
File No. 333-127578
Dear Mr. Field:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. We note a number of blank spaces throughout your registration
statement for information that you are not entitled to omit under
Rule 430A, such as the anticipated price range and related
information based on a bona fide estimate of the public offering
within that range. Please allow us sufficient time to review your
complete disclosure prior to any distribution of preliminary
prospectuses.
2. Please revise your document to discuss the effects of Hurricane
Katrina on your business, operations, customers and facilities.
Please also revise the risk factors and the discussion of your
cash
distribution policy and restrictions on distributions.
3. We note that concurrently with this public offering, you are
offering 53,256,122 common units to an affiliate of Loews. Please
tell us the exemption from registration that you are relying on
and
the facts which make the exemption available to you. Please
provide
us with your analysis with respect to the potential for the
integration of the private offer and sale of common units and the
public offering of common units, including a discussion of any
relevant staff interpretations. Please refer to Black Box
Incorporated (June 26, 1990) and Squadron, Ellenoff, Plesant &
Lehrer
(February 28, 1992). We may have further comment.
4. Please provide us with copies of any artwork you intend to use
for
our review and comment. Please keep in mind that we may have
comments on these materials and you should consider waiting for
these
comments before printing and circulating any artwork.
Summary Historical Financial and Operating Data, page 13
5. We note that your calculation of EBITDA includes an adjustment
for
miscellaneous other income, net for all periods presented. All
"EBITDA" references should be changed here and elsewhere to
"Adjusted
EBITDA" or otherwise given a more appropriate label.
Risk Factors, page 20
6. Please revise to include a risk that discusses the controlling
interest held by the affiliate of Loews.
7. We note that your only cash-generating assets are your
partnership
interests in Boardwalk Pipelines LP. Please include a risk factor
that discusses your dependence on the ability of Boardwalk
Pipelines
LP to make distributions and on your operating subsidiaries to
generate cash.
8. We note that your general partner will own units representing
an
aggregate 83.5% limited partner interest in you and will have call
rights when it owns 80% of the outstanding common units to
purchase
all of the remaining common units at a purchase price that may be
less than the current market price of the common units. Please
include a risk factor that discusses the risk that holders of
common
units may receive less than the current market price in the event
your general partner exercises its call right.
Capitalization, page 40
9. Please revise your capitalization table to present the pro
forma
adjustments arising from your offering of 15,000,000 common units
and
the expected use of proceeds separately from the other pro forma
adjustments presented.
Cash Distribution Policy and Restrictions on Distributions, page
42
Limitations on Our Ability to Make Quarterly Distributions, page
42
10. If applicable, please discuss any limitation on the transfer
of
cash from Texas Gas or Gulf South at the operating company level
to
you at the holding company level. Please also disclose, if
applicable, that unit holders have no contractual or other legal
right to distributions.
Our Initial Distribution Rate, page 43
11. Revise your disclosure to indicate whether you had sufficient
cash to pay your minimum quarterly distribution over the twelve
months ended December 31, 2004 and the twelve months ended June
30,
2005 if your distribution policy had been in place during these
periods. To the extent your historical excess cash available to
pay
distributions would have been insufficient to pay your intended
aggregate distribution over these periods, then indicate from
where
you would have obtained the additional cash, such as through
borrowings.
Estimated Available Cash, page 44
Minimum Cash Available to Pay Distributions, page 46
12. Please disclose how your anticipated new $43 million credit
facility or any other indebtedness factor into your tables. For
example, discuss any limitations on your ability to pay
distributions
under your anticipated new credit facility. Please also discuss
whether you make any material assumptions regarding the general
business climate or any extraordinary transactions. Further, your
estimated interest expense should include the incremental cost of
borrowings associated with the anticipated drawdown on your credit
facilities to finance capital improvement expenditures. Please
revise or advise.
Footnote (c), page 46
13. Please clarify, if true, that the $12.8 million environmental
remediation accrual in the fourth quarter of 2004 resulting from
the
Gulf South acquisition did not impact EBITDA due to its inclusion
in
the purchase price allocation.
Assumptions and Considerations, page 47
14. Please move this section so that the discussion begins right
before "How We Make Cash Distributions" on page 52.
15. Please expand your discussion to include the expected impact
of
your assumptions and considerations on Adjusted EBITDA rather than
individual income statement line items for the twelve months
ending
June 30, 2006.
16. You state that increasing production in South and East Texas
will
lead to improving basis differentials, which will produce higher
transportation rates on these parts of the system. Please revise
to
describe specifically what you mean by basis differentials. In
this
regard, disclose why higher transportation rates will occur and
provide an estimate of such amount.
Pro Forma Available Cash, page 49
17. Please move the first paragraph so that the disclosure appears
right after the table "Minimum Cash Available to Pay
Distributions.
18. Please revise the second paragraph which begins, "[p]ro forma
available cash from operating surplus...," so that the disclosure
appears in a footnote or as an assumption.
19. Please move the paragraph that begins, "[t]he following table
illustrates, on a pro forma basis...," so that it appears as the
first paragraph in this section. Then, please move the paragraph
that
begins, "[t]he pro forma financial statements, from which pro
forma
available cash is derived...," so that it appears as the second
paragraph in this section.
20. We note that your pro forma available cash would have been
insufficient to pay the entire distribution amount during 2004 and
for the twelve months ended June 30, 2005. Please revise the
table
to disclose the reasons for the insufficient cash.
Boardwalk Pipeline Partners, LP
Unaudited Pro Forma Cash Available to Pay Distributions, page 50
21. Regarding the shortfall, please indicate where you would have
obtained the additional cash, such as through borrowings.
22. Please revise your unaudited pro forma cash available to pay
distributions for the year ended December 31, 2004 and the twelve
months ended June 30, 2005 for the following:
* Your table showing pro forma cash available to pay distributions
should begin with the historical GAAP measure of your consolidated
net cash provided by operating activities. Next, revise the table
to
show the necessary adjustments, all of which should be historical
GAAP measures, to reach historical Adjusted EBITDA.
* Next, revise the table to show the necessary adjustments to
reach
pro forma Adjusted EBITDA, if any. Include a footnote to provide a
reconciliation of any such adjustments. The reconciliation should
begin with historical net income and list adjustments, including
historical interest expense, historical depreciation and
amortization, and pro forma adjustments to derive your net pro
forma
adjustment to historical adjusted EBITDA. Your footnote
reflecting
this reconciliation should also include a qualitative analysis
describing the timing of your recent acquisitions and the related
pro
forma adjustments.
* The next section of the tables should include the deductions
from
pro forma Adjusted EBITDA to arrive at pro forma cash available to
pay distributions.
23. If you have made an adjustment to add back the impact of net
increases in working capital to arrive at historical Adjusted
EBITDA
and do not subsequently reflect such amount as a reduction in
arriving at cash available for distributions, please indicate why.
For example, if you assume that working capital does not require,
or
generate, cash over time, or that management can otherwise avoid
the
use of cash through discretionary management of working capital,
please indicate such in a footnote.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 67
24. Please expand this section to discuss known material trends
and
uncertainties that will have, or are reasonably likely to have, a
material impact on your revenues, income, or your liquidity.
Results of Operations, page 71
25. Describe how the acquisitions of Texas Gas and Gulf South have
impacted your results of operations.
Six-Month Periods Ended June 30, 2005 and June 30, 2005, page 72
26. For each period, please revise to describe the changes in each
significant component of revenues and expenses and the reasons for
any material change. Refer to Item 303(a)(3) of Regulation S-K.
For
example, discuss the changes in gas transportation, gas storage
and
other revenues. Describe the how the operations of Gulf South
contributed to costs and expenses.
Contractual Obligations, page 74
27. Please describe the provisions that create, increase or
accelerate obligations, or include other information necessary for
an
understanding of the timing and amount of the contractual
obligations. Refer to Item 303(a)(5)(i) of Regulation S-K.
Quantitative and Qualitative Disclosures About Market Risk, page
78
28. Please revise to include quantitative information regarding
commodity price risk and credit risk. Refer to Item 305(a) of
Regulation S-K. Regarding your interest rate risk, please revise
to
quantify the fixed interest rate on your long-term debt.
Industry Overview, page 79
29. We note that you reference sources from EIA or the Energy
Information Administration. Please provide us with copies of
these
sources and highlight the sections on which you are relying for
your
disclosure.
Management, page 94
Directors and Executive Officers of Boardwalk GP, LLC, page 95
30. Please revise to clarify how long each director or officer has
held his current position and disclose any other positions held in
the last five years. Refer to Item 401(e) of Regulation S-K.
Certain Relationships and Related Party Transactions, page 98
31. We note that on page F-14 you disclose advance payments to
affiliates. Please revise to describe these advances or advise
us.
Underwriting, page 138
32. We note that you may deliver this prospectus electronically to
some investors. To the extent that you will engage in any
marketing
of this offering online, please confirm that your procedures for
electronic postings or links to the prospectus or for electronic
distributions have been reviewed and cleared by the Division`s
Office
of Chief Counsel, and that the procedures have not changed since
such
clearance.
Boardwalk Pipeline Partners, LP Unaudited Pro Forma Consolidated
Financial Statements, page F-1
33. Please revise your Unaudited Pro Forma Financial Statements to
present your pro forma adjustments due to the offering in a
separate
column.
34. Please revise your Pro Forma Statements of Financial Position
as
of December 31, 2004 and June 30, 2005 to present the pro forma
adjustment of the assumption of $ 250 million of indebtedness from
BPHC and the subsequent repayment with the proceeds of the
offering.
Unaudited Pro Forma Consolidated Statement of Operations for the
Twelve Months Ended June 30, 2005, page F-4
35. Please remove the Unaudited Pro Forma Consolidated Statements
of
Operations for the Twelve Months Ended June 30, 2005 and related
references to this period in the notes to the pro forma financial
statements. Pro Forma financial statements should be limited to
the
latest fiscal year and interim period included in the filing.
Refer
to Rule 11-02(c) of Regulation S-X.
Note 2. Pro Forma Adjustments and Assumptions, page F-9
36. Please disclose in reasonable detail the assumptions used
resulting in the pro forma adjustments for depreciation and
amortization and interest expense.
37. We note that you have not included a pro forma adjustment for
the
incremental interest expense associated with the $43 million of
borrowings to reimburse BPHC. Please revise your pro forma
statement
of operations and your pro forma tables located elsewhere in your
filing accordingly or tell us why you do not believe such an
adjustment is appropriate.
Note 3. Pro Forma Net Income Per Unit, page F-10
2. We note that you expect to make numerous distributions prior to
issuance of public units well in excess of earnings during the
previous twelve months. A dividend declared within a year of an
IPO
that is in excess of earnings during the previous twelve months is
deemed to be in contemplation of the offering with the intention
of
repayment out of offering proceeds. Thus, please disclose pro
forma
earnings per share giving effect to the number of shares whose
proceeds would be necessary to pay the dividend (but only the
amount
that exceeds current year`s earnings). You may provide this
disclosure either here or on the face of the statements of
operations. Refer to SAB Topic 1:B.3.
Item 16. Exhibits, page II-1
38. Please file all required exhibits in a timely manner so that
we
may have sufficient time to review them before you request
effectiveness of your registration statement. See Item 601 of
Regulation S-K.
Item 17. Undertakings, page II-2
39. Please add the following additional undertakings, as
consistent
with Item 20 of Guide 5:
"The registrant undertakes to send to each limited partner at
least
on an annual basis a detailed statement of any transactions with
the
General Partner or its affiliates, and of fees, commissions,
compensation and other benefits paid, or accrued to the General
Partner or its affiliates for the fiscal year completed, showing
the
amount paid or accrued to each recipient and the services
performed."
"The registrant undertakes to provide to the limited partners the
financial statements required by Form 10-K for the first full
fiscal
year of operations of the partnership."
Signatures, page II-3
40. Please revise to identify the principal accounting officer or
controller.
* * * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment decision. Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact John Cannarella, Staff Accountant, at (202)
551-3337 or William Choi, Accounting Branch Chief, at (202) 551-
3716,
if you have questions regarding comments on the financial
statements
and related matters. Please contact Peggy Kim, Staff Attorney, at
(202) 551-3411, or David Mittelman, Legal Branch Chief, at (202)
551-
3214 or me at (202) 551-3720 with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: Alan P. Baden, Esq.
Michael Swidler, Esq.
Vinson & Elkins L.L.P.
Via Facsimile
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W. Douglas Field
Boardwalk Pipeline Partners, LP
September 15, 2005
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