AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 23, 1994

REGISTRATION NO. 33-55863
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

AMENDMENT NO. 1

TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------

BORDEN CHEMICALS AND PLASTICS
LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

----------------

DELAWARE 31-1269627
(STATE OF ORGANIZATION) 2821

(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION NUMBER)
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)

HIGHWAY 73
GEISMAR, LOUISIANA 70734
(504) 673-6121
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING

AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

----------------

LAWRENCE L. DIEKER, ESQ.
SECRETARY
BCP MANAGEMENT, INC.
180 EAST BROAD ST.
COLUMBUS, OHIO 43215
(614) 225-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

PLEASE SEND COPIES OF ALL CORRESPONDENCE TO:

SIDLEY & AUSTIN ANDREWS & KURTH L.L.P.
875 THIRD AVENUE 425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022 NEW YORK, NY 10017
ATTENTION: MAHBOOB MAHMOOD, ESQ. ATTENTION: JONATHAN P. CRAMER, ESQ.
WILLIAM N. FINNEGAN, IV,
ESQ.

----------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]

If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED NOVEMBER 23, 1994

4,000,000 Depositary Units

Representing Common Limited Partner Interests

Borden Chemicals and Plastics Limited Partnership
--------
The 4,000,000 Depositary Units ("Units") representing common limited partner
interests in Borden Chemicals and Plastics Limited Partnership, a Dela-
ware limited partnership (the "Company" or the "Partnership"), are
being sold by the Company. The Company was formed in 1987 to ac-
quire, own and operate polyvinyl chloride, methanol and other
chemical plants located at Geismar, Louisiana, and
Illiopolis, Illinois, previously owned and operated by
Borden, Inc. ("Borden").

The Company distributes 100% of its Available Cash (as defined herein) after
the end of each quarter. BCP Management, Inc. (the "General Partner" or
"BCPM"), a wholly owned subsidiary of Borden, serves as the sole gen-
eral partner of each of the Company and its subsidiary operating
partnership, Borden Chemicals and Plastics Operating Limited
Partnership (the "Operating Company" or the "Operating
Partnership").

The Units are listed on the New York Stock Exchange under the symbol BCU.
On November 21, 1994, the last re-ported sale price of Units
on the Composite Tape of the New York Stock Exchange
was $19 7/8 per Unit.
--------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE UNITS SEE "INVESTMENT CONSIDERATIONS". SUCH FACTORS
INCLUDE THE FOLLOWING:
. THE MARKETS FOR THE COMPANY'S PRODUCTS HAVE
BEEN, AND ARE LIKELY TO CONTINUE TO BE,
COMPETITIVE AND CYCLICAL.
. THE COMPANY IS SUBJECT TO EXTENSIVE FEDERAL,
STATE AND LOCAL LAWS AND REGULATIONS RELATING
TO THE PROTECTION OF THE ENVIRONMENT. THE
COMPANY MAY INCUR MATERIAL ENVIRONMENTAL
LIABILITIES.
. UNITHOLDERS HAVE LIMITED VOTING RIGHTS AND THE
GENERAL PARTNER MANAGES AND CONTROLS THE
COMPANY.
. THE GENERAL PARTNER AND ITS AFFILIATES MAY HAVE
CONFLICTS OF INTEREST WITH THE COMPANY AND THE
UNITHOLDERS.
. THE COMPANY'S PARTNERSHIP AGREEMENT LIMITS THE
LIABILITY AND MODIFIES THE FIDUCIARY DUTIES OF
THE GENERAL PARTNER; UNITHOLDERS ARE DEEMED TO
HAVE CONSENTED TO CERTAIN ACTIONS AND CONFLICTS
OF INTEREST THAT MIGHT OTHERWISE BE DEEMED A
BREACH OF FIDUCIARY OR OTHER DUTIES UNDER STATE
LAW.

. THE GENERAL PARTNER ANTICIPATES THAT THE
COMPANY WILL BE TREATED AS A PARTNERSHIP FOR
TAX PURPOSES FOR TAXABLE YEARS ENDING ON OR
BEFORE DECEMBER 31, 1997, AND AS A CORPORATION
FOR ALL SUBSEQUENT TAXABLE YEARS.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECU-
RITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR AD- EQUACY OF THIS PROSPECTUS. ANY REP-
RESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Underwriting
Price to Discounts and Proceeds to
Public Commissions Company(1)
--------- ------------- -----------

Per Unit................................... $ $ $
Total(2)................................... $ $ $

(1) Before deduction of expenses payable by the Company estimated at $ .
(2) The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase a maximum of 600,000
additional Units to cover over-allotments of Units. If the option is
exercised in full, the total Price to Public will be $ ,
Underwriting Discounts and Commissions will be $ and Proceeds to
Company will be $ .
--------
The Units are offered by the several Underwriters when, as and if issued by
the Company, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that the Units will
be ready for delivery on or about , 1994.

CS First Boston PaineWebber Incorporated

The date of this Prospectus is , 1994.

TABLE OF CONTENTS

PAGE
----

PROSPECTUS SUMMARY........................................................ 3
INVESTMENT CONSIDERATIONS................................................. 13
Considerations Relating to the Company's Business........................ 13
Considerations Relating to the Possible Change of Control of Borden; Re-
lationship with Borden.................................................. 16
Considerations Relating to the Addis Facility............................ 17
Considerations Relating to Partnership Structure and Relationship to the
General Partner......................................................... 18
Tax Considerations....................................................... 21
PARTNERSHIP STRUCTURE..................................................... 23
THE ACQUISITION........................................................... 24
USE OF PROCEEDS........................................................... 26
CAPITALIZATION............................................................ 27
PRICE RANGE OF UNITS AND DISTRIBUTIONS.................................... 28
CASH DISTRIBUTIONS........................................................ 29
General.................................................................. 29
Distributions of Cash from Operations.................................... 30
Adjustment of the Target Distribution.................................... 30
Distributions of Cash from Interim Capital Transactions.................. 31
Distributions Upon Liquidation........................................... 31
Entity-Level Taxation.................................................... 31
SELECTED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA............ 33
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS............................................................... 35
BUSINESS AND PROPERTIES................................................... 42
General.................................................................. 42
PVC Polymers Products.................................................... 43
Methanol and Derivatives................................................. 46
Nitrogen Products........................................................ 47
Properties............................................................... 48
Raw Materials............................................................ 49
Insurance................................................................ 49
Marketing................................................................ 50
Utilities................................................................ 50
Purchase and Processing Agreements....................................... 50
Competition.............................................................. 51
Trademarks............................................................... 52
Management............................................................... 52
Environmental and Safety Regulations..................................... 52
Borden Environmental Indemnity........................................... 56
Addis Environmental Indemnity............................................ 57
Product Liability and Regulation......................................... 57
MANAGEMENT................................................................ 58
LEGAL PROCEEDINGS......................................................... 60
CONFLICTS OF INTEREST AND FIDUCIARY RESPONSIBILITY........................ 63
DESCRIPTION OF DEPOSITARY UNITS AND THE DEPOSIT AGREEMENT................. 67
General.................................................................. 67

PAGE
----

Combination of Units and Elimination of Distribution Support............. 67
Transfer of Units........................................................ 67
Distributions............................................................ 68
Federal Income Tax Matters............................................... 69
Withdrawal of Limited Partner Interests.................................. 69
Voting................................................................... 69
Resignation or Removal of Depositary..................................... 69
Amendment................................................................ 70
Termination.............................................................. 70
Duties and Status of Depositary.......................................... 70
The Depository Trust Company............................................. 70
Conditional Right to Require Purchase of Units by Borden................. 72
Miscellaneous............................................................ 73
SUMMARY OF THE PARTNERSHIP AGREEMENTS..................................... 73
Name..................................................................... 74
Organization and Duration................................................ 74
Purpose, Business and Management......................................... 74
Power of Attorney........................................................ 74
Restrictions on Authority of the General Partner......................... 75
Withdrawal or Removal of the General Partner; Obligations of BCPM and
Borden.................................................................. 75
Reimbursement for Services............................................... 76
Status as Limited Partner or Assignee.................................... 76
Issuance of Additional Units and Securities.............................. 77
Right to Call Units...................................................... 77
Amendment of Partnership Agreements...................................... 77
Meetings and Voting...................................................... 79
Indemnification.......................................................... 79
Limited Liability........................................................ 80
Books, Reports and Information to Unitholders............................ 80
Right to Inspect Company Books and Records............................... 81
Termination, Dissolution and Liquidation................................. 81
SUMMARY OF THE FINANCING DOCUMENTS........................................ 82
ALLOCATIONS OF INCOME AND LOSS............................................ 90
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS................................. 90
ERISA AND OTHER CONSIDERATIONS CONCERNING EMPLOYEE BENEFIT PLANS AND
RETIREMENT ACCOUNTS...................................................... 110
UNDERWRITING.............................................................. 113
LEGAL OPINIONS............................................................ 115
EXPERTS................................................................... 115
AVAILABLE INFORMATION..................................................... 115
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 116
GLOSSARY OF TERMS......................................................... 117
INDEX TO FINANCIAL STATEMENTS............................................. F-1

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE UNITS AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-
COUNTER MARKET, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and the notes thereto appearing elsewhere
in this Prospectus or incorporated by reference in this Prospectus. For the
definitions of certain terms used in this Prospectus, see "Glossary of Terms".
Unless otherwise indicated, the information contained in this Prospectus
assumes that the Underwriters' over-allotment option is not exercised. See
"Underwriting". As the context requires, references herein to the Company or
the Partnership constitute references to the Company and/or the Operating
Company or the Partnership and/or the Operating Partnership, respectively.

THE COMPANY

The Company is a publicly held limited partnership formed in 1987 to acquire,
own and operate through the Operating Company polyvinyl chloride ("PVC"),
methanol and other chemical plants located in Geismar, Louisiana, and
Illiopolis, Illinois, that were previously owned and operated by Borden. The
three principal product groups manufactured at these facilities are (i) PVC
Polymers Products, which consist of PVC resins and feedstocks (such as vinyl
chloride monomer ("VCM") and acetylene), (ii) Methanol and Derivatives, which
consist of methanol and formaldehyde, and (iii) Nitrogen Products, which
consist of ammonia and urea. During 1993, PVC Polymers Products, Methanol and
Derivatives and Nitrogen Products accounted for 60%, 28% and 12%, respectively,
of the Company's revenues.

The Company recently announced that the Operating Company has entered into an
agreement to acquire a PVC resin production facility located in Addis,
Louisiana (the "Addis Facility"). Upon completion of such acquisition, the
Company's stated annual capacity for the production of PVC resin is expected to
increase by over 50% to 1,270 million pounds and the Company will be the fifth
largest producer of PVC resins in the United States.

The Company manufactures and sells general purpose PVC resins for larger
volume construction applications, such as water distribution pipe, residential
siding and wallcoverings. The Company also manufactures and sells specialty
purpose PVC resins for use in applications such as vinyl flooring, electric
cable coating, film wrap for food packaging, toys and medical and household
products. As a result of PVC's many uses within the construction and automotive
industries, demand for PVC resin is highly dependent upon the overall level of
economic activity, both domestically and abroad. Published prices for PVC
resins have increased from an average of $0.272 per pound during the first
quarter of 1993 to an average of $0.402 per pound during the third quarter of
1994.

The Company is also one of the largest manufacturers of methanol in the
United States, with a stated annual capacity of 270 million gallons. Methanol
is used primarily as a feedstock in the production of other chemicals such as
formaldehyde, which is used in the manufacture of wood building products and
adhesives, and methyl tertiary butyl ether ("MTBE"), which is used as a
gasoline additive. Demand for methanol has increased substantially due to
increasing demand for wood building products in the construction industry and
for MTBE in response to environmental regulations. Published prices for
methanol have increased from an average of $0.44 per gallon during the first
quarter of 1993 to an average of $1.01 per gallon during the third quarter of
1994.

The Company's strategy is to maximize current cash distributions while
selectively reinvesting cash from operations to increase its production
capacity through expansions of its facilities, debottlenecking of production
processes and strategic acquisitions. Through these expenditures, the Company
seeks to lower production costs and improve operational flexibility in order to
minimize the impact of cyclical downturns in the Company's business and
maximize the benefits of cyclical upturns. The integrated design of the
Company's plants provides it with a comparatively high degree of flexibility to
shift production volumes according to market conditions and with the ability to
efficiently utilize by-product streams. The Company believes that the
diversification of its businesses into three product groups mitigates, to some
extent, the cyclicality of the markets for such commodity chemical products.

THE ACQUISITION

On August 12, 1994, the Operating Company entered into an agreement with
Occidental Chemical Corporation ("OxyChem") to purchase (the "Acquisition") the
Addis Facility and certain related assets (collectively, the "Addis Assets")
and assume certain obligations relating to the Addis Assets. See "The
Acquisition". The cash purchase price for the Addis Assets is $104.3 million,
subject to certain customary post-closing adjustments. Based primarily on the
inventory levels of the Addis Facility at September 30, 1994, the Company
expects that such post-closing adjustments could reduce the purchase price by
up to $5.0 million.

The Acquisition provides the Company the opportunity to increase its PVC
resin capacity at a time of increasing demand for PVC resin. The Company
believes that purchasing an existing plant, which has a proven operating
capacity, is substantially more cost effective than increasing capacity through
the construction of a new grass-roots facility. In addition, a new grass-roots
facility would require two to three years to complete.

The closing of this offering will occur concurrently with, and is conditioned
upon, the closing of the Acquisition. The Acquisition is subject to certain
conditions, including approval by the United States Federal Trade Commission
(the "FTC"), an environmental assessment of the real estate upon which the
Addis Facility is located and the financing of the Acquisition.

The purchase price for the Addis Assets will be financed in part by the
proceeds of this offering. The remaining purchase price will be financed
through a concurrent offering of senior unsecured notes (the "Notes") of the
Operating Company and its wholly-owned subsidiary, BCP Finance Corporation
("Finance Corp."). Neither the Acquisition nor this offering is conditioned
upon consummation of the Notes offering. In the event that the Notes offering
is postponed or not consummated, the Company will use short-term borrowings,
cash on hand or a combination thereof to fund a portion of the purchase price
of the Addis Assets. The use of cash on hand would reduce cash available for
distribution to Unitholders. See "Use of Proceeds" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources".

CASH DISTRIBUTIONS

The Company distributes 100% of its Available Cash as of the end of each
quarter on or about 45 days after the end of such quarter to Unitholders of
record as of the applicable record date and to the General Partner. "Available
Cash" means generally, with respect to any quarter, the sum of all cash
receipts of the Company plus net reductions to reserves established in prior
quarters, less cash disbursements and net additions to reserves in such
quarter. The General Partner has broad discretion in establishing reserves, and
its decisions regarding reserves could have a significant impact on the amount
of Available Cash. The timing and amounts of additions and reductions to
reserves may impact the amount of incentive distributions payable to the
General Partner. As a result, distributions to Unitholders may over time be
reduced from levels which would have been distributed if the General Partner
were not able to control the timing of additions and reductions to reserves.

Distributions by the Company of Available Cash are generally made 98% to the
Unitholders and 2% to the General Partner, subject to the payment of an
incentive distribution to the General Partner to the extent that a target level
of cash distributions to the Unitholders is achieved for any quarter. The
Amended and Restated Agreement of Limited Partnership of the Company (the
"Partnership Agreement") provides that, after an amount equal to $0.3647 per
Unit (the "Target Distribution") has been distributed for any quarter to
Unitholders, the General Partner will receive 20% of any then remaining
Available Cash for such quarter as an incentive distribution (in addition to
its 2% regular distribution). Unitholders would share in the balance of such
Available Cash pro rata. The Target Distribution is subject to adjustment under
certain circumstances. See "Cash Distributions".

The Company distributed an aggregate of $0.78 per Unit with respect to 1993
and $0.21, $0.65 and $1.02 per Unit, respectively, with respect to the first
three quarters of 1994. Because the distributions in the second and third
quarters of 1994 were in excess of the Target Distribution, the General Partner
was entitled to an incentive distribution of 20% of the amount distributed
above such amount. As a result, through the first nine months of 1994, the
Unitholders received 87% and the General Partner received 13% of all
distributions. In 1993, when no incentive distribution was made, Unitholders
received 98% and the General Partner received 2% of all distributions. The
increases in distributions during 1994 is largely the result of increased
Available Cash due to higher PVC and methanol prices. While the outlook for PVC
and methanol prices remains strong in the near term, these prices are cyclical
in nature and there can be no assurance that distributions at these levels can
be maintained in the future. Past cash distributions are not necessarily
indicative of future cash distributions. See "Price Range of Units and
Distributions".

Because of the Company's focus on maximizing current cash distributions, the
cyclical nature of its business and the fact that it does not retain
significant amounts of cash during cyclical upturns in the Company's business
for purposes of later distribution, the level of the Company's cash
distributions to Unitholders has tended to vary substantially from period to
period. Although the Company intends to continue its strategy of maximizing
current cash distributions and not retaining significant amounts of cash for
future distributions, there may be times, even during cyclical upturns in the
Company's business, when the Company's strategy will require that significant
amounts of otherwise distributable cash be retained for capital investment in
the business, strategic acquisitions, payment of future debt obligations or
general operating purposes. See "--The Acquisition". As a result, the level of
cash distributions is likely to continue to fluctuate and at times could
fluctuate even more than in the past.

THE OFFERING

Securities offered(1).............. 4,000,000 Units
Units to be outstanding after the 40,750,000 Units
offering(1).......................
Use of proceeds.................... The net proceeds from the sale of the Units
offered hereby will be used to fund a por-
tion of the purchase price of the Acquisi-
tion. See "Use of Proceeds".
New York Stock Exchange symbol..... BCU

- --------

(1) Does not give effect to the exercise of the over-allotment option of
600,000 Units granted to the Underwriters by the Company. See "Underwriting".

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING INFORMATION

The following table sets forth, for the periods and at the dates indicated,
summary consolidated historical financial and operating data for the Company
and combined pro forma financial data for the Company after giving effect to
the Acquisition, this offering, the offering of the Notes and the prepayment of
the Operating Company's existing notes. See "Use of Proceeds". The summary
consolidated historical financial data are derived from and should be read in
conjunction with the consolidated historical financial statements and notes
thereto included elsewhere in this Prospectus. See also "Management's
Discussion and Analysis of Financial Condition and Results of Operations". The
summary combined pro forma financial information is derived from and should be
read in conjunction with the pro forma financial information contained
elsewhere in this Prospectus. The pro forma statement of operations data
assumes that the Acquisition, this offering, the offering of the Notes and the
prepayment of the Company's existing notes referred to in "Use of Proceeds" had
been consummated on January 1, 1993. The pro forma balance sheet data assumes
that the Acquisition, this offering, the offering of the Notes and the
prepayment of the Operating Company's existing notes had been consummated on
September 23, 1994.

HISTORICAL PRO FORMA
------------------------------------------------------- ---------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1989 1990 1991 1992 1993 1993
--------- --------- --------- --------- --------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT AND PER UNIT DATA)

STATEMENT OF OPERATIONS
DATA:
Total revenues.......... $ 465,923 $ 420,631 $ 410,005 $ 401,803 $ 433,297 $529,459
Expenses
Cost of goods sold.... 353,871 335,309 317,504 337,982 397,771 490,123
Marketing, general and
administrative....... 16,745 17,745 18,578 18,118 18,993 19,243
Interest.............. 16,340 16,340 16,340 16,340 16,356 19,500
General Partner
incentive............ 11,072 5,832 5,497 2,146 -- --
Other................. (1,600) 109 533 132 1,612 3,092
Net (loss) income....... 69,495 45,296 51,553 27,085 (1,435) (2,474)
Net (loss) income per
Unit(1)................ 1.87 1.22 1.39 0.73 (0.04) (0.06)
Cash distributions per
Unit(2)................ 2.45 1.95 1.98 1.59 0.78
Percentage of
distributions
Unitholders........... 87% 91% 91% 95% 98%
General Partner....... 13% 9% 9% 5% 2%
OTHER DATA:
Capital expenditures.... $ 28,157 $ 22,084 $ 17,975 $ 10,534 $ 15,041
EBITDA(3)............... 137,158 108,368 115,895 89,155 57,867 $65,737
Depreciation............ 40,251 40,900 42,505 43,584 42,946 48,711
Costs reimbursed to
Borden................. 55,254 54,185 53,209 50,921 56,976
BALANCE SHEET DATA:
PP&E, net............... $417,186 $395,762 $369,189 $335,136 $305,975
Total assets............ 549,628 544,204 507,042 466,729 444,304
Long-term debt.......... 150,000 150,000 150,000 150,000 150,000
Total partners' capital. 341,707 314,558 292,555 260,595 230,205
OPERATING DATA:
Average price received
per unit sold(4)
PVC Polymers Products. 132 119 103 99 106
Methanol and
Derivatives.......... 99 87 110 88 94
Nitrogen Products..... 77 80 87 82 85
Raw material costs per
unit sold(4)
Natural gas........... 74 74 63 74 88
Ethylene.............. 207 171 128 116 115
Chlorine.............. 50 13 N/M(5) 7 83
Production volumes (in
pounds)
PVC Polymers Products. 1,786,288 1,912,233 1,793,271 1,929,093 1,848,657
Methanol and
Derivatives.......... 2,000,962 1,972,705 2,113,909 2,339,561 2,408,579
Nitrogen Products..... 1,178,916 1,250,910 1,291,566 1,307,764 1,207,020

- --------

(footnotes on following page)

HISTORICAL PRO FORMA
--------------------------- -------------
NINE MONTHS ENDED
-----------------------------------------
SEPTEMBER 24, SEPTEMBER 23, SEPTEMBER 23,
1993 1994 1994
------------- ------------- -------------
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT
AND PER UNIT DATA)

STATEMENT OF OPERATIONS DATA:
Total revenues....................... $ 307,576 $ 438,133 $537,799
Expenses
Cost of goods sold................. 286,887 326,225 417,413
Marketing, general and
administrative.................... 14,153 15,298 15,485
Interest........................... 12,066 12,009 14,264
General Partner incentive.......... -- 8,751 8,751
Other.............................. 530 6,312 7,210
Net (loss) income.................... (6,060) 69,538 74,676
Net (loss) income per Unit(1)........ (0.16) 1.87 1.81
Cash distributions per Unit(2)....... 0.60 1.88
Percentage of Distributions
Unitholders........................ 98% 87%
General Partner.................... 2% 13%
OTHER DATA:
Capital expenditures................. $ 7,991 $ 14,215
EBITDA(3)............................ 38,117 123,239 $134,956
Depreciation......................... 32,171 32,941 37,265
Costs Reimbursed to Borden........... 42,644 40,344
BALANCE SHEET DATA:
PP&E, net............................ $ 310,583 $ 286,635 $381,235
Total assets......................... 445,866 497,838 603,959
Long-term debt....................... 150,000 150,000 200,000(6)
Total partners' capital.............. 232,262 229,867 291,033(6)
OPERATING DATA:
Average price received per unit
sold(4)
PVC Polymers Products.............. 105 120
Methanol and Derivatives........... 91 139
Nitrogen Products.................. 86 112
Raw material costs per unit sold(4)
Natural gas........................ 87 84
Ethylene........................... 118 124
Chlorine........................... 69 120
Production volumes (in pounds)
PVC Polymers Products.............. 1,321,931 1,486,313
Methanol and Derivatives........... 1,503,577 1,945,598
Nitrogen Products.................. 879,066 855,160

- --------
(1) The General Partner's allocation of net income has been deducted before
calculating net income per Unit.
(2) The Company distributes 100% of its Available Cash as of the end of each
fiscal quarter on or about 45 days after the end of such quarter. The cash
distributions set forth herein with respect to any year represent the
aggregate distributions made with respect to the quarters occurring within
such year, although the cash distributions with respect to the last quarter
of a year are paid in the first quarter of the following year.
(3) EBITDA is calculated as net income plus interest, depreciation and
amortization and General Partner incentive. EBITDA is not intended to
represent cash flow and does not represent the measure of cash available
for distribution. EBITDA is not a measure under generally accepted
accounting principles, but provides additional information for evaluating
the Company's ability to make the Target Distribution. In addition, EBITDA
is not intended as an alternative to earnings from continuing operations or
net income.
(4) Represents relative average amounts per unit using 1985=100 as the base
year for all products.
(5) Not meaningful due to extreme oversupply of chlorine and the resulting
negative value in the marketplace.

(6) In the event the Notes offering is not consummated, the Company will use
short-term borrowings, cash on hand or a combination thereof to fund a
portion of the purchase price of the Addis Assets. In such event and
assuming a charge for prepayment of the Operating Company's existing notes
is not incurred, the principal amount of long-term debt and total partners'
capital would be $150,000 and $304,892, respectively. Total partners'
capital reflects the aggregate estimated charge related to the prepayment
of the Operating Company's existing notes. The total charge for prepayment
of such notes is currently estimated to be $14.0 million, of which each of
Borden and the Company would pay a portion.

RELATIONSHIP WITH BORDEN

BCPM, a wholly owned subsidiary of Borden, is the sole general partner of the
Company and the Operating Company. Borden holds no partnership interests in
either the Company or the Operating Company other than through BCPM's interests
as general partner, which represent a 2% interest on a combined basis. Subject
to certain specified exceptions, BCPM has agreed not to withdraw as general
partner prior to November 30, 2002, and Borden has agreed not to sell its
interests in BCPM prior to November 30, 2002. See "Summary of the Partnership
Agreements". The General Partner is entitled to receive reimbursement for all
its direct and indirect costs and may receive substantial incentive
distributions not shared in by Unitholders in the event the Company makes cash
distributions in excess of the Target Distribution. See "Cash Distributions".

Borden has advised the Company that Borden has entered into a merger
agreement (the "Merger Agreement") pursuant to which an affiliate of Kohlberg
Kravis Roberts & Co. ("KKR") would, subject to certain terms and conditions,
merge with and into Borden. In the event that such transaction were to be
effected, Borden would become a subsidiary of Whitehall Associates, L.P., an
affiliate of KKR. As a result of certain actions taken by Borden's Board of
Directors, the Unitholders will not have a right to require Borden to purchase
the Units in connection with the transactions contemplated in the Merger
Agreement. See "Description of the Depositary Units and the Deposit Agreement--
Conditional Right to Require Purchase of Units by Borden".

Sales to Borden represented approximately 19% of the Company's total sales in
1993 and approximately 21% of the Company's total sales in the first nine
months of 1994 (less than 18% in both 1993 and the first nine months of 1994 on
a pro forma basis after giving effect to the Acquisition). Borden and the
Operating Company are parties to certain purchase agreements (the "Purchase
Agreements") and processing agreements (the "Processing Agreements") described
under "Business and Properties--Purchase and Processing Agreements". Such
agreements require Borden, subject to the terms and conditions contained
therein, to purchase from the Company at least 85% of Borden's requirements for
PVC resins, methanol, ammonia and urea and to utilize certain percentages of
the Company's capacity to process formaldehyde and urea-formaldehyde
concentrate. The Company believes that the pricing formulae set forth in such
agreements have in the past provided aggregate prices and processing charges
for the covered products that over time have approximated the aggregate prices
and processing charges that Borden would have been able to obtain from
unaffiliated suppliers, considering the magnitude of Borden's purchases, the
long-term nature of such agreements and other factors. The Company believes
that this will continue to be the case in the future. There may be conditions
prevailing in the market at various times, however, under which the prices and
processing charges under these agreements could be higher or lower than those
obtainable from unaffiliated third parties.

Because the Purchase and Processing Agreements are requirements contracts,
sales or processing of products thereunder are dependent on Borden's
requirements for such products. Such requirements could be affected by a
variety of factors, including a sale or other disposition by Borden of all or
certain of its manufacturing plants to unaffiliated purchasers (in which event
such agreements would not apply to any such purchaser unless otherwise agreed
to by such purchaser). In the event that, whether following any change of
control of Borden or otherwise, Borden were to sell or otherwise dispose of all
or certain of its plants or otherwise reorient its businesses, Borden's
requirements for products sold or processed by the Company under the Purchase
and Processing Agreements could be diminished or eliminated. In the event that
Borden's requirements under any such agreements were to be materially
diminished or eliminated, the Company's sales of the applicable products would
be affected in the short-term while the Company attempted to find replacement
customers. Depending on market conditions, the Company may be able to effect
sales of such products at lower or higher prices than would otherwise have been
the case had Borden's requirements for such products been maintained at past
levels. In the event of a weak market for any such products, the

Company's sales volumes would likely be lower than if Borden's requirements for
such products had been maintained at past levels. The Company anticipates that,
if Borden were to sell all or certain of its chemical products manufacturing
facilities, a purchaser may be interested in negotiating the continuation of
all or certain of the Purchase and Processing Agreements.

Borden's other agreements with the Company include an environmental indemnity
agreement (the "Environmental Indemnity Agreement") (see "Business and
Properties--Environmental and Safety Regulations") and an Intercompany
Agreement (the "Intercompany Agreement") that contains, among other things, a
covenant by Borden not to compete in the manufacture or sale in the United
States of certain products manufactured by the Company (see "Business and
Properties--Competition"). Borden has also capitalized BCPM with a promissory
note of Borden with an aggregate outstanding principal amount of $37.5 million
and will, in connection with this offering, issue to BCPM an additional
promissory note in the amount of 10% of the net proceeds of this offering. In
addition, the Company has no employees, and the Company relies on the officers
and employees of BCPM, who are officers or employees of Borden.

Prior to the announcement of Borden's proposed merger with an affiliate of
KKR, Borden's management had presented a plan to its Board of Directors aimed
at improving Borden's financial performance. The plan recommended the sale of
certain of Borden's businesses, including the sale of Borden's dairy business
(excluding the cheese business) and Borden's wallcoverings and packaging
resources business. The sale of the wallcoverings and packaging resources
business would have included a sale of Borden's manufacturing plants that use
PVC resins purchased from the Company.

In November 1994, Borden announced an organizational restructuring involving
the reorganization of its businesses and assets into three primary operating
divisions: (i) the Packaging and Industrial Products Division; (ii) the Dairy
Division; and (iii) the Consumer Packaged Products Division. Such
reorganization will result in a reduction of Borden's staff by approximately
200 persons. Borden has advised the Company that the reorganization of Borden
into three operating divisions is intended to facilitate the operation of each
division as a stand-alone business and to reduce general overhead expenses.
Such reorganization may also facilitate the sale or other disposition of such
businesses or portions of such businesses. BCPM and most of the employees of
Borden serving BCPM and the Company have been included within the Packaging and
Industrial Products Division.

As described under "Summary of the Partnership Agreements", subject to
certain exceptions, Borden has agreed not to sell its interests in BCPM prior
to November 30, 2002 without approval by Unitholders holding more than 50% of
the Units held by persons other than Borden and its affiliates.

No assurance can be given as to whether, following a change of control or
otherwise, Borden would dispose of various assets or businesses, increase its
leverage or effect changes in its management so as to adversely affect the
financial condition, size or scope of business or management of Borden and
thereby its ability to perform its contractual obligations to the Company or
BCPM or adversely affect the management of BCPM and, accordingly, the
management of the Company.

NOTES OFFERING

The Operating Company intends to use the net proceeds from the sale of the
Notes first to prepay the currently outstanding $150.0 million aggregate
principal amount of existing notes of the Operating Company (the "Old Notes").
See "Summary of the Financing Documents--The Old Notes and the Working Capital
Facility". The remaining proceeds of the Notes offering will be used to fund a
portion of the purchase price

of the Addis Assets and for other permitted partnership purposes. In the event
the Notes offering is postponed or not consummated, the Company will use short-
term borrowings, cash on hand or a combination thereof to fund a portion of the
purchase price of the Addis Assets. See "Use of Proceeds".

The Operating Company does not have a contractual right to prepay the Old
Notes but it has initiated discussions with the holders of the Old Notes (the
"Old Noteholders") and anticipates that it is likely to obtain their consent to
prepayment of the Old Notes. The Operating Company expects that the prepayment
price will equal the outstanding aggregate principal of and accrued interest on
the Old Notes, together with a premium (the "Prepayment Premium") to be
negotiated with the Old Noteholders.

In connection with the original issuance by the Operating Company of the Old
Notes, Borden had entered into an agreement (the "Borden Purchase Obligation"),
which provides that, in the event of a change of control of Borden, the Old
Noteholders may elect to require Borden to purchase the Old Notes at a price
equal to the outstanding aggregate principal of and accrued interest on the Old
Notes, together with the Change of Control Premium. "Change of Control Premium"
means, as of any date of determination, the excess of (i) the scheduled
principal and interest payments on the Old Notes discounted at applicable
Treasury rates over (ii) the outstanding principal of and accrued interest on
the Old Notes. In the event that the Change of Control Premium were payable on
November 18, 1994, the amount of such premium would be approximately $14.0
million. Assuming interest rates remain constant or increase, such amount will
decrease over time. See "Summary of the Financing Documents--The Old Notes and
the Working Capital Facility--Borden Undertaking".

The change of control of Borden that would result from the completion of the
transactions contemplated in the Merger Agreement would trigger the Borden
Purchase Obligation. However, in the event that the Operating Company were to
prepay the Old Notes, the Borden Purchase Obligation would be terminated.
Borden has advised the Company that, in view of such termination of the Borden
Purchase Obligation and the benefits to Borden of such termination, Borden is
willing to pay a portion of the Prepayment Premium that Borden determines to be
fair and reasonable to Borden.

The Company believes that the refinancing of the Old Notes with the Notes
will also benefit the Company by way of a significant extension of the maturity
of the Operating Company's indebtedness and additional operating and financial
flexibility as a result of the elimination or modification of certain of the
restrictive covenants currently imposed on the Operating Company under the Note
Agreement (the "Note Agreement") of the Operating Company pursuant to which the
Old Notes were issued. In addition, the Company anticipates that the interest
rate on the Notes is likely to be lower than the interest rates on the Old
Notes. Because of these factors, the Company is also willing to pay a portion
of the Prepayment Premium so long as such payment is determined by Special
Approval to be fair and reasonable to the Company. "Special Approval" means
approval by a majority of the Board of Directors of the General Partner that
includes approval by a majority of a committee (the "Independent Committee") of
such Board of Directors composed of directors who are neither officers,
employees or directors of Borden nor officers or employees of the General
Partner.

The Company anticipates that the Prepayment Premium payable in connection
with the prepayment of the Old Notes will be no greater than the Change of
Control Premium payable by Borden had the Borden Purchase Obligation been
triggered at the time of such prepayment of the Old Notes. Borden and the
Company have not agreed to any allocation of the Prepayment Premium, although
the Company believes that an allocation can be made on a basis that is fair and
reasonable to the Company and Borden. Because the allocation of the Prepayment
Premium between Borden and the Company constitutes a conflict of interest
between Borden and the Company, any such allocation of the Prepayment Premium
will be subject to Special Approval. In the event that the Company is not able
to negotiate a satisfactory Prepayment Premium with the Old Noteholders or in
the event that the Company and Borden are not able to negotiate a satisfactory
allocation of the Prepayment Premium in a timely manner, the Operating Company
will not proceed with the offering of the Notes.

DEPOSITARY UNITS AND RESTRICTIONS ON OWNERSHIP

The Units offered hereby will be evidenced by Depositary Receipts. The Units
are eligible, but are not required, to be held by the persons acquiring such
Units through The Depository Trust Company. See "Description of Depositary
Units and the Deposit Agreement".

Because the Operating Company owns certain co-generation power facilities,
the Units may not be held by or on behalf of electric utilities, electric
utility holding companies or any subsidiary thereof in order that the Company
will not become a regulated public utility holding company under applicable
federal law.

SUMMARY OF CERTAIN INCOME TAX CONSEQUENCES

The following is a summary of certain federal income tax consequences of
acquiring, owning and disposing of the Units offered hereby and is based, in
part, upon the opinions of Sidley & Austin, special counsel to the Company, the
Operating Company and BCPM. Unitholders are urged to note the qualifications to
the opinions of Sidley & Austin described herein. For a more detailed
discussion of these consequences and the qualifications to the opinions of
Sidley & Austin, see "Certain Federal Income Tax Considerations".

Partnership Status and Treatment of Distributions. Based on certain
representations of BCPM, in the opinion of Sidley & Austin, under current law,
each of the Company and the Operating Company will be treated as a partnership
for federal income tax purposes, and owners of Units, whether held directly or
by a nominee, will generally be treated as partners for federal income tax
purposes. In the case of the Company, such treatment will not extend beyond the
Company's taxable year ending December 31, 1997. As a consequence, prior to
1998, the Company will pay no federal income tax, and Unitholders will be
required to report their allocable shares of income, gain, loss, deduction and
credit of the Company, even if cash is not distributed by the Company. Because
Unitholders will be required to include in income their allocable shares of the
Company's income regardless of whether cash distributions are made, Unitholders
could be allocated income from the Company in excess of the amount of any cash
distributions with respect to such income. For taxable years ending on or
before December 31, 1997, distributions of cash by the Company to a Unitholder
will not be taxable except to the extent such distributions exceed such
Unitholder's basis in his Units.

Automatic Taxation as Corporation after 1997. The General Partner anticipates
that, because of certain amendments made to the Code subsequent to the
formation of the Company, the Company will be treated as a corporation for tax
purposes for taxable years beginning after December 31, 1997. In that event,
the Company's income, gains, losses, deductions and credits will not pass
through to Unitholders, but instead will be reflected on the corporate tax
return of the Company. As a result, any distributions made to a Unitholder will
be treated as dividend income (to the extent of current or accumulated earnings
and profits), and, in the absence of current or accumulated earnings and
profits, as a nontaxable return of capital (to the extent of the Unitholder's
basis in his Units), or as capital gain (after the Unitholder's basis in his
Units is reduced to zero). Accordingly, the treatment of the Company for
federal income tax purposes as a corporation after 1997 will result in a
material reduction in a Unitholder's cash flow and after-tax return.

Legislation has been introduced that, if enacted, may change certain tax
rules applicable to large partnerships such as the Company. In addition, other
proposed legislation, if enacted, may permanently extend the treatment of the
Company as a partnership for federal income tax purposes. See "Certain Federal
Income Tax Considerations--Proposed Changes in Federal Income Tax Law".

Section 754 Election. Each of the Company and the Operating Company has
previously made, and if a termination of the Company occurs following the sale
of the Units being offered hereby (see "Certain Federal Income Tax
Considerations--Disposition of Units--Constructive Termination or Dissolution
of the Company"), will make, the election provided by Section 754 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Section 754
election will generally permit a Unitholder to calculate cost recovery and
depreciation deductions by reference to the portion of his purchase price
attributable to each asset of the Company (which will include the Company's
share of nonrecourse liabilities of the Operating Company).

Based on the trading history of the Units, the General Partner expects that no
constructive termination of the Company will occur as a result of the sale of
the Units offered hereby, and if such constructive termination does occur, its
effect will not be material to a purchaser of Units offered hereby.

Allocation of Income and Loss. In general, income and loss of the Company
will be allocated in proportion to the Unitholders' percentage interests in the
Company, provided that at least 1% of all items of income, gain, loss,
deduction and credit of each of the Company and the Operating Company will be
allocated to the General Partner. For federal income tax purposes, certain
items of income, gain, loss and deduction will be specially allocated to
account for differences between the tax basis and fair market value of property
contributed to the Company and the Operating Company by the General Partner,
Borden and its affiliates, and to facilitate in certain circumstances
uniformity of Units. In addition, the Partnership Agreement generally provides
for an allocation of gross income to the Unitholders and the General Partner to
reflect disproportionate cash distributions, on a per Unit basis.

Items of income, gain, loss, deduction and credit of the Company will
generally be determined on a monthly basis and be apportioned among the
Unitholders of record as of the opening of business on the first business day
of the month to which they relate, even though Unitholders may dispose of their
Units during the month in question.

Tax Shelter Registration. The Code generally requires that "tax shelters" be
registered with the Secretary of the Treasury. The Company has registered as a
tax shelter with the Internal Revenue Service ("IRS"). ISSUANCE OF THE
REGISTRATION NUMBER DOES NOT INDICATE THAT AN INVESTMENT IN THE COMPANY OR THE
CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE IRS. See
"Certain Federal Income Tax Considerations--Administrative Matters--
Registration as a Tax Shelter".

Ownership of Units by Tax-Exempt Entities. It is anticipated that
substantially all of the income derived from the Company by tax exempt entities
(including individual retirement accounts and other retirement plans) will
constitute unrelated business taxable income until December 31, 1997. As a
result, tax-exempt entities which become Unitholders will be required to report
Company taxable income on a federal income tax return filed with the IRS and
may be required to pay taxes on such income. See "Certain Federal Income Tax
Considerations--Tax Treatment of Operations--Unrelated Business Taxable
Income".

Considerations for Foreign Investors. Investments in Units may not be
advisable for foreign persons. A Unitholder who is a nonresident alien, foreign
corporation or other foreign person will be regarded as engaged in a trade or
business in the United States as a result of ownership of Units, and thus will
be required to file federal income tax returns, as well as to pay tax on such
Unitholder's share of the Company's taxable income, and possibly on gain from
the disposition of Units until December 31, 1997. Foreign corporate Unitholders
will also be subject to an additional branch profits tax of 30% unless reduced
or eliminated by an applicable treaty. In addition, distributions to foreign
persons will be subject to withholding.

State and Local Taxes. For taxable years ending on or prior to December 31,
1997, Unitholders will generally be required to file state and local tax
returns and pay state and local taxes in states in which the Company's
properties are located or in which the Company's activities otherwise result in
taxation. Distributions to Unitholders may be reduced by the amount of any
state income taxes paid by the Company on behalf of such Unitholders. The
Operating Company conducts business primarily in Illinois and Louisiana,
although an obligation to file tax returns or to pay taxes may arise in other
states.

THE TAX CONSEQUENCES OF AN INVESTMENT IN THE COMPANY TO A PARTICULAR INVESTOR
WILL DEPEND IN PART ON THE INVESTOR'S OWN TAX CIRCUMSTANCES. EACH PROSPECTIVE
INVESTOR SHOULD THEREFORE CONSULT HIS OWN TAX ADVISOR ABOUT THE FEDERAL, STATE
AND LOCAL TAX CONSEQUENCES TO SUCH INVESTOR OF AN INVESTMENT IN UNITS.

INVESTMENT CONSIDERATIONS

Prospective purchasers of Units should carefully consider the following
factors, in addition to other information contained herein, in evaluating an
investment in Units.

CONSIDERATIONS RELATING TO THE COMPANY'S BUSINESS

Cyclical Markets for Products; Lack of Control Over Cost of Raw Materials.
The markets for and profitability of the Company's products have been, and are
likely to continue to be, cyclical. Periods of high demand, high capacity
utilization and increasing operating margins tend to result in new plant
investment and increased production until supply exceeds demand, followed by
periods of declining prices and declining capacity utilization until the cycle
is repeated. In addition, markets for the Company's products are affected by
general economic conditions and a downturn in the economy could materially
adversely affect the Company, including its ability to make distributions to
Unitholders and service its debt obligations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations".

The principal raw material feedstock purchased by the Company is natural gas,
the price of which has been volatile in recent years. The Company's natural gas
costs comprised approximately 35% of its total production costs in 1993. In
addition, the Company buys most of its natural gas under long term market
sensitive supply contracts. Because of the large volume of purchases of natural
gas, any increase in the price of natural gas not passed along to customers
through selling price increases could materially adversely affect the Company.
The Company purchases other feedstocks, principally ethylene and chlorine.
Significant increases in the prices of these feedstocks could also materially
adversely affect the Company if not passed along to customers through selling
price increases. As a result, there have been substantial fluctuations in the
Company's cost of goods sold due to increases and decreases in raw material
costs. See "Business and Properties--Raw Materials".

Since changes in demand for the Company's products result in increases or
decreases in prices for the Company's products, total revenues may change
significantly from one period to another. Cost of goods sold, in particular raw
material costs, do not necessarily correlate with changes in product prices,
either in the direction of the price change or in absolute magnitude.
Therefore, although revenues may increase from a prior period, net income may
decline. For example, revenues increased in 1993 to $433.3 million from $401.8
million in 1992, due primarily to increased prices for the Company's products.
However, prices for raw materials also increased and the Company incurred a net
loss of $1.4 million in 1993, as compared to net income of $27.1 million in
1992. The Company expects such cycles in its business to continue.

Highly Competitive Industry. The business in which the Company operates is
highly competitive. The Company competes with major chemical manufacturers and
diversified companies, a number of which have revenues and capital resources
exceeding those of the Company. Because of the commodity nature of the
Company's products, the Company is not in a position to protect its position by
product differentiation and is not able to pass on cost increases to its
customers to the extent its competitors do not pass on such costs. See
"Business and Properties--Competition".

Factors Affecting Demand for Methanol and MTBE. Methanol is used as a
feedstock in the production of MTBE, an oxygenate and octane enhancer used in
reformulated gasoline. The Clean Air Act mandates numerous comprehensive
specifications for motor vehicle fuel, including increased oxygenate content
and lower volatility. Future demand for MTBE (and therefore methanol) will
depend on, among other things, the degree to which the Clean Air Act is
implemented and enforced, the possible adoption of additional legislation, the
willingness of the regulatory authorities to grant waivers for specific cities
or regions, and the difficulties in isolating non-attainment areas where its
use is not required. Although the Company expects there will be a continued
market preference for MTBE, there can be no assurance that MTBE will not be
replaced by alternative oxygenates or octane enhancers as a result of price or
regulatory changes.

Uncertainty as to Level of Cash Distributions. The Company's ability to make
cash distributions, and the amount of such distributions, will depend on, among
other factors, the Company's ability to generate Available Cash. The Company's
products are commodities for which the markets have been, and are likely to
continue to be, cyclical. Quarterly distributions for full quarters since the
formation of the Company on November 30, 1987 have ranged from $0.12 to $1.08
per Unit. No assurance can be given regarding the level of cash distributions
to Unitholders in future periods. Because of the Company's focus on maximizing
current cash distributions, the cyclical nature of its business and the fact
that it does not retain significant amounts of cash during cyclical upturns in
its business for purposes of later distribution, the level of the Company's
cash distributions to Unitholders has tended to vary substantially from period
to period. Although the Company intends to continue its strategy of maximizing
current cash distributions and not retaining significant amounts of cash for
future distributions, there may be times, even during cyclical upturns in its
business when the Company's strategy will require that significant amounts of
otherwise distributable cash be retained for capital investment in the business
or for strategic acquisitions. As a result, the level of cash distributions is
likely to continue to fluctuate and at times could fluctuate even more than in
the past. In addition, neither the Acquisition nor this offering is conditioned
upon consummation of the Notes offering. In the event that the Notes offering
is postponed or not consummated, the Company will use short-term borrowings,
cash on hand or a combination thereof to fund a portion of the purchase price
of the Addis Assets. The use of cash on hand would reduce cash available for
distribution to Unitholders. See "Use of Proceeds".

Cash Distributions Have Exceeded Net Income. The Company distributes 100% of
its Available Cash as of the end of each quarter to Unitholders and the General
Partner. Cash distributions have historically exceeded net income, primarily
due to the excess of depreciation expense, a non-cash reduction of income, over
capital expenditures. The amount of cash distributions in excess of net income
has resulted in an aggregate reduction in the Company's capital of $124.0
million from the date operations commenced through September 23, 1994.

Potential Environmental Liabilities. The Company is subject to extensive
federal, state and local environmental laws and regulations which impose
limitations on the discharge of pollutants into the air and water, establish
standards for the treatment, storage, transportation and disposal of solid and
hazardous wastes, and impose obligations to investigate and remediate
contamination in certain circumstances. The Company has expended substantial
resources, both financial and managerial, and it anticipates that it will
continue to do so in the future. Failure to comply with the extensive federal,
state and local environmental laws and regulations could result in significant
civil or criminal penalties, and remediation costs.

In 1985 the Louisiana Department of Environmental Quality (the "LDEQ") and
Borden entered into a settlement agreement (the "Settlement Agreement") that
called for the implementation of a long term groundwater and soil remediation
program at the Geismar complex to address contaminants. Borden and the Company
have implemented the Settlement Agreement, and have worked in cooperation with
the LDEQ to remediate the groundwater and soil contamination. The Company
believes that it already has sufficiently identified the extent of the
groundwater plume. Nevertheless, the Company intends to drill and test some
additional groundwater wells for the purpose of addressing issues raised by the
LDEQ concerning whether the extent of the groundwater contamination has been
identified. Borden has paid substantially all the costs to date of the
Settlement Agreement.

On October 27, 1994, the United States Department of Justice (the "DOJ"), at
the request of the United States Environmental Protection Agency (the "EPA"),
filed an action against the Company and BCPM in the United States District
Court for the Middle District of Louisiana. The complaint seeks facility-wide
corrective action and material civil penalties for alleged violations of the
federal Resource, Conservation and Recovery Act ("RCRA"), the federal
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), and the federal Clean Air Act (the "Clean Air Act") at the Geismar
complex. If the Company is unsuccessful in this proceeding, or otherwise
subject to RCRA permit requirements, it may be subject to three types of costs:
(i) corrective action; (ii) penalties; and (iii) costs needed to obtain a RCRA

permit. Corrective action could require the Company to conduct investigatory
and remedial activities at the Geismar complex concurrently with the
groundwater monitoring and remedial program that the Company is currently
conducting under the Settlement Agreement. The cost of any corrective action
could have a material adverse effect on the Company. Although the maximum
statutory penalty that would apply if the government is successful in its
enforcement action would be in excess of $150 million, the Company believes
that, assuming the Company is unsuccessful and based on information currently
available to it and an analysis of relevant case law and administrative
decisions, the more likely amount of any liability for civil penalties would
not exceed several million dollars. If the Company must incur additional costs
to obtain a RCRA permit, it estimates that it will spend approximately $1.0
million to complete the RCRA permit application process that it has begun as a
protective filing, and an additional amount, which the Company does not believe
would be material, to amend its pending RCRA permit application to include the
north trench sump at the Geismar facility.

If the United States is successful in requiring the Company to perform
corrective action at the Geismar complex, or the LDEQ requires the Company to
perform further remedial measures in response to data generated by the planned
additional groundwater wells, the Company anticipates that at least a portion
of such corrective action costs or additional costs required by LDEQ would be
covered by the Environmental Indemnity Agreement. Pursuant to such agreement,
Borden has agreed, subject to certain conditions, to indemnify the Company and
the Operating Company in respect of environmental liabilities arising from
facts or circumstances that existed and requirements in effect prior to
November 30, 1987, the date of the initial sale of the Geismar and Illiopolis
facilities to the Company. The extent to which any penalties or permit costs
that the Company may incur as a result of the government's recent enforcement
action will be subject to the Environmental Indemnity Agreement will depend, in
large part, on whether such penalties or costs are attributable to facts or
circumstances that existed and requirements in effect prior to November 30,
1987. See "Business and Properties--Borden Environmental Indemnity" for a more
detailed discussion of the terms and limitations of the Environmental Indemnity
Agreement.

Because of the complex nature of environmental insurance coverage and the
rapidly developing case law concerning such coverage, no assurance can be given
concerning the extent to which insurance may cover environmental claims against
the Company, including claims arising from the Settlement Agreement and the
enforcement action filed on October 27, 1994. However, insurance generally does
not cover penalties or costs of obtaining a permit.

A description of the Settlement Agreement, pending federal enforcement
action, and the Company's evaluation of these matters, are set forth under
"Legal Proceedings"; it is recommended that prospective purchasers of Units
carefully review that section.

Anticipated Capital Expenditures. The Company currently believes that the
level of annual base capital expenditures at its Geismar and Illiopolis
facilities over the next several years will be in the range of $20-25 million
per year. The Company anticipates that total capital expenditures for 1994 will
be approximately $23.0 million, of which $14.2 million was incurred during the
first three quarters. Total capital expenditures for 1995 are anticipated to be
approximately $42 to $46 million, $20 to $25 million of which will be used for
annual base capital expenditures and the balance of which will be used
primarily for an approved 30 million gallon methanol expansion and a proposed
expansion of the Addis Facility. The Company's actual level of capital
expenditures would vary substantially if the Company is required to undertake
corrective action or incur other environmental compliance costs in connection
with the proceedings discussed under "Legal Proceedings". No assurance can be
given that greater capital expenditures will not be required. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources--Capital Expenditures" and "Business and
Properties--Methanol and Derivatives".

Operating Risks. The Company has two major operating facilities, the Geismar
complex and the Illiopolis plant, and proposes to acquire a third major
operating facility, the Addis Facility. The loss or shutdown of operations over
an extended period of operations at any such facility would have a material
adverse effect on the Company. The Company's operations are subject to the
usual hazards associated with chemical manufacturing and the related storage
and transportation of feedstocks, products and wastes, including

explosions, fires, inclement weather and natural disasters, mechanical failure,
unscheduled downtime, transportation interruptions, remediation, chemical
spills, discharges or releases of toxic or hazardous substances or gases and
other environmental risks. These hazards can cause personal injury and loss of
life, severe damage to or destruction of property and equipment and
environmental damage, and may result in suspension of operations and the
imposition of civil or criminal penalties. The Company maintains property,
business interruption and casualty insurance which it believes is in accordance
with customary industry practices, but it is not fully insured against all
potential hazards incident to its business.

Potential Exposure to Increased Louisiana Use Taxes. The Louisiana Supreme
Court recently upheld the imposition of use taxes by a local Louisiana taxing
authority, Plaquemine Parish Government, against BP Oil Company on certain
intermediate materials used in its reprocessing of crude oil. The holdings of
this case could expose the Company to additional use tax liability in
connection with its current operations in Louisiana. Under Louisiana law, the
use tax is imposed by local authorities including parishes. Although the
Louisiana parish in which the Company's current facility is located has not
assessed any use taxes against the Company based on the holdings of the BP Oil
Company case, the parish does have a use tax ordinance and under the holdings
of the case could impose the use tax on the Company. For prior years for which
the statute of limitation has not elapsed and the Company is subject to
additional assessment, the Company's best current estimate of the potential
amount of use taxes which might be imposed is approximately $10.0 million
(exclusive of interest). The Company (together with many other businesses
located in Louisiana) has filed a motion to intervene in the BP Oil Company
case to support a rehearing and reversal of the court's decision. The Louisiana
Supreme Court has recently granted a rehearing of one of the holdings of the BP
Oil Company case. If the rehearing results in the reversal of such holding, the
potential amount of use taxes which might be imposed for the prior years and
future years may be substantially reduced. However, in the event the BP Oil
Company case is not reversed and the Louisiana parishes in which the Company's
facilities are located seek to assess a similar use tax, the Company estimates
that the increased use tax costs in future years will be approximately $2.5
million per year.

CONSIDERATIONS RELATING TO THE POSSIBLE CHANGE OF CONTROL OF BORDEN;
RELATIONSHIP WITH BORDEN

Borden has advised the Company that Borden has entered into the Merger
Agreement pursuant to which an affiliate of KKR would, subject to certain terms
and conditions, merge with and into Borden. In the event that such a
transaction were to be effected, Borden would become a subsidiary of Whitehall
Associates, L.P., an affiliate of KKR. As a result of certain actions taken by
Borden's Board of Directors, the Unitholders will not have a right to require
Borden to purchase the Units in connection with the transactions contemplated
in the Merger Agreement. See "Description of the Depositary Units and the
Deposit Agreement--Conditional Right to Require Purchase of Units by Borden".

Sales to Borden represented approximately 19% of the Company's total sales in
1993 and approximately 21% of the Company's total sales in the first nine
months of 1994 (less than 18% in both 1993 and the first nine months of 1994 on
a pro forma basis after giving effect to the Acquisition). Borden and the
Operating Company are parties to certain Purchase Agreements and Processing
Agreements described under "Business and Properties--Purchase and Processing
Agreements". Such agreements require Borden, subject to the terms and
conditions contained therein, to purchase from the Company at least 85% of
Borden's requirements for PVC resins, methanol, ammonia and urea and to utilize
certain percentages of the Company's capacity to process formaldehyde and urea-
formaldehyde concentrate. The Company believes that the pricing formulae set
forth in such agreements have in the past provided aggregate prices and
processing charges for the covered products that over time have approximated
the aggregate prices and processing charges that Borden would have been able to
obtain from unaffiliated suppliers, considering the magnitude of Borden's
purchases, the long-term nature of such agreements and other factors. The
Company believes that this will continue to be the case in the future. There
may be conditions prevailing in the market at various times, however, under
which the prices and processing charges under these agreements could be higher
or lower than those obtainable from unaffiliated third parties.

affected by a variety of factors, including a sale or other disposition by
Borden of all or certain of its manufacturing plants to unaffiliated purchasers
(in which event such agreements would not apply to any such purchaser unless
otherwise agreed to by such purchaser). In the event that, whether following
any change of control of Borden or otherwise, Borden were to sell or otherwise
dispose of all or certain of its plants or otherwise reorient its businesses,
Borden's requirements for products sold or processed by the Company under the
Purchase and Processing Agreements could be diminished or eliminated. In the
event that Borden's requirements under any such agreements were to be
materially diminished or eliminated, the Company's sales of the applicable
products would be affected in the short-term while the Company attempted to
find replacement customers. Depending on market conditions, the Company may be
able to effect sales of such products at lower or higher prices than would
otherwise have been the case had Borden's requirements for such products been
maintained at past levels. In the event of a weak market for any such products,
the Company's sales volumes would likely be lower than if Borden's requirements
for such products had been maintained at past levels. The Company anticipates
that, if Borden were to sell all or certain of its chemical products
manufacturing facilities, a purchaser may be interested in negotiating the
continuation of all or certain of the Purchase and Processing Agreements.

Prior to the announcement of Borden's proposed merger with an affiliate of
KKR, Borden's management had presented a plan to its Board of Directors aimed
at improving Borden's financial performance. The plan recommended the sale of
certain of Borden's businesses, including a sale of Borden's manufacturing
plants that use PVC resins purchased from the Company. In light of the proposed
merger of Borden, it has not been determined by Borden's Board of Directors
whether Borden will pursue the recommendations of its management's plan.

Borden's other agreements with the Company include an environmental indemnity
agreement (see "Business and Properties--Environmental and Safety Regulations")
and a covenant not to compete in the manufacture or sale in the United States
of certain products manufactured by the Company (see "Business and Properties--
Competition"). Borden has also capitalized BCPM with a promissory note of
Borden with an aggregate outstanding principal amount of $37.5 million and
will, in connection with this offering, issue to BCPM an additional promissory
note in the amount of 10% of the net proceeds of this offering. The promissory
note of Borden representing the original capitalization of BCPM was not
contributed to the Company and remains outstanding. Pursuant to the Partnership
Agreements, BCPM has a 1% general partner interest in the Company and a 1.0101%
general partner interest in the Operating Company. Pursuant to the Intercompany
Agreement, BCPM is required to maintain a net worth equal to at least 10% of
the capital contributions to the Company or the Operating Company. For this
purpose, "net worth" means the excess of (i) the fair market value of all
assets of BCPM (exclusive of any interest in, and notes and accounts receivable
from, any limited partnership in which BCPM has any interest) over (ii) all
liabilities of BCPM. In order to meet such net worth test, BCPM intends to
retain as assets, and does not intend to contribute to the Company, such
promissory note and the additional promissory note of Borden to be issued to it
by Borden in connection with this offering. In addition, the Company has no
employees, and the Company relies on the officers and employees of BCPM, who
are also officers or employees of Borden.

No assurance can be given as to whether, following a change of control or
otherwise, Borden would dispose of various assets or businesses, increase its
leverage or effect changes in its management so as to adversely affect the
financial condition, size, scope of business or management of Borden and
thereby its ability to perform its contractual obligations to the Company or
adversely affect the management of BCPM.

CONSIDERATIONS RELATING TO THE ADDIS FACILITY

Integration of Addis Facility. The Acquisition represents a significant
increase in the Company's PVC resin business. The Addis Facility's fiscal 1993
total net sales were approximately $96.2 million. Successful integration of the
Addis Facility into the Company's operations will depend primarily on the
Company's ability to maintain existing sales levels and achieve improved
operating efficiencies and lower overhead costs. There can be no assurance that
the Company can successfully integrate the Addis Facility.

Potential Addis Environmental Liabilities. Similar to the Company, the
operations of the Addis Facility are subject to federal, state and local
environmental, health and safety laws and regulations. Pursuant to the Asset
Transfer Agreement, OxyChem has agreed to indemnify the Company for
environmental liabilities arising from the manufacture, generation, treatment,
storage, handling, processing, disposal, discharge, loss, leak, escape or
spillage of any product, waste or substance generated or handled by OxyChem
prior to the closing of the Acquisition, any condition resulting therefrom
relating to acts, omissions or operations of OxyChem prior to such date, and
any duty, obligation or responsibility imposed on OxyChem prior to such date
under environmental laws in effect prior to such date to address such
condition. However, except with regard to claims arising from OxyChem's
disposal of waste at sites other than the Addis Facility, OxyChem has no
indemnification obligation if the claim for indemnification is the result of a
change in applicable law after the closing of the Acquisition. There can be no
assurance that the indemnification provided by OxyChem will be sufficient to
cover all environmental liabilities existing or arising at the Addis Facility.

CONSIDERATIONS RELATING TO PARTNERSHIP STRUCTURE AND RELATIONSHIP TO THE
GENERAL PARTNER

Limited Liability of Limited Partners is Not Unconditional. The Operating
Company conducts business in Louisiana, Illinois and other states. The
limitations on the liability of limited partners for the obligations of a
limited partnership have not been clearly established in some states. If it
were determined that the Company was, by virtue of its ownership of a limited
partner interest in the Operating Company or otherwise, conducting business in
any state without compliance with the applicable limited partnership statute,
or that the right or the exercise of the right by the Unitholders as a group to
remove or replace the General Partner of the Company, to make certain
amendments to the Partnership Agreement or to take other action pursuant to the
Partnership Agreement constituted participation in the "control" of the
Company's business, then the Unitholders could be held liable for the Company's
obligations to the same extent as a general partner. See "Summary of the
Partnership Agreements--Limited Liability".

Liability of Unitholders for Return of Certain Distributions. Unitholders
will not be liable for assessments in addition to their initial capital
investments in the Units. Under certain circumstances, however, a Unitholder
may be required to repay, for a period of one year after return, amounts
rightfully returned to him which represent a return of contribution and which
are necessary to discharge the Company's liabilities to creditors who extended
credit to the Company during the period such contribution was held by the
Company. In addition, under certain circumstances, a Unitholder may be required
to repay amounts wrongfully returned or distributed to him. See "Summary of the
Partnership Agreements--Limited Liability".

Management and Control by the General Partner; Difficulty in Removing General
Partner. The General Partner has broad discretion to manage the business and
operations of the Company including, without limitation, matters affecting the
amount of Available Cash. Unitholders have no right to elect the General
Partner or its Board of Directors on an annual or other ongoing or periodic
basis.

The limited partners of the Company (the "Limited Partners") may not remove
the General Partner unless (i) such removal is approved by Unitholders holding
at least 66 2/3% of the Units held by persons other than BDH One, Inc. ("Borden
Delaware"), a wholly owned subsidiary of Borden, or its affiliates and (ii)
they receive a legal opinion relating to the tax status of the Company and the
limited liability of the Unitholders. The substitution of a new general partner
requires the approval by Unitholders holding more than 50% of the Units held by
persons other than Borden Delaware or its affiliates (a "Majority Interest").

BCPM has agreed not to withdraw as general partner of the Company and the
Operating Company (with limited exceptions described below) without the
approval of a Majority Interest prior to November 30, 2002. Notwithstanding the
foregoing, BCPM may withdraw as general partner, without the approval of a
Majority Interest and without an opinion of counsel relating to certain
matters, upon 90 days' notice to the Unitholders if more than 50% of the
outstanding Units held by persons other than by Borden Delaware or its
affiliates are held by one person or its affiliates.

The General Partner may transfer all, but not less than all, of its general
partner interests in the Company and the Operating Company without the approval
of the Unitholders to a subsidiary of Borden or upon its merger or
consolidation into another entity or the transfer of all or substantially all
of its assets to another entity, provided in either case that such subsidiary
or entity assumes the rights and duties of the General Partner, agrees to be
bound by the provisions of the Partnership Agreement and the Amended and
Restated Agreement of Limited Partnership of the Operating Company (the
"Operating Partnership Agreement," and, together with the Partnership
Agreement, the "Partnership Agreements") and furnishes an opinion of counsel
that such transfer would not result in the loss of the limited liability of any
Unitholders or of the limited partner of the Operating Company or cause either
the Company or the Operating Company to be taxable as a corporation or an
association taxable as a corporation for federal income tax purposes. In the
case of any other transfer, in addition to the foregoing requirements, the vote
of a Majority Interest is required. The Partnership Agreements provide that the
withdrawal or removal of BCPM as the general partner of either the Company or
the Operating Company will automatically constitute its withdrawal or removal
as general partner of the other. See "Summary of the Partnership Agreement--
Withdrawal or Removal of the General Partner; Obligations of BCPM and Borden".

In addition, Borden has agreed to retain, either directly or through a wholly
owned subsidiary, beneficial ownership of 100% of the shares of capital stock
of BCPM until the earlier of (i) November 30, 2002, (ii) the first date as of
which the General Partner is permitted to withdraw as general partner of the
Company as described above or (iii) the date as of which a Majority Interest
approves the sale of such shares.

Conflicts of Interest. Certain conflicts of interest may arise as a result of
the General Partner's relationship with Borden and its affiliates, including
the Company. Such conflicts may include, among others, the following
situations: (i) decisions of the General Partner that affect Available Cash and
the payment of incentive distributions to the General Partner, such as the
General Partner's determination of the amount and timing of any capital
expenditures, borrowings and reserves and which expenditures are necessary or
appropriate to provide for the proper conduct of the business of the Company,
thereby reducing Available Cash from which the Target Distribution is payable;
(ii) the issuance of additional equity securities; (iii) payments to the
General Partner or its affiliates for any services rendered to or on behalf of
the Company, subject to the limitations described under "Conflicts of Interest
and Fiduciary Responsibilities"; (iv) the General Partner's determination of
which direct and indirect costs are reimbursable by the Company; (v)
enforcement by the General Partner of obligations owed by the General Partner
or its affiliates to the Company, including the obligations of Borden or its
subsidiaries under the Purchase and Processing Agreements and the Environmental
Indemnity Agreement; and (vi) the decision to retain separate counsel,
accountants or others to perform services for or on behalf of the Company.

Such conflicts of interest may also arise if and when Borden and its
affiliates engage in businesses, either currently or in the future, that may be
in competition with the business then conducted by the Company. See "--
Considerations Relating to the Possible Change of Control of Borden;
Relationship with Borden".

The Partnership Agreements provide that the General Partner may resolve any
conflicts of interest that may arise by, among other things, considering the
relative interests of all the parties to the conflict and such additional
factors as the General Partner deems relevant, reasonable or appropriate under
the circumstances. Thus, unlike the strict duty of a trustee who must refrain
under state law from engaging in transactions with its affiliates and must act
solely in the best interests of its beneficiary, the Partnership Agreement
permits the General Partner to consider the interests of all parties to any
conflict of interest, including Borden and its affiliates. See "Conflicts of
Interest and Fiduciary Responsibility".

As described under "Use of Proceeds", the Operating Company intends to offer
Notes and use a portion of the net proceeds to prepay the Old Notes. The
Company anticipates that, in order to effect such prepayment, it will need to
pay a Prepayment Premium. The prepayment of the existing Old Notes will, in
addition to providing certain benefits to the Company described under "Use of
Proceeds", benefit Borden

because it will have the effect of terminating the Borden Purchase Obligation
that would otherwise be triggered by a change of control of Borden. Because of
the benefits to Borden of the prepayment of the Old Notes, Borden has advised
the Company that it is willing to pay a portion of the Prepayment Premium.
Because the allocation of the Prepayment Premium between Borden and the Company
constitutes a conflict of interest between Borden and the Company, such
allocation will be subject to Special Approval. See "Use of Proceeds".

Modification of Fiduciary Duties. The General Partner is generally
accountable to the Company and to the Unitholders as a fiduciary. Consequently,
the General Partner generally must exercise good faith and integrity in
handling the assets and affairs of the Company. The Delaware Revised Uniform
Limited Partnership Act (the "Delaware Act") provides that Delaware limited
partnerships may, in their partnership agreements, modify the fiduciary duties
that might otherwise be applied by a court in analyzing the duty owed by
general partners to limited partners. The Partnership Agreements, as permitted
by the Delaware Act, contain various provisions that have the effect of
restricting the fiduciary duties that might otherwise be owed by the General
Partner to the Company and its partners. In addition, holders of Units are
deemed to have consented to certain actions and conflicts of interest that
might otherwise be deemed a breach of fiduciary or other duties under state
law. Such modifications of state law standards of fiduciary duty may
significantly limit a Unitholder's ability to successfully challenge the
actions of the General Partner as being in breach of what would otherwise have
been a fiduciary duty.

Limitations on the Voting Rights of the Limited Partners. Unlike the holders
of common stock in a corporation, holders of outstanding Units have only
limited voting rights on matters affecting the Company. As a result of such
limited voting rights, holders of Units will not have the ability to
participate in partnership governance to the same degree as holders of common
stock in a corporation. The treatment of the Company as a corporation for tax
purposes commencing January 1, 1998 would not, in itself, change the
Unitholders' status as a limited partner for any other purpose. The sale or
exchange of all or substantially all of the Company's or the Operating
Company's assets requires the approval of a Majority Interest. An election of
the General Partner to dissolve the Company requires the approval of a Majority
Interest. See "Summary of the Partnership Agreements--Meetings and Voting".

Unitholders holding 20% or more of the outstanding Units have the right to
propose amendments to the Partnership Agreement. Under certain circumstances,
Assignees have certain rights to cause the General Partner to vote the Units
owned by such Assignees pursuant to their written direction. See "Summary of
the Partnership Agreements--Amendment of Partnership Agreements"; --Meetings
and Voting".

Issuance of Additional Units May Cause Dilution to Existing Unitholders. The
Partnership Agreement authorizes the General Partner to cause the Company to
issue an unlimited number of additional units and other equity securities
("Additional Units") (subject to a limitation on the number of equity
securities that may be issued that have rights to distributions or in
liquidation ranking on a parity with, prior to or senior to, the Units) for
such consideration and on such terms and conditions as shall be established by
the General Partner in its sole discretion without the approval of any
Unitholders. See "Summary of the Partnership Agreements--Issuance of Additional
Units and Securities". Any increase in the number of Units outstanding would
result in a decrease in the proportionate ownership interest in the Company
represented by, and may adversely affect the market price of, Units then
outstanding and may reduce the amount of per Unit distributions by the Company.

Right of General Partner to Call Units. In the event that at any time less
than 10% of the Units are held by persons other than the General Partner and
its affiliates, the General Partner will have the right, which it may assign
and transfer to any of its affiliates or to the Company, to purchase all, but
not less than all, of the outstanding Units held by such nonaffiliated persons.
See "Summary of the Partnership Agreements--Right to Call Units".

Absence of Arm's-Length Agreements. Neither the Partnership Agreements nor
the Purchase and Processing Agreements and the Environmental Indemnity
Agreement nor any other agreement between

Borden and the Company was the result of arm's-length negotiations. See
"Conflicts of Interest and Fiduciary Responsibility".

Relationship with Borden. The Company has numerous continuing relationships
with Borden. The General Partner is a wholly-owned subsidiary of Borden. In
addition, Borden has entered into certain Purchase and Processing Agreements
with the Operating Company. The Company also has the right to use certain
trademarks and patents under a license agreement with Borden. Borden's other
agreements with the Company include an environmental indemnity agreement (see
"Business and Properties--Environmental and Safety Regulations") and a covenant
not to compete in the manufacture or sale in the United States of certain
products manufactured by the Company (see "Business and Properties--
Competition"). Borden has also capitalized the General Partner with a
promissory note of Borden having an aggregate outstanding principal amount of
$37.5 million and will, in connection with this offering, issue to the General
Partner an additional promissory note in the amount of 10% of the net proceeds
of this offering. In addition, the Company has no employees and the Company
relies on the officers and employees of the General Partner who are officers or
employees of Borden. The Partnership Agreements provide that the Company will
not engage in any business other than the manufacture or production of PVC
resins, VCM, acetylene, methanol, formaldehyde, urea-formaldehyde concentrate,
ammonia, urea and acetic acid, unless such other business is approved by
Special Approval. Moreover, the General Partner is not permitted to cause the
Company to construct any plants at locations other than Geismar and Illiopolis
or to expand significantly the capacity of the Geismar formaldehyde plants
without Special Approval. The Company's acquisition of the Addis Facility
received Special Approval. See "The Acquisition". The Company and the Operating
Company are intended to be limited purpose partnerships, and the Partnership
Agreements provide that the General Partner has no duty to propose or approve,
and in its sole discretion may decline to propose or approve, any of the above
actions. For a discussion relating to a possible change of control of Borden
see "--Considerations Relating to Possible Change of Control of Borden;
Relationship with Borden".

TAX CONSIDERATIONS

For a general discussion of the expected federal income tax consequences of
acquiring, owning and disposing of Units, see "Certain Federal Income Tax
Considerations".

Characterization of Partnership Income. Certain Unitholders, including any
Unitholder who is an individual, will not be permitted to use losses from other
passive activities to offset income from the Company. A Unitholder's share of
net passive income from the Company will be treated as investment income and
may be offset by such Unitholder's investment interest expense.

Partnership Status. Based upon certain representations of the General
Partner, Sidley & Austin, special counsel to the Company, the Operating Company
and BCPM, has rendered its opinion that under current law and regulations,
which are subject to change, (i) each of the Company and the Operating Company
will be treated as a partnership for federal income tax purposes (but, in the
case of the Company, such treatment will not extend beyond the Company's
taxable year ending December 31, 1997); (ii) the owners of Units (other than an
owner who is entitled to execute and deliver a Transfer Application but who has
failed to do so) will be treated as partners of the Company (but such treatment
will not extend beyond the Company's taxable year ending December 31, 1997);
and (iii) the acquisition of the Addis Assets by the Operating Company will not
be the addition of a substantial new line of business with respect to the
Company. However, no advance ruling from the IRS as to such status has been or
will be requested, and the opinion of counsel is not binding on the IRS. If the
IRS were to challenge the federal income tax status of the Company or the
amount of the Unitholder's allocable share of the Company's taxable income,
such challenge could result in an audit of the Unitholder's entire tax return
and in adjustments to non-Company items on that return. In addition, the
Unitholder would bear the cost of any expenses incurred in connection with an
examination of his personal tax return.

One of the criteria involved in determining whether the Company and the
Operating Company are treated as partnerships for federal income tax purposes
is whether the General Partner has and maintains a

substantial net worth (as such term is used for partnership tax law purposes).
The opinion of Sidley & Austin that the Company and the Operating Company will
be treated as partnerships for federal income tax purposes is expressly
conditioned on the General Partner maintaining a specified net worth. See
"Certain Federal Income Tax Considerations--Legal Opinions and Advice"; and "--
Partnership Status". At the time of the sale of the Units offered hereby, the
General Partner will have such net worth, represented in whole or in part by a
demand note issued by Borden.

Treatment of either the Company or the Operating Company as a corporation in
any taxable year (which will occur in the case of the Company in its first
taxable year beginning after December 31, 1997) would result in its income,
gains, losses, deductions and credits being reflected only on its tax return
rather than being passed through to Unitholders, and its net income being taxed
at corporate rates. In addition, distributions made to Unitholders would be
treated as dividend income (to the extent of current or accumulated earnings
and profits), and, in the absence of current or accumulated earnings and
profits, as a nontaxable return of capital (to the extent of the Unitholder's
basis in his Units), or as capital gain (after the Unitholder's basis in his
Units is reduced to zero). Furthermore, losses realized by the Company and the
Operating Company would not flow through to Unitholders.

Ownership of Units by Tax-Exempt Entities. It is anticipated that
substantially all of the income derived from the Company by tax exempt entities
(including individual retirement accounts and other retirement plans) will
constitute unrelated business taxable income until December 31, 1997. As a
result, tax-exempt entities which become Unitholders will be required to report
the Company's taxable income on a federal income tax return filed with the IRS
and may be required to pay taxes on such income. See "Certain Federal Income
Tax Considerations--Tax Treatment of Operations--Unrelated Business Taxable
Income".

Tax Liability Exceeding Cash Distributions or Proceeds from Dispositions of
Units. A Unitholder will be required to pay federal income tax and, in certain
cases, state and local income taxes, on his allocable share of the Company's
income, whether or not he receives cash distributions from the Company. Taxable
income may exceed cash distributions and Unitholders may be required to pay tax
liabilities without the receipt of cash from the Company. Further, upon the
sale or other disposition of Units, a Unitholder may incur tax liability in
excess of the amount of cash received. To the extent that a Unitholder's tax
liability exceeds the amount distributed to him or which he receives on the
sale or other disposition of his Units, he will incur an out-of-pocket expense.

State and Local Taxes. With respect to an investment in Units, Unitholders
will be required to file state and local income tax returns and to pay state
and local income taxes in their states of domicile. In addition, Unitholders
may be liable for state and local taxes in the various states in which the
Operating Company conducts business or in which its properties are located. The
Operating Company currently conducts business primarily in Illinois and
Louisiana, although an obligation to file tax returns or to pay taxes may arise
in other states.

Automatic Taxation as a Corporation after 1997. The General Partner
anticipates that, because of certain amendments made to the Code subsequent to
the formation of the Company, the Company will be treated as a corporation for
federal income tax purposes during the Company's first taxable year beginning
after December 31, 1997. In general, the principal tax disadvantage of the
treatment of the Company as a corporation is that a corporation pays taxes on
its net income and in addition, its shareholders generally pay taxes on any
dividends from the corporation. In contrast, a partnership pays no entity-level
tax and its partners pay tax on their share of the partnership net income and
on distributions that exceed their tax basis in their partnership interests.
Accordingly, the treatment of the Company for federal income tax purposes as a
corporation after 1997 will result in a material reduction in a Unitholder's
cash flow and after-tax return.

PARTNERSHIP STRUCTURE

The Company was formed in 1987 to acquire, own and operate, through the
Operating Company, PVC, methanol and other chemical plants located at Geismar,
Louisiana, and Illiopolis, Illinois, that were previously owned and operated by
Borden. BCPM is the sole general partner of each of the Company and the
Operating Company and has a 2% aggregate interest in the Company. BCPM is a
wholly-owned subsidiary of Borden. The Company is managed and operated by
officers and employees of BCPM, who are also employees of Borden. The Company
currently has no employees and does not anticipate having any employees.

The following chart depicts the organization and ownership of the Company
after giving effect to the sale of the Units offered hereby (assuming the
Underwriters' over-allotment option is not exercised).

[GRAPHIC APPEARS HERE]

The Operating Company owns 100% of Finance Corp., a co-issuer, together with
the Operating Company, of the Notes.

The principal executive offices of the Company and BCPM are located at
Highway 73, Geismar, Louisiana 70734, and the telephone number is (504) 673-
6121.

THE ACQUISITION

OVERVIEW

On August 12, 1994, the Operating Company entered into an asset transfer
agreement (the "Asset Transfer Agreement") with OxyChem to purchase the Addis
Assets and assume certain obligations relating to the Addis Assets. The cash
purchase price for the Addis Assets is $104.3 million, subject to certain
customary post-closing adjustments. Based primarily on the inventory levels of
the Addis Facility at September 30, 1994, the Company expects that such post-
closing adjustments could reduce the purchase price by up to $5.0 million.

The closing of this offering will occur concurrently with, and is conditioned
upon, the closing of the Acquisition. The Acquisition is subject to certain
conditions, including approval by the FTC, an environmental assessment of the
real estate upon which the Addis Facility is located and the financing of the
Acquisition.

The purchase price for the Addis Assets will be financed in part by the
proceeds of this offering. The remaining purchase price will be financed
through a concurrent offering of the Notes. Neither the Acquisition nor this
offering is conditioned upon consummation of the Notes offering. In the event
that the Notes offering is postponed or not consummated, the Company will use
short-term borrowings, cash on hand or a combination thereof to fund a portion
of the purchase price of the Addis Assets. The use of cash on hand would reduce
cash available for distribution to Unitholders. See "Use of Proceeds."

ADDIS FACILITY

The Addis Facility, which is located in Addis, Louisiana, produces general
purpose PVC resins. The Addis Facility began operations in 1979 and is located
on approximately 40 acres of a 220 acre site. Approximately 140 employees work
at the Addis Facility, including approximately 55 contract personnel. The
current permitted annual capacity of the plant is 600 million pounds although
proven annual capacity is 450 million pounds. Production during the years 1990
through 1993 has ranged from 407 million to 450 million pounds per year
depending on product mix and timing of maintenance turnarounds. In 1993, only
407 million pounds of PVC resins were produced, partially as a result of a
scheduled maintenance outage in November. In addition, during 1993, the Addis
Facility produced 95% of its volume as low molecular weight resin which runs at
a line rate 11% slower than standard molecular weight resin such as pipe grade
resin.

SPECIAL APPROVAL

Under the Operating Partnership Agreement, Special Approval is required in
order for the Operating Company to acquire, own and operate the Addis Assets.
As so required, the acquisition, ownership and operation by the Operating
Company of the Addis Assets and the Asset Transfer Agreement have been approved
by Special Approval.

CERTAIN TERMS OF THE ASSET TRANSFER AGREEMENT

Pursuant to the Asset Transfer Agreement, the Operating Company will purchase
the Addis Assets, which includes the Addis Facility, and assume certain
obligations relating to the current operation of the Addis Assets such as
executory obligations under existing leases, licenses, permits and contracts.
In addition, the General Partner will extend offers of employment, on terms
determined by it, to all the hourly employees and certain salaried employees
employed at the Addis Facility, and will provide certain employee benefits to
such employees. The Asset Transfer Agreement contains certain customary
representations and warranties of the Operating Company and OxyChem, as well as
customary closing conditions.

OxyChem has agreed to indemnify the Operating Company and affiliated persons
for any actions, losses and expenses arising out of the operation of the Addis
Facility prior to the closing and any pre-closing liabilities imposed under
environmental laws in effect prior to the closing. The Operating Company has
agreed to indemnify OxyChem and affiliated persons for any actions, losses and
expenses arising out of similar actions or liabilities arising after the
closing. In addition, OxyChem and the Operating Company have agreed to
indemnify each other for claims, damages, liabilities, losses or other expenses
arising out of, certain other matters, including (i) breaches of
representations, warranties and covenants, (ii) products liability for products
shipped by OxyChem or the Operating Company before or after the closing of the
Acquisition, as the case may be, and (iii) liabilities or obligations of
OxyChem which are or are not assumed by the Operating Company, as the case may
be. Certain of such indemnities are subject to limitations in terms of
indemnified amounts and indemnification periods.

VCM SUPPLY AGREEMENT AND PVC TOLLING AGREEMENT

Upon the closing of the Acquisition, the Operating Company and OxyChem will
enter into a VCM supply agreement (the "VCM Supply Agreement") that would
obligate the Operating Company to purchase from OxyChem its requirements for
VCM at the Addis Facility up to a specified annual base requirement. The VCM
Supply Agreement is a multi-year agreement under which OxyChem will sell VCM to
the Company at competitive rates.

Upon the closing of the Acquisition, the Operating Company and OxyChem will
also enter into a PVC Tolling Agreement (the "PVC Tolling Agreement"), under
which OxyChem will supply VCM to the Operating Company for conversion into a
specified annual base quantity of PVC at the Addis Facility for OxyChem. The
PVC Tolling Agreement is a multi-year agreement under which the Operating
Company will manufacture PVC for a competitive fee.

ACCOUNTING TREATMENT

The Acquisition will be treated as a purchase for accounting purposes.
Accordingly, the results of operations of the Addis Facility will be included
in the Company's consolidated results of operations from and after the closing
of the Acquisition. Based on internal engineering evaluations, which indicate
that the fair market value of the Addis Assets will exceed the acquisition
price, management anticipates that no goodwill will be recognized from the
Acquisition for accounting purposes.

USE OF PROCEEDS

The net proceeds from this offering of Units are estimated to be
approximately $74.2 million, after deduction of underwriting discounts and
commissions and estimated expenses. The Company intends to contribute all such
net proceeds to the Operating Company to fund a portion of the purchase price
for the Addis Assets and related expenses. See "The Acquisition". If the
Underwriters' over-allotment option is exercised in full, the Company intends
to contribute the estimated additional $11.3 million of net proceeds to the
Operating Company to be used to fund any remaining portion of the purchase
price for the Addis Assets, and for other permitted partnership purposes.

Concurrently with this offering of Units, the Operating Company and Finance
Corp. intend to make a public offering of the Notes in an aggregate principal
amount of $200.0 million. See "Summary of the Financing Documents-- The Notes".
Such offering will be made only by means of a separate prospectus. It is
possible that the Company may postpone or not consummate the Notes offering.
Neither the Acquisition nor this offering is conditioned upon consummation of
the Notes offering. The Operating Company intends to use the net proceeds from
the sale of the Notes first to prepay the currently outstanding $150.0 million
aggregate principal amount of the Old Notes. The remaining proceeds of the
Notes offering will be used to fund a portion of the purchase price of the
Addis Assets and for other permitted partnership purposes. In the event the
Notes offering is postponed or not consummated, the Company will use short-term
borrowings, cash on hand or a combination thereof to fund a portion of the
purchase price of the Addis Assets. In addition, in the event that the Notes
offering is not consummated, the Old Notes will not be refinanced and will
continue to remain outstanding (although in such event the Company may, but has
not determined that it will, attempt to refinance the Old Notes through a new
loan facility or to seek an amendment to certain terms of the Old Notes). See
"Summary of the Financing Documents--The Old Notes and the Working Capital
Facility".

The Operating Company does not have a contractual right to prepay the Old
Notes but it has initiated discussions with the Old Noteholders and anticipates
that it is likely to obtain their consent to prepayment of the Old Notes. The
Operating Company expects that the prepayment price will equal the outstanding
aggregate principal of and accrued interest on the Old Notes, together with a
Prepayment Premium to be negotiated with the Old Noteholders.

In connection with the original issuance by the Operating Company of the Old
Notes, Borden had entered into the Borden Purchase Obligation, which provides
that, in the event of a change of control of Borden, the Old Noteholders may
elect to require Borden to purchase the Old Notes at a price equal to the
outstanding aggregate principal of and accrued interest on the Old Notes,
together with the Change of Control Premium.

Change of Control Premium were payable on November 18, 1994, the amount of such
premium would be approximately $14.0 million. Assuming interest rates remain
constant or increase, such amount will decrease over time.

Borden and the Company have not agreed to any allocation of the Prepayment
Premium, although the Company believes that an allocation can be made on a
basis that is fair and reasonable to the Company and Borden. Because the
allocation of the Prepayment Premium between Borden and the Company constitutes
a conflict of interest between Borden and the Company, any such allocation of
the Prepayment Premium will be subject to Special Approval. In the event that
the Company is not able to negotiate a satisfactory Prepayment Premium with the
Old Noteholders or in the event that the Company and Borden are not able to
negotiate a satisfactory allocation of the Prepayment Premium in a timely
manner, the Operating Company will not proceed with the offering of the Notes
and any remaining funds required by the Operating Company for the purchase
price of the Addis Assets will be obtained as described below.

The General Partner will make a capital contribution to the Company in an
amount equal to 1% of the net proceeds of this offering. Such amount, together
with the proceeds of the Units offered hereby, will be contributed as a capital
contribution by the Company to the Operating Company. The General Partner will
also make a capital contribution directly to the Operating Company in an amount
equal to 1% of the aggregate amount of capital contributions referred to in the
preceding sentence.

CAPITALIZATION

The following table sets forth the consolidated capitalization of the Company
at September 23, 1994, and as adjusted to reflect (i) the consummation of the
Acquisition, (ii) the sale of 4,000,000 Units pursuant to this offering (after
deducting underwriting discounts and commissions and estimated offering
expenses), (iii) the issuance and sale by the Operating Company of the Notes,
(iv) the prepayment of the Old Notes and (v) the contribution to the capital of
the Company by the General Partner. Such information should be read in
conjunction with the historical and pro forma financial statements and the
notes thereto included elsewhere in this Prospectus or incorporated by
reference in this Prospectus.

AT SEPTEMBER 23, 1994
------------------------
ACTUAL AS ADJUSTED(1)
--------- --------------
(AMOUNTS IN THOUSANDS)

Long-Term Debt:
Old Notes(2)......................................... $150,000 $ --
Notes(3)............................................. -- 200,000
Partners' Capital(4):
Common Unitholders................................... 228,615 289,170
General Partner...................................... 1,252 1,863
--------- --------
Total Partners' Capital.............................. 229,867 291,033
--------- --------
Total Capitalization................................... $379,867 $491,033
========= ========

- --------

(1) In the event the Notes offering is not consummated, the Company will use
short-term borrowings, cash on hand or a combination thereof to fund a
portion of the purchase price of the Addis Assets. In such event and
assuming the Prepayment Premium is not incurred, the principal amount of
Old Notes outstanding would remain at $150,000 and total partners' capital
and total capitalization, as adjusted, would be $304,892 and $454,892,
respectively.

(2) See "Summary of the Financing Documents--The Old Notes and the Working
Capital Facility".

(3) See "Summary of the Financing Documents--The Notes".

(4) Partners' Capital, as adjusted, reflects the aggregate estimated charge
related to the prepayment of the Old Notes. The total Prepayment Premium is
currently estimated to be $14.0 million, of which each of Borden and the
Company would pay a portion. See "Use of Proceeds".

PRICE RANGE OF UNITS AND DISTRIBUTIONS

The Units are listed on the New York Stock Exchange, Inc. (the "NYSE") under
the symbol BCU. As of September 23, 1994 there were approximately 6,900 holders
of record of Units.

The following table presents for the periods indicated the cash distributions
declared on Units, and the high and low sale prices of the Units, as reported
on the NYSE Composite Tape. The cash distributions set forth below represent
distributions of Available Cash per Unit with respect to each quarter, which
distributions are made in the following quarter. As described under
"Description of Depository Units and the Deposit Agreement--Combination of
Units and Elimination of Distribution Support", until December 31, 1992 the
Units constituted two separate classes of limited partner interests in the
Partnership, Preference Units and Common Units (which Common Units traded on
the NYSE as Enhanced Common Units). The two classes of Units received the same
level of distributions per Unit, but traded at slightly different price levels.
The two classes were combined into a single class of Units effective December
31, 1992 and the listing of the Units on the NYSE was combined under the symbol
BCU on February 16, 1993. The following table reflects the trading history of
the Enhanced Common Units through February 15, 1993.

CASH
HIGH LOW DISTRIBUTIONS
------ ------- -------------

1989:First quarter................................ $ 24 $17 7/8 $0.80
Second quarter............................... 22 16 1/4 0.80
Third quarter................................ 18 7/8 13 1/2 0.50
Fourth quarter............................... 14 5/8 9 7/8 0.35
1990:First quarter................................ 12 5/8 10 1/8 0.34
Second quarter............................... 10 3/4 8 1/2 0.56
Third quarter................................ 10 5/8 7 5/8 0.53
Fourth quarter............................... 9 1/4 7 1/2 0.52
1991:First quarter................................ 13 1/4 8 3/8 0.39
Second quarter............................... 12 7/8 10 3/8 0.45
Third quarter................................ 13 1/4 11 5/8 0.62
Fourth quarter............................... 14 3/4 12 1/8 0.52
1992:First quarter................................ 22 7/8 13 3/4 0.45
Second quarter............................... 21 3/8 16 1/2 0.51
Third quarter................................ 19 3/8 15 7/8 0.32
Fourth quarter............................... 17 12 3/8 0.31
1993:First quarter................................ 17 1/8 13 5/8 0.30
Second quarter............................... 16 1/8 10 3/4 0.18
Third quarter................................ 12 1/8 8 7/8 0.12
Fourth quarter............................... 11 1/4 8 1/4 0.18
1994:First quarter................................ 13 1/4 9 7/8 0.21
Second quarter............................... 15 1/8 10 7/8 0.65
Third quarter................................ 25 7/8 13 1/4 1.02
Fourth quarter............................... 26 3/8 19 1/4 (1)
(through November 21, 1994)

- --------

(1) The Company anticipates declaring a distribution with respect to the fourth
quarter on or about January 24, 1995.

On November 21, 1994, the last reported sale price of Units on the NYSE
Composite Tape was $19 7/8 per Unit.

CASH DISTRIBUTIONS

GENERAL

A principal objective of the Company is to generate cash from operations and
to distribute Available Cash to the Unitholders and the General Partner in the
manner described herein. "Available Cash" means generally, with respect to any
quarter, the sum of all of the cash receipts of the Company (including
distributions of cash received from the Operating Company) plus net reductions
to reserves established in prior quarters, less all of its cash disbursements
and net additions to reserves in such quarter. The full definition of Available
Cash is set forth in "Glossary of Terms". Both the Old Notes and the Notes
being offered concurrently with this offering of Units impose restrictions on
the ability of the Operating Company to distribute cash to the Company and,
therefore, the ability of the Company to make distributions to Unitholders. See
"Summary of the Financing Documents". The definition of Available Cash permits
the General Partner to establish cash reserves that it determines are necessary
or appropriate to provide for the proper conduct of the business of the
Company, to stabilize distributions of cash to the Unitholders and the General
Partner with respect to the remaining quarters within a fiscal year and the
first quarter of the following year or as necessary to comply with the terms of
any agreement or obligation of the Company. The General Partner has broad
discretion in establishing reserves, and its decisions regarding reserves could
have a significant impact on the amount of Available Cash and distributions.
The timing and amounts of additions and reductions to reserves may impact the
amount of incentive distributions payable to the General Partner. As a result,
distributions to Unitholders may over time be reduced from levels which would
have been distributed if the General Partner were not able to control the
timing of additions and reductions to reserves.

The Company will distribute 100% of its Available Cash as of the end of each
quarter on or about 45 days after the end of such quarter to Unitholders of
record on the applicable record date and to the General Partner.

Cash distributions are characterized as either distributions of Cash from
Operations or Cash from Interim Capital Transactions. This distinction affects
the amounts distributed to the Unitholders relative to the General Partner. See
"--Distributions of Cash from Interim Capital Transactions". Cash from
Operations, which is determined on a cumulative basis, generally refers to all
cash generated by the operations of the Company's business since the date the
Company commenced operations in 1987 ("Company Inception"), after deducting
related cash expenditures, reserves and certain other items. Cash from Interim
Capital Transactions generally refers to cash generated by (i) borrowings and
sales of debt securities by the Company (other than for working capital
purposes), (ii) sales of equity interests by the Company for cash and (iii)
sales or other voluntary or involuntary dispositions of any assets of the
Company for cash (other than inventory, accounts receivable and other current
assets and assets disposed of in the ordinary course of business). The full
definitions of Cash from Operations and Cash from Interim Capital Transactions
are set forth in "Glossary of Terms".

Amounts of cash distributed by the Company on any date from any source will
be treated as a distribution of Cash from Operations, until the sum of all
amounts so distributed to the Unitholders and to the General Partner (including
any incentive distributions) equals the aggregate amount of all Cash from
Operations from Company Inception through the date of such distribution. Any
amount of cash (irrespective of its source) distributed on such date in excess
of the aggregate amount of all Cash from Operations from Company Inception
through the quarter prior to such distribution will be deemed to constitute
Cash from Interim Capital Transactions and distributed accordingly. If
Available Cash that is deemed to constitute Cash from Interim Capital
Transactions is distributed in an aggregate amount equal to $367,500,000, the
distinction between Cash from Operations and Cash from Interim Capital
Transactions will cease, and all Available Cash will be distributed as Cash
from Operations. The General Partner does not anticipate that there will be
significant amounts of Available Cash that are deemed to constitute Cash from
Interim Capital Transactions distributed to the Unitholders. See "--
Distributions of Cash from Operations" and "--Distributions of Cash from
Interim Capital Transactions".

Capital expenditures that are made to upgrade and maintain the Company's
plants or to comply with laws relating to the protection of the environment or
expenditures that the General Partner determines to make to acquire other
companies or assets (including the Addis Assets) reduce the amount of Available
Cash. Further, for taxable years beginning after December 31, 1997, the Company
will be treated as a corporation for tax purposes. Since net income and gain
will be taxed to the Company, the amount of Available Cash will be reduced
which will result in a material reduction in a Unitholders' cash flow and
after-tax return. See "--Entity-Level Taxation".

The following description of distributions under "Distribution of Cash from
Operations", "Distributions of Cash from Interim Capital Transactions" and
"Distributions Upon Liquidation", combines the 1.0101% distribution that is
required to be made by the Operating Company to the General Partner with the 1%
distribution that is required to be made by the Company to the General Partner
and restates the Company's distributions as if both such distributions were
required to be made at the level of the Company with the effect that, in
appropriate contexts, the Company is stated to be required to make 2% regular
distributions to the General Partner.

DISTRIBUTIONS OF CASH FROM OPERATIONS

Distributions by the Company of Available Cash with respect to any quarter
that is deemed to be Cash from Operations will be made in the following manner:

first, 98% of any such Available Cash to all Unitholders pro rata and 2%
thereof to the General Partner, until there has been distributed in respect of
each such Unit an amount equal to $0.3647 for such quarter; and

thereafter, 78% of any such Available Cash then remaining to all Unitholders
pro rata and 22% (20% incentive distribution plus 2% regular distribution) to
the General Partner.

The following table illustrates the distribution of Available Cash from
Operations:

DISTRIBUTION UNITHOLDERS GENERAL PARTNER
------------ ----------- ---------------

Up to the Target Distribution................. 98% 2%
After the Target Distribution................. 78% 22%

ADJUSTMENT OF THE TARGET DISTRIBUTION

The Company will be treated, solely for tax purposes, as a corporation for
taxable years beginning after December 31, 1997. See "--Entity-Level Taxation".
As a result of the taxation of the Company as a corporation, the Target
Distribution for each quarter beginning after December 31, 1997, will be equal
to (i) $0.3647 multiplied by (ii) 1 minus the sum of (x) the highest marginal
federal corporate income tax rate for the calendar year in which such quarter
occurs plus (y) the effective over-all state and local income tax rate
applicable to the Company for the calendar year next preceding the calendar
year in which such quarter occurs (after taking into account the benefit of any
deduction allowable for federal income tax purposes with respect to the payment
of state and local income taxes). Such effective over-all state and local
income tax rate shall be determined for the calendar year next preceding the
first calendar year during which the Company is taxable for federal income tax
purposes as a corporation or as an association taxable as a corporation by
determining such rate as if the Company had been subject to such state and
local taxes during such preceding calendar year.

The Target Distribution will also be proportionately adjusted in the event of
any combination or subdivision of Units (whether effected by a distribution
payable in Units or otherwise) but not by reason of the issuance of additional
Units for cash. In addition, if a distribution is made of Available Cash
constituting Cash from Interim Capital Transactions which are dispositions of
assets arising from condemnation, fire, acts of God or other similar events
beyond the reasonable control of the Company, the Target Distribution will be
adjusted downward by multiplying the Target Distribution, as the same may have
been previously adjusted, by a fraction, the numerator of which is the
Unrecovered Capital (as defined below) immediately after giving effect to such
distribution and the denominator of which is the Unrecovered Capital
immediately prior to such distribution. The "Unrecovered Capital" is
$281,250,000, less the aggregate distributions of cash from such Interim
Capital Transactions on the Units. If and when the Unrecovered Capital is zero,
the Target Distribution will have been reduced to zero and all Available Cash
constituting Cash from Operations will

thereafter be distributed 78% to the Unitholders and 22% to the General
Partner. Distributions of Cash from Interim Capital Transactions will not
reduce the Target Distribution in the quarter in which they are distributed.

DISTRIBUTIONS OF CASH FROM INTERIM CAPITAL TRANSACTIONS

Distributions on any date by the Company of Available Cash that is deemed to
be Cash from Interim Capital Transactions will be distributed 98% to all
Unitholders pro rata and 2% to the General Partner until the Unitholders have
received, since the Company commenced operations through such date,
distributions of Available Cash constituting Cash from Interim Capital
Transactions in an aggregate amount equal to $367,500,000. Thereafter, all
Available Cash that otherwise would be deemed to be Cash from Interim Capital
Transactions will be deemed to be Cash from Operations and will be distributed
as provided in "--Distributions of Cash From Operations".

DISTRIBUTIONS UPON LIQUIDATION

Following the commencement of the dissolution and liquidation of the Company,
assets will be sold or otherwise disposed of, and the partners' capital account
balances will be adjusted to reflect any resulting gain or loss. The proceeds
of such liquidation will, first, be applied to the payment of creditors of the
Company in the order of priority provided in the Partnership Agreement and by
law, and thereafter any remaining proceeds (or assets in kind) will be
distributed to the Unitholders and the General Partner in accordance with the
positive balances in their respective capital account balances, as adjusted,
and, finally, 98% to the Unitholders and 2% to the General Partner.

Any gain (or unrealized gain attributable to assets distributed in kind) will
be allocated to each partner as follows:

first, each partner having a deficit balance in such partner's capital
account to the extent of and in proportion to such deficit balance;

second, any then remaining gain shall be allocated 98% to all Unitholders,
pro rata, and 2% to the General Partner until the capital account for each Unit
is equal to its Remaining Capital (as defined below);

third, any then remaining gain shall be allocated 98% to all Unitholders and
2% to the General Partner until the amount of gain allocated to such
Unitholders, when combined with Cash from Operations theretofore distributed to
Unitholders and to the General Partner (including incentive distributions),
equals the aggregate amount of Cash from Operations generated since the Company
commenced operations through the date of such allocation (which gain so
allocated to the Unitholders shall be allocated among them in the same manner
as if it were Cash from Operations distributed in accordance with the
priorities set forth under "--Distributions of Cash from Operations"); and

fourth, any then remaining gain shall be allocated 17% (15% as incentive
distribution plus 2% regular distribution) to the General Partner and 83% to
all Unitholders.

"Remaining Capital" with respect to any Unit means, in general, $10 less the
sum of any distributions of Available Cash constituting Cash from Interim
Capital Transactions and any distributions of cash (or the Net Agreed Value (as
defined in the Partnership Agreement) of any assets distributed in kind) in
connection with the dissolution and liquidation of the Company theretofore made
in respect of such Unit.

ENTITY-LEVEL TAXATION

Publicly traded limited partnerships are generally treated as corporations
for federal income tax purposes for taxable years beginning after December 31,
1987. However, the Code contains a "grandfather" provision under which certain
publicly traded partnerships existing on December 17, 1987, including the
Company, are treated as partnerships for federal income tax purposes until
their first taxable years beginning after December 31, 1997. The benefit of the
"grandfather" provision will cease and the Company will be treated as a
corporation for federal income tax purposes at an earlier date if the Company
adds a substantial new line of business. Based on certain representations of
BCPM, in the opinion of Sidley & Austin, special counsel to

BCPM and the Company, the acquisition of the Addis Assets will not be treated
as the addition of a substantial new line of business with respect to the
Company.

At the time the Company is treated as a corporation under the publicly traded
partnership rules, it will be treated as contributing all of its assets
(subject to all of its liabilities) to a newly formed corporation in exchange
for all of such corporation's stock and as distributing such stock to
Unitholders in complete liquidation of the Company. This deemed contribution
and liquidation should be tax-free to Unitholders and the Company, so long as
the Company, at such time, does not have liabilities in excess of the adjusted
tax basis of its assets.

When the Company becomes taxable as a corporation under the publicly traded
partnership rules or as an association taxable as a corporation for federal
income tax purposes, the Target Distribution for each quarter would be reduced
as described under "--Adjustment of the Target Distribution".

SELECTED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA

The following table sets forth, for the periods and at the dates indicated,
selected consolidated historical financial and operating data for the Company
and combined pro forma financial data for the Company after giving effect to
the Acquisition, this offering, the offering of the Notes and the prepayment of
the Old Notes. See "Use of Proceeds". The selected consolidated historical
financial data are derived from and should be read in conjunction with the
consolidated historical financial statements and notes thereto included
elsewhere in this Prospectus. See also "Management's Discussion and Analysis of
Financial Condition and Results of Operations". The selected combined pro forma
financial information is derived from and should be read in conjunction with
the pro forma financial information contained elsewhere in this Prospectus. The
pro forma statement of operations data assumes that the Acquisition, this
offering, the offering of the Notes and the prepayment of the Old Notes had
been consummated on January 1, 1993. The pro forma balance sheet data assumes
that the Acquisition, this offering, the offering of the Notes and the
prepayment of the Old Notes had been consummated on September 23, 1994.

STATEMENT OF OPERATIONS
DATA:
Total revenues.......... $ 465,923 $ 420,631 $ 410,005 $ 401,803 $ 433,297 $529,459
Expenses
Cost of goods sold.... 353,871 335,309 317,504 337,982 397,771 490,123
Marketing, general and
administrative....... 16,745 17,745 18,578 18,118 18,993 19,243
Interest.............. 16,340 16,340 16,340 16,340 16,356 19,500
General Partner
incentive............ 11,072 5,832 5,497 2,146 -- --
Other................. (1,600) 109 533 132 1,612 3,092
Net (loss) income....... 69,495 45,296 51,553 27,085 (1,435) (2,474)
Net (loss) income per
Unit(1)................ 1.87 1.22 1.39 0.73 (0.04) (0.06)
Cash distributions per
Unit(2)................ 2.45 1.95 1.98 1.59 0.78
Percentage of
Distributions
Unitholders........... 87% 91% 91% 95% 98%
General Partner....... 13% 9% 9% 5% 2%
OTHER DATA:
Capital expenditures.... $ 28,157 $ 22,084 $ 17,975 $ 10,534 $ 15,041
EBITDA(3)............... 137,158 108,368 115,895 89,155 57,867 $ 65,737
Depreciation............ 40,251 40,900 42,505 43,584 42,946 48,711
Costs Reimbursed to
Borden................. 55,254 54,185 53,209 50,921 56,976
BALANCE SHEET DATA:
PP&E, net............... $417,186 $395,762 $369,189 $335,136 $305,975
Total assets............ 549,628 544,204 507,042 466,729 444,304
Long-term debt.......... 150,000 150,000 150,000 150,000 150,000
Total partners' capital. 341,707 314,558 292,555 260,595 230,205
OPERATING DATA:
Average price received
per unit sold(4)
PVC Polymers Products. 132 119 103 99 106
Methanol and
Derivatives.......... 99 87 110 88 94
Nitrogen Products..... 77 80 87 82 85
Raw material costs per
unit sold(4)
Natural gas........... 74 74 63 74 88
Ethylene.............. 207 171 128 116 115
Chlorine.............. 50 13 N/M(5) 7 83
Production volumes (in
pounds)
PVC Polymers Products. 1,786,288 1,912,233 1,793,271 1,929,093 1,848,657
Methanol and
Derivatives.......... 2,000,962 1,972,705 2,113,909 2,339,561 2,408,579
Nitrogen Products..... 1,178,916 1,250,910 1,291,566 1,307,764 1,207,020

- --------
(footnotes on following page)

INCOME STATEMENT DATA:
Total revenues....................... $ 307,576 $ 438,133 $537,799
Expenses
Cost of goods sold................. 286,887 326,225 417,413
Marketing, general and
administrative.................... 14,153 15,298 15,485
Interest........................... 12,066 12,009 14,264
General Partner incentive.......... -- 8,751 8,751
Other.............................. 530 6,312 7,210
Net (loss) income.................... (6,060) 69,538 74,676
Net (loss) income per Unit(1)........ (0.16) 1.87 1.81
Cash distributions per Unit(2)....... 0.60 1.88
Percentage of distributions
Unitholders........................ 98% 87%
General Partner.................... 2% 13%
OTHER DATA:
Capital expenditures................. $ 7,991 $ 14,215
EBITDA(3)............................ 38,117 123,239 $134,956
Depreciation......................... 32,171 32,941 37,265
Costs Reimbursed to Borden........... 42,644 40,344
BALANCE SHEET DATA:
PP&E, net............................ $ 310,583 $ 286,635 $381,235
Total assets......................... 445,866 497,838 603,959
Long-term debt....................... 150,000 150,000 200,000(6)
Total partners' capital.............. 232,262 229,867 291,033(6)
OPERATING DATA:
Average price received per unit
sold(4)
PVC Polymers Products.............. 105 120
Methanol and Derivatives........... 91 139
Nitrogen Products.................. 86 112
Raw material costs per unit sold(4)
Natural gas........................ 87 84
Ethylene........................... 118 124
Chlorine........................... 69 120
Production volumes (in pounds)
PVC Polymers Products.............. 1,361,931 1,486,313
Methanol and Derivatives........... 1,503,577 1,945,598
Nitrogen Products.................. 879,066 866,160

- --------
(1) The General Partner's allocation of net income has been deducted before
calculating net income per Unit.
(2) The Company distributes 100% of its Available Cash as of the end of each
fiscal quarter on or about 45 days after the end of such quarter. The cash
distributions set forth herein with respect to any year represent the
aggregate distributions made with respect to the quarters occurring within
such year, although the cash distributions with respect to the last
quarter of a year are paid in the first quarter of the following year.
(3) EBITDA is calculated as net income plus interest, depreciation and
amortization and General Partner incentive. EBITDA is not intended to
represent cash flow and does not represent the measure of cash available
for distribution. EBITDA is not a measure under generally accepted
accounting principles, but provides additional information for evaluating
the Company's ability to make the Target Distribution. In addition, EBITDA
is not intended as an alternative to earnings from continuing operations
or net income.
(4) Represents relative average amounts per unit using 1985=100 as the base
year for all products.
(5) Not meaningful due to extreme oversupply of chlorine and the resulting
negative value in the marketplace.

(6) In the event the Notes offering is not consummated, the Company will use
short-term borrowings, cash on hand or a combination thereof to fund a
portion of the purchase price of the Addis Assets. In such event and
assuming the Prepayment Premium is not incurred, the principal amount of
long-term debt and total partners' capital would be $150,000 and $304,892,
respectively. Total partners' capital reflects the aggregate estimated
charge related to the prepayment of the Old Notes. The Total Prepayment
Premium is currently estimated to be $14.0 million, of which each of
Borden and the Company would pay a portion.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis should be read in conjunction with the
historical consolidated financial statements of the Company and the pro forma
combined financial statements of the Company and the notes thereto included
elsewhere in this Prospectus.

OVERVIEW

The Company's revenues are derived from three principal product groups: (i)
PVC Polymers Products, which consist of PVC resins, VCM, the principal
feedstock for PVC resins, and acetylene, (ii) Methanol and Derivatives and
(iii) Nitrogen Products, which consist of ammonia and urea. See "Business and
Properties--General".

The markets for and profitability of the Company's products have been, and
are likely to continue to be, cyclical. Periods of high demand, high capacity
utilization and increasing operating margins tend to result in new plant
investment and increased production until supply exceeds demand, followed by
periods of declining prices and declining capacity utilization until the cycle
is repeated. In addition, markets for the Company's products are affected by
general economic conditions and a downturn in the economy could have a material
adverse affect on the Company, including its ability to make distributions to
Unitholders and service its debt obligations. The demand for the Company's PVC
products is primarily dependent on the construction and automotive industries.
Methanol demand is also dependent on the construction industry, as well as the
demand for MTBE. Demand for the Company's Nitrogen Products is dependent
primarily on the agricultural industry.

The principal raw material feedstock for the Company's products is natural
gas, the price of which has been volatile in recent years. The other principal
feedstocks are ethylene and chlorine. Prices for these raw materials may change
significantly from year to year. In particular, the price of chlorine increased
dramatically from 1992 to 1993.

Currently the Company is experiencing strong demand for its PVC products due
to strength in the construction and automotive industries and expects continued
strong demand for PVC resins into 1995. PVC sales prices are, however,
approaching historically high levels and could be negatively impacted by
adverse changes in general economic conditions, as well as adverse changes in
the construction and automotive industries.

During 1994, due to strength in the construction industry, the Company has
experienced increased demand for methanol and formaldehyde in downstream
applications such as adhesives for plywood and other pressed wood products.
Methanol demand has also been affected by the use of MTBE to comply with
certain requirements of the Clean Air Act. The Company expects continued strong
demand for methanol products into 1995, subject to the extent of implementation
and enforcement of the Clean Air Act and the substitution of other products for
MTBE. Published methanol prices have increased from approximately $0.47 per
gallon during the fourth quarter of 1993 to approximately $1.50 per gallon
during the fourth quarter of 1994. The Company does not expect announced
capacity increases which are scheduled to come on stream in the next two to
three years to exceed projected increases in methanol demand.

The Company is experiencing strong demand for its Nitrogen Products due
primarily to shortages in supply. Ammonia prices have increased due to tight
worldwide supply resulting from restricted production in the former Soviet
Union. Urea prices have recently increased due to increased demand primarily
from India and China, which had restricted their purchases of urea in 1993. The
Company expects continued strong demand for its Nitrogen Products into 1995.

The cost of ethylene, the primary feedstock for PVC, has recently been
rising. The Company believes that its PVC operations have lower exposure to
ethylene price increases than many other manufacturers, because the Company is
able to produce a portion of its PVC raw material, VCM, from acetylene instead
of ethylene. Acetylene-based VCM manufacturing accounts for approximately one-
third of the Company's total

VCM production. The primary raw material for acetylene is natural gas, thus the
cost of acetylene is affected by changes in natural gas prices which, in 1994,
have remained at levels comparable to 1993, but are expected to increase
modestly in 1995. Natural gas is also the principal raw material for methanol.
Chlorine is a feedstock for PVC resins and unit costs have varied significantly
on a historical basis, as demonstrated in 1991 when chlorine had a negative
value in the market due to an extreme oversupply situation. Recently, chlorine
prices have decreased from approximately $180 per ton in the first half of 1994
to approximately $145 per ton in November 1994. The Company expects chlorine
prices to remain near current levels into 1995.

On August 12, 1994, the Company entered into an agreement with OxyChem to
purchase the Addis Assets, which includes the Addis Facility. The Addis
Facility produces general purpose PVC resins and has a current annual permitted
capacity of 600 million pounds, although production during the years 1990
through 1993 has ranged from 407 million to 450 million pounds per year. At
present, the Company's Geismar complex and Illiopolis plant have annual stated
capacities of 440 million and 380 million pounds of PVC resins, respectively.
The net proceeds from this offering will be used to fund a portion of the cash
purchase price of the Addis Assets. The closing of this offering will occur
simultaneously with, and is conditioned upon, the closing of the acquisition of
the Addis Assets.

RESULTS OF OPERATIONS

The following table sets forth the dollar amount of total revenues and the
percentage of total revenues for each of the three principal product groups of
the Company for the respective periods shown therein (dollars in thousands):

YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
---------------------------------------- ------------------------------
SEPTEMBER SEPTEMBER 23,
1991 1992 1993 24, 1993 1994
------------ ------------ ------------ ------------ ----------------

PVC Polymers Products... $232,963 57% $247,209 61% $261,342 60% $185,524 60% $ 241,627 55%
Methanol and
Derivatives............ 119,278 29 100,002 25 119,779 28 84,352 28 146,506 33
Nitrogen Products....... 57,764 14 54,592 14 52,176 12 37,700 12 50,000 12
-------- --- -------- --- -------- --- -------- --- --------- ----
Total Revenues......... $410,005 100% $401,803 100% $433,297 100% $307,576 100% $ 438,133 100%
======== === ======== === ======== === ======== === ========= ====

The following table summarizes relative average prices received per unit of
product sold per period for the three principal product groups of the Company
and relative average raw material costs per unit per period for the principal
raw materials (using 1985=100 as the base year for all products); as well as
production volumes for each period. The price indices in the table reflect
changes in the mix and volume of individual products sold as well as changes in
selling prices.

YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
-------------------------- -------------------------------------
1991 1992 1993 SEPTEMBER 24, 1993 SEPTEMBER 23, 1994
------- ------- ------- ------------------ ------------------

Average price received
per unit sold
PVC Polymers Products. 103 99 106 105 120
Methanol and
Derivatives.......... 110 88 94 91 139
Nitrogen Products..... 87 82 85 86 112
Raw material costs per
unit sold
Natural gas........... 63 74 88 87 84
Ethylene.............. 128 116 115 118 124
Chlorine.............. N/M(1) 7 83 69 120
Production volumes
(in millions of pounds)
PVC Polymers Products. 1,793 1,929 1,849 1,322 1,486
Methanol and
Derivatives.......... 2,114 2,340 2,409 1,701 1,946
Nitrogen Products..... 1,292 1,308 1,207 879 855

- --------
(1) Not meaningful due to extreme oversupply of chlorine and the resulting
negative value in the market place.

NINE MONTHS ENDED SEPTEMBER 23, 1994 COMPARED TO NINE MONTHS ENDED SEPTEMBER
24, 1993

Total Revenues

Total revenues for the first nine months of 1994 increased 42.4% to $438.1
million compared to $307.6 million in 1993.

Total revenues for PVC Polymers Products increased 30.2% to $241.6 million
from $185.5 million in 1993. The improvement was due to strong increases in
volume and selling prices for PVC resins resulting from strength in the
construction and automotive industries, as well as other industries.

Total revenues for Methanol and Derivatives increased 73.7% to $146.5 million
in 1994 from $84.4 million in 1993. Increased volumes and significant increases
in selling prices were due to the worldwide tightness in the methanol market
resulting from limited growth in methanol supply and industry consolidations in
recent years and increased demand for methanol and formaldehyde in downstream
applications such as MTBE and adhesives.

Total revenues for Nitrogen Products increased 32.6% to $50.0 million in 1994
from $37.7 million in 1993. Ammonia selling prices increased significantly
fueled primarily by strong demand from industrial users and the worldwide
tightness in the ammonia market. Volumes were comparable to the same period in
1993. Urea volumes and selling prices showed modest improvements.

Cost of Goods Sold

Total cost of goods sold increased 13.7% to $326.2 million in 1994 from
$286.9 million in 1993. The increase was a result of the increased volumes
discussed above and an aggregate raw material cost increase of approximately 7%
comprised of significant unit cost increases for chlorine offset by reduced
natural gas costs. Ethylene costs were comparable during both periods.
Expressed as a percentage of total revenues, cost of goods sold decreased to
74% of total revenues in 1994 from 93% in 1993, resulting in greatly improved
gross margins and net income for the Company.

Gross margins for PVC Polymers Products more than doubled as a result of the
improved selling prices and volumes discussed above, offset by substantially
higher chlorine costs.

Gross margins for Methanol and Derivatives increased over 500% as a result of
the increased volumes and significantly higher selling prices discussed above,
combined with reduced natural gas costs.

Gross margins for Nitrogen Products improved from a slightly negative
position in 1993 to a profitable position in 1994 on the strength of the
ammonia selling price increases and reduced natural gas costs discussed above.

Incentive Distribution to General Partner

An incentive distribution to the General Partner of $8.8 million has been
generated in the first nine months of 1994 as a result of the second and third
quarter cash distributions to Unitholders of $0.65 and $1.02 per Unit,
respectively, exceeding the Target Distribution due to improved operating
performance. The distributions generated during the first three quarters of
1993 did not exceed the Target Distribution, resulting in no incentive
distribution to the General Partner.

Other (Income) and Expense, Including Minority Interest

The net expense for 1994 was $6.3 million compared to $0.5 million in 1993.
This increase was primarily due to a $4.0 million provision established in the
third quarter 1994 for potential expenses related to environmental matters. See
"Legal Proceedings". The increase was also partially due to the increase in the
minority interest in consolidated subsidiary due to the subsidiary's improved
operating performance.

Net Income (Loss)

Net income was $69.5 million compared to a net loss of $6.1 million in 1993.
As discussed above, the primary reasons for the improved operating performance
were significant selling price increases in all product lines and volume
improvements in PVC resins and methanol, partially offset by increased raw
material costs.

1993 COMPARED TO 1992

Total Revenues

Total revenues for 1993 increased 7.8% to $433.3 million compared to $401.8
million in 1992.

Total revenues for PVC Polymers Products increased 5.7% to $261.3 million
compared to 1992. The improvement was a result of higher selling prices for PVC
resins, partially offset by a 1.2% decrease in volume. PVC producers, including
the Company, increased PVC selling prices in 1993 in an attempt to pass on some
of the increased costs associated with chlorine.

Total revenues for Methanol and Derivatives increased 19.8% to $119.8 million
compared to 1992 as a result of increased volumes and slightly higher selling
prices. The increased volume was achieved through production capacity increases
that came on-stream in 1993 that allowed the Company to meet increased winter
demand for MTBE, as well as increased general industry demand.

Total revenues for Nitrogen Products decreased 4.4% to $52.2 million compared
to 1992. Generally weak market conditions led to reduced volumes for ammonia
and urea, offset partially by slightly higher ammonia selling prices from low
1992 levels.

Cost of Goods Sold

Total cost of goods sold increased 17.7% to $397.8 million in 1993 from
$338.0 million in 1992. The increase resulted almost entirely from an aggregate
raw material cost increase of approximately 32% comprised of substantially
higher unit costs for natural gas and a dramatic unit cost increase for
chlorine, with ethylene costs remaining comparable to 1992. As a percentage of
total revenues, cost of goods sold increased to 92% of revenues in 1993 from
84% in 1992, resulting in reduced gross margins and net loss for the Company.

Gross margins for PVC Polymers Products decreased 54% as a result of the
significant increase in chlorine costs which could not be fully recovered in
product pricing due to strong industry-wide competition.

Gross margins for Methanol and Derivatives decreased 7.7% from 1992. While
sales volumes and selling prices improved, it was not sufficient to offset
substantially higher natural gas costs.

Gross margins for Nitrogen Products declined to a moderate loss in 1993 from
near break-even in 1992. The increased ammonia selling price did not offset the
negative impact of reduced volumes and higher raw material costs.

Incentive Distribution to General Partner

No incentive distribution to the General Partner was generated in 1993 as no
quarterly cash distribution to Unitholders exceeded the Target Distribution. In
1992, incentive distributions to the General Partner aggregating $2.1 million
were generated in the first and second quarters, but no incentive distributions
were generated in the third or fourth quarter.

Other (Income) Expense, net

Other (income) and expense increased to $1.6 million in 1993 from $0.1
million in 1992 resulting from decreased interest income earned on reduced cash
balances during 1993 and from the amortization of the transition obligation
related to the 1993 adoption of SFAS No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions".

Net Income (Loss)

The Company incurred a net loss of $1.4 million in 1993 compared to net
income of $27.1 million in 1992. As discussed above, the primary reason for the
net loss in 1993 was increased raw material costs, including a dramatic
increase in unit costs for chlorine and substantially higher unit costs for
natural gas, partially offset by slightly higher selling prices in all three
principal product groups of the Company.

1992 COMPARED TO 1991

Total Revenues

Total revenues for 1992 decreased 2.0% to $401.8 million from $410.0 million
in 1991.

Total revenues for PVC Polymer Products increased 6.1% to $247.2 million as a
result of increased volume partially offset by lower selling prices. Domestic
demand for PVC resin in building and construction applications achieved record
levels in 1992, but industrywide capacity (which experienced substantial
additions in 1991 and 1992) exceeded demand resulting in increased price
competition.

Total revenues for Methanol and Derivatives decreased 16.2% to $100.0 million
as a result of lower selling prices compared to 1991, when unscheduled
production outages by several major domestic methanol producers resulted in
tight supplies and higher prices. These decreases were partially offset by
higher volumes from increased demand for methanol, especially for use in MTBE
and formaldehyde.

Total revenues for Nitrogen Products decreased 5.5% to $54.6 million as a
result of lower selling prices for ammonia and urea compared to 1991. Volume
was essentially unchanged as demand in key fertilizer end uses remained stable.

Cost of Goods Sold

Total cost of goods sold increased 6.4% to $338.0 million in 1992 from $317.5
million in 1991. The increase was a result of increased PVC resin volumes
discussed above and an aggregate raw material cost increase of approximately
12% comprised of unit cost increases for natural gas and chlorine, partially
offset by reduced ethylene costs. As a percentage of total revenues, cost of
goods sold increased to 84% of revenues in 1992 from 77% in 1991, resulting in
reduced gross margins and net income for the Company.

Gross margins for PVC Polymers Products increased 2% from 1991. The higher
sales volumes and reduced raw material ethylene costs combined to more than
offset lower selling prices and increased chlorine costs.

Gross margins for Methanol and Derivatives decreased 51% from 1991 as a
result of lower selling prices and increased natural gas costs.

Gross margins for Nitrogen Products decreased from a moderately profitable
position in 1991 to near break-even in 1992 as a result of lower selling price
and higher natural gas costs.

Incentive Distribution to General Partner

The incentive distribution to the General Partner generated in 1992 decreased
to $2.1 million from $5.5 million in 1991. In 1992, an incentive distribution
was generated in the first and second quarters only, whereas an incentive
distribution was generated in all four quarters of 1991.

Net Income

Net income for 1992 decreased to $27.1 million compared to $51.6 million in
1991. As discussed above, the primary reasons for the decrease in net income
were decreases in selling prices in each of the Company's three principal
product groups and a raw material cost increase of approximately 12%,
consisting of unit cost increases in both natural gas and chlorine.

INFLATION

Both inflation and deflation can cause fluctuations in annual earnings of the
Company. Inflation and deflation can cause variations in the costs of raw
materials and in the demand for, and prices of, commodity chemicals. Margins
can fluctuate because costs of raw materials and selling prices of commodity
chemicals may not increase or decrease at the same rates or in the same
direction during the same periods.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows from Operations. Cash provided by operations increased to $93.4
million for the nine months ended September 23, 1994, as compared to $25.5
million for the nine months ended September 24, 1993. The increase was
primarily attributable to an increase in net income and increased accruals for
the incentive distribution payable and other liabilities. Operating cash flows
were negatively affected by an increase of $22.0 million in receivables. Cash
provided by operations for the year ended December 31, 1993 decreased to $38.5
million, as compared to $63.9 million for the prior year. The decrease was
primarily attributable to a decrease in net income, an increase in receivables
and an increase in inventories, partially offset by an increase in payables.

Cash Flows from Investing Activities. Capital expenditures for the first nine
months of 1994 totaled $14.2 million, $4.6 million of which related to
completion of the urea granulation and expansion project and other
discretionary capital projects and $9.6 million of which related to non-
discretionary projects, and environmental and safety related projects. Non-
discretionary capital expenditures vary from year to year with normal equipment
renovation requirements.

Capital expenditures for 1993 totaled $15.0 million. This amount included
$5.9 million for the expansion of facilities (such as the new urea granulation
and expansion project) and for other discretionary capital improvements. Non-
discretionary capital expenditures totaled $9.2 million for 1993, which amount
included a large number of relatively small projects. During 1993, capital
expenditures were primarily related to the urea granulation and expansion
project, the ethylene-based VCM plant environmental project, and waste
treatment upgrades.

Cash Flows from Financing Activities. The Company makes quarterly
distributions to Unitholders and the General Partner of 100% of its Available
Cash. Available Cash means generally, with respect to any quarter, the sum of
all cash receipts of the Company plus net reductions to reserves established in
prior quarters, less all of its cash disbursements and net additions to
reserves in such quarter. These reserves are retained to provide for the proper
conduct of the Company's business, to stabilize distributions of cash to
Unitholders and the General Partner and as necessary to comply with the terms
of any agreement or obligation of the Company.

Cash distributions of $38.6 million were made during the first nine months of
1994 compared to $29.3 million in the 1993 period. During the first three
quarters of 1994, the Company generated, respectively, $0.21, $0.65 and $1.02
of Available Cash per Unit which amounts were distributed in the following
quarters. See "Price Range of Units and Distributions". Cash distributions with
respect to interim periods are not necessarily indicative of cash distributions
with respect to a full year. Moreover, due to the cyclical nature of the
Company's business (see "Investment Considerations--Considerations Relating to
the Company's Business--Cyclical Markets for Products; Lack of Control over
Cost of Raw Materials"), past cash distributions are not necessarily indicative
of future cash distributions.

As indicated under "Business and Properties--PVC Polymers Products"; "--
Methanol and Derivatives"; "--Nitrogen Products"; and "--Raw Materials", there
are various seasonality factors affecting results of operations and, therefore,
cash distributions. In addition, the amount of Available Cash constituting Cash
from Operations for any period does not necessarily correlate directly with net
income for such period because various items and transactions affect net income
and Available Cash constituting Cash from Operations differently. For example,
depreciation reduces net income but does not affect Available Cash constituting
Cash from Operations, while changes in working capital items (including
receivables, inventories, accounts payable and other items) generally do not
affect net income but do affect such Available Cash.

Moreover, as provided for in the Partnership Agreements, certain reserves may
be established which affect Available Cash constituting Cash from Operations
but do not affect cash balances in financial statements. See the definitions of
Available Cash and Cash from Operations set forth in the "Glossary of Terms".
Such reserves have generally been used to set cash aside for interest payments,
capital expenditures and other accrued items.

Liquidity. The Company expects to satisfy its cash requirements, including
the requirements of the Addis Facility, through internally generated cash and
borrowings. The Operating Company has a short-term unsecured working capital
facility of up to $20 million under the Revolving Credit Agreement (as defined
herein) to support working capital requirements. Borrowings under the working
capital facility bear interest at rates fixed at the time of each borrowing. As
of the date of this Prospectus, no borrowings were outstanding under such
working capital facility. The Company intends, in connection with the
Acquisition, to either expand its existing working capital facility by
approximately $20 million or implement an additional working capital facility
in the amount of approximately $20 million.

Beginning in November 1995, the $150.0 million principal amount of the Old
Notes is mandatorily redeemable by the Operating Company (at 100% of the
principal amount thereof plus accrued interest) in principal amounts of $30.0
million per year for the years 1995 through 1999. The Operating Company intends
to use the net proceeds from the sale of the Notes to prepay the Old Notes.

Capital Expenditures. The Company currently believes that the level of annual
base capital expenditures at its Geismar and Illiopolis facilities over the
next several years will be in the range of $20 to $25 million per year. The
Company anticipates that total capital expenditures for 1994 will be
approximately $23.0 million, of which $14.2 million was incurred during the
first three quarters. Total capital expenditures for 1995 are anticipated to be
approximately $42 to $46 million, $20 to $25 million of which will be used for
annual base capital expenditures and the balance of which will be used
primarily for an approved 30 million gallon methanol expansion and a proposed
expansion of the Addis Facility. The Company's actual level of capital
expenditures would vary substantially if the Company is required to undertake
corrective action or incur other environmental compliance costs in connection
with the proceedings discussed under "Legal Proceedings". No assurance can be
given that greater capital expenditures will not be required. See "Business and
Properties--Environmental and Safety Regulations".

Environmental Expenditures. Annual environmental capital expenditures for
1991-1993 ranged from $1.3 to $7.4 million. These amounts did not vary
significantly from amounts budgeted by the Company. Environmental capital
expenditures for the nine months ended September 23, 1994 were $1.5 million.
The 1995 budget for environmental capital expenditures is approximately $4
million, and is included in the budget of $42 to $46 million discussed above.

Annual non-capital environmental expenditures for 1991-1993 ranged from $19.0
to $22.5 million. These amounts did not vary significantly from amounts
budgeted by the Company. Non-capital environmental expenditures for the nine
months ended September 23, 1994 were $13.7 million. In connection with
potential environmental matters, an additional provision of $4.0 million was
reflected in the operating results for the nine months ended September 23,
1994. See "Legal Proceedings". The 1995 budget for non-capital environmental
expenditures is approximately $22 million. The Company's actual level of non-
capital expenditures would vary substantially if the Company is required to
undertake corrective action or incur other environmental compliance costs in
connection with the proceedings discussed under "Legal Proceedings". No
assurance can be given that greater non-capital environmental expenditures will
not be required. See "Business and Properties--Environmental and Safety
Regulations" and "Legal Proceedings".

BUSINESS AND PROPERTIES

GENERAL

The Company is a publicly held limited partnership formed in 1987 to acquire,
own and operate PVC, methanol and other chemical plants located in Geismar,
Louisiana, and Illiopolis, Illinois, that were previously owned and operated by
Borden. The three principal product groups manufactured at these facilities are
(i) PVC Polymers Products, which consist of PVC resins and feedstocks (such as
VCM and acetylene), (ii) Methanol and Derivatives, which consist of methanol
and formaldehyde, and (iii) Nitrogen Products, which consist of ammonia and
urea. During 1993, PVC Polymers Products, Methanol and Derivatives and Nitrogen
Products accounted for 60%, 28% and 12%, respectively, of the Company's
revenues.

The Company seeks to increase its productive capacity through selective
expansions of its existing facilities and "debottlenecking" of production
facilities at its plants. From 1988 to 1993 the Company increased overall
capacity of the Geismar and Illiopolis plants by 14.6% through various
expansions and "debottlenecking" projects at a cost of approximately $38
million. Incremental sales from these capacity increases approximated $170
million during this period.

The Company recently announced that the Operating Company has entered into an
agreement to acquire the Addis Facility, a PVC resin production facility
located in Addis, Louisiana. Upon completion of the Acquisition, the Company's
stated annual capacity for the production of PVC resin is expected to increase
by over 50% to 1.27 billion pounds. After the four largest producers, which
have capacities ranging from 1.38 billion pounds to 2.38 billion pounds, the
Company will be the fifth largest producer of PVC resins in the United States
upon completion of the Acquisition.

The Company's production complex at Geismar, Louisiana, and a plant at
Illiopolis, Illinois, produce products for the following applications:

- --------------------------------------------------------------------------------

PRODUCTS LOCATION PRINCIPAL APPLICATIONS
- ----------------------------------------------------------------------------------------------

PVC POLYMERS PRODUCTS
PVC Geismar Water distribution pipe, residential
Illiopolis siding, wallcoverings, vinyl flooring
VCM Geismar Raw material for the Company's PVC
operations
Acetylene Geismar Raw material for the Company's VCM
operations
METHANOL AND DERIVATIVES
Methanol Geismar Formaldehyde, MTBE, adhesives and
fibers or raw materials for the Company's
formaldehyde operations
Formaldehyde Geismar Pressed wood products, adhesives, fibers
NITROGEN PRODUCTS
Ammonia Geismar Fertilizers, fibers, plastics, explosives
Urea Geismar Fertilizers, animal feeds, adhesives, plastics

Upon consummation of the Acquisition, the Company's production facilities will
also include a plant located at Addis, Louisiana, that produces PVC resins.
Principal applications for PVC resins produced at the Addis Facility include
film wrap for food products, wallcoverings and molded products.

The Company's plants can generally be operated at rates in excess of stated
capacity to take advantage of market opportunities without undue adverse
effects. References to capacity in this Prospectus assume normal operating
conditions, including downtime and maintenance. The Company's objective is to
operate the Geismar, Illiopolis and Addis plants at or near full capacity
because of the reduced operating costs per unit of output at full operation.

The integrated design of the Company's plants provides it with a high degree
of flexibility to shift production volumes according to market conditions and
with the ability to efficiently utilize by-product streams. The Company's
products are produced through the highly integrated lines set forth below:

[GRAPHIC APPEARS HERE]

PVC POLYMERS PRODUCTS

PVC Resins. PVC is the second largest volume plastic material produced in the
world. The Company produces general purpose and specialty purpose PVC resins at
two plants--one located at the Geismar complex and another at Illiopolis--with
stated annual capacities of 440 million and 380 million pounds of PVC resins,
respectively. The PVC resin plants operated at approximately 99% of combined
capacity in 1993 and approximately 110% of combined capacity during the first
nine months of 1994. Although there have been year-to-year fluctuations in
product mix, the Company has over time concentrated on the higher margin grades
of PVC resin and reduced its dependence on commodity pipe grade PVC resins,
which have historically experienced lower margins. Based on data from the
Society of the Plastics Industry, the Company believes that for 1993 the
Company accounted for 7.7% of total industry sales of PVC resins--11.6% pro
forma for the Acquisition.

The following table shows the Company's actual and the Addis Facility's
estimated domestic product mix for PVC resins as compared to the industry's
product mix for 1993.

% OF COMPANY'S % OF ADDIS FACILITY % OF INDUSTRY
TOTAL PRODUCTION TOTAL PRODUCTION TOTAL PRODUCTION(1)
PVC RESIN USE (ACTUAL) (ESTIMATED) (ESTIMATED)
------------- ---------------- ------------------- -------------------

Rigid Pipe...... 33.8% 10.0% 43.0%
Calendaring..... 15.6 50.0 11.9
Wire & Cable.... 13.5 -- 4.3
Coatings........ 9.2 -- 4.0
Film & Sheet.... 8.7 -- 3.7
Siding.......... 6.2 -- 12.4
Paste........... 2.3 -- 2.3
Molding......... 0.4 20.0 5.7
All Other....... 10.3 20.0 12.7
----- ----- -----
TOTAL......... 100.0% 100.0% 100.0%
===== ===== =====

- --------

(1) Source: Society of the Plastics Industry, Committee on Resins Statistics

The PVC resin industry has been experiencing strong demand for nearly two
years. Producer inventories have been reduced to minimal levels, while plants
are operating at maximum capacities. As a result, published prices for PVC
resins have increased from an average of $0.272 per pound during the first
quarter of 1993 to an average of $0.402 per pound during the third quarter of
1994.

During 1993, approximately 14% of the Company's total production of PVC
resins was sold to Borden for use in its downstream vinyl conversion
operations. The balance was purchased by many small customers, none of which
accounted for more than approximately 7.4% of total sales. During 1993, PVC
resins were shipped from the Addis Facility to approximately 70 customers. Of
these, the top ten customers represented approximately 80% of the Addis
Facility's total sales volume of PVC resins during 1993. Other than OxyChem,
which accounted for approximately 29% of total sales, no customer accounted for
more than approximately 19% of total sales during 1993. Unless there is a
shortage of PVC resin capacity, demand for PVC resins generally tends to be
seasonal with higher demand during spring months and lower demand during winter
months.

Production Process. PVC resins are produced by the polymerization of VCM, a
raw material produced by the Company. The production by the Company of certain
specialty grades of PVC resins also involves the use of certain quantities
(approximately 8.0 million pounds annually) of vinyl acetate monomer, a raw
material not produced by the Company. The Company purchases quantities of vinyl
acetate monomer from Borden (which in turn purchases such raw material in bulk
from third parties) or from unrelated third parties. Purchases from Borden have
been and will be at prices that do not exceed the market price of vinyl acetate
monomer.

All the VCM used by the Company's Geismar and Illiopolis PVC resin plants is
obtained from the Company's two Geismar VCM plants discussed below. During 1993
and the first nine months of 1994, substantially all of the production of such
VCM plants was consumed by the Company's PVC resins plants at Geismar and
Illiopolis. The Geismar PVC resin plant obtains VCM from the Company's adjacent
VCM plants in the Geismar complex and the Illiopolis PVC resin plant obtains
VCM from the Company's Geismar plant via rail. The VCM requirement at the Addis
Facility is currently supplied by OxyChem which has arranged for physical
delivery to the Addis Facility by pipeline via exchange, but may also be
supplied by rail car from OxyChem's plant in Deer Park, Texas or from OxyChem's
joint venture facility (OxyMar) in Corpus Christi, Texas.

VCM is principally used in the production of PVC resins. The Company produces
VCM by two processes: an ethylene process and an acetylene process. The
finished product of both of these processes is essentially identical but the
production costs vary depending on the cost of raw materials and energy. The
ability to produce VCM by either process allows the Company the flexibility of
favoring the process that results in the lower cost at any particular time. The
Company is currently operating at full capacity; consequently, the Company is
producing VCM by both processes.

Ethylene-Based VCM. Ethylene-based VCM ("VCM-E") is produced by the Company
at a 610 million pound stated annual capacity plant at the Geismar complex. The
plant operated at approximately 90% of capacity during 1993 and approximately
101% of capacity during the first nine months of 1994. During 1993,
substantially all of the production of the VCM-E plant was consumed by the
Company's PVC resin plants at the Geismar complex and Illiopolis.

Ethylene and chlorine constitute the principal feedstocks used in the
production of VCM-E. Both feedstocks are purchased by the Geismar plant from
outside sources.

Acetylene-Based VCM. Acetylene-based VCM ("VCM-A") is produced at a 320
million pound stated annual capacity plant at the Geismar complex. The plant
operated at approximately 93% of capacity during 1993 and 87% of capacity
during the first nine months of 1994. During 1993 and the first nine months of
1994, all of the VCM-A produced at the Geismar complex was consumed by the PVC
resin plants at Geismar and Illiopolis.

The Geismar complex contains the only VCM-A plant in the United States. The
integration of the VCM-A plant with the other plants on site provides
stability, cost and efficiency benefits to the plants located at the Geismar
complex. Although ethylene has generally been regarded as a lower cost
feedstock for the production of VCM, the VCM-A plant reduces the overall
processing costs of the Geismar complex because the acetylene plant produces as
a by-product acetylene off-gas, which is used as a feedstock in the production
of methanol. In addition, hydrochloric acid, a feedstock used in the production
of VCM-A, is produced as a by-product by the adjacent VCM-E plant. Furthermore,
certain industrial plants located near the Geismar complex have excess supplies
of hydrochloric acid that the Company is generally able to purchase at
relatively low cost.

In addition to hydrochloric acid, acetylene is a primary feedstock used in
the production of VCM-A.

Acetylene. Acetylene is primarily used as a feedstock for VCM-A and for other
chemical intermediates. The Company has a 50% interest in a 200 million pound
stated annual capacity acetylene plant at the Geismar complex, with the
remaining 50% interest held by BASF Corporation ("BASF"). The plant was
operated at approximately 97% of capacity during 1993 and approximately 93% of
capacity during the first six months of 1994, with all production being
consumed by either the Company or BASF.

During 1993 and the first nine months of 1994, approximately 67% and 65%,
respectively, of the total sales volume of the acetylene plant was used
internally as a principal feedstock of the Geismar VCM-A plant. BASF accounted
for approximately 33% of the plant's 1993 sales volume, less than its full 50%
share of 1993 production. Acetylene not required by BASF is available to the
Company at cost. It is anticipated that excess acetylene will be available to
the Company through 1996.

The principal feedstocks used in the production of acetylene are natural gas
and oxygen. Oxygen is obtained from certain air separation units and related
air compression systems, which are jointly owned by the Operating Company, BASF
and Liquid Air Corporation pursuant to joint venture arrangements. For a
description of the Company's arrangements for the purchase of natural gas, see
"--Raw Materials".

As long as a subsidiary of Borden is the general partner of the Company, the
plant will be operated and managed by employees of such general partner
pursuant to an operating agreement with BASF. The agreement provides that, if a
Borden subsidiary ceases to be the general partner, BASF will have the
exclusive

right to become the operator of the plant and the personnel necessary to
operate the plant will be encouraged to accept employment with BASF. The
Company's interest in the acetylene plant and the air separation systems is
subject to certain rights of first refusal and limitations on transfer. In
addition, the Company and the third parties who hold the other interests in
such assets have mutual rights under certain circumstances, to require the
other party to purchase its interests.

METHANOL AND DERIVATIVES

Methanol. Methanol is used primarily as a feedstock in the production of
other chemicals. Such chemicals include formaldehyde, which is used in the
manufacture of wood building products and adhesives, and MTBE, which is used as
a gasoline additive. Methanol is produced at a 270 million gallon stated annual
capacity plant at the Geismar complex. The plant operated at approximately 104%
of capacity during 1993 and approximately 111% of capacity during the first
nine months of 1994.

Market conditions for methanol have improved significantly due to limited
growth in the supply of methanol and industry consolidation during the past
several years as well as strong demand for MTBE and formaldehyde. Since the
second quarter of 1993, production outages in the United States and Europe have
tightened the supply of methanol. The Company and many of its competitors have
taken steps to expand their methanol capacity through various plant and process
improvements, and certain competitors have also announced plans to increase
their methanol capacity through plant expansion. The Company is currently in
the process of increasing stated annual methanol capacity by over 10% to 300
million gallons through "debottlenecking" and other process improvements. The
Company expects these increases to be completed by the end of 1994. By the end
of 1995, the Company anticipates completing an expansion of its methanol plant
that it expects will increase annual stated methanol capacity by 30 million
gallons.

In 1993, approximately 44% of total sales of methanol was to third parties
(other than Borden). Borden accounted for approximately 32% of such sales for
its downstream formaldehyde production. Approximately 17% of sales was used
internally in the production of formaldehyde and the remaining approximately 7%
was used primarily to satisfy tolling and exchange arrangements. No customer
(other than Borden) accounted for more than 19.1% of total methanol sales in
1993.

The primary raw material feedstock used in the production of methanol is
natural gas. The efficiency of the Geismar methanol plant has been enhanced by
using the by-product of the Geismar acetylene plant, acetylene off-gas, as a
partial substitute feedstock for purchased natural gas. Natural gas represented
approximately 79% of the Company's total cost of producing methanol during 1993
and the first nine months of 1994.

Formaldehyde. Formaldehyde is a chemical intermediate used primarily in the
production of plywood and other pressed wood products. The Company produces
50%-concentration formaldehyde (which is 50% formaldehyde and 50% water) at
three units in the Geismar complex. The formaldehyde plants have stated annual
capacities of 270 million, 190 million and 180 million pounds per year,
respectively, for the 50%-concentration formaldehyde. During 1993 and the first
nine months of 1994, the three plants operated at approximately 84% and 95%,
respectively, of combined capacity. The smaller plant is also capable of
producing urea-formaldehyde concentrate for the fertilizer industry. If
operated for production of urea-formaldehyde, the smaller plant's stated annual
capacity would be 125 million pounds.

Formaldehyde demand is generally influenced by the construction industry and
housing starts. Total United States production capacity of 50%-concentration
formaldehyde is approximately 7.4 billion pounds, with the formaldehyde units
at the Geismar complex representing 640 million pounds (approximately 9%) of
such total.

During 1993, approximately 58% of the Company's formaldehyde sales was made
to a third party, approximately 40% was to Borden, and the remaining
approximately 2% was utilized by the Company in the production of urea-
formaldehyde concentrate.

The principal feedstock used in the production of formaldehyde is methanol.
The Geismar formaldehyde plants obtain all of such feedstock from the adjacent
methanol plant.

Borden produces formaldehyde and urea-formaldehyde concentrate at other
facilities located in the United States and facilities outside the United
States. The Company does not have any interest in such other facilities and,
accordingly, Borden may be a competitor of the Company with respect to
formaldehyde and urea-formaldehyde concentrate. The Operating Partnership
Agreement provides that the Operating Company may not significantly expand the
capacity of the Geismar formaldehyde plants without Special Approval. The
Operating Company is intended to be a limited purpose partnership and the
Operating Partnership Agreement provides that the General Partner shall have no
duty to propose or approve, and in its sole discretion may decline to propose
or approve, any such expansion. See "Conflicts of Interest and Fiduciary
Responsibility".

NITROGEN PRODUCTS

Ammonia. Ammonia is a commodity chemical which is used primarily for
fertilizer applications and as an intermediate for other agricultural chemicals
such as pesticides and herbicides. The Company produces ammonia at a 400,000
ton stated annual capacity plant located at the Geismar complex. The plant
operated at approximately 94% of capacity during 1993 and approximately 89% of
capacity during the first nine months of 1994.

In the latter half of 1993 and continuing into 1994, the worldwide supply of
ammonia has experienced a series of disruptions and reductions due to plant
shutdowns, operating problems and interruptions in the supply of natural gas,
the primary feedstock in the production of ammonia. At the same time, demand
for ammonia, particularly in Asia (China, India and Pakistan), has increased
for both industrial and fertilizer applications. These factors have combined to
cause occasional shortages of ammonia in the United States, which is a net
importer of nitrogen products, and increasing selling prices for ammonia.

Demand for ammonia is seasonal, with prices tending to be higher in the
spring and fall months than during the remainder of the year. In addition,
fertilizer demand is sharply affected by swings in crop acreage.

During 1993, approximately 62% of total sales of ammonia was made to third
parties (other than Borden), approximately 36% of total sales was made to the
Company's adjacent urea plant, and approximately 2% of total sales was made to
Borden. During 1993, five customers accounted for approximately 50.7% of total
sales volume with no customer accounting for more than 13.2% of total sales.

The principal feedstock used in the production of ammonia is natural gas. Two
by-products of the production of ammonia are carbon dioxide and low pressure
steam. The ammonia plant supplies the carbon dioxide to the urea and methanol
plants and the steam to the plant-wide supply grid.

Urea. Urea is a commodity chemical which is used primarily in fertilizer
applications. Urea's high nitrogen content (46%) makes it an effective and
popular dry nitrogen fertilizer. In addition, urea is used in the production of
animal feed and pesticides. Outside the agricultural chemical industry, urea is
used largely in the production of urea-formaldehyde resins used in the wood
building products industry.

The Company produces urea at a 250,000 ton stated annual capacity plant at
the Geismar complex. In 1993 the Company converted the plant to produce
granular urea, a widely accepted form of urea product. The plant operated at
approximately 92% of capacity in 1993 and approximately 86% of capacity during
the first nine months of 1994.

Because of the importance of the agricultural chemical industry as a market
for urea, demand is affected sharply by swings in crop acreage. In addition,
like ammonia, demand for urea is seasonal, with prices tending to be higher in
the spring and fall months than during the remainder of the year. Worldwide
urea production has expanded rapidly over the past 20 years, particularly in
countries with abundant supplies of low cost natural gas. Like ammonia, urea
demand has suffered during recent years from reduced United States fertilizer
demand. It has also been affected even more severely than ammonia by imports
from third world countries because storage and shipping of urea are easier and
less costly than in the case of ammonia. Competition from imports has moderated
recently as the declining value of the United States dollar has made United
States markets less attractive.

Urea prices remained stable in 1993 and through the third quarter of 1994 due
to many of the same factors which influenced the price of ammonia. However,
unlike ammonia, the supply of urea has increased during this time period as
several new world scale plants came on stream. This factor has kept urea prices
at relatively stable levels in spite of the increasing demand.

During 1993, approximately 78% of the Company's urea was sold to third
parties, approximately 21% to Borden, and the remaining approximately 1% was
used internally by the Company in the production of urea-formaldehyde
concentrate.

The principal feedstocks used in the production of urea are ammonia and
carbon dioxide, which the Company obtains from its adjacent ammonia plant.

PROPERTIES

Construction of the Geismar complex began over thirty years ago. Acetylene,
methanol and VCM-A plants were completed in the early 1960s; and ammonia and
urea plants were added during the period 1965 to 1967. A VCM-E plant and a
formaldehyde plant were added in the mid 1970s, a second formaldehyde plant was
brought on stream in 1986, and a third formaldehyde plant was brought on stream
in 1991. In 1983 Borden completed construction of a PVC resin plant at the
Geismar complex. The PVC resin facility at Illiopolis became operational in
1962.

The Geismar complex is located on approximately 490 acres in Ascension
Parish, Louisiana, adjacent to the Mississippi River between Baton Rouge and
New Orleans. The Illiopolis PVC resin facility is located on approximately 45
acres in central Illinois between Springfield and Decatur. The Addis Facility
is located on approximately 40 acres of a 220 acre site adjacent to the
Mississippi River, approximately 20 miles from the Geismar complex.

The following table sets forth the approximate annual capacity of each of the
principal manufacturing plants at the Geismar complex and the PVC plant at
Illiopolis, all of which are owned by the Company except as noted, and with
respect to the PVC plant at the Addis Facility, which will be owned by the
Company after the Acquisition.

1988 1993
ANNUAL STATED CAPACITY ANNUAL STATED CAPACITY 5 YEAR CAPACITY
PLANTS (STATED IN MILLIONS) (STATED IN MILLIONS) PERCENTAGE INCREASE
- ------ ---------------------- ---------------------- -------------------

Geismar, LA:
PVC Polymers Products
PVC Resins.......... 400 lbs. 440 lbs. 10.0%
Acetylene-based
VCM(1)............. 320 lbs. 320 lbs. --
Ethylene-based VCM.. 550 lbs. 610 lbs. 10.9%
Acetylene........... 190 lbs. 200 lbs. 5.3%
Methanol and
Derivatives
Methanol............ 230 gals. 270 gals. 17.4%
Formaldehyde I...... 210 lbs. 270 lbs. 28.6%
Formaldehyde II(2).. 160 lbs. 180 lbs. 12.5%
Formaldehyde III.... -- 190 lbs. N/M
Nitrogen Products
Ammonia............. .40 tons .40 tons --
Urea................ .22 tons .25 tons 13.6%
Illiopolis, IL:
PVC Resins............ 350 lbs. 380 lbs. 8.6%
Addis, LA:
PVC Resins............ 450 lbs. 450 lbs. --
Total equivalent
lbs.(3)................ 5,405 6,130 13.4%

- --------
(1) 50% owned by the Company.

(2) Also capable of producing urea-formaldehyde concentrate at an annual stated
capacity of 125 million pounds.
(3) Equivalent pounds is based on 6.63 pounds per gallon.

RAW MATERIALS

The principal purchased raw material used in the Company's operations is
natural gas. In 1993, the Company purchased over 58 billion cubic feet of
natural gas for feedstock and as an energy source. Currently, the Company is
one of the largest industrial purchasers of natural gas in the state of
Louisiana. Natural gas is supplied by pipeline to the Geismar complex by six
major natural gas pipelines. In 1993, natural gas represented 38%, 68% and 79%
of total production costs for acetylene, ammonia and methanol, respectively,
and 35% of the Company's total production costs. The Company purchases the
majority of its natural gas under long-term, market sensitive supply contracts.
The cost of purchasing natural gas is, in general, greater in winter months,
reflecting increased demand for natural gas by consumers and industry during
such months. Although the Company has diversified its suppliers and does not
currently anticipate any difficulty in obtaining adequate natural gas supplies,
there can be no assurance that the Company will in the future be able to
purchase adequate supplies of natural gas at acceptable price levels.

The Company purchases other raw materials in its operations, principally,
ethylene and chlorine. Ethylene is currently supplied by pipeline to the
Geismar complex by three suppliers. Chlorine is supplied by railcar to the
Geismar complex by various suppliers. The major raw material for the Illiopolis
PVC plant, VCM, is supplied by railcar from the Geismar complex. In addition,
in connection with the production of certain specialty grades of PVC resins,
the Company purchases certain quantities of vinyl acetate monomer. See "--PVC
Polymers Products--PVC Resins". The Company anticipates purchasing its VCM
requirements for the Addis Facility under the VCM Supply Agreement to be
entered into between the Operating Company and OxyChem at the closing of the
Acquisition. See "The Acquisition--VCM Supply Agreement and PVC Tolling
Agreement". The Company does not believe that the loss of any present supplier
would have a material adverse effect on the production of any particular
product because of numerous, competitive alternate suppliers.

Because raw materials have accounted for a high percentage of the Company's
total production costs, and are expected to continue to represent a high
percentage of such costs for the Company, the Company's ability to pass on
increases in costs of these raw material feedstocks will have a significant
impact on operating results. The ability to pass on increases in feedstock and
fuel costs is, to a large extent, dependent on market conditions. Because of
the large volume of purchases of natural gas, any increase in the price of
natural gas or a shortage in its availability could materially adversely affect
the Company's income and cash flow and its ability to make distributions to
Unitholders and service its debt obligations.

INSURANCE

The Company maintains property, business interruption and casualty insurance
which it believes is in accordance with customary industry practices, but it is
not fully insured against all potential hazards incident to its business. The
Company also maintains pollution legal liability insurance coverage. However,
because of the complex nature of environmental insurance coverage and the
rapidly developing case law concerning such coverage, no assurance can be given
concerning the extent to which its pollution legal liability insurance, or any
other insurance that the Company has, may cover environmental claims against
the Company. Insurance, however, generally does not cover penalties. See "Legal
Proceedings".

The Company's insurance is currently included in Borden's master insurance
program although it may be separate from such master insurance program in the
future if the General Partner so determines. The Company believes that the
terms and premiums for the insurance obtained through Borden's program are no
less favorable than those generally available through an independent program.
All costs of the insurance program, including but not limited to premiums,
service fees, deductible losses, and uninsured loss amounts, are direct
operating expenses of the Company and are payable by the Company. At the
closing of the Acquisition, the Addis Facility will be included in the
Company's insurance program. For a description of the Company's right to be
indemnified for certain losses related to periods prior to the closing of the
Acquisition, see "The Acquisition--Certain Terms of the Asset Transfer
Agreement".

MARKETING

The Company's PVC resin sales are conducted through a professional staff of
approximately nine trained personnel geographically located in nine
territories, supported by a regional sales office located in Northbrook,
Illinois. In addition to the regional sales managers, there are three product
sales managers performing marketing functions. All are employees of the General
Partner. Following the Acquisition, all sales and marketing of PVC resins
produced at the Addis Facility will be consolidated with the Company's existing
marketing organization.

The Company's other products are similarly marketed through a professional
field sales organization of three employees and two additional marketing
managers under the management of the director of non-PVC resins sales and
marketing located at Geismar. The professionals involved in this sales function
are geographically positioned in three locations covering the United States.

The Company's activity is based on customer contact on a regular basis to
secure and maintain long-term supply relationships. A substantial portion of
the Company's sales is made under contracts with annual negotiations relating
to specific conditions of sale.

Occasional export sales outside North America of products from both
facilities have been, and will continue to be, coordinated through Borden's
international sales representatives in Columbus, Ohio.

UTILITIES

The Geismar complex operates three high thermal efficiency co-generation
units providing the complex with low cost electricity, steam and high
temperature reformer combustion air. Each unit is composed of a natural gas
burning turbine/generator unit combined with a steam producing heat recovery
system.

These three co-generation units are designed to provide 100% of the
electricity, a significant portion of the steam, and a portion of the reformer
combustion air requirements of the Geismar complex at full production levels.
These co-generation units have electrical outputs of 20, 35 and 35 megawatts.
The electricity supplied by the three co-generation units through a substation
owned by Monochem, Inc. ("Monochem"), a corporation of which the Operating
Company owns 50% of the capital stock, usually exceeds the requirement of the
Geismar complex with the excess production being sold to Gulf States Utilities
at its "avoided cost" rate. The Company's interest in Monochem is subject to
certain rights of first refusal and limitations on transfer.

The Addis Facility obtains its electricity and water requirements from local
public utilities. Natural gas is purchased by pipeline from various intrastate
suppliers.

PURCHASE AND PROCESSING AGREEMENTS

In connection with the formation of the Company in 1987, Borden entered into
certain Purchase Agreements and Processing Agreements with the Operating
Company covering the following products: PVC resins, methanol, ammonia, urea,
formaldehyde and urea-formaldehyde concentrate. The Purchase and Processing
Agreements each have a remaining term of eight years, subject to termination by
Borden in the event BCPM ceases to be the general partner of the Company, other
than by reason of (i) the withdrawal of BCPM as general partner under
circumstances where such withdrawal violates the Partnership Agreement, (ii)
removal of BCPM as general partner by the Unitholders under circumstances where
cause exists or (iii) any other event except (x) voluntary withdrawal by BCPM
as general partner of the Company under circumstances where such withdrawal
does not violate the Partnership Agreement and such withdrawal is approved by a
Majority Interest or (y) the removal of BCPM as general partner of the Company
by action of the Unitholders under circumstances where cause does not exist.

The Purchase Agreements require Borden to purchase from the Company and the
Company to supply to Borden, subject to certain monthly quantity limits, at
least 85% (and at the option of Borden up to 100%) of the quantities of PVC
resins, methanol, ammonia and urea required by Borden for use in its plants in
the

continental United States. Under the Purchase Agreements, the price for PVC
resins, ammonia, urea and methanol will generally be an amount equal to the
monthly weighted average price per unit that the Company charges its lowest-
priced major customer (other than Borden). If the Company does not make any
sales to any major customers other than Borden, then the price to Borden will
be the lowest prevailing price in the relevant geographic area. The Purchase
Agreements also provide that the Company is required to meet competitive third-
party offers or let Borden purchase the lower-priced product from such third
parties in lieu of purchases under the Purchase Agreements.

The Processing Agreements for formaldehyde and urea-formaldehyde concentrate
essentially require Borden to utilize the processing capacity of the
formaldehyde plants so that the formaldehyde plants operate at no less than 90%
of capacity, after taking into account the purchases of formaldehyde by an
unaffiliated third party under a long-term requirements contract. Although such
third party's current requirements for formaldehyde exceed 200 million pounds
per year, in the event that such third party's annual requirements are less
than such amount, Borden has the option of reducing or terminating its
obligation to utilize such processing capacity. Under the Processing
Agreements, Borden is required to pay the Company a fee for each pound of
formaldehyde and urea-formaldehyde concentrate processed equal to the Company's
processing costs plus a per pound charge. The per-pound charge is subject to
increase or decrease based on changes in the Consumer Price Index from October
1987. The Processing Agreements also require the Company to meet competitive
third party offers covering formaldehyde unless meeting such offer would impose
a significant economic penalty on the Company, in which case Borden will be
permitted to accept such offer and reduce its obligations under the Processing
Agreements by a corresponding amount.

The Company believes that the pricing formulae set forth in the Purchase and
Processing Agreements have historically produced aggregate prices and
processing charges for the covered products that over time have approximated
the aggregate prices and processing charges that Borden would have been able to
obtain from unaffiliated suppliers considering the magnitude of Borden's
purchases, the long-term nature of such agreements and other factors. The
Company believes that this will continue to be the case in the future. There
may be conditions prevailing in the market at various times, however, under
which the prices and processing charges set under the Purchase and Processing
Agreements could be higher or lower than those obtainable from unaffiliated
third parties.

The Company is free to sell or otherwise dispose of, as it deems appropriate,
any quantities of PVC resins, ammonia, urea, methanol or formaldehyde which
Borden is not required to purchase. In addition, the Purchase and Processing
Agreements do not cover acetylene, VCM or industrial gases, which are either
consumed internally by the Company or have not been historically purchased by
Borden.

Because the foregoing Purchase and Processing Agreements are requirements
contracts, sales of products thereunder are dependent on Borden's requirements
for such products. Such requirements could be affected by a variety of factors,
including a sale or other disposition by Borden of all or certain of its
manufacturing plants to unaffiliated purchasers (in which event such agreements
shall not apply to any such purchaser unless otherwise agreed to by such
purchaser). In the event that, whether following any change of control of
Borden or otherwise, Borden were to sell or otherwise dispose of all or certain
of its plants or otherwise reorient its businesses, Borden's requirements for
products sold or processed by the Company under the Purchase and Processing
Agreements could be diminished or eliminated. The Company anticipates that if
Borden were to sell all or certain of its chemical manufacturing facilities, a
purchaser may be interested in negotiating the continuation of all or certain
of the Purchase and Processing Agreements. For a discussion of these factors,
see "Investment Considerations--Possible Change of Control of Borden".

COMPETITION

The Company encounters competition from numerous manufacturers in all of its
product lines. Many of such competitors have substantially greater financial
resources and are more highly diversified than the Company. In addition to
price, other significant factors in the marketing of the products are delivery,
quality and, in the case of PVC resins, technical service. The Company believes
that the overall efficiency, integration

and optimization of product mix of the facilities at Geismar and Illiopolis
make the Company well positioned to compete in the markets it serves. The
acquisition of the Addis Facility should enable the Company to further optimize
its product mix.

Borden has agreed in the Intercompany Agreement that, so long as BCPM is the
general partner of the Company, Borden will not engage in the manufacture or
sale in the United States of methanol, ammonia, urea, acetylene, VCM or PVC
resins. However, if BCPM (i) is removed as general partner by the Unitholders
under circumstances where cause exists or (ii) withdraws as general partner
under circumstances where such withdrawal violates the Partnership Agreements,
Borden shall not engage in such manufacture or sale for a period of two years
from the date of such removal or withdrawal. If Borden were to sell any of its
manufacturing facilities to an unaffiliated purchaser that is not a successor
to Borden, the purchasers of such facilities would be free to compete with the
Company.

TRADEMARKS

The Company entered into a Use of Name and Trademark License Agreement ("Use
of Name and Trademark License Agreement") with Borden pursuant to which the
Company is permitted to use in its name the Borden name and logo. The Use of
Name and Trademark License Agreement and the right to use the Borden name and
logo shall terminate in the event that BCPM ceases to be the General Partner.

MANAGEMENT

The General Partner manages and controls the activities of the Company and
the Operating Company and the General Partner's activities are limited to such
management and control. See "Management." Unitholders do not direct or
participate in the management or control of the Company. The General Partner
has fiduciary duties to Unitholders. See "Conflicts of Interest and Fiduciary
Responsibility". Notwithstanding any limitation on obligations or duties, the
General Partner will be liable, as general partner, for all the debts of the
Company and the Operating Company (to the extent not paid by the Company or the
Operating Company) other than the Old Notes, the Notes and any other debt
incurred by the Company or the Operating Company that is made specifically
nonrecourse to the General Partner.

As is commonly the case with publicly traded limited partnerships, the
Company and the Operating Company do not directly employ any of the persons
responsible for managing or operating the business of the Company or the
Operating Company, but instead rely on the officers and employees of the
General Partner and reimburse the General Partner for their services. At
October 6, 1994, the General Partner employed approximately 730 individuals,
who are also employees of Borden.

ENVIRONMENTAL AND SAFETY REGULATIONS

General. The Company's operations are subject to federal, state and local
environmental, health and safety laws and regulations, including laws relating
to air quality, hazardous and solid wastes, chemical management, and water
quality. The Company has expended substantial resources, both financial and
managerial, to comply with environmental regulations and permitting
requirements, and anticipates that it will continue to do so in the future.
Although the Company believes that its operations generally are in material
compliance with these requirements, there can be no assurance that significant
costs, civil and criminal penalties, and liabilities will not be incurred. The
Company holds various environmental permits for operations at each of its
plants. In the event a governmental agency were to deny a permit application or
permit renewal, or revoke or substantially modify an existing permit, such
agency action could have a material adverse effect on the Company's ability to
continue the affected plant operations. Plant expansions are subject to
securing necessary environmental permits. Environmental laws and regulations
have changed substantially and rapidly in recent years, and the Company
anticipates continuing changes. The trend in environmental regulation is to
place more restrictions and limitations on activities that may affect the
environment, such as emissions of pollutants and the generation and disposal of
wastes. Increasingly strict environmental regulations have resulted in
increased operating costs for the Company, and it is possible that the costs of
compliance with environmental, health and safety laws and regulations will
continue to increase.

The Company maintains an environmental and industrial safety and health
compliance program and conducts internal regulatory audits at its Geismar and
Illiopolis plants. The Company's plants have had a history of involvement in
regulatory, enforcement and variance proceedings in connection with safety,
health and environmental matters. Risks of substantial costs and liabilities
are inherent in certain plant operations and certain products found at and
produced by the plants, as they are with other enterprises engaged in the
chemical business, and there can be no assurance that significant costs and
liabilities will not be incurred.

Each of the federal health, safety and environmental programs typically have
state counterparts. The state environmental programs generally must be at least
as stringent as the federal requirements, and some state requirements are more
onerous than the federal requirements. Both federal and state environmental
programs allow the imposition of substantial civil and criminal penalties for
the violation of such programs. The Company's plants in the past have been
subject to enforcement proceedings with respect to environmental issues
typically encountered in the chemical industry. Past proceedings generally have
been settled.

Like the operations of the Company, the operations of the Addis plant are
subject to federal, state and local environmental, health and safety laws and
regulations, including laws relating to air quality, hazardous and solid
wastes, chemical management, and water quality. In connection with the
Company's acquisition of the Addis plant, the Company has conducted an
environmental assessment of that plant. Such assessment included a review of
certain federal and state environmental agency files for the Addis plant, a
review of certain OxyChem files, interviews with personnel at the Addis plant,
tours of the plant and groundwater sampling. Based on the results of the
environmental assessment, the Company does not know of material violations of
environmental, health or safety laws at the Addis plant. In addition, based on
the information available to the Company to date, the Company believes that
environmental capital expenditures at the Addis plant may be in excess of $3.0
million over the next several years.

Air Quality. The Geismar, Illiopolis and Addis plants emit air contaminants
and are subject to the requirements of the Clean Air Act and comparable state
statutes. Many of the existing requirements under these laws are embodied in
permits issued to the plants by state environmental agencies. The Company
believes that the Geismar and Illiopolis plants generally are in material
compliance with these requirements. Based on the results of the Company's
environmental assessment of the Addis plant, the Company does not know of
material violations of the Clean Air Act, or comparable Louisiana laws, at that
plant.

The 1990 Amendments to the Clean Air Act (the "1990 Clean Air Act
Amendments") substantially revised and expanded the air pollution control
requirements throughout the United States. As discussed below, certain of these
new or revised requirements may impact the Geismar, Illiopolis and Addis
plants.

The 1990 Clean Air Act Amendments require more stringent controls on volatile
organic compounds ("VOC") emissions in ozone non-attainment areas and also
require, subject to certain exceptions, the control of nitrogen oxide ("NOx")
emissions in such areas. The Geismar and Addis plants are located in a "non-
attainment area" for ozone under the 1990 Clean Air Act Amendments.

Under the 1990 Clean Air Act Amendments, additional capital expenditures may
be required at the Geismar and Addis plants in order to upgrade existing
pollution control equipment and/or install additional control equipment to
comply with the new more stringent regulations for VOC and NOx.

The 1990 Clean Air Act Amendments and state laws and regulations also require
certain sources to control emissions of hazardous air pollutants, including
vinyl chloride. In particular, the EPA promulgated a rule in April 1994, which
may require the modification of the existing emission control equipment at the
Geismar facility. Capital expenditures may be necessary to comply with these
control standards.

The 1990 Clean Air Act Amendments further require "enhanced monitoring" of
the emissions from certain pieces of equipment. Although monitoring systems are
already in place at the Geismar, Illiopolis and Addis plants, capital
expenditures may be necessary to upgrade the systems to comply with the
"enhanced monitoring" requirement.

Based on the information currently available to the Company, the Company does
not believe that the capital expenditures that may be required at the Geismar,
Illiopolis and Addis plants to comply with the 1990 Clear Air Act Amendments
and corresponding state regulations will be material. However, because all the
regulatory requirements under the 1990 Clean Air Act Amendments are not yet
final, and the Company is continuing to evaluate the impact of such amendments
on it, there can be no assurance that the actual costs will not exceed the
Company's estimates.

The DOJ, at the request of the EPA, has brought an enforcement proceeding
against the Company and BCPM for alleged violation of the Clean Air Act, and
other environmental statutes, at the Geismar facility. See "Legal Proceedings".

OSHA and Community Right to Know. The Geismar, Illiopolis and Addis plants
are subject to the requirements of the federal Occupational Safety and Health
Act ("OSHA") and comparable state statutes. The Company believes that the
Geismar and Illiopolis plants generally are in material compliance with OSHA
requirements, including general industry standards, vinyl chloride exposure
requirements, recordkeeping requirements and chemical process safety standards.
Based on the results of the Company's environmental assessment of the Addis
plant, the Company does not know of material violations of OSHA at that plant.
It is possible that changes in safety and health regulations, or a finding of
noncompliance with current regulations, could result in additional capital
expenditures or operating expenses for the Geismar, Illiopolis and Addis
plants.

The OSHA hazard communication standard and the EPA community right-to-know
regulations under the Emergency Planning and Community Right-to-Know Act
("EPCRA") require the Company to organize information about the hazardous
materials in the plants and to communicate that information to employees and
certain governmental authorities. The Company has prepared a detailed hazard
communication program and will continue this program as a part of its
industrial safety and health compliance program. The Company is a member of the
Community Awareness and Environmental Response ("CAER") program of the Chemical
Manufacturer's Association, as well as the Association's Responsible Care
efforts. At Geismar, membership in such programs includes participation in the
Geismar Area Mutual Aid organization, which maintains a community warning
system for notification of chemical releases through the local sheriff's
department. The Company believes that it generally is in material compliance
with EPCRA. Based on the results of the Company's environmental assessment of
the Addis plant, the Company does not know of material violations of EPCRA at
that plant.

The Company is currently subject to a proceeding for alleged violations at
the Illiopolis facility of release reporting requirements under EPCRA. This
proceeding is discussed under "Legal Proceedings".

Solid and Hazardous Waste. The Geismar, Illiopolis and Addis plants generate
hazardous and nonhazardous solid waste and are subject to the requirements of
RCRA and comparable state statutes. The Company believes that the Geismar and
Illiopolis plants generally are in material compliance with RCRA. However, see
"Legal Proceedings". Based on the results of the Company's environmental
assessment of the Addis plant, the Company does not know of material violations
of RCRA at that plant.

A primary trigger for RCRA requirements is the designation of a substance as
a "hazardous waste". It is anticipated that additional substances will in the
future be designated as "hazardous waste", which would likely result in
additional capital expenditures or operating expenses.

The Geismar complex is operating under RCRA interim status and has filed a
permanent RCRA permit application for its valorization of chlorinated residuals
("VCR") unit and related tanks. However, the Company does not believe that the
Geismar facility must obtain a RCRA permit and is challenging the applicability
of the RCRA permit requirements to it. The Company's challenge to those permit
requirements, the potential permitting costs, civil penalties and corrective
action costs that it may incur if that challenge is unsuccessful, are discussed
under "Legal Proceedings".

The DOJ, at the request of the EPA, has brought an enforcement proceeding
against the Company and BCPM for alleged violations of RCRA, and other
environmental statutes, at the Geismar facility. See "Legal Proceeding".

Superfund. CERCLA, also known as the "Superfund" law, imposes liability,
without regard to fault or the legality of the original conduct, on certain
classes of persons that are considered to have contributed to the release of a
"hazardous substance" into the environment. These persons include the owner or
operator of the disposal site or sites where the release occurred and the
companies that disposed, or arranged for the disposal of, the hazardous
substances found at the site. Persons who are or were responsible for releases
of hazardous substances under CERCLA may be subject to joint and several
liability for the costs of cleaning up the hazardous substances and for damages
to natural resources. In the ordinary course of the Company's operations,
substances are generated that fall within the CERCLA definition of "hazardous
substance". If such wastes have been disposed of at sites which are targeted
for cleanup by federal or state regulatory authorities, the Company may be
among those responsible under CERCLA or analogous state laws for all or part of
the costs of such cleanup. The Geismar, Illiopolis and Addis plants have in the
past and are expected to continue to generate hazardous substances and dispose
of such hazardous substances at various offsite disposal sites.

The DOJ, at the request of the EPA, has brought an enforcement proceeding
against the Company and BCPM for alleged violation of CERCLA's reporting
requirements, and other environmental requirements, at the Geismar facility.
See "Legal Proceedings".

Toxic Substances Control Act. The Company is subject to the Toxic Substances
Control Act ("TSCA"), which regulates the development, manufacture, processing,
distribution, importation, use, and disposal of thousands of chemicals. Among
other requirements, TSCA provides that a chemical cannot be manufactured,
processed, imported or distributed in the United States until it has been
included on the TSCA Chemical Inventory. Other important TSCA requirements
govern recordkeeping and reporting. For example, TSCA requires a company to
maintain records of allegations of significant adverse reactions to health or
the environment caused by chemicals or chemical processes. The Company believes
that it generally is in material compliance with TSCA. Based on the results of
the Company's environmental assessment of the Addis plant to date, the Company
does not know of material violations of TSCA at that plant. Violations of TSCA
can result in significant penalties.

Water Quality. The Geismar, Illiopolis and Addis plants maintain wastewater
discharge permits for their facilities pursuant to the Federal Water Pollution
Control Act of 1972 and comparable state laws. See "Legal Proceedings" for a
discussion of the Company's challenge to a wastewater permit for the Geismar
facility. Where required, the Company and the Addis plant have also applied for
permits to discharge stormwater. The Company believes that the Geismar and
Illiopolis plants generally are in material compliance with the Federal Water
Pollution Control Act of 1972 and comparable state laws. Based on the results
of the Company's environmental assessment of the Addis plant, the Company does
not know of material violations of the Federal Water Pollution Control Act of
1972 or comparable Louisiana laws at the Addis plant. In cases where there are
excursions from the permit requirements, the Geismar and Illiopolis plants are
taking action to achieve compliance, are working in cooperation with the
appropriate agency to achieve compliance or are in good faith pursuing their
procedural rights in the permitting process.

The wastewater treatment plant at the Illiopolis facility has been having
difficulty meeting its wastewater permit limitations for biochemical oxygen
demand ("BOD") and total suspended solids ("TSS"). The Illinois Pollution
Control Board has granted the facility an emergency provisional variance from
the BOD and TSS permit limitations. This variance will expire on December 3,
1994. The facility will be able to apply for another forty-five day variance,
but there is no assurance that the Board will grant another variance. The
Company believes that it has identified the cause of the upset condition, and
has undertaken corrective measures. At this time, the Company does not know
whether its corrective measures will resolve the upset condition, although
preliminary data indicate that the corrective measures have resolved the upset
condition

in the area of the production process where the problem is believed to have
originated. If the corrective measures do not resolve the upset condition, the
Company may have to incur additional costs to correct this problem, and may be
subject to civil penalties. Any such costs and civil penalties cannot
accurately be estimated at this time.

The EPA has issued effluent regulations specifying amounts of pollutants
allowable in direct discharges and in discharges to publicly owned treatment
works. The Geismar, Illiopolis and Addis plants manufacture or use as raw
materials a number of chemicals subject to additional regulation. Both federal
and state authorities continue to develop legislation and regulations to
control the discharge of certain toxic water pollutants. Passage of such
legislation or regulations could necessitate additional capital expenditures to
reduce discharges of these substances into the environment either during
routine or episodic events. The Company does not believe that these legislative
developments would have a material adverse impact on the Company's operations.

It is common for chemical plants from time to time to encounter areas of
groundwater contamination during the ordinary course of business. Typically,
some of these contamination events are historical and cannot be documented as
to the causal circumstances. While some contamination events have been
identified at the Company's plants and at the Addis plant, it is the Company's
policy, where possible, to address and resolve these contamination events. The
Company believes that environmental indemnities available to it would cover the
majority of these known or unknown contamination events. The Company does not
believe that the known contamination events will have a material adverse impact
on the Company's operations. The Company believes that the Geismar and
Illiopolis plants generally are in material compliance with all laws with
respect to known groundwater contamination events. Based on the results of the
Company's environmental assessment of the Addis plant, the Company does not
know of material violations of laws applicable to groundwater contamination at
that plant. At the Geismar complex, Borden and the Company have complied with
the Settlement Agreement with the state of Louisiana for groundwater
remediation. See "Legal Proceedings" for further discussion.

Present and Future Environmental Capital Expenditures. Although it is the
Company's policy to comply with all applicable environmental, health and safety
laws and regulations, in many instances the implementing regulations have not
been finalized. Even where regulations or standards have been adopted, they are
subject to varying and conflicting interpretations and implementation. In many
cases, compliance with environmental regulations or standards can only be
achieved by capital expenditures, some of which may be significant. To the
extent estimates are available, capital expenditures for environmental control
facilities are expected to total approximately $3.0 million in 1994 and
approximately $4.0 million in 1995 (although such estimate could vary
substantially depending on the outcome of the various proceedings and matters
discussed herein, and no assurance can be given that greater expenditures on
the part of the Company will not be required as to matters not covered by the
environmental indemnity from Borden). For a discussion concerning possible
capital expenditures at the Addis plant, see "--General" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources".

BORDEN ENVIRONMENTAL INDEMNITY

Under the Environmental Indemnity Agreement, subject to certain conditions,
Borden has agreed to indemnify the Company and the Operating Company in respect
of environmental liabilities arising from facts or circumstances that existed
and requirements in effect prior to November 30, 1987, the date of the initial
sale by Borden of the Geismar and Illiopolis plants to the Company (the
"Transfer Date"). The Company is responsible for environmental liabilities
arising from facts or circumstances that existed and requirements in effect on
or after the Transfer Date. With respect to certain environmental liabilities
that may arise from facts or circumstances that existed and requirements in
effect both prior to and after the Transfer Date, Borden and the Company will
share liabilities on an equitable basis considering all of the facts and
circumstances including, but not limited to, the relative contribution of each
to the matter and the amount of time each has operated the asset in question
(to the extent relevant). No claims can be made under the

Environmental Indemnity Agreement after November 30, 2002, and no claim can,
with certain exceptions, be made with respect to the first $0.5 million of
liabilities which Borden would otherwise be responsible for thereunder in any
year, but such excluded amounts shall not exceed $3.5 million in the aggregate.
Excluded amounts under the Environmental Indemnity Agreement have aggregated
approximately $2.0 million through September 30, 1994.

If the United States is successful in requiring the Company to perform
corrective action at the Geismar facility or the LDEQ requires the Company to
take further remedial measures in connection with the Settlement Agreement (see
"Legal Proceedings"), the Company anticipates that a portion of its corrective
action costs would be covered by the Environmental Indemnity Agreement. The
extent to which any penalties or permit costs that the Company may incur as a
result of pending environmental proceedings will be subject to the
Environmental Indemnity Agreement will depend, in large part, on whether such
penalties or costs are attributable to facts or circumstances that existed and
requirements in effect prior to the Transfer Date.

ADDIS ENVIRONMENTAL INDEMNITY

OxyChem has agreed to indemnify the Company for environmental liabilities
arising from the manufacture, generation, treatment, storage, handling,
processing, disposal, discharge, loss, leak, escape or spillage of any product,
waste or substance generated or handled by OxyChem prior to the closing of the
Acquisition, any condition resulting therefrom relating to acts, omissions or
operations of OxyChem prior to such date, and any duty, obligation or
responsibility imposed on OxyChem prior to such date under environmental laws
in effect prior to such date to address such condition. However, except with
regard to claims arising from OxyChem's disposal of waste at sites other than
the Addis Facility, OxyChem has no indemnification obligation if the claim for
indemnification is the result of a change in applicable law after the closing
of the Acquisition. Such indemnification obligation is subject to certain
limitations. There can be no assurance that the indemnification provided by
OxyChem will be sufficient to cover all environmental liabilities existing or
arising at the Addis Facility.

PRODUCT LIABILITY AND REGULATION

The United States Food and Drug Administration ("FDA") is proposing new
regulations providing for the safe use of vinyl chloride polymers in food-
contact articles. According to the FDA, such regulations are required because
vinyl chloride monomer, a component of vinyl chloride polymer, has been shown
to be a carcinogen. However, the FDA concludes in its proposal that there is a
reasonable certainty of no harm from the exposure to the small amounts of vinyl
chloride monomer that may result from the use of vinyl chloride polymers in
food packaging which complies with the FDA's proposed regulations. Thus, the
FDA proposal would continue to allow substantially all presently allowable
uses, including all products currently made using products produced by the
Company. While the FDA has tentatively concluded that such action will not have
a significant effect on the human environment, it is considering whether to
develop a full environmental impact statement to consider the potential effect
on the environment of the disposal of these food-contact articles. The EPA has
authority with respect to the safe use of vinyl chloride polymer pipe in
municipal water systems and has not imposed any restrictions on its use. It is
possible, however, that the FDA, the EPA, or other federal and state agencies
may seek to impose additional restrictions on the use or disposal of vinyl
chloride polymer. Moreover, while Borden has agreed to indemnify the Company in
respect of liabilities arising from products (including but not limited to
vinyl chloride polymer) shipped prior to the Transfer Date, the Company will be
responsible for any subsequent product liabilities. As a result of the
Company's manufacture, distribution and use of different chemicals, the Company
may be subject to various lawsuits and claims, such as product liability and
toxic tort claims, which arise in the ordinary course of business and which
seek compensation for physical injury, pain and suffering, costs of medical
monitoring, property damage, and other alleged harms. New or different types of
claims arising from the Company's various chemical operations may be made in
the future.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Partnerships do not have directors or officers. The Company is managed by
and under the direction of BCPM. See "Summary of the Partnership Agreements."
As the sole stockholder of BCPM, Borden elects the directors of BCPM on an
annual basis. Set forth below is certain information concerning the directors
and executive officers of BCPM.

SERVED IN PRESENT
NAME AGE POSITION WITH GENERAL PARTNER POSITION SINCE
---- --- ----------------------------- -----------------

Joseph M. Saggese....... 63 Chairman of the Board of Directors,
President and Chief Executive Officer 1990
Daniel M. Galbreath..... 66 Director 1987
Edward H. Jennings...... 57 Director 1989
David A. Kelly.......... 56 Director, Treasurer and Principal Financial Officer 1987(1)
George W. Koch.......... 68 Director 1987
John P. Stapleton....... 49 Director and Vice President 1987
Ronald B. Wiles......... 56 Director 1990
Judy A. Barker.......... 53 Vice President 1994
W. Bailey Barton........ 56 Vice President 1994
Lawrence L. Dieker...... 56 Secretary 1987
Wayne P. Leonard........ 52 Vice President 1987
John L. Russ III........ 54 Vice President 1987
James O. Stevning....... 35 Controller and Principal Accounting Officer 1994

- --------

(1) Mr. Kelly was elected a director effective March 1, 1994.

Joseph M. Saggese has been Chairman of the Board of Directors, President and
Chief Executive Officer of BCPM since July 1990. He is also Executive Vice
President of Borden and President of Borden Packaging and Industrial Products
Division Domestic and International (the "Borden PIP Division"), positions he
has held since July 1990. From January 1989 to August 1990 he served as Senior
Group Vice President of the Borden PIP Division. He served as a Senior Vice
President of the Borden PIP Division from October 1985 to January 1989.

Daniel M. Galbreath is a director of BCPM. He is Chairman of the Board and
CEO of The Galbreath Company, a position he has held since 1979. The Galbreath
Company is a national full-service real estate business. Mr. Galbreath is also
a director of Churchill Downs, Incorporated, the owner and operator of
thoroughbred racetracks.

Edward H. Jennings is a director of BCPM. He is also a professor and
President Emeritus of The Ohio State University. He served as president of The
Ohio State University from 1981 to 1990. Mr. Jennings is also a director of
Super Foods, Inc., a wholesale grocers, Lancaster Colony, Inc., a manufacturer
and marketer of food, automotive and glass products, and Hymedix, Inc., a
medical products company.

David A. Kelly is a director, Treasurer and Principal Financial Officer of
BCPM. He is also Vice President and Treasurer of Borden, a position he has held
since 1980.

George W. Koch is a director of BCPM. He is Of Counsel in the law firm of
Kirkpatrick & Lockhart since January 1992. Prior to that he was a partner of
Kirkpatrick & Lockhart since April 1990. From 1966 to April 1990, he was
President and Chief Executive Officer of the Grocery Manufacturers of America,
Inc., a non-profit organization of the leading grocery manufacturers in the
United States. Mr. Koch is also a director of McCormick & Co., a food products
company.

John P. Stapleton is a director and a Vice President of BCPM. He is also Vice
President of the Borden PIP Division, a position he has held since 1983. He has
served in other capacities with the Borden PIP Division since 1972, including
assistant controller, manager of business planning/commercial development, and
director of planning and development.

Ronald B. Wiles is a director of BCPM. He is also Controller of the Borden
PIP Division, a position he has held since July 1, 1990. Prior to that he held
various Group Controller positions for the Borden PIP Division.

Judy A. Barker has been Vice President of BCPM since June 1994. She is also
Vice President, Social Responsibility for Borden, a position she has held since
October 1990. Prior to that time, she was Director of Social Responsibility for
Borden. She also is the President of the Borden Foundation.

W. Bailey Barton has been Vice President of BCPM since June 1994. He has also
served as Chief Environmental Officer of Borden since April 1, 1991. Prior to
that time, he was Vice President of Environmental Affairs for the Borden
Chemical Division, and Corporate Director of Environmental Affairs for Borden.

Lawrence L. Dieker is Secretary of BCPM. He is also Assistant General Counsel
of Borden, a position he has held since 1982.

Wayne P. Leonard is a Vice President of BCPM. From 1984 to 1987, he was
Director of Manufacturing, Basic Chemicals Unit of the Borden PIP Division.
Prior thereto, he was manager of the vinyl products sector of the Basic
Chemicals Unit of the Borden PIP Division. He has served in the chemical
business for thirty years and at all such times he has worked at the Geismar
complex.

John L. Russ III is a Vice President of BCPM. From 1986 to 1987, he was
General Manager, Thermoplastics Unit and Petrochemical Borden PIP Division. He
joined Borden in 1982 as director of sales and marketing for the Thermoplastics
Unit of the Borden PIP Division. He has served in the PVC resin business in
sales and marketing capacities for over thirty years.

James O. Stevning has been Controller and Principal Accounting Officer of
BCPM since March, 1994. He is also Group Controller of the Company, a position
he has held since April 1992. Prior to that he was Assistant Controller of the
Borden PIP Division.

INDEPENDENT COMMITTEE. BCPM is required to maintain an Independent Committee
of its Board of Directors, which is to be composed of at least three directors,
each of whom is neither an officer, employee or director of Borden nor an
officer or employee of BCPM. The Partnership Agreements provide that certain
actions require Special Approval. Such actions include an expansion of the
scope of business of the Partnerships, the making of material capital
expenditures, the material curtailment of the operations of any plant, the
material expansion of the capacity of any plant and the amendment of or entry
into by either of the Partnerships of any agreement with Borden. The members of
the Independent Committee are Daniel M. Galbreath, Edward H. Jennings and
George W. Koch.

COMPENSATION. All the direct and indirect costs of the General Partner
incurred in connection with the operation of the Company, including general and
administrative costs and compensation and benefits payable to officers and
other employees engaged in the operation of the Company, are paid or reimbursed
by the Company. Pursuant to the Partnership Agreement, the General Partner is
to determine the costs that are allocable to the Company in any reasonable
manner determined by the General Partner in its sole discretion.

The executive officers of BCPM management operate the business of the
Company. The Company does not directly employ any of the executives, but
instead reimburses Borden on behalf of BCPM for the allocable cost of
(including fringe and post-employment benefits, if any) the services of such
persons, including salary and bonus. In addition, Borden maintains a number of
employee benefit plans for employees of Borden and

its subsidiaries. Officers and employees of BCPM, a wholly-owned subsidiary of
Borden, are eligible to participate in such plans, including long-term
incentives such as options to purchase common stock of Borden and performance
units payable based on the attainment of specified performance goals.

The Board of Directors of the General Partner recently approved in principle,
by Special Approval, the adoption by the General Partner of an employee
incentive plan for management and employees of the General Partner. The plan is
intended to provide incentives to the management and employees of the General
Partner to enhance the financial performance of the Company or the market value
of the Units or both. Rewards will be made under the plan on the basis of or in
relation to services performed, directly or indirectly, for the benefit of the
Company and on the basis of the financial performance of the Company or the
market value of the Units or both. The benefits to be provided under the plan
will be in addition to, and not in lieu of, the benefits provided to management
and employees of the General Partner under existing plans or employee benefit
arrangements. The plan may involve the grant by the Company of Units,
restricted Units or options to purchase Units, the provision by the General
Partner of cash bonuses or some combination thereof. It is expected that all
Units under the plan would be made available through open market purchases. The
General Partner will be reimbursed by the Company for all payments made or
expenses incurred by the General Partner under the plan. As currently approved,
the maximum amount of additional Units that could be available under the plan
would be 3% of the outstanding Units and, if the plan involves payments by the
Company, the maximum amount payable by the Company during any year would be 3%
of the Available Cash distributed to Unitholders with respect to such year. The
final terms of the plan are subject to Special Approval and final terms of the
plan so approved may be different from the terms indicated herein (including in
respect of maximum amounts of Units or payments).

LEGAL PROCEEDINGS

LOUISIANA GROUNDWATER REMEDIATION SETTLEMENT AGREEMENT

In 1985 the LDEQ and Borden entered into the Settlement Agreement that called
for the implementation of a long term groundwater and soil remediation program
at the Geismar complex to address contaminants, including ethylene dichloride
("EDC"). Also during this time frame, Borden commenced closure of various units
identified to have been contributors to the EDC contamination underlying the
Geismar complex. Borden and the Company have implemented the Settlement
Agreement, and have worked in cooperation with the LDEQ to remediate the
groundwater and soil contamination. The Settlement Agreement contemplated,
among other things, that Borden would install a series of groundwater
monitoring and recovery wells, and recovery trench systems. The Company
believes that it already has sufficiently identified the extent of the
groundwater plume. Nevertheless, the Company intends to drill and test some
additional groundwater wells for the purpose of addressing issues raised by the
LDEQ concerning whether the extent of the groundwater contamination has been
identified. Borden has paid substantially all the costs to date of the
Settlement Agreement. It is unknown how long the remediation program will
continue or whether the LDEQ will require the Company to incur costs to take
further remedial measures in response to data generated by the planned
additional groundwater wells. If the LDEQ requires the Company to take further
remedial measures, the Company anticipates that a portion of such costs would
be covered by the Environmental Indemnity Agreement. See"Business and
Properties--Borden Environmental Indemnity".

FEDERAL ENVIRONMENTAL ENFORCEMENT PROCEEDING

On October 27, 1994, the DOJ, at the request of the EPA filed an enforcement
proceeding against the Company and BCPM in the United States District Court for
the Middle District of Louisiana (the "Geismar enforcement proceeding"). The
complaint seeks civil penalties for alleged violations of RCRA, CERCLA and the
Clean Air Act at the Geismar facility, as well as corrective action at that
facility. Prior to the filing of the complaint, the Company and the DOJ had
engaged in settlement discussions.

The federal government's primary allegations for which it seeks penalties
include claims that (i) the Company's international export of a partially
depleted mercuric chloride catalyst for recycling violated

RCRA; (ii) the Company should have applied for a RCRA permit for operation of
its VCR unit and related tanks before August 1991; and (iii) the Company should
have applied for a RCRA permit for the north trench sump at the Geismar complex
because such sump allegedly contains hazardous waste. The government's
allegations include other claims related to these and other alleged RCRA
violations, as well as claims of alleged violations of immediate release
reporting requirements under CERCLA and requirements governing particulate
matter emissions under the Clean Air Act. The Company plans to vigorously
defend itself against all such allegations.

Because of a reversal of LDEQ's position that the partially depleted mercuric
chloride catalyst was not a hazardous waste, and pending the outcome of the
Geismar enforcement proceeding, the Company has ceased exporting the partially
depleted mercuric chloride catalyst for recycling and is currently handling it
as if it were a hazardous waste. Accordingly, even if a court should determine
that the partially depleted catalyst was a hazardous waste when it was
exported, the Company does not anticipate that it would incur material
additional expenditures to continue to manage the partially depleted catalyst
as a hazardous waste.

In 1991, as a protective filing, the Company applied for a hazardous waste
permit for the VCR unit and related tanks. In January 1994, in response to a
petition from the Company to LDEQ for a determination that the VCR unit does
not require a RCRA permit, LDEQ determined that the VCR unit is subject to
RCRA. The Company continues to maintain that the VCR unit is not subject to
RCRA and has filed appeals of LDEQ's determination in Louisiana state courts.

In May 1994, the Company filed a Complaint for Declaratory Judgment in the
United States District Court in Baton Rouge seeking a determination that (i)
the partially depleted mercuric chloride catalyst was not a hazardous waste
when it was exported for recycling, (ii) the materials entering the VCR unit
and related tanks are not hazardous waste and (iii) the north trench sump does
not require a RCRA permit. The EPA has moved to dismiss this Complaint.

If the Company is unsuccessful in prosecuting its Declaratory Judgment
Action, or in defending itself against the Geismar enforcement proceeding, it
could be subject to three types of costs: (i) penalties; (ii) corrective
action; and (iii) costs needed to obtain a RCRA permit. Although the maximum
statutory penalties that would apply in a successful enforcement action by the
DOJ would be in excess of $150 million, the Company believes that, assuming the
Company is unsuccessful and based on information currently available to it and
an analysis of relevant case law and administrative decisions, the more likely
amount of any liability for civil penalties would not exceed several million
dollars.

If the Company is unsuccessful in either the Declaratory Judgment Action or
the Geismar enforcement proceeding, it may also be subject to corrective
action. The federal government also can require corrective action for a
facility subject to RCRA permit requirements. Corrective action could require
the Company to conduct investigatory and remedial activities at the Geismar
complex concurrently with the groundwater monitoring and remedial program that
the Company is currently conducting under the Settlement Agreement with LDEQ.
The DOJ has advised the Company that it intends to seek facility-wide
corrective action to address potential contamination at the Geismar complex.
The EPA has indicated that it intends to evaluate the adequacy of the existing
groundwater remediation project performed under the Settlement Agreement with
LDEQ, and to determine the potential for other areas of contamination on or
near the Geismar complex. The cost of any corrective action could be material,
depending on the scope of such corrective action. However, the actual cost of a
facility-wide corrective action cannot be identified until the EPA provides
substantially more information to the Company.

If the Company is unsuccessful in either proceeding concerning its challenge
to the applicability of the RCRA permit requirements to the VCR unit and
related tanks, or the north trench sump, it will have to incur additional
permitting costs. The Company estimates that its costs to complete the
permitting process for the VCR unit and related tanks would be approximately
$1.0 million. The Company believes that the costs for amending its pending RCRA
permit application to include the north trench sump would not be material.

Because of the complex nature of environmental insurance coverage and the
rapidly developing case law concerning such coverage, no assurance can be given
concerning the extent to which insurance may cover environmental claims against
the Company. However, insurance generally does not cover penalties or the costs
of obtaining permits.

EMERGENCY PLANNING AND COMMUNITY RIGHT-TO-KNOW ACT PROCEEDING

In February 1993, an EPA Administrative Law Judge held that the Illiopolis
facility had violated CERCLA and EPCRA by failing to report certain relief
valve releases, which occurred between February 1987 and July 1989, that the
Company believes are exempt from CERCLA and EPCRA reporting. The Company's
petition for reconsideration was denied, a penalty hearing will be scheduled,
and further appeals are possible. Management does not believe that any ultimate
penalty arising from this proceeding would have a material adverse effect on
the Company. The proposed penalty in EPA's administrative complaint initiating
this proceeding in 1991 was $1.0 million.

FEDERAL WASTEWATER PERMIT

The Geismar facility has a permit for each of its two wastewater outfalls.
The Company is challenging conditions in one of those permits. As a result of
the government's delay in responding to this challenge, the challenged permit
is expiring and the Company is applying for a new permit. Depending on the
result of that permit application, the Company's current permit challenge may
be irrelevant.

GENERAL PROCEEDINGS

The Company manufactures, distributes and uses many different chemicals in
its business. As a result of its chemical operations, the Company is subject to
various lawsuits and claims, such as product liability and toxic tort claims,
which arise in the ordinary course of business and which seek compensation for
physical injury, pain and suffering, costs of medical monitoring, property
damage, and other alleged harm. New or different claims arising from the
Company's various chemical operations may be made in the future.

The Company is subject to various other legal proceedings and claims which
arise in the ordinary course of business. The management of BCPM believes,
based upon the information it presently possesses, that the realistic range of
liability to the Company of these other matters, taking into account the
Company's insurance coverage, including its risk retention program, and the
Environmental Indemnity Agreement with Borden, would not have a material
adverse effect on the financial position and results of operations of the
Company.

CONFLICTS OF INTEREST AND FIDUCIARY RESPONSIBILITY

CONFLICTS OF INTEREST

Certain conflicts of interest could arise as a result of the General
Partner's relationship with Borden and its affiliates, the Company or any
Unitholder. The General Partner makes all decisions relating to the Company.
Some of the officers of the General Partner who make such decisions may also be
officers of Borden and its affiliates. In addition, Borden owns all the
outstanding capital stock of the General Partner. The directors and officers of
Borden have fiduciary duties to manage Borden, including its investments in its
subsidiaries (including the General Partner) and affiliates, in a manner
beneficial to the shareholders of Borden. In general, the General Partner has a
fiduciary duty to the Company, including a duty to manage the Company in a
manner beneficial to the Company and, through it, the Unitholders. However, the
Partnership Agreement contains provisions that allow the General Partner to
take into account the interests of parties in addition to the Company and the
Unitholders in resolving conflicts of interest and provisions that may restrict
the remedies available to Unitholders for actions taken that might otherwise
constitute breaches of fiduciary duty. The duty of the directors and officers
of the General Partner and Borden to their shareholders and affiliates may,
therefore, come into conflict with the duties of the General Partner to the
Company.

Potential conflicts of interest could arise in the situations described
below, among others:

(a) Because of the definitions of Available Cash and Cash from Operations
set forth elsewhere herein, the amount of cash expenditures and reserves in
any quarter will affect whether or the extent to which there is sufficient
Available Cash constituting Cash from Operations in order to meet the
Target Distribution. Borrowings and issuances of additional Units also
increase the amount of Available Cash and, in the case of working capital
borrowings, the amount of Cash from Operations. Any actions taken by the
General Partner consistent with the standards of "reasonable discretion"
set forth in the definitions of Available Cash or Cash from Operations will
be deemed not to breach any duty of the General Partner to the Company or
the Unitholders. See "Cash Distributions".

(b) Under the terms of the Partnership Agreements, the General Partner
will exercise its discretion in managing the business of the Company and,
as a result, the General Partner is not restricted from paying Borden, its
subsidiaries or affiliates for services rendered, if any, to the Company.
In this connection, the General Partner will determine which of its direct
or indirect costs (including costs allocated to the General Partner by its
affiliates) are reimbursable by the Company.

(c) In connection with the formation of the Company, Borden entered into
the Purchase and Processing Agreements. Borden's interest in enlarging or
reducing its requirements for products which are subject to such Purchase
and Processing Agreements may differ from the Company's interest in such
changes. The price of products purchased by Borden under the Purchase
Agreements is generally an amount equal to the weighted average price per
unit that the Company charges its lowest-priced major customer other than
Borden. Because the General Partner is a wholly-owned subsidiary of Borden,
and the General Partner determines the terms and conditions, including
price, upon which the Company sells products to all third parties, the
General Partner's pricing decisions indirectly determine, in certain cases,
the price of the Company's products to Borden. The intention of the General
Partner, however, is to sell the Company's products to third parties on
terms that are in the best interests of the Company, including the best
price available after taking into account purchase volumes, contract
duration and other relevant factors.

(d) At the time of the formation of the Company, Borden retained various
formaldehyde plants at locations other than the Geismar complex and
methanol plants located in Brazil and Argentina. Although (i) the Company
acquired from Borden a long-term supply contract with an unaffiliated third
party covering formaldehyde and (ii) Borden entered into Processing and
Purchase Agreements covering formaldehyde, urea-formaldehyde concentrate
and methanol which, subject to the terms and conditions contained therein,
require Borden to utilize certain portions of the formaldehyde and urea-
formaldehyde

concentrate processing capacities of the Company and to purchase certain of
Borden's methanol requirements from the Company, Borden and the Company may
compete with each other with respect to formaldehyde, urea-formaldehyde
concentrate and methanol under certain circumstances. During the term of
the Processing Agreements covering urea-formaldehyde concentrate, the
Company will not sell urea-formaldehyde concentrate to any person other
than Borden.

(e) The Operating Partnership Agreement provides that the Operating
Company is not permitted to expand the production capacity of the two
formaldehyde plants at the Geismar complex beyond 385 million pounds per
year unless such expansion receives Special Approval. The Operating
Partnership Agreement also provides that the Operating Company will not
engage in any business other than the manufacture or production of PVC
resins, VCM, acetylene, methanol, formaldehyde, urea-formaldehyde
concentrate, ammonia, urea and acetic acid or construct any plants at
locations other than Geismar and Illiopolis unless approved by Special
Approval. The Operating Partnership Agreement provides that the General
Partner has no duty to the limited partners in the Operating Company to
propose or approve, and in its sole discretion may decline to propose or
approve, any of the above actions.

(f) The General Partner has certain varying interests and priorities with
respect to Available Cash and net proceeds of capital transactions. See
"Cash Distributions". The timing and amount of cash receipts and proceeds
of capital transactions received by or allocated to the General Partner may
be affected by various determinations made by the General Partner under the
Partnership Agreements (including, for example, those relating to the
amount of capital expenditures, the timing of any capital transaction, the
establishment and maintenance of reserves, the timing of expenditures, the
incurrence of debt and other matters).

(g) The General Partner has the authority under the Partnership Agreement
to cause the Company to issue, among other types of partnership interests,
additional units or other partnership interests with a preference with
respect to distributions over the Units. In the event that the General
Partner causes the Company to issue units or other partnership interests
with a preference with respect to distributions over the Units, the amount
of funds available for distribution by the Company on the Units may be
decreased. Similarly, issuance of additional partnership interests on a
parity with the Units as to distributions could result in a reduction of
funds available for distribution on Units on a per Unit basis.

(h) Neither of the Partnership Agreements nor any of the agreements,
contracts and arrangements between the Company or the Operating Company, on
the one hand, and the General Partner, Borden and its affiliates, on the
other hand (including, without limitation, the Purchase and Processing
Agreements and the Environmental Indemnity Agreement), were or will be the
result of arm's-length negotiations.

(i) The decision whether the Company or the General Partner should
purchase outstanding Units at any time may involve the General Partner or
Borden in a conflict of interest. See "Summary of the Partnership
Agreements--Right to Call Units".

(j) The Company does not have any employees and relies solely on
employees of the General Partner and its affiliates, including Borden. The
General Partner conducts no business other than as general partner of the
Company and the Operating Company. There may be competition between the
Company and Borden and its affiliates for the time and effort of a small
number of employees who provide services to the General Partner.

(k) As a matter of practice and whenever possible, the General Partner
limits the liability under contractual arrangements of the Company to all
or particular assets of the Company, with the other party thereto to have
no recourse against the General Partner or its assets other than its
interest in the Company. In some circumstances, such action of the General
Partner may result in the terms of the transaction being less favorable to
the Company than would otherwise be the case. The Partnership Agreement
provides that such action does not constitute a breach of the General
Partner's fiduciary obligations.

(l) The Company is, and may from time to time in the future be, a party
to various agreements to which the General Partner and its affiliates,
including Borden, are also parties and that provide certain benefits to the
Company. However, these agreements do not grant to the holders of the
Units, separate and apart from the Company, the right to enforce the
obligations of the General Partner or of such affiliates in favor of the
Company. Therefore, the General Partner is primarily responsible for
enforcing such obligations, including obligations that it or such
affiliates may owe to the Company.

As described under "Use of Proceeds", the Operating Company intends to offer
Notes and use a portion of the net proceeds of the Notes to prepay the Old
Notes. The Company anticipates that it will, in order to effect such
prepayment, need to pay a Prepayment Premium. The prepayment of the Old Notes
will, in addition to providing various benefits to the Company described under
"Use of Proceeds", benefit Borden because it will have the effect of
terminating the Borden Purchase Obligation that would otherwise be triggered by
a change of control of Borden. Because of the benefits to Borden of the
prepayment of the Old Notes, Borden has advised the Company that it is willing
to pay a portion of the Prepayment Premium. Because the allocation of the
Prepayment Premium between Borden and the Company constitutes a conflict of
interest between Borden and the Company, any such allocation will be subject to
Special Approval. See "Use of Proceeds".

FIDUCIARY RESPONSIBILITIES OF THE GENERAL PARTNER; RESOLUTION OF CONFLICTS OF
INTEREST; INDEMNIFICATION; DERIVATIVE ACTIONS

Fiduciary Responsibilities of the General Partner

The General Partner is generally accountable to the Company and to the
Unitholders as a fiduciary. Consequently, the General Partner must exercise
good faith and integrity in handling the assets and affairs of the Company. In
contrast to the relatively well developed state of the law concerning fiduciary
duties owed by officers and directors to the shareholders of a corporation, the
law concerning the duties owed by general partners to the other partners and to
their partnerships is relatively undeveloped. The Delaware Act provides that
Delaware limited partnerships may, in their partnership agreements, restrict or
expand the fiduciary duties that might otherwise be applied by a court in
analyzing the standard of duty owed by general partners to limited partners. In
order to induce the General Partner to manage the business of the Company, the
Partnership Agreements, as permitted by the Delaware Act, contain various
provisions that have the effect of restricting the fiduciary duties that might
otherwise be owed by the General Partner to the Company and its partners.
Further, as discussed below, certain transactions approved by Special Approval
are conclusively deemed to be fair and reasonable to the Company. In addition,
holders of Units are deemed to have consented to certain actions and conflicts
of interest that might otherwise be deemed a breach of fiduciary or other
duties under state law.

The Partnership Agreements provide that whenever a potential conflict of
interest arises between the General Partner or any of its affiliates on the one
hand, and the Company, or any Unitholder on the other hand, any resolution or
course of action in respect of such conflict of interest will not be a breach
of the Partnership Agreements, any other agreements, or any duty expressed or
implied by law or equity, if the resolution or course of action is fair and
reasonable to the Company. Any resolution or course of action that receives
Special Approval shall be deemed fair and reasonable to the Company. The
General Partner may also adopt a resolution or course of action that has not
received Special Approval and if such resolution or course of action is fair
and reasonable to the Company and the Operating Company, it will not be a
breach of the Partnership Agreements, any other agreements or any duty
expressed or implied by law or equity. The General Partner (including the
Independent Committee in connection with any Special Approval) is authorized
but not required in connection with the resolution of any conflict of interest
to consider the relative interests of all parties to the conflict of interest
and additional factors deemed appropriate. The Partnership Agreements also
provide that any determination of the fairness and reasonableness of any
transaction shall take into account the relationship of the parties to the
transaction and the relative benefits and detriments of such transaction when
considered in the aggregate with other transactions between the parties to the

transaction. The Partnership Agreements also provide that certain actions on
the part of the General Partner discussed above under "--Conflicts of Interest"
will be deemed not to constitute breaches of any duty to the Company. The
extent to which these provisions are enforceable under Delaware law is not
clear.

Delaware law provides that a limited partner may institute legal action on
behalf of a partnership (a partnership derivative action) to recover damages
from a third party (including a general partner) where the general partner has
refused to institute the action or where an effort to cause the general partner
to do so is not likely to succeed. In addition, the statutory or case law of
certain jurisdictions may permit a limited partner to institute legal action on
behalf of himself or all other similarly situated limited partners (a class
action) to recover damages from a general partner for violations of its
fiduciary duties to the limited partners.

Furthermore, the terms of various agreements relating to the Company and the
manner in which those agreements were entered into involve certain conflicts of
interest. See "Investment Considerations--Considerations Relating to
Partnership Structure and Relationship to General Partner--Conflicts of
Interest".

The Partnership Agreements provide that the General Partner will not be
liable to the Company, the Operating Company or the Unitholders for any acts or
omissions taken in good faith. The extent to which these provisions are
enforceable under Delaware law is not clear. In addition, the Company and the
Operating Company have, under the Partnership Agreements, and Borden has, under
other agreements, granted broad rights of indemnification to the General
Partner, its affiliates and the directors, officers, partners, employees,
agents and controlling persons of the General Partner and its affiliates. See
"Summary of the Partnership Agreements--Indemnification". It is not clear to
what extent these indemnification rights are enforceable under Delaware law. In
addition, insofar as such indemnification purports to indemnify the General
Partner, certain of its officers and its directors and controlling persons for
liabilities arising under the Securities Act, such indemnity may be
unenforceable.

The nature of fiduciary obligations of general partners is a developing area
of the law, and Unitholders should consult their own legal counsel concerning
the fiduciary responsibilities of the General Partner and the remedies
available to Unitholders. The rights of the Unitholders under Delaware law are
in addition to any rights that they may have under the federal securities laws,
and Unitholders will not be deemed to have waived such rights by becoming
partners in the Company.

DESCRIPTION OF DEPOSITARY UNITS AND THE DEPOSIT AGREEMENT

The following is a description of certain provisions of the Third Amended and
Restated Deposit Agreement among the Company, Society National Bank, as
depositary (the "Depositary"), Borden and BCPM, as General Partner and as
attorney-in-fact for the Assignees and the Limited Partners (the "Deposit
Agreement"), and such description is qualified in its entirety by reference to
the Deposit Agreement, which is incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus is a part.

GENERAL

The Units are registered under the Securities Exchange Act of 1934, as
amended ("Exchange Act") and the rules and regulations thereunder, and the
Company is subject to the reporting requirements of the Exchange Act. The
Company is required to file periodic reports containing financial and other
information with the Securities and Exchange Commission.

Prior to the closing of this offering, all of the Units being offered hereby
will be deposited with the Depositary in exchange for Depositary Receipts
evidencing such Units. Purchasers of Units in this offering and subsequent
transferees of Units (or their brokers, agents or nominees on their behalf)
will be required to execute and deliver a transfer application ("Transfer
Application").

Units may be held in "street name" or by any other nominee holder. The
Company is entitled to treat the nominee holder of a Unit as the absolute owner
thereof, and the beneficial owner's rights are limited solely to those that it
has against the nominee holder as a result of or by reason of any understanding
or agreement between such beneficial owner and nominee holder. See "--The
Depository Trust Company".

The Units are listed on the NYSE under the symbol BCU.

COMBINATION OF UNITS AND ELIMINATION OF DISTRIBUTION SUPPORT

The currently issued and outstanding 36,750,000 Units originally constituted
depositary units representing two separate classes of limited partner interests
in the Company: a class of 28,125,000 Preference Units and a class of 8,625,000
Common Units. Under the terms of the Partnership Agreement, the Preference
Units were entitled to receive distributions of Available Cash constituting
Cash from Operations in preference to the Common Units.

Effective December 31, 1992, the differences and distinctions between the
Preference Units and Common Units were automatically eliminated pursuant to the
terms of the Partnership Agreement and the Preference Units and Common Units
became a single class of 36,750,000 Common Units. On February 16, 1993, the
36,750,000 Common Units began trading on the NYSE as a single class of Units.

Pursuant to a Distribution Support Agreement, Borden had agreed to provide
certain levels of distribution support for the benefit of the holders of
Preference Units. Pursuant to a Direct Payment Agreement, Borden Delaware had
agreed to make certain direct payments to the holders of Common Units, which
direct payment obligations of Borden Delaware were guaranteed by Borden
pursuant to a Guaranty. Prior to the combination of the Units, the Common
Units, as enhanced by the Direct Payment Agreement and the Guaranty, were
traded on the NYSE as Enhanced Common Units. Effective December 31, 1992,
Borden's obligations under the Distribution Support Agreement and the Guaranty
and Borden Delaware's obligations under the Direct Payment Agreement expired
pursuant to the respective terms of such agreements.

TRANSFER OF UNITS

Units evidenced by Depositary Receipts are securities and are transferable in
accordance with the laws governing transfers of securities. Persons who are
Ineligible Persons (as hereinafter defined) may not purchase or otherwise
acquire Units. In order to ensure that Units are not held by or on behalf of
persons who are

Ineligible Persons, the General Partner is authorized to establish procedures
in conjunction with the Depositary and any national securities exchange on
which the Units are listed or any securities market through which the Units are
traded, to limit the transfer of Units to persons who are not Ineligible
Persons. In addition, the Partnership Agreement provides that, if any
legislation, regulation, ruling or judicial decision would result in the
taxation of the Company for federal income tax purposes as a corporation or an
association taxable as a corporation, then the General Partner may, under
certain circumstances, impose such restrictions on the transfer of Units as may
be required, in the opinion of counsel, to prevent the taxation of the Company
for federal income tax purposes as a corporation or as an association taxable
as a corporation.

As used in this Prospectus, an "Ineligible Person" means a person (including
a corporation, partnership or other entity) deemed to constitute an electric
utility, an electric utility holding company or any subsidiary thereof under
regulations promulgated from time to time by the Federal Energy Regulatory
Commission. As of the date of this Prospectus, a person is an Ineligible Person
if such person is, with certain exceptions, primarily engaged in the generation
or sale of electric power or is a parent or subsidiary of such a person. There
can be no assurance that the determination of who is an "Ineligible Person"
will not change from time to time.

Until the transfer of a Unit has been registered on the books of the
Depositary, the Depositary and the Company, notwithstanding any notice to the
contrary or any notation or other writing on the Depositary Receipt, may treat
the record holder thereof as the absolute owner for all purposes. A transfer of
a Unit (including a transfer from the Underwriters as a part of the offering
made hereby) will not be recorded by the Depositary or recognized by the
Company unless the transferee executes and delivers a Transfer Application. By
executing and delivering a Transfer Application, a transferee of Units
automatically requests admission as a Limited Partner of the Company, agrees to
be bound by the terms and conditions of, and executes, the Partnership
Agreement and the Deposit Agreement, represents that he has the capacity and
authority to enter into the Partnership Agreement and the Deposit Agreement,
grants powers of attorney to the General Partner and any liquidator of the
Company and makes the consents and waivers contained in the Partnership
Agreement. The Transfer Application also contains a representation by the
purchaser of the Unit that such purchaser is not an Ineligible Person. An
Assignee will become a Limited Partner of the Company in respect of transferred
Units upon the consent of the General Partner and the recordation of the name
of the Assignee on the books and records of the Company. Such consent may be
withheld in the sole discretion of the General Partner. A purchaser or other
transferee of Units who does not execute and deliver a Transfer Application
obtains only (a) the right to negotiate the Units to a purchaser or other
transferee and (b) the right to transfer the right to request admission as a
Limited Partner with respect to the Units. Thus, a purchaser or transferee of
Units who does not execute and deliver a Transfer Application will not receive
cash distributions and, unless the Units are held in a nominee or street name
account and the nominee or broker has executed and delivered a Transfer
Application with respect to such Units, may not receive certain federal income
tax information or reports furnished to record holders of Units. Whether or not
a transferee of Units executes a Transfer Application, the transferee, by
acceptance of a Depositary Receipt evidencing the Units, is deemed to become a
party to the Deposit Agreement and to be bound by its terms and conditions. A
transferor of Units has a duty to provide his transferee all information
necessary to obtain recordation of the transfer of the Units, but a transferee
agrees, by acceptance of a Depositary Receipt evidencing the Units, that his
transferor has no duty to cause the execution and delivery of a Transfer
Application by the transferee and has no liability or responsibility if the
transferee neglects or chooses not to execute and deliver a Transfer
Application. See "Summary of the Partnership Agreements--Status as Limited
Partner or Assignee".

DISTRIBUTIONS

To facilitate cash or other distributions, the Depositary shall, at the
General Partner's request, furnish to the General Partner a list of the
recordholders of the Units and the number of Units held by them, as recorded on
the books and records of the Depositary as of the close of business on the last
Business Day of

the month preceding the month in which such request is made, or as of such
record date as the General Partner may specify.

At the request of the General Partner, subject to certain notice conditions,
the Depositary may act as paying agent with respect to a cash or other
distribution. The General Partner shall deposit with the Depositary funds
sufficient to pay the distribution. The Depositary shall calculate the amount
of the distribution to which each Unitholder is entitled based upon the number
of Depositary Receipts registered in his name. On the date set by the General
Partner for the distribution, the Depositary shall distribute the funds
received from the General Partner to the recordholders of Depositary Receipts
as of the record date; provided that the Depositary may withhold any funds
permitted to be withheld pursuant to the Deposit Agreement or the Partnership
Agreement. The Company may appoint a co-paying agent, including, without
limitation, the General Partner or an affiliate of the Company.

FEDERAL INCOME TAX MATTERS

The Depositary shall have no duty, obligation or liability with respect to
(a) the allocation of federal tax benefits related to federal tax matters
respecting the Company, the General Partner, the Limited Partners or the
Assignees or (b) any income or other tax reporting obligations imposed upon the
Company, the General Partner or any Limited Partner by the Internal Revenue
Service or any other federal, state or local taxing authority.

WITHDRAWAL OF LIMITED PARTNER INTERESTS

Upon the written request of a Unitholder for withdrawal of limited partner
interests from deposit with the Depositary and surrender of the Unitholder's
Depositary Receipt evidencing his Units in compliance with the terms of the
Deposit Agreement, the Depositary will request from the Company and deliver to
the Unitholder a certificate representing the withdrawn limited partner
interests previously represented by such Units. Limited partner interests
withdrawn from deposit with the Depositary are not transferable (except to the
Company or a general partner of the Company or by death or operation of law)
unless redeposited with the Depositary. In order to transfer limited partner
interests so withdrawn, a holder must redeposit the withdrawn limited partner
interests with the Depositary by delivering the certificate representing the
limited partner interests to the Depositary in exchange for Units and
requesting a Depositary Receipt evidencing Units representing such limited
partner interests, which may then be transferred. Redeposit of withdrawn
limited partner interests with the Depositary will require 60 days' advance
written notice (except for redeposit by the General Partner or its affiliates,
which will not require any prior notice) and is subject to certain other
restrictions.

VOTING

Upon receipt from the Company of notice of any meeting of which recordholders
of Depositary Receipts are entitled to notice, the Depositary shall, at the
request of the Company, mail to each recordholder of Depositary Receipts as of
the record date specified in the notice of the meeting a copy of such notice.
The rights of a recordholder to vote on any matter concerning the Company shall
be governed solely by the terms of the Partnership Agreement and applicable
law.

RESIGNATION OR REMOVAL OF DEPOSITARY

The Depositary may at any time resign or be removed by the General Partner,
such resignation or removal to become effective upon the appointment by the
General Partner of a successor depositary and its acceptance of such
appointment. If no successor depositary is appointed and has accepted such
appointment within 30 days after such resignation or removal, the General
Partner is authorized to act as the depositary until a successor depositary is
appointed.

AMENDMENT

Any provision of the Deposit Agreement, including the form of Depositary
Receipt or Transfer Application, may at any time and from time to time be
amended by the Company and the Depositary in any respect deemed necessary or
desirable by them, without the approval of Unitholders. However, no amendment
to the Deposit Agreement may impair the right of a Unitholder to surrender a
Depositary Receipt and withdraw limited partner interests represented by the
Units evidenced thereby. See "--Withdrawal of Limited Partner Interests". The
Depositary will furnish each holder of record of a Depositary Receipt and each
securities exchange on which the Units are listed for trading with notice of
any material amendment to the Deposit Agreement. Each holder of record of a
Depositary Receipt at the time any amendment to the Deposit Agreement becomes
effective will be deemed, by continuing to hold Units, to consent and agree to
the amendment and to be bound by the Deposit Agreement as amended.

The Depositary will give notice of the imposition of any fee or charge (other
than fees and charges provided for in the Deposit Agreement), or change
therein, upon the holders of Depositary Receipts or transferees to each holder
of record and each securities exchange on which Units are listed for trading.
The imposition of any fee or charge, or change therein, will not be effective
until the expiration of 90 days after the date of notice, unless it becomes
effective earlier in the form of an amendment to the Deposit Agreement effected
by the Partnership and the Depositary.

TERMINATION

The Depositary will terminate the Deposit Agreement, whenever directed to do
so by the Company, by mailing notice of termination to the record holders of
all Units then outstanding at least 30 days before the date fixed for
termination.

DUTIES AND STATUS OF DEPOSITARY

The Depositary's only duties are essentially ministerial ones set forth in
the Deposit Agreement. The Depositary will make no warranties or
representations as to the validity or sufficiency of any certificate
representing limited partner interests on deposit with the Depositary. In
addition to acting as depositary for Units, the Depositary will act as
registrar and transfer agent for Units. The Depositary will receive a fee from
the Company for serving in these capacities. The Company has agreed to
indemnify the Depositary, its agents, any registrar or transfer agent and each
of their respective shareholders, directors, officers and employees (other than
an affiliate of the Company) against all claims arising out of acts performed
or omitted in respect of the Deposit Agreement, except for any liability due to
the negligence, gross negligence, bad faith or intentional misconduct of the
indemnified person or entity. All fees charged by the Depositary for transfers
of Units will be borne by the Company and not by Unitholders, except that fees
similar to those customarily paid by stockholders for surety bond premiums to
replace lost or stolen certificates, taxes or other governmental charges,
special charges for services requested by holders of Units, including
withdrawal of limited partner interests and redeposit of withdrawn limited
partner interests, and other similar fees or charges will be borne by the
affected holder. There will be no charge to holders for disbursements of the
Company's cash distributions.

THE DEPOSITORY TRUST COMPANY

The Units are eligible, but are not be required, to be held by the persons
acquiring such Units through The Depository Trust Company ("DTC").

Subject to any requirements imposed by DTC, any Limited Partner or Assignee
that has signed a Transfer Application with respect to a Unit may elect for
such Unit to be transferred to and held by DTC as Limited Partner or Assignee.
Subject to any requirements imposed by DTC, any beneficial owner ("Beneficial
Owner") of a Unit held by DTC as Limited Partner or Assignee may elect to hold
such Unit directly as

Limited Partner or Assignee by causing DTC to transfer such Unit to such
Beneficial Owner by signing a Transfer Application and otherwise complying with
the provisions of the Deposit Agreement. Any such issuance or transfer shall be
subject to and effected in accordance with the applicable rules of DTC and the
applicable provisions relating to transfer of the Units set forth in the
Deposit Agreement. Units held by DTC as Limited Partner or Assignee are held in
the name of Cede & Co., as nominee for DTC.

DTC is a limited-purpose company organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the Uniform Commercial Code of the State of New York and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for participating
organizations ("Participants") to facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations (including the Underwriters). Indirect access to
the DTC system is also available to Indirect Participants. Indirect
Participants are persons such as brokers, banks, dealers or trust companies
that clear through or maintain a custodial relationship with a Participant
either directly or indirectly.

Beneficial Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, Units held by DTC may do so only through Participants and Indirect
Participants. In addition, Beneficial Owners will receive all distributions on
the Units through the Participants, who in turn will receive them from DTC.
Under the book-entry format, Beneficial Owners may experience some delay in
their receipt of distributions, since such payments will be forwarded by the
Partnership to Cede & Co., as nominee for DTC. DTC will forward such payments
to its Participants which thereafter will forward them to Indirect Participants
or Beneficial Owners.

Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Units held by DTC and is required
to transmit distributions of amounts with respect to such Units that are
actually received by DTC. Participants and Indirect Participants with which
Beneficial Owners have accounts with respect to such Units are similarly
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Beneficial Owners.

Because DTC can act only on behalf of Participants, who in turn act on behalf
of Indirect Participants and certain banks, the ability of a Beneficial Owner
of Units held by DTC to pledge such Units to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
Units may be limited due to the lack of a physical certificate for such Units.

DTC has advised the General Partner that it will take any action permitted to
be taken by a Beneficial Owner of Units held by DTC under the Partnership
Agreement only at the direction of one or more Participants to whose account
with DTC such Units are credited.

Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of Units among Participants and Indirect Participants, DTC is under
no obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time. Neither the Company, the General
Partner nor the Depositary will have any responsibility for the performance by
DTC or their respective Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. Beneficial Owners holding Units through DTC are not Limited
Partners or Assignees with respect to such Units and do not have any rights to
receive distributions, federal income tax information or reports from the
Company or to vote their Units in the Company except indirectly through the DTC
system described herein.

CONDITIONAL RIGHT TO REQUIRE PURCHASE OF UNITS BY BORDEN

As described below, Borden has provided the Unitholders with a right to
require Borden to purchase the Units in the event of a change of control of
Borden, which right may be amended, supplemented or terminated prior to such
change of control by the Board of Directors of Borden in its discretion. Borden
has advised the Company that the Board of Directors of Borden has taken action
such that the put right shall not apply in connection with the transactions
contemplated in the Merger Agreement.

Under the Deposit Agreement, holders of Units currently have the right,
subject to the limitations described below (the "Put Right"), to require Borden
to purchase their Units under certain circumstances. In the event (i) the
preferred share purchase rights (the "Preferred Share Purchase Rights") issued
by Borden under the Rights Agreement dated as of January 28, 1986 between
Borden and The Bank of New York, as Rights Agent (the "Rights Agent"), as
amended or supplemented from time to time (the "Rights Agreement"), become
nonredeemable pursuant to the terms thereof (the first date of such
nonredeemability being hereinafter referred to as the "Change-in-Control Date")
and (ii) the general partner of the Company and the Operating Company is a
Subsidiary (as hereinafter defined) of Borden immediately prior to the Change-
in-Control Date, then each holder of a Unit shall have the right, at such
holder's option, to require Borden to purchase all (but not less than all) of
such holder's Units on the date (the "Purchase Date") that is 100 days (unless
such date falls on other than a business day, in which event on the next
business day) after the Change-in-Control Date at a cash price per Unit equal
to the greater of $12.50 or 125% of the Current Market Price (as hereinafter
defined) of a Unit as of the Change-in-Control Date.

Within 30 days after the Change-in-Control Date, Borden is obligated to mail
all holders of record of Units a notice indicating that the Put Right is
exercisable, the price to be received upon exercise, the date before which a
holder must notify Borden of such holder's intention to exercise the Put Right,
and the procedure which such holder must follow to exercise the Put Right.
Borden shall cause a copy of such notice to be delivered to the Depositary and
to be published in a newspaper of general circulation in the Borough of
Manhattan, The City of New York. To exercise the Put Right, a holder of Units
must deliver on or before the ninetieth (90) day after the Change-in-Control
Date written notice to the Depositary of such holder's exercise of the Put
Right, together with the related Depositary Receipt. See "--Transfer of Units".
If the Purchase Date falls between any record date for a cash distribution on
the Units and the date of such cash distribution, the Units to be purchased
must be accompanied by the payment of the cash amount which the registered
holder thereof is to receive on such date.

Notwithstanding the foregoing, (i) if the Preferred Share Purchase Rights
cease to be outstanding by reason of redemption or otherwise, the Put Rights
shall automatically terminate unless at that time the Board of Directors of
Borden, in its sole discretion, determines that the Put Rights shall continue,
in which event the Put Rights shall be exercisable on such terms and conditions
as the Board then specifies and (ii) the Put Rights may be amended,
supplemented or terminated at any time prior to the Change-in-Control Date if
the Board of Directors of Borden, in its sole discretion, so provides. The
right of the Board of Directors of Borden to continue the Put Rights pursuant
to clause (i) or to amend, supplement or terminate the Put Rights pursuant to
clause (ii) may be exercised without regard to the interests of Unitholders.

The Rights Agreement currently provides that the Preferred Share Purchase
Rights become nonredeemable on the tenth business day after the first public
announcement that a person, together with affiliates and associates, becomes
the beneficial owner (subject to certain exceptions specified in the Rights
Agreement) of 20% or more of the shares of common stock of Borden then
outstanding. The Rights Agreement provides that it may be amended or
supplemented from time to time without the approval of the holders of Preferred
Share Purchase Rights if Borden and the Rights Agent deem such amendment or
supplement necessary or desirable and if such amendment or supplement shall not
adversely affect the interest of the holders of Preferred Share Purchase
Rights.

As used herein, (i) "Current Market Price" of a Unit as of any date means the
average of the daily Closing Prices (as hereinafter defined) per Unit for the
twenty consecutive Trading Days (as hereinafter defined) immediately prior to
such date; (ii) "Closing Price" for any day means the last sale price on such
day, regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices on such day, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the NYSE or, if the
Units are not listed or admitted to trading on the NYSE, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Units are
listed or admitted to trading or, if the Units are not listed or admitted to
trading on any national securities exchange, the last quoted price on such day
or, if not so quoted, the average of the high bid and low asked prices on such
day in the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other system then
in use, or, if on any such day the Units are not quoted by any such
organization, the average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in the Units selected
by the Board of Directors of Borden, or, if on any such day no market maker is
making a market in the Units, the fair value of such Units on such day as
determined reasonably in good faith by the Board of Directors of Borden; (iii)
"Trading Day" means a day on which the principal national securities exchange
on which the Units are listed or admitted to trading is open for the
transaction of business or, if the Units are not listed or admitted to trading
on any national securities exchange, a day on which banking institutions in New
York City generally are open; and (iv) "Subsidiary" of Borden means any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly,
by Borden.

MISCELLANEOUS

The General Partner of the Company may elect to have the Depositary deliver
certain reports and notices required to be delivered by the General Partner to
the Unitholders pursuant to the Partnership Agreement. Upon receipt of any such
report or notice from the General Partner, the Depositary will mail such report
or notice to the Unitholders.

The Depositary will not assume any obligation or be subject to any liability
under the Deposit Agreement other than for its negligence, bad faith or
intentional misconduct in respect of acts to be performed by the Depositary
under the Deposit Agreement. The Depositary will not be liable if it is
prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement.

The Depositary is not obligated to prosecute or defend any legal proceeding
in respect of the Units unless satisfactory indemnity is furnished. The
Depositary may rely on advice of or information from legal counsel,
accountants, any Depositor (as defined in the Deposit Agreement), any
Unitholder or other persons believed by it reasonably and in good faith to be
competent to give such advice or information.

SUMMARY OF THE PARTNERSHIP AGREEMENTS

The following paragraphs are a summary of certain provisions of the
Partnership Agreement and the Operating Partnership Agreement. The Company will
provide a prospective Unitholder with a copy of the Partnership Agreements upon
request at no charge. The following discussion is qualified in its entirety by
reference to the Partnership Agreements. See "Glossary of Terms" for
definitions of certain terms used in the following discussion.

Certain provisions of the Partnership Agreements are summarized elsewhere in
this Prospectus under various headings. With regard to various transactions and
relationships of the Company with the General Partner and its affiliates, see
"Conflicts of Interest and Fiduciary Responsibility"; with regard to the
transfer of Units, see "Description of Depositary Units and the Deposit
Agreement"; with regard to distributions of Available Cash, see "Cash
Distributions"; and, with regard to allocations of taxable income and taxable
loss,

see "Allocations of Income and Loss" and "Certain Federal Income Tax
Considerations". Prospective investors are urged to review these sections of
this Prospectus and the Partnership Agreements carefully.

NAME

The Partnership Agreements provide that, in the event that neither BCPM nor
another subsidiary of Borden is General Partner, the Company and the Operating
Company shall change their names to names that do not include "Borden" therein.
Consistent therewith, Borden has entered into a Use of Name and Trademark
License Agreement with the Company and Operating Company which grants the
Company and the Operating Company the right to use the Borden name and logo
only so long as BCPM or another subsidiary of Borden is the general partner.

ORGANIZATION AND DURATION

The Company and the Operating Company are Delaware limited partnerships. BCPM
is the general partner of each of the Company and the Operating Company and
directly holds an aggregate 2% interest in the Company and the Operating
Company on a combined basis. The Unitholders hold a 98% interest in the Company
and the Operating Company on a combined basis. Both the Company and the
Operating Company will continue in existence until December 21, 2082, unless
sooner terminated pursuant to their respective Partnership Agreements.

PURPOSE, BUSINESS AND MANAGEMENT

The purpose and business of the Company under the Partnership Agreement is
limited to serving as the limited partner of the Operating Company unless a
modification of such purpose receives Special Approval. The Partnership
Agreement provides that the General Partner has no duty to the Unitholders to
propose or approve, and in its sole discretion may decline to propose or
approve, any modification of such purpose. In the Note Agreement (as defined
herein), the Company has agreed, so long as the Old Notes are outstanding, not
to engage in any other business and not to incur indebtedness without the
consent of holders of a majority in outstanding principal amount of the Old
Notes. The Partnership Agreement provides that, so long as the Old Notes are
outstanding, the Company will not engage in any other business without the
consent of holders of a majority in outstanding principal amount of the Old
Notes.

The Operating Partnership Agreement provides that, unless approved by Special
Approval, the Operating Partnership may not engage in any business other than
the manufacture or production and sale of PVC resins, VCM, acetylene, methanol,
formaldehyde, urea-formaldehyde concentrate, ammonia, urea and acetic acid at
the Geismar and Illiopolis facilities. The Operating Partnership Agreement
provides that the General Partner has no duty to the Limited Partners to
propose or approve, and in its sole discretion may decline to propose or
approve, any of the above actions. The acquisition, ownership and operation by
the Operating Company of the Addis Assets and the sale or other distribution by
the Company of Chemicals Products produced at the Addis Facility has been
approved by Special Approval.

The General Partner is authorized in general to perform all acts deemed
necessary to carry out such purposes and to conduct the business of the Company
and the Operating Company.

POWER OF ATTORNEY

Each Limited Partner, and each person who acquires a Unit from a prior holder
and executes and delivers a Transfer Application with respect thereto, grants
to the General Partner a power of attorney to, among other things, execute and
file certain documents required in connection with the qualification,
continuance or dissolution of the Company, or the amendment of the Partnership
Agreement and to make the consents and waivers contained in the Partnership
Agreement.

RESTRICTIONS ON AUTHORITY OF THE GENERAL PARTNER

The authority of the General Partner is limited in certain respects under the
Partnership Agreement. The General Partner is prohibited, without the prior
approval of a Majority Interest, from, among other things, selling or
exchanging all or substantially all of the Company's assets in a single
transaction or a series of related transactions or approving on behalf of the
Company the sale, exchange or other disposition of all or substantially all of
the assets of the Operating Company, provided that the Company may mortgage,
pledge, hypothecate or grant a security interest in, all or substantially all
of the Company's assets and the Operating Company may mortgage, pledge,
hypothecate or grant a security interest in, all or substantially all of the
Operating Company's assets, without such approval. Either of the Company or the
Operating Company may also sell all or substantially all of its assets pursuant
to a foreclosure or other realization upon the foregoing encumbrances without
such approval. Except as provided in the Partnership Agreement and generally
described below under "--Amendment of Partnership Agreements", any amendment to
a provision of the Partnership Agreement will require the approval of a
Majority Interest and any amendment which would materially and adversely affect
any type or class of partnership interests will require the approval of a
majority of the holders of such type or class or partnership interests.

WITHDRAWAL OR REMOVAL OF THE GENERAL PARTNER; OBLIGATIONS OF BCPM AND BORDEN

BCPM has agreed not to withdraw as General Partner of the Company and the
Operating Company (with limited exceptions described below) without the
approval of a Majority Interest prior to November 30, 2002. Thereafter, the
General Partner may withdraw upon at least 90 days prior written notice to the
Limited Partners. In any case, BCPM may withdraw only in the event that the
Company receives an opinion of counsel that such withdrawal will not result in
the loss of limited liability of any Unitholder or of the limited partner of
the Operating Company or cause the Company or the Operating Company to be
taxable as a corporation or an association taxable as a corporation for federal
income tax purposes. Notwithstanding the foregoing, BCPM may withdraw, without
approval of a Majority Interest and without such an opinion of counsel, upon 90
days' notice to the Limited Partners if more than 50% of the outstanding Units
held by persons other than Borden Delaware or its affiliates are held by one
person or its affiliates.

In addition, Borden has agreed to retain, either directly or through a wholly
owned subsidiary, beneficial ownership of 100% of the shares of capital stock
of BCPM until the earlier of (i) November 30, 2002, (ii) the first date as of
which the General Partner is permitted to withdraw as general partner of the
Company as described in this section or (iii) the date as of which a Majority
Interest approves the sale of such shares.

The General Partner may be removed by a vote of holders of at least 66 2/3%
of all Units held by persons other than Borden Delaware or its affiliates,
subject to the approval of a successor General Partner by a Majority Interest
and receipt of an opinion of counsel that such removal and the approval of such
successor will not result in the loss of the limited liability of any Limited
Partner or of the limited partner of the Operating Company or cause the Company
or the Operating Company to be taxable as a corporation or an association
taxable as a corporation for federal income tax purposes.

Removal or withdrawal of the General Partner of the Company also constitutes
removal or withdrawal, as the case may be, of the General Partner as general
partner of the Operating Company.

In the event of (i) withdrawal of the General Partner as the general partner
of the Company or the Operating Company under circumstances where such
withdrawal does not violate the Partnership Agreements or (ii) removal of the
General Partner by the Limited Partners under circumstances where "cause" for
removal does not exist, the General Partner will have the option to require a
successor General Partner (if any) to acquire the general partner interests of
the departing General Partner as a general partner in the Company and the
Operating Company for a cash payment equal to the fair market value of such

general partner interests as of the effective date of such departure. If the
General Partner withdraws as the general partner of the Company or Operating
Company under circumstances where such withdrawal violates the Partnership
Agreements, or if the General Partner is removed by the Limited Partners under
circumstances where cause exists, a successor general partner will have the
option to acquire such general partner interests in accordance with the
preceding sentence. For purposes of the foregoing, "cause" means that a court
of competent jurisdiction has entered a final, non-appealable judgment finding
the General Partner liable for actual fraud, gross negligence or willful or
wanton misconduct in its capacity as general partner of either of the Company
or Operating Company. In either case, such value will be determined by
agreement between the departing General Partner and the successor General
Partner or, if no agreement is reached, by an independent investment banking
firm or other independent expert selected by the departing General Partner and
the successor General Partner (or if no expert can be agreed upon, by the
expert chosen by agreement of the experts selected by each of the General
Partner and departing General Partner). In addition, the Operating Company
would be required to reimburse the departing General Partner for all employee
related liabilities, including severance liabilities, incurred in connection
with the termination of the employees employed by the departing General Partner
for the benefit of the Company and the Operating Company.

If the above-described option is not exercised by the party entitled to do
so, the departing General Partner's general partner interests in the Company
will be converted into Units and the departing General Partner will become a
Limited Partner, which will result in dilution of existing Unitholders, and the
departing General Partner's general partner interest in the Operating Company
will be redeemed for cash in an amount determined as described in the preceding
paragraph. If the departing General Partner becomes a Limited Partner, all
allocations and distributions by the Company will thereafter be made 98% to
Unitholders and 2% to the successor General Partner of the Company.

The General Partner may transfer all, but not less than all, of its general
partner interests in the Company and the Operating Company without the approval
of the Limited Partners to a subsidiary of Borden or upon its merger or
consolidation into another entity or the transfer of all or substantially all
of its assets to another entity, provided in either case that such subsidiary
or entity assumes the rights and duties of the General Partner, agrees to be
bound by the provisions of the Partnership Agreements and furnishes an opinion
of counsel that such transfer would not result in the loss of the limited
liability of any Limited Partner or of the limited partner of the Operating
Company or cause either the Company or the Operating Company to be taxable as a
corporation or an association taxable as a corporation for federal income tax
purposes. In the case of any other transfer, in addition to the foregoing
requirements, the vote of a Majority Interest is required.

REIMBURSEMENT FOR SERVICES

The Partnership Agreements provide that the General Partner is not entitled
to receive any compensation for its services as general partner of the Company
or the Operating Company; the General Partner is, however, entitled to be
reimbursed on a monthly basis (or such other basis as the General Partner may
determine in its sole discretion) for all direct and indirect expenses it
incurs or payments it makes on behalf of the Company or the Operating Company,
and all other necessary or appropriate expenses allocable to the Company or the
Operating Company or otherwise incurred by the General Partner in connection
with the operation of the Company's or the Operating Company's business. The
Partnership Agreements provide that the General Partner shall determine the
fees and expenses that are allocable to the Company or the Operating Company in
any reasonable manner determined by the General Partner in its sole discretion.

STATUS AS LIMITED PARTNER OR ASSIGNEE

Except as described below under "--Limited Liability", Unitholders will not
be required to make additional contributions to the Company.

A transferee of Units, in order to be registered on the books of the transfer
agent as the record holder, must execute and deliver a Transfer Application.
See "Description of Depositary Units and the Deposit Agreement--Transfer of
Units" for a more complete description of the requirements for the transfer of
Units and Depositary Receipts. An Assignee, pending its admission as a
substituted Limited Partner in the Company, is entitled to an interest in the
Company equivalent to that of a Limited Partner with respect to the right to
share in allocations and distributions from the Company, including liquidating
distributions. The General Partner will vote Units owned by an Assignee who has
not become a substituted Limited Partner at the written direction of such
Assignee. Such an Assignee will have no other rights of a Limited Partner
unless and until such Assignee becomes a substituted Limited Partner. See "--
Meetings and Voting" below. Transferees who do not execute and deliver a
Transfer Application will be treated neither as Assignees nor as record holders
of Units, and will not have the right to vote or receive cash distributions,
federal income tax allocations or reports furnished to record holders of Units.
The only rights such transferees will have is the right to negotiate such Unit
to a purchaser or other transferee and the right to transfer the right to
request admission as a Limited Partner in respect of the transferred Unit to a
purchaser or other transferee who executes a Transfer Application in respect of
the Unit. A nominee or broker who has executed a Transfer Application with
respect to Units held in street name or nominee accounts will receive such
distributions and reports pertaining to such Units.

ISSUANCE OF ADDITIONAL UNITS AND SECURITIES

The Partnership Agreement authorizes the General Partner to cause the Company
to issue Additional Units for such consideration and on such terms and
conditions as shall be established by the General Partner. However, after
giving effect to this offering and assuming the Underwriters' over-allotment
option is not exercised, the General Partner may not issue without approval of
a Majority Interest more than 7,250,000 Additional Units that have rights to
distributions or in liquidation ranking on a parity with, prior to or senior
to, the Units. Upon the issuance of any Additional Units by the Company,
including the Units offered hereby, the Partnership Agreement requires the
General Partner to make an additional capital contribution to the Company such
that the General Partner shall at all times have at least a 1% interest in each
item of Company income, gain, loss, deduction and credit of the Company and the
Operating Company.

RIGHT TO CALL UNITS

In the event that at any time less than 10% of the Units are held by persons
other than the General Partner and its affiliates, the General Partner will
have the right, which it may assign and transfer to any of its affiliates or to
the Company, on a date to be selected by the General Partner on at least 10 but
not more than 60 days' notice, to purchase all, but not less than all, of the
outstanding Units held by such nonaffiliated persons. The purchase price per
Unit in the event of such purchase shall be the greater of (a) $10, or (b) the
Current Market Price (as defined under "Description of Depositary Units and the
Deposit Agreement--Conditional Right to Require Purchase of Units by Borden")
of a Unit as of the date written notice of its election to call outstanding
Units is given.

AMENDMENT OF PARTNERSHIP AGREEMENTS

Amendments to the Partnership Agreement may be proposed by the General
Partner or by Limited Partners holding 20% or more of the Units. If an
amendment is properly proposed, the General Partner is required to seek written
approval of the holders of the number of Units required to approve such
amendment or call a meeting of the Limited Partners to consider and vote upon
the proposed amendment. Proposed amendments (other than those described below)
must be approved by holders of at least a Majority Interest, except that no
amendment may be made which would enlarge the obligations of any Partner,
restrict in any way any action by or rights of the General Partner as set forth
in the Partnership Agreement, modify the compensation payable by the Company or
the Operating Company to the General Partner or any of its

Affiliates, change the term of the Company or give any person the right to
dissolve the Company other than the General Partner's right to dissolve the
Company with the approval of a Majority Interest, change such right of the
General Partner in any way or change the requirement that the Company change
its name to one not including the name "Borden" in the event neither BCPM nor
another subsidiary of Borden is the General Partner.

Amendments to the Operating Partnership Agreement may be proposed either by
the General Partner or by the Company as the sole limited partner of the
Operating Company. Proposed amendments require the approval of the Company, as
the limited partner of the Operating Company, and of the General Partner of the
Operating Company.

The General Partner may make amendments to the Partnership Agreement and the
Operating Partnership Agreement without the approval of any Limited Partner or
Assignee or the respective Partnership to reflect (i) a change in the name of
the Company or the location of the principal place of business of the Company,
(ii) admission, substitution, withdrawal or removal of Partners in accordance
with the Partnership Agreement, (iii) a change that, in the sole discretion of
the General Partner, is reasonable and necessary or appropriate to qualify or
continue the qualification of the Company as a partnership in which the limited
partners have limited liability or that is necessary or advisable in the
opinion of the General Partner to ensure that the Company will not be taxable
as a corporation or an association taxable as a corporation for federal income
tax purposes, (iv) an amendment that is necessary, in the opinion of counsel to
the Company, to prevent the Company or the General Partner or its directors or
officers from in any manner being subjected to the provisions of the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, or "plan asset" regulations adopted under the Employee Retirement
Security Act of 1974, as amended, whether or not substantially similar to plan
asset regulations currently applied or proposed, (v) an amendment that in the
sole discretion of the General Partner is necessary or desirable in connection
with the authorization of Additional Units, (vi) any amendment expressly
permitted in the Partnership Agreement to be made by the General Partner acting
alone and (vii) other amendments similar to the foregoing.

In addition, the General Partner may make amendments to the Partnership
Agreement and the Operating Partnership Agreement without such consent if such
amendments do not adversely affect the Limited Partners in any material
respect, or are necessary or desirable to satisfy any requirement, condition or
guideline contained in any opinion, directive, order, ruling or regulation of
any federal or state agency or judicial authority or contained in any federal
or state statute or that is necessary or desirable to facilitate the trading of
the Depositary Units (including the subclassification of outstanding Units) or
to comply with any rule, regulation, guideline or requirement any securities
exchange on which the Units are or will be listed for trading, compliance with
any of which the General Partner deems to be in the best interest of the
Company, the Operating Company and the Limited Partners, or are required to
effect the intent of the provisions of the Partnership Agreement or the
Operating Partnership Agreement, or are otherwise contemplated by the
Partnership Agreement or the Operating Partnership Agreement, and any other
amendments similar to the foregoing.

Any amendment which materially and adversely affects the rights or
preferences of any type or class of Units will require the approval of a
majority of the type or class of Units affected. Except for amendments
described in the two preceding paragraphs, no amendment will become effective
without the approval of all Unitholders unless the Company obtains an opinion
of counsel to the effect that such amendment will not cause the Company or the
Operating Company to be taxable as a corporation or an association taxable as a
corporation for federal income tax purposes and will not affect the limited
liability of any Limited Partner in the Company or the limited partner of the
Operating Company.

The Partnership Agreement provides that certain of the provisions in the
Partnership Agreement relating to distributions to Partners (as defined in the
Partnership Agreement) shall only be amended by the approval of Partners
holding at least 95% of the aggregate percentage interests of the Partners in
the Company.

MEETINGS AND VOTING

Limited Partners or Assignees who are record holders of Units on the record
date set pursuant to the Partnership Agreement will be entitled to notice of,
and to vote at, meetings of Limited Partners of the Company and to act with
respect to matters as to which approvals may be solicited. However, with
respect to voting rights attributable to Units that are owned by Assignees who
have not yet been admitted as Limited Partners, the General Partner shall be
deemed to be the Limited Partner with respect thereto and shall, in exercising
the voting rights in respect of such Units on any matter, vote such Units at
the written direction of such record holder. Absent such direction, such Units
will not be voted.

Any action that is required or permitted to be taken by the Limited Partners
may be taken either at a meeting of the Limited Partners or without a meeting
if approvals in writing setting forth the action so taken are signed by holders
of such number of Units as would be necessary to authorize or take such action
at a meeting of the Limited Partners. Meetings of the Limited Partners of the
Partnership may be called by the General Partner or by Limited Partners owning
at least 20% of the Units. Limited Partners may vote either in person or by
proxy at meetings. A Limited Partner Majority Interest represented in person or
by proxy will constitute a quorum at a meeting of Limited Partners of the
Company.

Each owner of a Unit has a vote according to his percentage interest in the
Company, although Additional Units having special voting rights could, under
certain circumstances, be issued by the General Partner. The Partnership
Agreement provides that Units held in nominee or street name accounts will be
voted by the broker (or other nominee) pursuant to the instruction of the
beneficial owner unless the arrangement between the beneficial owner and his
nominee provides otherwise.

Any notice, demand, request, report or proxy materials required or permitted
to be given or made to record holders of Units (whether or not such record
holder has been admitted as a Limited Partner) under the terms of the
Partnership Agreement will be delivered to the record holder by the Company or
by the Transfer Agent at the request of the Company.

INDEMNIFICATION

The Partnership Agreements provide that the Company and the Operating Company
will, to the fullest extent permitted by law, indemnify the General Partner,
any departing General Partner, any person who is or was an affiliate of the
General Partner or any departing General Partner, any person who is or was an
officer, director, employee, partner, agent or trustee of the General Partner
or any departing General Partner or any such affiliate, or any person who is or
was serving at the request of the General Partner or any departing General
Partner or any such affiliate as an officer, director, employee, partner, agent
or trustee of another person ("Indemnitees") from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, settlements and other amounts
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, by reason
of its status as the General Partner, a departing General Partner or an
affiliate thereof, an officer, director, employee, partner, agent or trustee of
the General Partner, any departing General Partner or affiliate thereof or a
person serving at the request of the Company or the Operating Company in
another entity in a similar capacity if the Indemnitee acted in good faith and
in a manner which such Indemnitee in good faith believed to be in, or not
opposed to, the best interests of the Company and Operating Company and, with
respect to any criminal proceeding, had no reasonable cause to believe its
conduct was unlawful. Any indemnification under these provisions will be only
out of the assets of the Company or the Operating Company, as the case may be.
The Company and the Operating Company are authorized to purchase insurance
against liabilities asserted against and expenses incurred by such persons in
connection with the Company's or Operating Company's activities, whether or not
the Company or Operating Company would have the power to indemnify such person
against such liabilities under the provisions described above.

LIMITED LIABILITY

Assuming that a Limited Partner does not participate in the control of the
business of the Company (within the meaning of the Delaware Act ) and that he
otherwise acts in conformity with the provisions of the Partnership Agreement,
his liability under the Delaware Act will be limited, subject to certain
possible exceptions, generally to the amount of capital he is obligated to
contribute to the Company in respect of his Units plus his share of any
undistributed profits and assets of the Company.

Under the Delaware Act in effect prior to September 1, 1988, (a) a limited
partner is liable, for a period of one year after the date of the return to him
of any part of his contribution returned without violation of the partnership
agreement or the Delaware Act, for the amount of such returned contribution,
but only to the extent necessary to discharge liabilities of the limited
partnership to creditors who extended credit while such contribution was held
by the limited partnership, and (b) a limited partner is liable for the amount
of any contribution returned to him in violation of the partnership agreement
or the Delaware Act for a period of six years after the return of such
contribution. The Delaware Act in effect prior to September 1, 1988 provides
that a partner receives a return of his contribution to the extent that a
distribution to him reduces his share of the fair value of the net assets of
the limited partnership below the agreed value (as set forth in the records of
the limited partnership) of his contribution which has not been distributed to
him. Under the Delaware Act in effect prior to September 1, 1988, a limited
partner may not receive a distribution from a limited partnership to the extent
that, at the time of the distribution and after giving effect to the
distribution, all liabilities of the limited partnership, other than
liabilities to partners on account of their interests in the limited
partnership, exceed the fair value of the limited partnership's assets.

Certain amendments of the Delaware Act became effective on September 1, 1988.
As discussed above, prior to such amendments, Section 17-608 of the Delaware
Act required a partner of a limited partnership to return to the limited
partnership certain distributions to the extent such distributions constituted
a return to the partner of his contribution to the limited partnership. Under
one of the amendments, Section 17-608 of the Delaware Act was eliminated from
the Delaware Act. Another amendment of the Delaware Act changed certain other
provisions of the Delaware Act, which are discussed above, relating to
limitations on distributions which may be made to partners. Section 17-607(a)
of the amended Delaware Act prohibits a limited partnership from making a
distribution to a partner to the extent that at the time of the distribution
and after giving effect thereto all liabilities of the limited partnership,
other than liabilities to partners on account of their partnership interests
and liabilities for which the recourse of creditors is limited to specified
property of the limited partnership, exceed the fair value of the assets of the
limited partnership. For purposes of this limitation, the fair value of
property that is subject to a liability for which recourse of creditors is
limited will be included in the assets of a limited partnership only to the
extent that the fair value of the property exceeds that liability. Under the
amended Delaware Act, a limited partner who received such a prohibited
distribution and who knew that the distribution violated Section 17-607(a) of
the amended Delaware Act will be liable to the limited partnership for the
amount of the distribution for a period of three years from the date of the
distribution. At the date of this Prospectus, the possible effect and
interpretation of the amendments to the Delaware Act, insofar as the Company is
concerned, remain unclear. However, the amended Delaware Act provides that such
amendments will not affect any obligation or liability of a Limited Partner
under the Partnership Agreement or other applicable law (including relevant
fraudulent conveyance acts) for the amount of a distribution. Moreover, the
obligation of a Limited Partner in this regard is no greater than the
obligation of such Limited Partner to repay funds to the extent provided under
repealed Section 17-608 or otherwise wrongfully distributed to it.

BOOKS, REPORTS AND INFORMATION TO UNITHOLDERS

The General Partner is required to keep appropriate books of the Company's
business at the principal office of the Company. The books are maintained for
both tax and financial reporting purposes on an accrual basis. The fiscal year
of the Company is the calendar year.

As soon as practicable, but in no event later than 90 days after the close of
each calendar year, the General Partner will furnish each record holder of a
Unit (as of a record date selected by the General Partner) an annual report
containing audited financial statements of the Company for the past fiscal year
prepared on the accrual basis in accordance with generally accepted accounting
principles. As soon as practicable, but in no event later than 60 days after
the close of each calendar quarter (except the fourth quarter), the General
Partner will furnish each record holder of a Unit (as of a record date selected
by the General Partner) with unaudited financial statements prepared in the
same manner.

The General Partner will use all reasonable efforts to furnish each
Unitholder information reasonably required for tax reporting purposes within 75
days after the close of each taxable year. Such information is expected to be
furnished in a summary form so that certain complex calculations normally
required of partners can be avoided. No reconciliation of financial statement
information to tax reporting information will be provided to Unitholders. The
General Partner's ability to furnish such summary information to Unitholders
will depend on the cooperation of such Unitholders in supplying certain
information to the General Partner. Every Unitholder (without regard to whether
he supplies such information to the General Partner) will receive information
to assist him in determining his federal and state tax liability and filing his
federal and state income tax returns.

RIGHT TO INSPECT COMPANY BOOKS AND RECORDS

The Partnership Agreement provides that a Limited Partner can for a purpose
reasonably related to such Limited Partner's interest as a limited partner,
upon reasonable demand and at his own expense, have furnished to him (a) a
current list of the name and last known address of each partner, (b) a copy of
the Company's tax returns, (c) a copy of the Partnership Agreement, the
certificate of limited partnership of the Company, amendments thereto and
powers of attorney pursuant to which the same have been executed, (d)
information regarding the status of the Company's business and financial
condition, (e) information regarding the amount of cash and a description and
statement of the agreed value of any other property or services contributed by
each Partner and which each Partner has agreed to contribute in the future, and
the date on which each became a Partner and (f) such other information
regarding the affairs of the Company as is just and reasonable. The General
Partner may and intends to keep confidential from the Limited Partners trade
secrets or other information the disclosure of which the General Partner
believes in good faith is not in the best interests of the Company or the
Operating Company or which the Company or the Operating Company are required by
law or by agreements with third parties to keep confidential.

TERMINATION, DISSOLUTION AND LIQUIDATION

The Company and the Operating Company will continue until December 31, 2082,
unless sooner terminated pursuant to the Partnership Agreement and the
Operating Partnership Agreement, respectively. The Partnership will be
dissolved upon (i) the election of the General Partner, if approved by a
Majority Interest, (ii) the sale of all or substantially all of the assets and
properties of the Company or the Operating Company, respectively, (iii) the
dissolution of the Operating Company unless the Operating Company is thereafter
reconstituted in accordance with the provisions of the Operating Partnership
Agreement, (iv) the bankruptcy or dissolution of the General Partner, or (v)
withdrawal or removal of the General Partner or any other event that results in
its ceasing to be the General Partner (other than by reason of a transfer in
accordance with the Partnership Agreement or withdrawal or removal following
approval of a successor pursuant to the provisions thereof), provided that the
Company shall not be dissolved upon an event described in clause (v) if within
90 days after such event all Limited Partners agree in writing to continue the
business of the Partnership and to the appointment, effective as of the date of
such event, of a successor General Partner. Upon a dissolution pursuant to
clause (iv) or (v), a Limited Partner Majority Interest may also elect, within
certain time limitations, to reconstitute the Company and continue its business
on the same terms and conditions set forth in the Partnership Agreement by
forming a new limited partnership on terms identical to those set forth in the
Partnership Agreement and having as a general partner an entity approved by a
Limited Partner Majority Interest, subject to receipt by the Company of an
opinion of counsel that such

reconstitution, continuation and approval will not result in the loss of the
limited liability of Unitholders or cause the Company, the reconstituted
limited partnership or the Operating Company to be taxable as a corporation or
an association taxable as a corporation for federal income tax purposes.

Upon dissolution of the Company, unless the Company is reconstituted and
continued as a new limited partnership, the person authorized to wind up the
affairs of the Company and the Operating Company (the "Liquidator") will
liquidate the Company's and the Operating Company's assets and apply the
proceeds of the liquidation in the order of priority set forth in the
Partnership Agreement and the Operating Partnership Agreement. The Liquidator
may defer liquidation or distribution of the Company's and the Operating
Company's assets and/or distribute assets to the partners in kind if it
determines that a sale would be unsuitable.

SUMMARY OF THE FINANCING DOCUMENTS

THE NOTES

Concurrently with this offering of Units, the Operating Company and Finance
Corp. propose to make a public offering of the Notes. Such offering will be
made only by means of a separate prospectus.

The description of the Notes set forth below represents the Company's current
expectation of the final terms the Notes will have upon consummation of the
offering thereof. There can be no assurance that such offering will be
consummated or that, if consummated, the Notes will not in fact have terms,
including restrictive covenants, materially more adverse to the Operating
Company and the Company than the terms described below. As noted under "Use of
Proceeds", in the event the Notes offering is postponed or not consummated, the
Company will use short-term borrowings, cash on hand or a combination thereof
to fund a portion of the purchase price for the Addis Assets. In addition, in
the event that the Notes offering is not consummated, the Old Notes will not be
refinanced and will continue to remain outstanding (although in such event the
Company may, but has not determined that it will, attempt to refinance the Old
Notes through a new loan facility or to seek an amendment to certain terms of
the Old Notes).

The Notes are expected to be senior unsecured notes of the Operating Company
and Finance Corp., with an aggregate principal amount of approximately $200.0
million, and are expected to mature in 2001. The Notes are not expected to have
the benefit of any sinking fund or mandatory redemption provision, although the
Operating Company and Finance Corp. are expected to have the option to redeem
the Notes upon customary terms commencing no sooner than four years after the
offering. The Notes will be non-recourse to the General Partner.

The indenture pursuant to which the Notes will be issued (the "Indenture") is
expected to contain customary terms, including customary covenants of the
Operating Company and events of default. Such covenants are expected to include
(i) a restriction on the ability of the Operating Company and its subsidiaries
to incur secured debt or engage in sale and lease-back transactions, (ii) a
restriction on the ability of the Operating Company and its subsidiaries to
incur debt if the Consolidated EBITDA Coverage Ratio (such term, together with
certain other capitalized terms used in this description of the Indenture, are
defined below) as of the date such debt is issued exceeds 2.5 to 1, (iii) a
restriction on the ability of the Operating Company and its subsidiaries to
create or permit to exist any consensual encumbrance or restriction on the
ability of any such subsidiary to (1) pay dividends or make any other
distributions on its capital stock or pay any debt or other obligation owed to
the Operating Company, (2) make any loans or advances to the Operating Company
or (3) transfer any of its tangible property or tangible assets to the
Operating Company, (iv) a restriction on the ability of the Operating Company
and its subsidiaries to use the cash proceeds of certain asset sales or
dispositions, (v) a limitation on the ability of the subsidiaries of the
Operating Company to issue debt or preferred stock and (vi) a requirement that
the resulting, surviving or transferee person or lessee in certain
consolidations and mergers involving the Operating Company, or sales,
conveyances, transfers or leases of all or substantially all the assets of the
Operating Company, assume all the obligations of the Operating Company under
the Indenture and the Notes.

In addition, the Indenture is expected to provide that, with certain limited
exceptions, the Operating Company will not, and will not permit any of its
subsidiaries, directly or indirectly, to: (1) declare or pay any dividend or
make any distribution on or in respect of its capital stock, including any
payment in connection with any merger or consolidation involving the Operating
Company (except dividends or distributions payable solely in its capital stock
(other than Disqualified Capital Stock) or payable to the Operating Company or
a subsidiary), (2) purchase, redeem or otherwise acquire or retire for value
any capital stock of the Operating Company or of any direct or indirect parent
of the Operating Company, (3) purchase, repurchase, redeem, defease or
otherwise acquire or retire for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Subordinated Obligations
(other than the purchase, repurchase or other acquisition of Subordinated
Obligations purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of
the date of acquisition) or (4) make any Investment in any affiliate of the
Operating Company other than a subsidiary or a person which will become a
subsidiary as a result of any such Investment (any such dividend, distribution,
purchase, redemption, repurchase, defeasance, other acquisition, retirement or
Investment being herein referred to as a "Restricted Payment"), unless, at the
time of such Restricted Payment:

(i) no default or event of default under the Indenture shall have
occurred and be continuing or would occur as a consequence thereof;

(ii) the Consolidated EBITDA Coverage Ratio exceeds 3.0 to 1;

(iii) total debt of the Operating Company and its consolidated
subsidiaries does not exceed 60% of Consolidated Net Tangible Assets on a
pro forma basis as of the end of the most recently completed fiscal quarter
ending at least 45 days prior to the date on which such Restricted Payment
is made; and

(iv) such Restricted Payment (the amount of any such payment, if other
than cash, to be determined by the board of directors of the Operating
Company) together with the aggregate of all other Restricted Payments
(other than certain permitted Restricted Payments) made by the Operating
Company and its subsidiaries in the fiscal quarter during which such
Restricted Payment is made shall not exceed an amount equal to Available
Cash of the Operating Company for the immediately preceding fiscal quarter.

The Indenture also is expected to provide that, upon a Change of Control,
each holder of Notes will have the right to require that the Operating Company
and Finance Corp. repurchase such holder's Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase.

For purposes of the foregoing description of the Indenture, the following
terms have the meanings specified:

"Available Cash" has the meaning given to such term in the Operating
Partnership Agreement, as amended to the date of the Indenture.

"Borden" means Borden, Inc., a New Jersey corporation, and its successors
(other than as a result of any transaction described in clause (a)(i) of the
definition of "Change of Control," as if Borden, Inc. were deemed for such
purposes to be the Operating Company).

A "Change of Control" occurs when (a) (i) any person or "group" for purposes
of Section 13(d) of the Exchange Act (a "Group"), other than Permitted Holders,
shall beneficially own, directly or indirectly, more than 50% of the total
voting power of all classes of Voting Stock of the General Partner, the Company
or the Operating Company, (ii) (A) the Operating Company shall sell, lease,
convey or otherwise dispose of all or substantially all the Operating Company's
assets to any person or Group or (B) the Operating Company shall consolidate
with or merge into another person or another person shall consolidate with or
merge into the Operating Company, in case of either of the foregoing, in a
transaction in which the outstanding Voting Stock of the Operating Company is
reclassified or changed into or exchanged for cash, securities or other
property, other than, in the case of either of clauses (A) or (B), to, with or
into, as applicable, one or more Permitted Holders or a person, more than 50%
of the total voting power of all classes of Voting Stock of which, after

giving effect to such transaction, is beneficially owned, directly or
indirectly, by one or more Permitted Holders or (iii) the Operating Company,
the Company or the General Partner shall adopt a plan of liquidation or
dissolution (unless all or substantially all the Operating Company's assets are
distributed pursuant to such plan to one or more Permitted Holders) and (b) a
Rating Decline occurs within the period of 60 days following the first public
announcement of any of the events described in clause (a) (the "Announcement")
(which period shall be extended if during such 60 days either both Rating
Agencies (as defined in the Indenture) shall have placed the Operating Company
on credit watch (with negative implications) or one of the Rating Agencies
shall have placed the Operating Company on credit watch (with negative
implications) and the other Rating Agency shall have made the determination
described in the definition of Rating Decline, until such time as it can be
determined whether or not there has been a Rating Decline). A "Rating Decline"
shall be deemed to have occurred (i) in the event the Notes are rated below
investment grade by each Rating Agency on the day before the Announcement, if
each such rating is reduced by more than one gradation (whether or not within
the same rating category) and (ii) in the event the Notes are rated investment
grade by either or both of the Rating Agencies on the day before the
Announcement, if the Notes cease to be rated investment grade by at least one
Rating Agency.

"Consolidated EBITDA Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (ii) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that (1) if the Operating Company or any of
its subsidiaries has issued any debt since the beginning of such period that
remains outstanding as of such date of determination or if the transaction
giving rise to the need to calculate the Consolidated EBITDA Coverage Ratio is
an issuance of debt, or both, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving effect on a pro forma basis to such
debt as if such debt had been issued on the first day of such period and the
discharge of any other debt repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new debt as if such discharge had occurred
on the first day of such period, (2) if since the beginning of such period the
Operating Company or any of its subsidiaries shall have made any Asset
Disposition (as defined in the Indenture), the EBITDA for such period shall be
reduced by an amount equal to the EBITDA (if positive) directly attributable to
the assets that were the subject of such Asset Disposition for such period, or
increased by an amount equal to the EBITDA (if negative), directly attributable
thereto for such period, and Consolidated Interest Expense for such period
shall be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any debt or preferred stock of the Operating Company
or any of its subsidiaries repaid, repurchased, defeased or otherwise
discharged with respect to the Operating Company and its continuing subsidiary
or from which the Operating Company or such continuing subsidiary has been
released by reason of the assumption thereof by the transferee of such Asset
Disposition, in connection with such Asset Dispositions for such period (or, if
the capital stock of any subsidiary is sold, the Consolidated Interest Expense
for such period directly attributable to the debt or preferred stock of such
subsidiary to the extent the Operating Company and its continuing subsidiaries
are no longer liable for such debt or preferred stock after such sale), (3) if
since the beginning of such period the Operating Company or any of its
subsidiaries (by merger or otherwise) shall have made an Investment in any
subsidiary (or any person which becomes a subsidiary) or an acquisition of
assets, including any acquisition of assets occurring in connection with a
transaction causing a calculation to be made hereunder, which constitutes all
or substantially all of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto (including the issuance of any debt) as if such
Investment or acquisition occurred on the first day of such period and (4) if
since the beginning of such period any person (that subsequently became a
subsidiary or was merged with or into the Operating Company or any subsidiary
since the beginning of such period) shall have made any Asset Disposition or
any Investment that would have required an adjustment pursuant to clause (2) or
(3) above if made by the Operating Company or a subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such Asset Disposition or
Investment occurred on the first day of such period.

"Consolidated Interest Expense" means, for any period, the total interest
expense of the Operating Company and its consolidated subsidiaries, including
(i) interest expense attributable to capital lease obligations, (ii)
amortization of debt discount and debt issuance cost, (iii) capitalized
interest, (iv) non-cash interest payments, (v) commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) net costs under Interest Rate Protection Agreements (as defined
in the Indenture), including amortization of fees, (vii) preferred stock
dividends in respect of all preferred stock held by persons other than the
Operating Company or a wholly owned subsidiary of the Operating Company, (viii)
interest incurred in connection with investments in discontinued operations and
(ix) interest actually paid by the Operating Company or any of its consolidated
subsidiaries under any guarantee of debt or other obligation of any other
person.

"Consolidated Net Income" means, for any period, the net income of the
Operating Company and its consolidated subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:

(i) any net income of any person if such person is not a Subsidiary,
except that (A) the Operating Company's equity in the net income of any
such person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
person during such period to the Operating Company or a subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a subsidiary, to the limitations contained in clause (iii)
below) and (B) the Operating Company's equity in a net loss of any such
person for such period shall be included in determining such Consolidated
Net Income;

(ii) any net income of any person acquired by the Operating Company or a
subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;

(iii) any net income of any subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such subsidiary, directly or indirectly, to the Operating
Company, except that (A) the Operating Company's equity in the net income
of any such subsidiary for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such subsidiary during such period to the Operating Company
or another subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution to another subsidiary, to the
limitation contained in this clause) and (B) the Operating Company's equity
in a net loss of any such subsidiary for such period shall be included in
determining such Consolidated Net Income;

(iv) any gain (or loss) realized upon the sale or other disposition of
any property, plant or equipment of the Operating Company or its
consolidated subsidiaries (including pursuant to any sale-and-leaseback
arrangement) which is not sold or otherwise disposed of in the ordinary
course of business and any gain (or loss) realized upon the sale or other
disposition of any capital stock of any person; and

(v) the cumulative effect of a change in accounting principles.

"Consolidated Net Tangible Assets" means the total assets of the Operating
Company and its subsidiaries appearing on a consolidated balance sheet of the
Operating Company and its subsidiaries (prepared in accordance with generally
accepted accounting principles) as of any date selected by the Operating
Company not more than 90 days prior to the date of determination, after (i)
adding thereto all Attributable Debt (as defined in the Indenture) of the
Operating Company and its subsidiaries in respect of any sale and leaseback
arrangement not capitalized on such balance sheet, (ii) eliminating all
intercompany transactions and all amounts properly attributable to minority
interests, if any, in the stock and surplus of subsidiaries and (iii) deducting
therefrom (without duplication of deductions):

(i) all liabilities of the Operating Company and its subsidiaries other
than debt;

(ii) the net book amount of all assets, after deducting any reserves
applicable thereto, which would be treated as intangible under generally
accepted accounting principles, including such items as goodwill,
trademarks, trade names, service marks, brand names, copyrights, patents
and licenses, and rights with respect to the foregoing, unamortized debt
discount and expense and organization expenses;

(iii) any write-up in the book value of any asset on the books of the
Operating Company or any subsidiary resulting from a revaluation thereof
subsequent to the date of the Indenture (other than the write-up of the
book value of an asset made in accordance with purchase accounting under
generally accepted accounting principles in connection with the purchase of
such asset);

(iv) all deferred charges (other than prepaid expenses); and

(v) all reserves, including without limitation, reserves for deferred
income taxes, liabilities (fixed or contingent), depreciation,
obsolescence, depletion, insurance and inventory valuation, which appear or
under generally accepted accounting principles are required to appear on
such balance sheet.

"Disqualified Capital Stock" means any capital stock that is Redeemable Stock
or Exchangeable Stock.

"EBITDA" for any period means the Consolidated Net Income for such period,
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) income tax expense, (ii) Consolidated Interest Expense, (iii)
depreciation expense, (iv) amortization expense and (v) all other noncash items
reducing Consolidated Net Income, less all noncash items increasing
Consolidated Net Income.

"Exchangeable Stock" means any capital stock that is exchangeable or
convertible into another security (other than capital stock of the Operating
Company that is neither Exchangeable Stock nor Redeemable Stock).

"Investment" in any person means any loan or advance to, any acquisition of
capital stock, obligation or other security of, or capital contribution or
other investment in, such person.

"issue" means issue, assume, guarantee, incur or otherwise become liable for;
provided, however, that any debt or capital stock of a person existing at the
time such person becomes a subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be issued by such subsidiary at
the time it becomes a subsidiary.

"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, and excluding any other consideration received in the form of
assumption by the acquiring person of debt or other obligations relating to
such properties or assets or received in any other noncash form) therefrom, in
each case net of all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all Federal, state, provincial, foreign
and local taxes required to be accrued as a liability under generally accepted
accounting principles, as a consequence of such Asset Disposition, and in each
case net of all payments made on any debt which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any lien
upon or other security agreement of any kind with respect to such assets, or
which must by its terms, or in order to obtain a necessary consent to such
Asset Disposition, or by applicable law be repaid out of the proceeds from such
Asset Disposition, and net of amounts thereof allocable to minority interest
holders in subsidiaries.

"Net Cash Proceeds", with respect to any issuance or sale of capital stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.

"Permitted Holders" means, as of the date of determination, (a) Borden and
its subsidiaries, (b) Kohlberg Kravis Roberts & Co., a New York general
partnership, its successors and its affiliates and (c) (i) any officer or other
member of management employed by Borden, the General Partner, the Operating
Company or any subsidiary for the 12-month period prior to the date of
determination; (ii) any persons described in clause (i) who have retired
(including as the result of disability) after the date of the Indenture from
the employment of Borden, the General Partner, the Operating Company or any
subsidiary in the ordinary course of business; (iii) family members or the
relatives of the persons described in clauses (i) and (ii); (iv) any trusts
created for the benefit of the persons described in clauses (i), (ii), (iii) or
(v); (v) in the event of the incompetence or death of any of the persons
described in clauses (i), (ii) and (iii), such person's estate, executor,
administrator,

committee or other personal representative, or beneficiaries, in each case who
at any particular date shall beneficially own or have the right to acquire,
directly or indirectly, capital stock and (vi) any person, the management of
which is controlled by one or more persons described in clause (i) or (ii);
provided, however, that in connection with the transaction that otherwise would
constitute a Change of Control were the persons described in this clause (c)
not Permitted Holders, any debt incurred as a result thereof shall not be
recourse to any of the assets of the Operating Company or any subsidiary.

"Redeemable Stock" means any capital stock that by its terms or otherwise is
required to be redeemed prior to the first anniversary of the stated maturity
of the Notes or is redeemable at the option of the holder thereof at any time
prior to the first anniversary of the stated maturity of the Notes.

"Subordinated Obligation" means any Debt of the Company (whether outstanding
on the date hereof or hereafter incurred) that is subordinate or junior in
right of payment to the Notes.

"Voting Stock" of any person means, with respect to a corporation, all
classes of capital stock of such corporation then outstanding and normally
entitled to vote in the election of directors or, with respect to a
partnership, any general partnership interest in such partnership.

THE OLD NOTES AND THE WORKING CAPITAL FACILITY

General. The Operating Company is party to (i) the Note Agreement with the
Old Noteholders and (ii) a Revolving Credit Agreement dated as of November 20,
1987 (the "Revolving Credit Agreement"), with the lender (the "Lender")
specified therein. The Company has not incurred any indebtedness or entered
into any borrowing arrangements, although as described herein the Company has
provided certain assurances for the benefit of the Old Noteholders and the
Lender.

The following summary of certain provisions contained in the Note Agreement
and the Revolving Credit Agreement and related documents does not purport to
the complete and is subject to, and is qualified in its entirety by reference
to, the provisions of the Note Agreement and the Revolving Credit Agreement.

The Old Notes. Simultaneously with the initial offering of Preference Units
in November 1987, the Operating Company issued and sold in a private placement
$150.0 million aggregate principal amount of Old Notes to the Old Noteholders
pursuant to the Note Agreement. The entire net proceeds of such issuance and
sale were distributed and paid to Borden and its affiliates in connection with
the contribution by Borden of the Geismar complex, the Illiopolis plant and
related assets to the Operating Company. As described under "Use of Proceeds",
the Company intends to prepay the Old Notes with the proceeds of the Notes
offering and has initiated discussions with the Old Noteholders to obtain their
consent to such prepayment.

An aggregate of $90.0 million principal amount of the Old Notes will mature
in 1997 and bear interest at 10.70% per annum (the "1997 Notes") and an
aggregate of $60.0 million principal amount of the Old Notes will mature in
1999 and bear interest at 11.10% per annum (the "1999 Notes"). The Operating
Company does not have the right to prepay the Old Notes prior to maturity.
However, it is obligated to redeem, at a redemption price equal to 100% of the
principal amount thereof plus accrued interest to the redemption date, $30.0
million principal amount of the 1997 Notes in each of 1995 and 1996 (with the
remaining $30.0 million being due upon maturity in 1997) and $30.0 million
principal amount of the 1999 Notes in 1998 (with the remaining $30.0 million
being due upon maturity in 1999). Further, the Operating Company is obligated
to offer to purchase the Old Notes prior to maturity if, at any time prior to
the tenth anniversary of the issuance of the Old Notes (i) more than 50% of the
Units that were originally Preference Units are owned beneficially or of record
by any person or group of related persons (other than Borden and its
affiliates) or (ii) Borden or its affiliates cease to own at least a majority
of the outstanding voting stock of the general partner of the Operating Company
other than by reason of removal of BCPM as the General Partner by action of the
Limited Partners pursuant to the provisions of the Partnership Agreement. In
connection with any such repurchase, the purchase price would be equal to 100%
of the principal amount of the Old Notes being repurchased plus interest
accrued to the date of repurchase and an additional amount calculated to enable
the holders of the Old Notes to avoid any loss resulting from the repurchase of
the Old Notes prior to their stated maturity.

So long as any of the Old Notes are outstanding, under the Note Agreement,
distributions by the Operating Company to the Company as to any quarter may be
made only to the extent of the Operating Company's Available Cash (as defined
in the Note Agreement) with respect to such quarter, provided that no such
distribution may be made unless, after giving effect to such distribution, (a)
no condition or event exists which constitutes an event of default or could
become an event of default upon the giving of notice or the passage of time or
both, and (b) either (i) the aggregate of all such distributions made during
the period from the date of the issuance of the Old Notes through the date of
such proposed distribution shall not exceed the Operating Company's Cash from
Operations (as so defined) during such period or (ii) the Operating Company's
Total Indebtedness (as so defined) shall not exceed 50% of its Consolidated Net
Tangible Assets (as so defined). The definitions of Available Cash and Cash
from Operations relating to the Operating Company included in the Note
Agreement do not differ materially from those relating to the Company contained
in the Partnership Agreement except that (i) the definition of Available Cash
included in the Note Agreement provides for a deduction for any reserves
created in the reasonable discretion of the General Partner for the payment of
the Operating Company's debt service obligations, (ii) although the definition
of Cash from Operations under the Partnership Agreement includes as cash
receipts in the determination of Cash from Operations relating to the Company
all amounts borrowed for working capital purposes, the definition in the Note
Agreement limits the amount of working capital which may be included as cash
receipts in determination of the Operating Company's Cash from Operations to
$20.0 million subject to adjustment on a proportional basis to reflect any
future increases or decreases in the total gross revenues of the Operating
Company, and (iii) although the definitions of Available Cash and Cash from
Operations under the Note Agreement include as a deduction in the determination
of Available Cash and Cash from Operations relating to the Operating Company
amounts expended for certain types of Investments (as so defined), the
definition in the Partnership Agreement does not include such deduction in the
determination of Available Cash or Cash from Operations relating to the
Company.

The Note Agreement (a) with certain exceptions, limits the right of the
Operating Company and its Restricted Subsidiaries (as so defined) (if any) to
create liens on their respective assets; (b) with certain exceptions, prohibits
the issuance, assumption or guarantee of Indebtedness (as so defined, but
excluding the Old Notes and certain other Indebtedness) in excess of the sum of
$50.0 million plus 100% of the proceeds of any sale after issuance of the Old
Notes by the Operating Company of its limited partner interests if, after
giving effect to such borrowing, the Total Indebtedness (as so defined) of the
Operating Company does not exceed 55% of its Consolidated Net Tangible Assets
(as so defined) or 50% of such proceeds if Total Indebtedness exceeds 55% of
such Consolidated Net Tangible Assets; (c) restricts certain consolidations,
mergers and sales of all or substantially all of the assets of the Operating
Company and its Restricted Subsidiaries (as so defined; (d) prohibits
Investments (as so defined) other than (i) Investments in readily marketable
obligations of the United States or any state thereof or any political
subdivision of any such state having one of the two highest ratings obtainable
from either Standard and Poor's Corporation or Moody's Investors Service, Inc.,
(ii) investments in commercial paper having a maturity of no more than 270 days
and one of the two highest ratings obtainable from either Standard and Poor's
Corporation or Moody's Investors Service, Inc., (iii) Investments in certain
short-term certificates of deposit; (iv) Investments in Restricted
Subsidiaries, and (v) other Investments not exceeding $5.0 million in the
aggregate; (e) prohibits sales of assets (other than inventory, accounts
receivable and certain retirements and replacements) if (i) the aggregate book
value of the assets sold in any fiscal year exceeds 10% of such Consolidated
Net Tangible Assets as of the end of the preceding fiscal year or (ii) the
total book value of all of the assets sold after the issuance and sale of the
Old Notes exceed 30% of such Consolidated Net Tangible Assets or (iii) the
assets to be sold produced operating income during either of the two most
recently completed fiscal years in excess of 10% of the Operating Company's
consolidated operating income for either of such years; (f) prohibits
amendments, modifications or supplements to the Operating Company Agreement if
such amendments, modifications or supplements would have a material adverse
effect on the Operating Company or its ability to perform its obligations under
the Note Agreement or the Old Notes; (g) prohibits the Operating Company from
engaging in any line of business other than the business as described in the
Registration Statement of the Company dated November 20, 1987 and activities
incidental or related thereto; (h) requires the Operating Company to

comply with, and not terminate or amend, the Purchase Agreements and Processing
Agreements and certain other agreements between Borden and the Operating
Company unless the General Partner by Special Approval in good faith determines
that such actions will not adversely affect the Operating Company or its
ability to perform its obligations under the Note Agreement and the Old Notes;
and (i) prohibits or limits certain other actions.

Borden Undertaking. In connection with the Note Agreement, Borden agreed
pursuant to the Borden Purchase Obligation that: (a) in the event of a
specified change in control of Borden, the holder or holders of any Old Notes
will have the right, under certain circumstances, to require Borden to purchase
the Old Notes at a price equal to 100% of the principal amount thereof plus
interest accrued to the date of purchase and the Change of Control Premium; (b)
Borden will not permit the Company to engage in any business other than the
ownership of partnership interests in the Operating Company and activities
directly related thereto, or to incur any indebtedness; and (c) Borden will
comply with, and not terminate or amend, the Purchase Agreements and Processing
Agreements and certain other agreements between Borden and the Operating
Company unless the General Partner by Special Approval determines in good faith
that such actions will not adversely affect the Operating Company or its
ability to perform its obligations under the Note Agreement and the Old Notes.

In connection with the Note Agreement, the Company agreed (the "Company
Undertaking") not to engage in any business other than its ownership of
partnership interests in the Operating Company and any activities directly
related thereto or issue, assume or guarantee any indebtedness so long as the
Old Notes are outstanding.

The Note Agreement provides for an event of default in the event that Borden
breaches any of its obligations under the Borden Purchase Obligation or the
Company breaches any of its obligations under the Company Undertaking as well
as for usual events of default on the part of the Operating Company as borrower
and for the acceleration of the Old Notes upon the occurrence and continuance
of any event of default. If the Old Notes are accelerated, the Operating
Company would be obligated to pay 100% of the outstanding principal amount of
the Old Notes plus accrued interest and an amount calculated to avoid the
incurrence of any loss by the holders of the Old Notes resulting from the
payment of the Old Notes prior to their respective stated maturities. The Note
Agreement provides that no recourse may be had against the General Partner for
payment of the Old Notes.

Working Capital Facility. The Operating Company has in effect a short-term
unsecured working capital facility of up to $20.0 million (the "Working Capital
Facility") under the Revolving Credit Agreement to support working capital
requirements. The Working Capital Facility permits short-term borrowing by the
Operating Company of up to $20.0 million outstanding at any time. Borrowings
under the Working Capital Facility will bear interest at either of the
following floating rates as selected from time to time by the Operating
Company: (i) the prime rate of interest established from time to time by the
lender under the Working Capital Facility or (ii) quoted money market rates. As
of the date of this prospectus, no borrowings under the Working Capital
Facility were outstanding. The Revolving Credit Agreement incorporates by
reference the covenants of the Operating Company contained in the Note
Agreement. Accordingly, whether or not the Old Notes are refinanced, the
covenants of the Operating Company provided with respect to the Old Notes and
described above will continue to apply so long as the Revolving Credit
Agreement is in effect in accordance with its terms. The Revolving Credit
Agreement requires that during each period of twelve consecutive months
borrowings under the Working Capital Facility be repaid for a period of 30
consecutive days. The Revolving Credit Agreement was for an initial term of one
year commencing November 30, 1987 and automatically renews for successive terms
of one year subject to termination by the Operating Company at any time upon
thirty days' notice and by the lender at the end of the original term or any
renewal term upon sixty days' notice. The Revolving Credit Agreement provides
that no recourse may be had against the General Partner for payment of the
borrowings thereunder.

ALLOCATIONS OF INCOME AND LOSS

The Partnership Agreement provides that, for capital account maintenance and
federal income tax purposes, items of income, gain, loss, deduction and credit
are generally allocated among the Unitholders and the General Partner in
accordance with their percentage interests. There are certain important
exceptions to this general principle. An allocation of gross income will be
made to any Unitholder or the General Partner in the event such Unitholders or
the General Partner receives a distribution of cash (other than in connection
with liquidation and dissolution) which is disproportionate to a distribution
of cash received by any other Unitholders or the General Partner. The amount of
any such gross income allocation will generally be the amount by which the
disproportionate distribution (on a per Unit basis and with respect to the
General Partner as if its interest was represented by Units) exceeds the
distribution to the other Unitholders. Further, an allocation of loss,
deduction or a nondeductible item which results in a deficit balance in a
Unitholder's capital account in excess of such Unitholder's share of minimum
gain (see "Certain Federal Income Tax Considerations--Tax Consequences of Unit
Ownership--Allocations of Income and Losses") will, to the extent of such
excess, be allocated to the General Partner and the General Partner will be
allocated a like amount of subsequent income or gain otherwise allocable to the
other Unitholders.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The Company, the Operating Company and BCPM have been advised by their
special counsel, Sidley & Austin ("Counsel"), that the following summary
correctly describes the material federal income tax matters of general
application that should be considered by prospective Unitholders who are
individual citizens or residents of the United States, and to the extent set
forth below under "-- Legal Opinion and Advice", represents the opinion of
Counsel, insofar as it relates to matters of law and legal conclusion. It is
impractical to comment on all aspects of federal, state, local and foreign laws
that may affect the tax consequences of the transactions contemplated by the
offering of Units made hereby and of an investment in such Units. Each
prospective Unitholder should consult, and must depend on, his own tax advisor
concerning the federal, state, local and foreign tax consequences to him before
deciding to acquire Units.

Except as otherwise noted herein, this summary is based on current provisions
of the Code, existing and proposed regulations thereunder and current
administrative rulings and court decisions. The tax provisions discussed in
this section are in many cases subject to varying interpretations. No assurance
can be given that future legislative or administrative changes or court
decisions would not require significant modification of the conclusions
expressed in this section.

Except where indicated, the discussion below describes general federal income
tax considerations applicable to individuals who are citizens or residents of
the United States. Accordingly, the following discussion has limited
application to domestic corporations and persons subject to specialized federal
income tax treatment, such as foreign persons, tax-exempt entities and
insurance companies.

LEGAL OPINIONS AND ADVICE

Counsel has rendered its opinion that, based on the representations and
subject to the qualifications set forth in the detailed discussion which
follows, for federal income tax purposes (a) each of the Company and the
Operating Company will be treated as a partnership (but, in the case of the
Company, such treatment will not extend beyond the Company's taxable year
ending December 31, 1997), (b) the owners of Units (other than an owner who is
entitled to execute and deliver a Transfer Application but who has failed to do
so) will be treated as partners of the Company (but such treatment will not
extend beyond the Company's taxable year ending December 31, 1997) and (c) the
acquisition of the Addis Assets by the Operating Company will not be the
addition of a substantially new line of business with respect to the Company.
Counsel bases its opinions on its interpretation of the Code and Treasury
Regulations issued thereunder, judicial decisions, the facts set forth in this
Prospectus and certain factual representations made by BCPM, and its opinion is
subject to the accuracy of such facts.

Counsel's opinions represent only its best legal judgment and do not bind the
IRS or the courts. Thus, no assurance can be provided that the opinions and
statements set forth herein will be sustained by a court if contested, or will
not be significantly modified by court decisions or future legislative or
administrative changes, which may or may not be retroactively applied with
respect to the Partnerships or the Unitholders. In addition, even if the
Company, the Operating Company, or the Unitholders prevail in any such contest,
the Company, the Operating Company, or the Unitholders may incur substantial
costs in connection with such contest. To the extent that such fees are
incurred by the Company, the Operating Company, the costs will be borne
indirectly by all partners; to the extent such fees are incurred by a
Unitholder, he will not be reimbursed by the Company, the Operating Company,
and, therefore, will bear such costs directly.

PARTNERSHIP STATUS

In rendering its opinion as described above that the Company and the
Operating Company will be treated as partnerships for federal income tax
purposes, Counsel has relied on the following representations by BCPM:

1. BCPM will have at all relevant times a net worth at least equal to
$37,500,000, and the General Partner's net worth will be increased by an
amount equal to 10% of any additional capital contributions to the Company
or the Operating Company, including amounts contributed pursuant to the
proposed transactions described in this Prospectus. For purposes of the
foregoing, "net worth" means the excess of (x) the fair market value of all
assets of BCPM (exclusive of any interest in, and notes and accounts
receivable from, any limited partnership in which BCPM has any interest)
over (y) all liabilities of BCPM.

2. The Company and the Operating Company will be operated in accordance
with applicable state partnership statutes, the Partnership Agreements and
the statements and representations made in this Prospectus.

3. BCPM will, at all times during the existence of the Company and the
Operating Company, have at least a one percent interest in each material
item of income, gain, loss, deduction and credit of each of the Company and
the Operating Company.

Counsel's opinion as to the partnership status of the Company and the Operating
Company in the event that BCPM is not the General Partner of the Company or the
Operating Company, as the case may be, is based on the assumption that any new
general partner will be able to make and satisfy the foregoing representations.
In addition, prospective Unitholders should note that Counsel's opinion is
expressly conditioned on the maintenance by BCPM of the net worth specified
above (including any additional amounts required as a result of capital
contributions). BCPM is precluded, under the Intercompany Agreement and the
Partnership Agreement, from entering into other businesses and incurring
liabilities other than in its capacity as General Partner of the Company and
the Operating Company. In addition, BCPM has agreed in the Intercompany
Agreement not to make any distribution to Borden, its sole stockholder, if
immediately after such distribution the net worth of BCPM would be reduced
below the requisite amount. In the event the net worth of BCPM is reduced as a
result of a breach of the foregoing provisions of the Intercompany Agreement or
the Partnership Agreement, Borden will be obligated to contribute additional
capital to BCPM to restore such net worth. However, if the net worth of BCPM is
reduced below the requisite amount other than as a result of a breach of the
foregoing provisions of the Partnership Agreement or Intercompany Agreement,
Borden will have no obligation to contribute additional capital to BCPM in
order to increase BCPM's net worth. Further, neither Borden nor BCPM will have
any obligation to maintain BCPM's net worth, except as described in this
paragraph.

Counsel's opinion as to the partnership status of the Company and the
Operating Company is based upon the provisions of Treasury Regulation Section
301.7701-2, and judicial decisions and IRS rulings construing those provisions.
Treasury Regulation Section 301.7701-2 provides that an organization which
qualifies under state law as a limited partnership will be classified as a
partnership for federal income tax purposes unless it has more corporate
characteristics than noncorporate characteristics. The Treasury Regulation
provides that the principal characteristics which are unique to a corporation
are (i) centralized

management, (ii) continuity of life, (iii) free transferability of interests
and (iv) limited liability. Counsel is of the opinion that neither the Company
nor the Operating Company possesses a majority of the foregoing corporate
characteristics and, thus, each will be treated as a partnership for federal
income tax purposes (but, in the case of the Company, such treatment will not
extend beyond the Company's taxable year ending December 31, 1997).

No federal income tax ruling will be sought from the IRS as to the status of
the Company and the Operating Company as partnerships. However, Counsel's
opinion as to the partnership status of the Company and the Operating Company
depends upon the ability of the Company and the Operating Company to meet the
criteria set forth by the IRS which must be met for limited partnerships to
receive advance rulings as to their classification as partnerships for federal
income tax purposes.

A partnership is not a taxable entity and incurs no federal income tax
liability. Instead, each partner is required to take into account in computing
his federal income tax liability his allocable share of income, gains, losses,
deductions and credits of the partnership regardless of whether cash
distributions are made. Distributions by a partnership to a partner are
generally not taxable unless the distribution is in excess of the partner's
adjusted basis in his partnership interest.

Publicly Traded Partnership Status. Section 7704 of the Code generally treats
publicly traded limited partnerships as corporations for federal income tax
purposes for taxable years beginning after December 31, 1987. However, a
"grandfather" provision applicable to Section 7704 of the Code treats publicly
traded partnerships existing on December 17, 1987, including the Company, as
partnerships for federal income tax purposes until their first taxable year
beginning after December 31, 1997. The benefit of the "grandfather" provision
will cease and the Company will be treated as a corporation for federal income
tax purposes at an earlier date if the Company adds a substantial new line of
business. Based on certain representations of BCPM, in the opinion of Counsel,
the acquisition of the Addis Assets by the Operating Company will not be
treated as the addition of a substantial new line of business with respect to
the Company. Although legislation has been introduced that, if enacted, would
permanently extend the "grandfather" provision, it cannot be predicted whether
such proposed legislation would be enacted.

Automatic Taxation as Corporation after 1997. Under Section 7704 of the Code,
the Company will be treated solely for tax purposes as a corporation for
taxable years beginning after December 31, 1997. At the time the Company is
treated as a corporation under the publicly traded partnership rules, it will
be treated as contributing all of its assets (subject to all of its
liabilities) to a newly formed corporation (the "Corporation") in exchange for
all of the Corporation's stock and as distributing such stock to Unitholders in
complete liquidation of the Company (such deemed contribution and distribution
being referred to herein as the "Tax Conversion").

The Tax Conversion will generally be tax-free to the Unitholders and to the
Company except to the extent the Company's aggregate tax basis in its assets is
less than the liabilities assumed by the Corporation. Subsequent to the Tax
Conversion, a Unitholder will have a tax basis in the Corporation's stock equal
to such Unitholder's adjusted tax basis in his Units minus such Unitholder's
share of the liabilities assumed by the Corporation.

After the Tax Conversion, a Unitholder will be taxable only on distributions
received from the Corporation, if any. Nonliquidating distributions will be
taxable as dividends to the extent of any current or accumulated earnings and
profits of the Corporation. Any nonliquidating distributions in excess of
current or accumulated earnings and profits of the Corporation, or any
liquidating distributions will be treated as a tax free return of capital to
the extent of the Unitholder's basis in the Corporation's stock and as capital
gain to the extent of the balance, assuming that such stock is held as a
capital asset. The Tax Conversion would cause the Company's taxable year to
close as to all Unitholders on December 31, 1997.

Following the Tax Conversion, all of the assets and liabilities formerly
owned by the Company will be owned by the Corporation. The Corporation will not
recognize any gain or loss on the Tax Conversion. Subsequent to the Tax
Conversion, the income, gains, losses, deductions and credits attributable to
the assets

and liabilities previously held by the Company will be included in the tax
return filed by the Corporation, and the Corporation will pay taxes on any
taxable income it recognizes from time to time.

The principal tax disadvantage of the treatment of the Company as a
corporation is that a corporation pays taxes on its net income and in addition,
its shareholders pay taxes on any dividends from the corporation, whereas a
partnership pays no entity-level tax for federal income tax purposes and its
partners pay tax on their share of the partnership net income and on
distributions that exceed their tax basis in their partnership interests.
Accordingly, the treatment of the Company as the Corporation subsequent to the
Tax Conversion will result in a material reduction in a Unitholder's cash flow
and after-tax return.

The foregoing discussion of tax consequences relating to the Tax Conversion
is based on the assumption that not more than 20% of the stock of the
Corporation transferred to Unitholders pursuant to the Tax Conversion will be
subsequently sold pursuant to purchase agreements entered into prior to the Tax
Conversion.

The discussion below is based on the assumption that each of the Company and
the Operating Company will be classified as a partnership for federal income
tax purposes. If that assumption proves to be erroneous, most, if not all, of
the tax consequences described below would not be applicable to Unitholders.

PARTNER STATUS

Unitholders who have become Limited Partners pursuant to the provisions of
the Partnership Agreement will be treated as partners of the Company for
federal income tax purposes.

The IRS has ruled that assignees of partnership interests who have not been
admitted to a partnership as partners, but who have the capacity to exercise
substantial dominion and control over the assigned partnership interests, will
be treated as partners for federal income tax purposes. On the basis of such
ruling, except as otherwise described herein, (a) Assignees who have executed
and delivered Transfer Applications, and are awaiting admission as limited
partners, and (b) Unitholders whose Units are held in street name or by another
nominee, will be treated as partners for federal income tax purposes. As such
ruling does not extend, on its facts, to assignees of Units who are entitled to
execute and deliver Transfer Applications and thereby become entitled to direct
the exercise of attendant rights, but who fail to execute and deliver Transfer
Applications, the tax status of such Unitholders is unclear. Such Unitholders
should consult their own tax advisors with respect to their status as partners
in the Company for federal income tax purposes. A purchaser or other transferee
of Units who does not execute and deliver a Transfer Application may not
receive certain federal income tax information or reports furnished to record
holders of Units, unless the Units are held in a nominee or street name account
and the nominee or broker has executed and delivered a Transfer Application
with respect to such Units.

A beneficial owner of Units whose Units have been transferred to a short
seller to complete a short sale would appear to lose his status as a partner
with respect to such Units for federal income tax purposes. See "--Tax
Treatment of Operations--Treatment of Short Sales" below.

TAX CONSEQUENCES OF UNIT OWNERSHIP

Treatment of Company Distributions. Distributions by the Company to a
Unitholder generally will not be taxable to such Unitholder for federal income
tax purposes to the extent of his basis in his Units immediately before the
distribution. Cash distributions in excess of such basis generally will be
considered to be gain from the sale or exchange of the Units, taxable in
accordance with the rules described below under "--Disposition of Units." Any
reduction in a Unitholder's share of the nonrecourse liabilities (as defined
below) of the Company and the Operating Company will be treated as a
distribution of cash to such Unitholder. Payments with respect to the Old Notes
and the Notes by the Operating Company, as well as a decrease in a Unitholder's
percentage interest in the Company because of an offering of additional Units
by the Company, will decrease such Unitholder's share of nonrecourse debt, and
thus will result in a corresponding deemed distribution of cash.

A non pro-rata distribution of money or property which is treated as received
by a Unitholder in exchange for his share of the Company's "unrealized
receivables" (including depreciation recapture) and/or

substantially appreciated "inventory items" (both as defined in Section 751 of
the Code) will generally result in the realization of ordinary income to the
extent that such distribution is in excess of his basis for such Unitholder's
share of such unrealized receivables and inventory items relinquished in the
exchange. A non-pro rata distribution might be deemed to occur with respect to
the existing partners if the Company issued additional Units at a time when the
Company's assets were subject to nonrecourse liabilities.

Flow-Through of Taxable Income. The Company's income, gains, losses,
deductions and credits will consist of its allocable share of the income,
gains, losses, deductions and credits of the Operating Company. Unitholders
will be required to take into account their allocable shares of income, gains,
losses, deductions and credits of the Operating Company (through the Company)
without regard to whether corresponding cash distributions are received by
Unitholders.

Basis of Units. In general, a Unitholder's tax basis for his Units initially
will be equal to the price of such Units to him plus his share of those
liabilities of the Company that are without recourse to any partner including
the General Partner ("nonrecourse liabilities"). The Old Notes are, and the
Notes would be, nonrecourse liabilities. A Unitholder's tax basis will
generally be increased by (a) his share of the Company's taxable income and (b)
his share of increases in nonrecourse liabilities incurred by the Company and
the Operating Company. Generally, a Unitholder's basis in his interest will be
decreased (but not below zero) by (i) his share of Company distributions, (ii)
his share of decreases in nonrecourse liabilities of the Company, (iii) his
share of losses of the Company and (iv) his share of nondeductible expenditures
of the Company which are not chargeable to capital. See "Disposition of Units--
Aggregate Tax Basis for Units" below.

Limitations on Deductibility of Company Losses. To the extent losses are
incurred by the Company, a Unitholder's share of deductions for the losses will
be limited to the tax basis of the Unitholder's Units and, in the case of an
individual Unitholder, to the amount which the Unitholder is considered to be
"at risk" with respect to the Company's activities, if that is less than the
Unitholder's basis. A Unitholder must recapture losses deducted in previous
years to the extent that Company distributions cause the Unitholder's at risk
amount to be less than zero at the end of any taxable year. Losses disallowed
to a Unitholder or recaptured as a result of these limitations will carry
forward and will be allowable to the extent that the Unitholder's basis or at
risk amount (whichever is the limiting factor) is increased.

In general, a Unitholder will be at risk to the extent of the purchase price
of his Units. A Unitholder's at risk amount will increase or decrease as the
basis of the Unitholder's Units increases or decreases.

The passive loss limitations generally provide that individuals, estates,
trusts and certain closely held corporations and personal service corporations
can deduct losses from passive activities (generally, activities in which the
taxpayer does not materially participate) that are not in excess of the
taxpayer's income only from such passive activities or investments. The passive
loss limitations are to be applied separately with respect to each publicly
traded partnership. Accordingly, the losses generated by the Company, if any,
will be available only to offset future income generated by the Company and
will not be available to offset income from other passive activities or
investments (including other publicly traded partnerships) or salary or active
business income. Passive losses that are not deductible because they exceed the
Unitholder's income generated by the Company may be deducted in full when the
Unitholder disposes of his entire investment in the Company in a fully taxable
transaction to an unrelated party. The passive activity loss rules are applied
after other applicable limitations on deductions such as the at risk rules and
the basis limitation discussed above.

A Unitholder's share of net income from the Company may be offset by any
suspended passive losses from the Company, but it may not be offset by any
other current or carryover losses from other passive activities, including
those attributable to other publicly traded partnerships. The IRS has announced
that Treasury Regulations will be issued which characterize net passive income
from a publicly traded partnership as investment income for purposes of the
limitations on the deductibility of investment interest.

Limitation on Interest Deductions. The deductibility of a non-corporate
taxpayer's "investment interest" expense is generally limited to the amount of
such taxpayer's "net investment income." As noted, a Unitholder's net passive
income from the Company will be treated as investment income for this purpose.
In addition, the Unitholder's share of the Company's portfolio income (i.e.,
income from interest, dividends, annuities and royalties not derived in the
ordinary course of trade or business) and certain gains from the disposition of
investment property (including the Units) will be treated as investment income.
Investment interest expense includes (i) interest on indebtedness properly
allocable to property held for investment, (ii) a partnership's interest
expense attributed to portfolio income and (iii) the portion of interest
expense incurred or continued by a partner to purchase or carry an interest in
a passive activity to the extent attributable to portfolio income. The
computation of a Unitholder's investment interest expense will take into
account interest on any margin account borrowing or other loan incurred to
purchase or carry a Unit to the extent attributable to portfolio income
pursuant to the passive loss rules and, as noted above, net passive income from
the Company less deductible expenses (other than interest) directly connected
with the production of investment income. In addition, a Unitholder's share of
the Company's portfolio income from the foregoing sources will be treated as
investment income. A non-corporate taxpayer's net capital gain from the
disposition of investment property is included in investment income only to the
extent such taxpayer elects to make corresponding reduction in the amount of
net capital gain that is subject to tax at the maximum rate applicable to net
capital gains, currently 28%. Investment interest deductions that are
disallowed may be carried forward and deducted in subsequent years to the
extent of net investment income in such years.

Allocation of Income and Losses. In general, the Company's items of income,
gain, loss, deduction and credit will be allocated for book and tax purposes,
in accordance with the percentage interests of the General Partner and the
Unitholders. However, as discussed below, special allocations for book and tax
purposes will generally be made to reflect disproportionate distributions of
cash. Also, special tax (but not book) allocations will be made to reflect
Book-Tax Disparities (as defined below) with respect to Contributed Properties
(as defined below), Adjusted Properties (as defined below), recapture income
and recaptured credits. In addition, the General Partner is empowered by the
Partnership Agreement to allocate various Company items other than in
accordance with the percentage interests when, in its judgment, such special
allocations are necessary to comply with applicable provisions of the Code and
Treasury Regulations and to achieve uniformity of Units. See "--Uniformity of
Units" below.

Under Section 704(b) of the Code, a special allocation of income, gain, loss,
deduction or credit (or an item thereof) by a partnership to a partner will not
be given effect for federal income tax purposes unless the allocation has
"substantial economic effect." If the allocation does not have "substantial
economic effect," a partner's distributive share will be recomputed on the
basis of the partner's interest in the partnership, taking into account all
facts and circumstances. Generally, an allocation has substantial economic
effect if there is a reasonable possibility that the allocation will affect
substantially the dollar amounts to be received by the partners from the
partnership, independent of tax consequences.

Treasury Regulations under Section 704(b) of the Code (the "Section 704(b)
Regulations") delineate the circumstances under which the IRS will view
partnership allocations as having "economic effect" and as being "substantial."
Generally, for an allocation to have "economic effect" under the Section 704(b)
Regulations (a) the allocation must be reflected as an appropriate increase or
decrease in each partner's capital account, (b) liquidation proceeds must,
throughout the term of the partnership, be distributable in accordance with the
partners' positive capital account balances and (c) any partner with a deficit
in his capital account following the distribution of liquidation proceeds must
be required to restore the amount of such deficit to the partnership, which
amount is to be distributed to partners in accordance with their positive
capital account balances or paid to creditors.

In general, for capital accounts to reflect the economic arrangement among
the partners, the Section 704(b) Regulations provide that a partner's capital
account must be increased by (i) the amount of money he has contributed to the
partnership, (ii) the fair market value of property he has contributed to the
partnership (net of liabilities encumbering the contributed property that the
partnership is considered to assume or take

subject to under Section 752 of the Code) and (iii) his distributive share of
partnership income and gain (or items thereof), including income and gain
exempt from tax. A partner's capital account must be decreased by (i) the
amount of money distributed to him by the partnership, (ii) the fair market
value of property distributed to him by the partnership (net of liabilities
encumbering the distributed property that he is considered to assume or take
subject to under Section 752 of the Code), (iii) his distributive share of
certain partnership syndication expenses that are neither deductible nor
amortizable and (iv) his distributive share of partnership losses and
deductions.

In addition, the Section 704(b) Regulations permit the partners' capital
accounts to be increased or decreased to reflect the revaluation of partnership
property (at fair market value) if the adjustments are made for a substantial
non-tax business purpose in connection with a contribution or distribution of
money or other property as consideration for the acquisition or relinquishment
of an interest in the partnership. Crediting a partner's book capital account
with a property's fair market value, however, creates a disparity between the
partner's book capital account and his "tax" capital account (a "Book-Tax
Disparity"), because the tax capital account reflects only recognized tax
consequences (i.e., it reflects only the tax basis rather than the value of
partnership property). Book-Tax Disparities are eliminated through allocations
that cause the partner whose book capital account reflects built-in gain or
loss to bear the corresponding tax benefit or burden in accordance with the
principles of Section 704(c) of the Code. One of the fundamental concepts
underlying the Section 704(b) regulations is that the partners' allocable
shares of all items of book income, gain, loss and deduction are governed by
Section 704(b) of the Code, once the appropriate book treatment has been
determined. The principles of Section 704(c) of the Code govern the partners'
distributive shares of all tax items attributable to a Book-Tax Disparity.

Special allocations may have "economic effect" even in the absence of a full
obligation to restore deficit capital accounts on the liquidation of the
partnership, if (1) the agreement contains a "qualified income offset"
provision, and (2) the special allocation does not cause or increase a deficit
balance in a partner's specially adjusted capital account (as adjusted for
certain items such as reasonable anticipated future distributions) as of the
end of the partnership taxable year to which the allocation relates. A
qualified income offset requires that in the event of any unexpected
distribution (or specified adjustments or allocations) there must be an
allocation of income or gain to the distributee that eliminates the resulting
capital account deficit as quickly as possible.

In general, deductions and credits associated with nonrecourse debt of a
partnership must be allocated in accordance with the partners' interests in the
partnership. The amount of nonrecourse deductions for a partnership taxable
year equals the net increase, if any, in the amount of partnership "minimum
gain" during that taxable year. Partnership minimum gain is determined by
computing, with respect to each nonrecourse liability of the partnership, the
amount of gain, if any, that the partnership would realize for tax purposes by
disposing of the partnership property (subject to such liability) in a taxable
transaction in full satisfaction of such liability. If, however, partnership
property subject to one or more nonrecourse liabilities of the partnership is
properly reflected on the books of the partnership at a book value that differs
from the adjusted tax basis of such property, the book value, rather than the
adjusted tax basis, of the partnership property is used to compute the minimum
gain.

Pursuant to the Section 704(b) Regulations, deductions attributable to
nonrecourse debt will be deemed to be allocated in accordance with the
partners' interests in a partnership if the partnership agreement provides that
allocations of nonrecourse deductions are made in a manner that is reasonably
consistent with allocations of other significant partnership items of income or
loss attributable to partnership property securing the nonrecourse liabilities
(other than minimum gain recognized by the partnership). In addition, if a
partner does not have an obligation to restore a negative balance in his
capital account, the partnership agreement must contain a "minimum gain
chargeback" provision. A partnership agreement contains a minimum gain
chargeback provision if it provides that if there is a net decrease in
partnership minimum gain during a partnership taxable year, each partner will
be allocated items of partnership income and gain for that year equal to such
partner's share of the net decrease in partnership minimum gain.

A special allocation must not only have economic effect to be respected, but
such economic effect must also be substantial. The economic effect of an
allocation is substantial if there is a reasonable possibility that the
allocation will affect substantially the dollar amounts to be received by the
partners from the partnership, independent of tax consequences.

The manner of allocation for items of income, gain, loss, deduction and
credit for both book and tax purposes is set forth in the Partnership
Agreement. In general, except in the case of liquidating distributions,
allocations are made to the Unitholders and the General Partner in accordance
with their percentage interests in the Company (i.e., pro rata in accordance
with their respective Capital Contribution). However, the Partnership Agreement
provides, for both book and tax purposes, certain special allocations of income
and gain as required by the qualified income offset and minimum gain chargeback
provisions discussed above. In addition, to the extent that the cash
distributed to the General Partner in any year represents an incentive
distribution, the General Partner will be allocated a corresponding amount of
gross income. To the extent that the cash distributed to any Unitholder or the
General Partner (other than as an incentive distribution) is disproportionate
(on a per Unit basis) to the cash distributed to the other Unitholders, the
Unitholders (or the General Partner) receiving such disproportionate cash
distribution will receive a corresponding allocation of gross income. In both
cases, such allocations will be exclusive of (a) allocations with respect to
Contributed Property and Adjusted Property pursuant to the principles of
Section 704(c) of the Code and (b) allocations designed to eliminate Book-Tax
Disparities caused by the application of "ceiling" limitations (as described
below). The amount of the gross income allocation to the Unitholders (or the
General Partner) receiving a disproportionate distribution (other than an
incentive distribution) will be equal to the product of (x) the amount by which
such person's distribution (on a per Unit basis and with respect to the General
Partner as if its interest was represented by Units) exceeds the distribution
received (on a per Unit basis and with respect to the General Partner as if its
interest was represented by Units) by the Unitholder receiving the smallest
distribution and (y) the number of units owned by such person. Any allocation
of gross income to a Unitholder in accordance with the minimum gain chargeback
described above will reduce the amount of gross income to be allocated to
Unitholders in respect of such disproportionate distributions.

The Partnership Agreement further provides, solely for tax purposes, special
allocations of (a) income, gain, loss and deduction attributable to properties
contributed to the Company in exchange for Units ("Contributed Property"), (b)
income, gain, loss and deduction attributable to properties when the Company
has adjusted the book value of such properties upon the subsequent issuance of
any Units to reflect unrealized appreciation or depreciation in value from the
later of the Operating Company's acquisition date for such properties or the
latest date of a prior issuance of Units ("Adjusted Property"), (c) gross
income and deductions to preserve the uniformity of the intrinsic federal
income tax characteristics of Units issued or sold from time to time and (d)
recaptured income and recaptured credits resulting from the sale or disposition
of assets.

With respect to Contributed Property, the Partnership Agreement provides
that, for federal income tax purposes, items of income, gain, loss and
deduction shall first be allocated among the partners in a manner consistent
with Section 704(c) of the Code. Treasury Regulations provide that tax
allocations will be deemed to be in accordance with the partners' interests if
they are made in accordance with Section 704(c) principles. In addition, the
Partnership Agreement provides that items of income, gain, loss and deduction
attributable to any Adjusted Property shall be allocated for federal income tax
purposes in accordance with Section 704(c) principles.

Although allocations for federal income tax purposes of income, gain, losses
and deductions attributable to Contributed Property pursuant to Section 704(c)
of the Code do not have economic effect (because such allocations are not
reflected in the partners' capital accounts), the Section 704(b) Regulations
require Section 704(c) allocations (at least as to gain, loss and depreciation
deductions) to eliminate Book-Tax Disparities. Similarly, although the
allocations of income, gains, losses and deductions attributable to Adjusted
Property do not have economic effect, they are required allocations for federal
income tax purposes (at least as to gain, loss and depreciation deductions)
pursuant to the Section 704(b) Regulations to eliminate Book-Tax

Disparities resulting from the revaluation of the Company's property for book
purposes when additional Units are issued by the Company. The General Partner
will administer such allocations to result, to the maximum extent possible, in
a Unitholder having tax consequences equivalent to that which such Unitholder
would have had if he had purchased a direct interest in the Company's assets.

Items of gross income and deduction will be allocated in a manner intended
to eliminate Book-Tax Disparities, if any, arising from the application of
certain "ceiling" limitations imposed on allocations related to Contributed
Property or Adjusted Property. Such curative allocations of gross income and
deductions to preserve the uniformity of the intrinsic tax characteristics of
Units will not have economic effect because they will not be reflected in the
capital accounts of the Unitholders. Treasury Regulations under Section 704(c)
of the Code permit a partnership to make reasonable curative allocations to
reduce or eliminate Book-Tax Disparities. Counsel believes the curative
allocations provided in the Partnership Agreement are reasonable and should be
respected for federal income tax purposes.

The Partnership Agreement also requires gain from the sale of properties of
the Company that is characterized as recapture income and recaptured tax
credits to be allocated among the Unitholders and the General Partner (or
their successors) in the same manner in which such partners were allocated the
deductions giving rise to such recapture income and were allocated credits
giving rise to such recaptured credits. The Section 704(b) Regulations and
Treasury Regulation Sections 1.1245-1(e) and 1.1250-1(f) tend to support a
special allocation of recapture income and recaptured credits. However, such
regulations do not specifically address a special allocation based on the
allocation of the deductions or credits giving rise to such recapture income
and recaptured credits, as provided for in the Partnership Agreement.
Therefore, it is not clear that the allocations of recapture income and
recaptured credits provided for in the Partnership Agreement will be given
effect for federal income tax purposes. If the allocations with respect to
such recapture income and recaptured credits are not respected, such items
will be reallocated to all Unitholders and the General Partner according to
their percentage interests.

The Partnership Agreement does not require the Unitholders to restore any
deficit balance in their capital accounts upon liquidation of the Company.
However, the Partnership Agreement contains "minimum gain chargeback" and
"qualified income offset" provisions which, under the Section 704(b)
Regulations, should obviate the requirement to restore negative capital
accounts, although the qualified income offset is made subject to the gross
income allocation in respect of disproportionate distributions. Taxable income
and gain will be allocated in a manner consistent with the book allocations
associated with the minimum gain chargeback and qualified income offset
provisions. In addition, the Partnership Agreement provides that allocations
of losses or deductions which would result in a negative balance in a
Unitholder's Capital Account to the extent of such negative balance will be
allocated to the General Partner.

In the event the IRS successfully asserts an adjustment to the taxable
income of the General Partner and, as a result of any such adjustment, either
the Company or the Operating Company is entitled to a deduction, the
Partnership Agreements provide that such deduction will be allocated to the
General Partner for both book and tax purposes.

The allocations of income, gain, loss, deduction or credit (and items
thereof) under the Partnership Agreements (other than the curative allocations
to preserve uniformity of the Units' intrinsic federal income tax
characteristics) should generally be considered to have "substantial economic
effect". However, because the application of the Section 704(b) Regulations in
many situations is unclear, there are many uncertainties relating to the
allocations. Investors should be aware that certain aspects of the allocations
contained in the Partnership Agreements may be challenged by the IRS, and such
challenges may be sustained. In particular, the curative allocations to
preserve uniformity of the Units' intrinsic federal income tax characteristics
may be challenged because such allocations are not in technical compliance
with the Section 704(b) Regulations of the Code. However, such allocations are
in accordance with Section 704(c) principles in attempting to eliminate fully
Book-Tax Disparities. Also, the IRS may contend that the gross income
allocation in respect of disproportionate distributions should not be made
subject to the qualified income offset although the effect

of the order in which such allocations are made under the Partnership Agreement
should be in accordance with such regulations. If an allocation contained in
the Partnership Agreements is not given effect for federal income tax purposes,
items of income, gain, loss, deduction or credit will be reallocated to the
Unitholders and the General Partner in accordance with their respective
interests in such items, based upon all the relevant facts and circumstances.
Such reallocation among the Unitholders and the General Partner of such items
of income, gain, loss, deduction or credit allocated under the Partnership
Agreement could result in additional taxable income to the Unitholders. Such
reallocation of Company items could also affect the uniformity of the intrinsic
federal income tax characteristics of the Units. See "--Uniformity of Units"
below.

TAX TREATMENT OF OPERATIONS

Income and Deductions. No federal income tax will be paid by the Company
until its first taxable year beginning after December 31, 1997. Instead, each
Unitholder will be required to report on his income tax return his allocable
share of income, gains, losses, deductions and credits of the Company
(substantially all of which will be the Company's share of such items of the
Operating Company), irrespective of whether the Company makes a distribution of
cash to the Unitholder. Subject to the application of the passive loss rules, a
Unitholder is generally entitled to deduct on his personal income tax return
his allocable share of Company losses, if any, to the extent of the lesser of
the adjusted tax basis of his Units at the end of the year in which such losses
occur or the amount that the Unitholder is considered "at risk" at the end of
that year. See "--Tax Consequences of Unit Ownership--Limitations on
Deductibility of Company Losses" above. The characterization of any item of
profit or loss (e.g., as capital gain or loss rather than ordinary income or
loss) will be the same for the Unitholder as it was for the Company.

A Unitholder who owns Units at any time during a quarter and who disposes of
such Units prior to the record date for a distribution will be allocated items
of Company income and gain attributable to the months in such quarter during
which such Units were owned but will not be entitled to receive such cash
distribution. In addition, circumstances could arise in which a Unitholder's
distributive share of the Company's taxable income is substantially greater
than cash distributions. This could occur, for example, due to extraordinary
sales of the Operating Company's assets followed by a reinvestment of the
proceeds.

Accounting Method and Taxable Year. The Company and the Operating Company use
the calendar year as their taxable years and adopted the accrual method of
accounting for federal income tax purposes.

Initial Tax Basis, Depreciation and Amortization. The tax basis established
for the various assets of the Operating Company will be used for purposes of
computing depreciation and cost recovery deductions and, ultimately, gain or
loss on the disposition of the Operating Company's assets.

The Company elected to use depreciation methods that resulted in the largest
available depreciation deductions in the early years of the Operating Company.
Property subsequently acquired or constructed by the Operating Company may be
depreciated using accelerated depreciation methods permitted by the Code.

If the Company disposes of depreciable property by sale, foreclosure or
otherwise, all or a portion of any gain (determined by reference to the amount
of depreciation previously deducted and the nature of the property) may be
subject to the recapture rules and taxed as ordinary income rather than capital
gain. Similarly, a partner who has taken cost recovery or depreciation
deductions with respect to property owned by the Company may be required to
recapture such deductions upon a sale of his interest in the Company. See "--
Tax Consequences of Unit Ownership--Allocation of Income and Losses" above and
"--Disposition of Units" below.

The costs incurred in promoting the issuance of Units must be capitalized and
cannot be deducted by the Company currently, ratably or upon termination of the
Company.

The tax basis of goodwill used in a trade or business acquired after August
10, 1993 (or prior to that time in certain events), can be amortized over 15
years. However, see "--Section 754 Election" below with respect to the
amortization of Section 743(b) adjustments allocated to goodwill.

Section 754 Election. The Company and the Operating Company have previously
made the election permitted by Section 754 of the Code. Such an election will
generally permit a purchaser of Units to adjust his share of the basis in the
Company's and the Operating Company's properties pursuant to Section 743(b) of
the Code as if he had acquired a direct interest in the Company's and the
Operating Company's assets. Such elections are irrevocable without the consent
of the IRS. The Section 743(b) adjustment is attributed solely to a purchaser
of Units and is not added to the basis of the Company's and the Operating
Company's assets associated with all of the Unitholders (the "Common Bases").

Proposed Treasury Regulation Section 1.168-2(n) generally requires the
Section 743(b) adjustment attributable to depreciable property to be
depreciated as if the total amount of such adjustment were attributable to
newly-acquired depreciable property placed in service when the transfer occurs.
Under Treasury Regulation Section 1.167(c)-1(a)(6), which will apply to a small
portion of the Company's and the Operating Company's assets, a Section 743(b)
adjustment is generally required to be depreciated using the straight-line
method. The depreciation method and useful lives associated with the Section
743(b) adjustment, therefore, may differ from the method and useful lives
generally used to depreciate the Common Bases in such properties. However, the
General Partner intends to adopt a reporting position under which such
differences should not arise despite its inconsistency with such Treasury
Regulations. See "--Disposition of Units --Constructive Termination or
Dissolution of the Company" and "--Uniformity of Units" below. Any Section
743(b) adjustment attributable to goodwill will be treated as a separate
intangible asset amortizable over 15 years on a straight line basis from the
date of its acquisition.

A Section 754 election is advantageous if the transferee's basis in such
Units is higher than such Units' share of the aggregate basis to the Company
and the Operating Company of the Company's and the Operating Company's assets
immediately prior to the transfer. In such a case, pursuant to the election,
the transferee would take a new and higher basis in his share of the Company's
and the Operating Company's assets for purposes of calculating, among other
items, his depreciation deductions and his share of any gain, loss or deduction
on a sale of the Company's and the Operating Company's assets. Conversely, a
Section 754 election is disadvantageous if the transferee's basis in such Units
is lower than such Units' share of the aggregate basis of the Company's and the
Operating Company's assets immediately prior to the transfer.

The amount that a Unitholder would be able to obtain on a sale or other
disposition of his Units may be affected favorably or adversely by the
elections under Section 754 depending on whether the sale price of the Unit is
higher or lower than such Unit's share of the aggregate basis of the Company's
and the Operating Company's assets at the time of the sale or other
disposition.

The calculations and adjustments in connection with the Section 754 election
depend, among other things, on the date on which a transfer occurs and the
price at which the transfer occurs. To help reduce the complexity of those
calculations and the resulting administrative cost to the Company, the General
Partner will apply the following method in making the necessary adjustments
pursuant to the Section 754 election: the price paid by a transferee for his
Units will be deemed to be the lowest quoted trading price of the Units during
the calendar month in which the transfer was deemed to occur, without regard to
the actual price paid. The application of such convention yields a less
favorable tax result, as compared to adjustments based on actual price, to a
transferee who paid more than the "convention price" for his Units. The
calculations under Section 754 are highly complex, and there is little legal
authority concerning the mechanics of the calculations, particularly in the
context of publicly traded partnerships. It is possible that the IRS will
successfully assert that the adjustments made by the General Partner do not
meet the requirements of the Code or the Treasury Regulations and require a
different basis adjustment to be made.

100

Should the IRS require a different basis adjustment to be made, and should,
in the General Partner's opinion, the expense of compliance exceed the benefit
of the elections, the General Partner may seek permission from the IRS to
revoke any Section 754 elections previously made for the Company and the
Operating Company. Such a revocation may increase the ratio of a Unitholder's
distributive share of taxable income to cash distributions and adversely
affect the amount which a Unitholder will receive from the sale of his Units.

Estimates of Relative Fair Market Values and Basis of Properties. The
consequences of the acquisition, ownership and disposition of Units will
depend in part on estimates by the General Partner of the relative fair market
values and determinations of the tax basis of the assets of the Company and
the Operating Company. The federal income tax consequences of such estimates
and determinations of basis may be subject to challenge and will not be
binding on the IRS or the courts. If the estimates of fair market value or
determinations of basis were found to be incorrect, the character and amount
of items of income, gain, loss, deduction or credit previously reported by
Unitholders might change, and Unitholders might be required to amend their
previously filed tax returns or to file claims for refund. See "--
Administrative Matters--Accuracy-Related Penalties" below.

Treatment of Short Sales. It would appear that a Unitholder whose Units are
loaned to a "short seller" to cover a short sale of Units would be considered
as having transferred beneficial ownership of such Units, and would, thus, no
longer be a partner with respect to such Units during the period of such loan.
As a result, during such period any income, gain, deductions, losses or
credits of the Company allocable to such Units would appear not to be
reportable by such Unitholder, and any cash distributions received by the
Unitholder with respect to such Units would be fully taxable and all of such
distributions would appear to be treated as ordinary income. The IRS may also
contend that a loan of Units to a "short seller" constitutes a taxable
exchange. If such a contention were successfully made, the lending Unitholder
may be required to recognize gain or loss. Unitholders desiring to assure
their status as partners should modify their brokerage account agreements, if
any, to prohibit their brokers from borrowing their Units.

Alternative Minimum Tax. Each Unitholder will be required to take into
account his distributive share of any items of Company income, gain, loss or
deduction for purposes of the alternative minimum tax. A portion of the
Company's depreciation deductions may be treated as an item of tax preference
for this purpose.

Alternative minimum tax is imposed currently at a rate of 26% on the first
$175,000 of alternative minimum income in excess of the exemption amount and
28% on any additional alternative minimum taxable income. Alternative minimum
taxable income is calculated using the 150% declining balance method of
depreciation with respect to personal property and 40-year straight-line
depreciation for real property, compared to the alternative methods provided
for under Section 168 of the Code (including more accelerated methods of
depreciation which the Company may use in computing its income for regular
federal income tax purposes). A Unitholder's alternative minimum taxable
income derived from the Company may be higher than his share of Company net
income because the Company may use more accelerated methods of depreciation
for purposes of computing federal taxable income or loss. Unitholders should
consult their tax advisors as to the impact of an investment in Units on their
liability for the alternative minimum tax.

Unrelated Business Taxable Income. Certain entities otherwise generally
exempt from federal income taxes (such as individual retirement accounts
("IRAs"), employee benefit plans and other charitable or exempt organizations)
are nevertheless taxed under Section 511 of the Code on net unrelated business
taxable income in excess of $1,000, and each such entity must file a tax
return for each year in which it has more than $1,000 of gross income included
in computing unrelated business taxable income. It is anticipated that
substantially all of a tax-exempt entity's distributive share of the income
from the Company will constitute unrelated business taxable income until
December 31, 1997. Employee benefit plans and other tax-exempt entities
classified as trusts for federal income tax purposes, including IRAs, are
taxable on their unrelated business income at the rates applicable to taxable
trusts, which are essentially the same as the rates applicable to individuals,
except that each such rate applies at a much lower taxable income level for
trusts than for

101

individuals. Other tax-exempt entities that are classified as corporations for
federal income tax purposes are taxable on their unrelated business income at
the rates applicable to taxable corporations. Persons investing on behalf of an
otherwise tax-exempt entity should consider whether the after-tax return on an
investment in the Units will compare favorably with other investment
alternatives.

DISPOSITION OF UNITS

If a Unit is sold or otherwise disposed of, the determination of gain or loss
from the sale or other disposition will be based on the difference between the
amount realized and the tax basis for such Unit. See "--Tax Consequences of
Unit Ownership--Basis of Units" above. Upon the sale of his Units, a
Unitholder's "amount realized" will be measured by the sum of the cash or other
property received plus the portion of the Company's nonrecourse debt allocated
to the Units sold. Similarly, upon a gift of his Units, a Unitholder will be
deemed to have received cash equal to the portion of the Company's nonrecourse
debt allocable to such Units. To the extent that the amount of cash or property
actually received plus the allocable share of the Company's nonrecourse debt
exceeds the Unitholder's tax basis for the Units disposed of, the Unitholder
will recognize gain. The tax liability, resulting from such gain could exceed
the amount of cash received upon the disposition of such Units.

Generally, gain recognized by a Unitholder (other than a dealer) on the sale
or other disposition of a Unit held for more than twelve months will be taxable
as long-term capital gain. The portion of the proceeds of such sale or other
disposition attributable to a Unitholder's share of "substantially appreciated
inventory items" and "unrealized receivables" of the Company (as defined in
Sections 751(c) and 751(d) of the Code) will be treated as ordinary income.
Unrealized receivables would include recapture income. For this purpose,
"inventory" includes any property that would produce ordinary income on the
sale thereof. Inventory items of the Company will be considered to have
substantially appreciated in value if their fair market value exceeds 120% of
their adjusted basis to the Company and 10% of the fair market value of all
property, other than money, of the Company. Ordinary income attributable to
unrealized receivables and substantially appreciated inventory may exceed net
taxable gain realized upon the sale of Units and may be recognized even if
there is a net taxable loss realized on the sale of Units. A Unitholder must
report to the Company's Transfer Agent (on behalf of the Company) any transfer
of Units. See "--Information Return Filing Requirements" below.

The treatment of distributions received after a Unitholder has disposed of
his Units is unclear. Such a distribution may be fully taxable as ordinary
income or may reduce a Unitholder's basis for the Units disposed of, resulting
in a larger gain or smaller loss from such disposition.

Aggregate Tax Basis for Units. The IRS has ruled that a partner must maintain
an aggregate adjusted tax basis for his interests in a single partnership
(consisting of all interests acquired in separate transactions). On a sale of a
portion of such aggregate interest, such partner would be required to allocate
his aggregate tax basis between the interest sold and the interest retained, by
some equitable apportionment method. If applicable, the aggregation of tax
basis of a Unitholder effectively prohibits a Unitholder from choosing among
Units with varying amounts of inherent gain or loss to control the timing of
the recognition of such inherent gain or loss, as would be possible in a stock
transaction. Thus, the ruling may result in an acceleration of gain or deferral
of loss on a sale of a portion of a Unitholder's Units. It is not clear whether
such ruling applies to publicly traded limited partnerships, such as the
Company, the interests in which are evidenced by separate registered
certificates providing a verifiable means of identifying each separate interest
and tracing the purchase price of such interest. A Unitholder considering the
purchase of additional Units or a sale of Units purchased at differing prices
should consult his tax advisor as to the possible consequences of that ruling.

Transferor/Transferee Allocations. In general, the Company's taxable income
and losses will be determined annually and will be prorated on a monthly basis
and subsequently apportioned among the Unitholders in proportion to the number
of Units owned by them as of the opening of the NYSE on the first business day
of the month in which such gain or loss is recognized for federal income tax
purposes. As a

102

result of this monthly allocation, a Unitholder transferring Units in the open
market may be allocated income, gain, loss, deduction and credit accrued after
the transfer.

The use of the monthly conventions discussed above may not be permitted by
existing Treasury Regulations. If the IRS treats transfers of Units as
occurring throughout each month and a monthly convention is not allowed by
Treasury Regulations (or only applies to transfers of less than all of a
partner's interest), the IRS may contend that taxable income or losses of the
Company must be reallocated among the partners. If any such contention were
sustained, the Unitholders' respective tax liabilities would be adjusted to the
possible detriment of certain Unitholders. The General Partner is authorized to
revise the Company's method of allocation between transferors and transferees
(as well as among partners whose interests otherwise vary during a taxable
period) to comply with any future Treasury Regulations.

For transfers of an interest in a "parent" partnership (such as the Company)
that holds an interest in a "subsidiary" partnership (such as the Operating
Company), the items of the subsidiary partnership are to be allocated among the
partners of the parent partnership by (a) assigning an appropriate portion of
each such item to each day in the parent partnership's taxable year and (b)
allocating the items assigned to each day among the partners of the parent
partnership based on their interests in that partnership as of the close of the
day. It is contemplated that the Company's share of items of taxable income and
loss of the Operating Company will be determined and allocated among the
Unitholders on a monthly basis as described above. However, the General Partner
is authorized to revise this method of allocation if it determines it is
necessary or otherwise is in the best interest of the Company.

Information Return Filing Requirements. A Unitholder who sells or exchanges
Units is required to notify the Company in writing of such sale or exchange,
and the Company is required to notify the IRS of such transaction and to
furnish certain information to the transferor and transferee. However, these
reporting requirements do not apply with respect to a sale by an individual who
is a citizen of the United States and who effects such sale through a broker.
In addition, a transferor and a transferee of a Unit will be required to report
to the IRS the amount of the consideration received for such Unit that is
allocated to goodwill or going concern value of the Company. Failure to satisfy
such reporting obligations may lead to the imposition of substantial penalties.

Constructive Termination or Dissolution of the Company. Under Section
708(b)(1)(B) of the Code, the Company will be considered terminated for
purposes of the Code if within any 12-month period there is a sale or exchange
of 50% or more of the interests in the capital and profits of the Company. For
this purpose, multiple sales or exchanges of the same Unit within a 12-month
period are generally counted only once. In general, the Company does not have
the ability accurately to determine whether or when a termination has occurred,
because Units have been and will be freely tradeable in "street name" (i.e.,
the name of the owner's stockbroker).

A termination of the Company would result in the assets of the Company and
the Operating Company being treated, solely for tax purposes, as having been
distributed to their respective partners and having been recontributed to the
Company or the Operating Company, as the case may be, each of which would be
treated as a new partnership for federal income tax purposes. For example, as a
result of a termination of the Company during 1994, depreciation deductions
which would otherwise be allowable to the Company and the Operating Company in
computing taxable income for taxable years ending in 1994 and certain
subsequent years would be deferred and such deductions allowable in later years
would increase.

As a further result of a termination of the Company, the Company would be
required to file an additional tax return and make new elections (including an
election under Section 754 of the Code (see "--Tax Treatment of Operations--
Section 754 Election" above). Failure to file such tax return or to make such
elections could have adverse effects on the Unitholders. Based on the trading
history of the Units, the General Partner expects that no constructive
termination will occur as a result of the sale of Units being

103

offered hereby, and if such constructive termination does occur, its effect
will not be material to a purchaser of Units offered hereby.

A termination of the Company would cause the Company's taxable year to close
as to all Unitholders. A termination may either accelerate the application of
(or subject the reconstituted partnerships to the application of) any change in
law effective as of a date after the termination.

Entity-Level Collections. In the event that the Company is required under
applicable law to pay any federal, state or local income tax on behalf of any
Unitholder or the General Partner or former Unitholder, the General Partner is
authorized to pay such taxes from Company funds. Such payments, if made, will
be deemed current distributions of Available Cash to the partner on whose
behalf payment was made. The General Partner is authorized (but not required)
to amend the Partnership Agreement in the manner necessary to maintain
uniformity of intrinsic tax characteristics of Units and to adjust subsequent
distributions so that, after giving effect to such deemed distribution, the
priority and characterization of distributions otherwise applicable under the
Partnership Agreement are maintained as nearly as practicable. In the event the
Company is permitted (but not required) under applicable law to pay any such
taxes, the General Partner is authorized (but not required) to pay such taxes
from Company funds and to amend the Partnership Agreement and adjust subsequent
distributions as described above. The Partnership Agreement further provides
that the General Partner is authorized (but not required) to attempt to collect
tax deficiencies from persons who were Unitholders at the time such
deficiencies arose, and any amounts so collected will become Company assets.

The amounts payable by the Company could be calculated based upon the maximum
effective rate of tax for individuals or corporations, whichever is higher.
Thus, such a payment by the Company could give rise to an overpayment of tax on
behalf of an individual Unitholder. The individual Unitholder could claim a
credit for withheld amounts.

UNIFORMITY OF UNITS

There can arise a lack of uniformity in the intrinsic tax characteristics of
Units sold pursuant to the Company's 1987 and 1988 offerings, Units sold
pursuant to the offering made hereby, or Units issued by the Company subsequent
to the offering made hereby. In the absence of such uniformity, compliance with
a number of federal income tax requirements, both statutory and regulatory,
could be substantially diminished. In addition, such nonuniformity could have a
negative impact on the ability of a Unitholder to dispose of his interest in
the Company. As described above, such lack of uniformity can result from a
literal application of proposed Treasury Regulation Section 1.168-2(n) and
Treasury Regulation Section 1.167(c)-(1)(a)(6) and the application of certain
"ceiling" limitations on the Company's ability to make allocations to eliminate
Book-Tax Disparities attributable to Contributed Properties and Adjusted
Properties. This risk of such lack of uniformity arising is increased following
a termination of the Company. See "--Disposition of Units-- Constructive
Termination or Dissolution of the Company" above.

The General Partner elected to depreciate the portion of a Section 743(b)
adjustment attributable to unrealized appreciation in the value of Contributed
Property or Adjusted Property (to the extent of any unamortized Book-Tax
Disparity) using a rate derived from the depreciation method and useful life
applied to the Common Bases (as defined under "Tax Treatment of Operations--
Section 754 Election" above) of such property, despite its inconsistency with
Proposed Regulation Section 1.168-2(n) and Treasury Regulation Section
1.167(c)-1(a)(6). If the General Partner determines that such position cannot
reasonably be taken, the General Partner may adopt a depreciation convention
under which all purchasers acquiring Units in the same month would receive
depreciation, whether attributable to Common Basis or Section 743(b) basis,
based upon the same applicable rate as if they had purchased a direct interest
in the Company's and the Operating Company's property. If such an aggregate
approach is adopted, it may result in lower annual depreciation deductions than
would otherwise be allowable to certain Unitholders and risk the loss of
depreciation deductions not taken in the year that such deductions are
otherwise allowable. Such convention

104

will not be adopted if the General Partner determines that the loss of such
depreciation deductions will have a material adverse effect on the Unitholders.
If the General Partner chooses not to utilize such aggregate method, the
General Partner may use any other reasonable depreciation convention to
preserve the uniformity of the intrinsic tax characteristics of any Unit that
would not have a material adverse effect on the Unitholders. In the event the
IRS were to contend successfully that the convention adopted by the General
Partner was improper, the Company could be required to adopt a different
convention, as determined by the IRS. In such case, Unitholders may be required
to file amended tax returns and report additional taxable income.

Items of income and deduction may be specially allocated in a manner that is
intended to preserve the uniformity of intrinsic tax characteristics among all
Units, despite the application of "ceiling" limitations to Contributed
Properties and Adjusted Properties. Such special allocations will be made
solely for federal income tax purposes. See "--Tax Consequences of Unit
Ownership--Allocation of Income and Losses" above.

ADMINISTRATIVE MATTERS

Income Tax Information Returns and Audit Procedures. The Company plans to
furnish Unitholders with tax information within 75 days after the close of each
taxable year of the Company. Specifically, the Company intends to furnish to
each Unitholder a Schedule K-1 which sets forth his allocable share of the
Company's income, gains, losses, deductions and credits. In preparing such
information, the General Partner will necessarily use various accounting and
reporting conventions to determine each Unitholder's allocable share of income,
gains, losses, deductions and credits. There is no assurance that any such
conventions will yield a result that conforms to the requirements of the Code,
Treasury Regulations or administrative pronouncements of the IRS. The General
Partner cannot assure prospective Unitholders that the IRS will not contend
that such accounting and reporting conventions are impermissible. Contesting
any such allegations could result in substantial expense to the Company. In
addition, if the IRS were to prevail Unitholders may incur substantial
liabilities for taxes and interest.

The federal income tax information returns filed by the Company may be
audited by the IRS. The Code contains partnership audit procedures that
significantly simplify the manner in which IRS audit adjustments of partnership
items are resolved. Adjustments (if any) resulting from such an audit may
require each Unitholder to file an amended tax return, and possibly may result
in an audit of the Unitholder's return. Any audit of a Unitholder's return
could result in adjustments of non-Company as well as Company items.

Partnerships generally are treated as separate entities for purposes of
federal tax audits, judicial review of administrative adjustments by the IRS
and tax settlement proceedings. The tax treatment of partnership items of
income, gain, loss, deduction and credit is determined at the partnership level
in a unified partnership proceeding rather than in separate proceedings with
the partners. The Code provides for one partner to be designated as the "Tax
Matters Partner" for these purposes. The Partnership Agreement appoints the
General Partner as the Tax Matters Partner for the Company.

The Tax Matters Partner is entitled to make certain elections on behalf of
the Company and Unitholders and can extend the statute of limitations for
assessment of tax deficiencies against Unitholders with respect to Company
items. In connection with adjustments to the Company's tax returns proposed by
the IRS, the Tax Matters Partner may bind any Unitholder with less than a 1%
profits interest in the Company to a settlement with the IRS unless the
Unitholder elects, by filing a statement with the IRS, not to give such
authority to the Tax Matters Partner. The Tax Matters Partner may seek judicial
review (to which all the Unitholders are bound) of a final administrative
adjustment with respect to the Company and, if the Tax Matters Partner fails to
seek judicial review, such review may be sought by any Unitholder having at
least a 1% interest in the profits of the Company and by Unitholders having in
the aggregate at least a 5% profits interest. Only one judicial proceeding will
go forward, however, and each Unitholder with an interest in the outcome may
participate.

105

The Unitholders will generally be required to treat Company items on their
federal income tax returns in a manner consistent with the treatment of the
items on the Company's information return. In general, that consistency
requirement is waived if the Unitholder files a statement with the IRS
identifying the inconsistency. Failure to satisfy the consistency requirement,
if not waived, will result in an adjustment to conform the treatment of the
item by the Unitholder to the treatment on the Company return. Even if the
consistency requirement is waived, adjustments to the Unitholder's tax
liability with respect to Company items may result from an audit of the
Company's or the Unitholder's tax return. Intentional or negligent disregard of
the consistency requirement may subject a Unitholder to substantial penalties.

Nominee Reporting. Persons who hold an interest in the Company as a nominee
for another person must report certain information to the Company. Temporary
Treasury Regulations provide that such information should include (i) the name,
address and taxpayer identification number of the beneficial owners and the
nominee; (ii) whether the beneficial owner is (a) a person that is not a United
States person, (b) foreign government, an international organization or any
wholly owned agency or instrumentality of either of the foregoing or (c) a tax-
exempt entity; (iii) the amount and description of Units held, acquired or
transferred for the beneficial owners and (iv) certain information including
the dates of acquisitions and transfers, means of acquisitions and transfers
and acquisition cost for purchases, as well as the amount of net proceeds from
sales. Brokers and financial institutions are required to furnish additional
information, including whether they are a United States person and certain
information on Units they acquire, hold or transfer for their own account. A
penalty of $50 per failure (up to a maximum of $100,000 per calendar year) may
be imposed for failure to report such information to the Company. The nominee
is required to supply the beneficial owner of the Units with the information
furnished to the Company.

Registration as a Tax Shelter. The Code requires that "tax shelters" be
registered with the Secretary of the Treasury. The temporary Treasury
Regulations interpreting the tax shelter registration provisions of the Code
are extremely broad. The General Partner believes that under such temporary
Treasury Regulations, the Company will be subject to the registration
requirement. The Company has registered as a tax shelter with the IRS. ISSUANCE
OF THE REGISTRATION NUMBER DOES NOT INDICATE THAT AN INVESTMENT IN THE COMPANY
OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE
IRS. The Company must furnish the registration number to the Unitholders, and a
Unitholder who sells or otherwise transfers a Unit in a subsequent transaction
must furnish the registration number to the transferee. The penalty for failure
of the transferor of a Unit to furnish such registration number to the
transferee is $100 for each such failure. The Unitholders must disclose the tax
shelter registration number of the Company on Form 8271 to be attached to the
tax return on which any deduction, loss, credit or other benefit generated by
the Company is claimed or income of the Company is included. A Unitholder who
fails to disclose the tax shelter registration number on his return, without
reasonable cause for such failure, will be subject to a $250 penalty for each
such failure. Any penalties discussed herein are not deductible for federal
income tax purposes.

Accuracy-Related Penalties. An additional tax equal to 20% of the amount of
any portion of an underpayment of tax which is attributable to one or more of
certain listed causes, including substantial understatements of income tax and
substantial valuation misstatements, is imposed by the Code. No penalty will be
imposed, however, with respect to any portion of an underpayment if it is shown
that there was reasonable cause for such portion and that the taxpayer acted in
good faith with respect to such portion.

A substantial understatement of income tax in any taxable year exists if the
amount of the understatement exceeds the greater of 10% of the tax required to
be shown on the return for the taxable year or $5,000 ($10,000 for most
corporations). The amount of any understatement subject to penalty generally is
reduced if any portion (i) is attributable to an item with respect to which
there is, or was, "substantial authority" for the position taken on the return
or (ii) is attributable to an item as to which there is adequate disclosure on
the return. If any item of income, gain, loss, deduction or credit of the
Company included in the distributive shares of Unitholders might result in such
an "understatement" of income for which no "substantial authority" exists, the
Company must disclose the pertinent facts on its return. In addition, the

106

Company will make a reasonable effort to furnish sufficient information for
Unitholders to make adequate disclosure on their returns to avoid liability for
this penalty.

A substantial valuation misstatement exists if the value of any property (or
the adjusted tax basis of any property) claimed on a tax return is 200% or more
of the amount determined to be the correct amount of such valuation or adjusted
tax basis. No penalty is imposed unless the portion of the underpayment
attributable to a substantial valuation misstatement exceeds $5,000 ($10,000
for most corporations). If the valuation claimed on a return is 400% or more
than the correct valuation, the penalty imposed increases to 40%.

INVESTMENT BY FOREIGN INVESTORS

Nonresident aliens and foreign corporations, partnerships, trusts or estates,
as determined for federal income tax purposes ("foreign persons"), who are
partners in a partnership engaged in a trade or business in the United States
will be considered to be engaged in such trade or business, even though the
foreign person is only a limited partner. The activities of the Company
constitute a United States trade or business for this purpose. Moreover, such
activities will be deemed to be conducted through a permanent establishment.
Therefore, a foreign person who becomes a Unitholder will be required to file
United States tax returns on which he must report his share of the Company's
items of income, gain, loss, deduction and credit and pay United States taxes
at regular United States rates on his share of any net income of the Company. A
foreign person may also be required to report, and pay tax on, gain from the
disposition of his Units.

The Code imposes federal income (including withholding) taxation on
dispositions of United States real property interests ("USRPIs"), which include
(i) interests in certain entities (including publicly traded partnerships)
holding United States real estate assets that comprise more than 50% of the
fair market value of the real estate and business related assets of such
entities and (ii) distributions by partnerships to foreign persons of gains
attributable to USRPIs. In general, a foreign person not owning more than 5% of
the publicly traded partnership interests will qualify for an exception for
interests in publicly traded entities, such as the Company. Even if such 5%
exception does not apply, however, based on the determination of the relative
fair market values of the USRPIs and non-USRPIs of the Company (which are
subject to change) as described above, the General Partner expects that Units
of the Company would not be classified as USRPIs.

The Company will generally be required to pay a withholding tax (currently,
at a rate of 39.6% with respect to foreign individual Unitholders and 35% with
respect to foreign corporate Unitholders) on the portion of the Company's
income which is effectively connected with the conduct of a United States trade
or business and which is allocable to foreign Unitholders, regardless of
whether any actual distributions have been made to such Unitholders. However,
under the procedural guidelines issued by the IRS, a publicly traded
partnership, such as the Company, must withhold on the cash distributed to
foreign investors at a rate of 31% unless an election is made by the
partnership to withhold tax on the basis of taxable income allocable to such
investors. Each foreign Unitholder must obtain a taxpayer identification number
from the IRS and submit that number to the Transfer Agent of the Company on a
Form W-8 in order to obtain credit for the taxes withheld. Subsequent adoption
of Treasury Regulations or the issuance of other administrative pronouncements
may require the Company to change these procedures.

Because a foreign corporate Unitholder will be treated as engaged in a United
States trade or business, such a Unitholder will be subject to United States
branch profits tax at a rate of 30%, in addition to regular federal income tax,
on its allocable share of the Company's earnings and profits (as adjusted for
changes in the foreign corporate Unitholder's "U.S. net equity") which are
effectively connected with the conduct of a United States trade or business.
Such a tax may be reduced or eliminated by an income tax treaty between the
United States and the country with respect to which the foreign corporate
Unitholder is a "qualified resident". In addition, such a Unitholder is subject
to special information reporting requirements under Section 6038C of the Code.

107

CERTIFICATION OF NON-FOREIGN STATUS

Section 1446 of the Code allows partnerships to request non-foreign partners
of such partnerships to certify under penalties of perjury as to their non-
foreign status. Any Unitholder failing to submit a completed Form W-9 will be
subject to federal income tax withholding by the Company under Section 1446 of
the Code as a foreign investor.

PROPOSED CHANGES IN FEDERAL INCOME TAX LAW

Several bills recently introduced in Congress would, if enacted, affect the
tax treatment of the Company and Unitholders.

Two identical bills introduced in the House and Senate, H.R. 3619 and S.
2179, respectively, would permit publicly traded partnerships existing on
December 17, 1987, including the Company, to continue to be treated as
partnerships for federal income tax purposes for taxable years beginning after
December 31, 1997. Under current law, such partnerships, including the Company,
would be treated as a corporation for federal income tax purposes for taxable
years beginning after December 31, 1997. See "--Partnership Status--Automatic
Taxation as Corporation after 1997". It cannot be predicted whether a provision
such as that in H.R. 3619 or S. 2179 will be enacted.

Proposed legislation introduced in the Congress as part of the Tax
Simplification Act of 1993 (the "1993 Bill") would, among other things,
simplify the tax treatment of partners of "large partnerships" such as the
Company. The 1993 Bill, as proposed, would change the manner in which certain
items of income, gain, loss, deduction and credit are reported to partners by a
large partnership. For example, under current law, the Company generally
reports to a Unitholder his share of Company items that are used to compute net
capital gain or loss (such as the Company's net long-term capital gain and net
short-term capital loss). Under the 1993 Bill, however, the Company would
report to each Unitholder only his share of the Company's net capital gain or
loss. Also, under the 1993 Bill, ownership changes would not cause the
termination of a large partnership for tax purposes.

The 1993 Bill would also make a number of changes to the tax compliance and
administrative rules relating to large partnerships. One provision would
require that each partner in a large partnership take into account his share of
any adjustments to partnership items in the year such adjustments are made.
Under current law, adjustments relating to partnership items for a previous
taxable year are taken into account by those persons who were partners in the
previous taxable year. Alternatively, under the 1993 Bill, a large partnership
could elect to or, in some circumstances could be required to, directly pay the
tax resulting from any such adjustments. In either case, therefore, Unitholders
many bear the economic burden of tax adjustments relating to periods predating
their acquisition of Units. It cannot be predicted whether or in what form tax
legislation similar to the 1993 Bill will be enacted. However, if tax
legislation is enacted which included provisions similar to those discussed
above with respect to the 1993 Bill, a Unitholder might experience a reduction
in cash distributions.

OTHER TAXES

In addition to federal income taxes, Unitholders may be subject to other
taxes, such as state and local income taxes, unincorporated business taxes, and
estate, inheritance or intangible taxes that may be imposed by the various
jurisdictions in which the Company and the Operating Company do business or own
property. Although an analysis of those various taxes cannot be presented here,
each prospective Unitholder should consider their potential impact on his
investment in the Company. For example, a Unitholder's allocable share of the
income, gains, losses, deductions and credits of the Company may be required to
be included in determining his income subject to tax under the laws of the
state or locality in which he is a resident and of the states and localities in
which the Operating Company does business or its properties are located. The
Operating Company owns property and is doing business primarily in Louisiana
and Illinois. A Unitholder

108

will likely be required to file state income tax returns in such states and may
be subject to penalties for failure to comply with such requirements. In
addition, an obligation to file tax returns or to pay taxes may arise in other
states. Moreover, in certain states tax losses may not produce a tax benefit in
the year incurred (if, for example, the partner has no income from sources
within that state) and also may not be available to offset income in subsequent
taxable years. Distributions to Unitholders may be reduced by the amount of any
state income taxes paid by the Company on behalf of such Unitholders.

It is the responsibility of each prospective Unitholder to investigate the
legal and tax consequences, under the laws of pertinent states or localities,
of his investment in the Company. Accordingly, each prospective Unitholder
should consult, and must depend upon, his own tax counsel or other advisor with
regard to those matters. Further, it is the responsibility of each Unitholder
to file all state and local, as well as federal, tax returns that may be
required of such Unitholder.

109

ERISA AND OTHER CONSIDERATIONS CONCERNING
EMPLOYEE BENEFIT PLANS AND RETIREMENT ACCOUNTS

This section is a summary of certain matters arising under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Code which a fiduciary of an "employee benefit plan" as defined in and
subject to ERISA or of a "plan" as defined in Section 4975 of the Code who has
investment discretion should consider before deciding to purchase Units (such
"employee benefit plans" and "plans" being referred to herein as "Plans" and
such fiduciaries with investment discretion being referred to herein as "Plan
Fiduciaries"). The discussion below under "--Plan Asset Issue" also should be
considered by any prospective purchaser of Units that is not a Plan. This
section is not intended to deal with all matters arising under ERISA or Section
4975 of the Code that may be relevant to a prospective purchaser of Units and
does not include state law or other legal requirements applicable to
governmental or church plans. The following statements regarding certain
matters arising under ERISA and the Code are based on the provisions of ERISA
and the Code as currently in effect and the existing administrative and
judicial interpretations thereunder. No assurance can be given that
administrative, judicial or legislative changes will not occur that could make
such statements incorrect or incomplete.

In general, the terms "employee benefit plan" as defined in ERISA and "plan"
as defined in Section 4975 of the Code together refer to any plan or account of
various types that provide retirement or welfare benefits to an individual or
to an employer's employees and their beneficiaries. Such plans include, but are
not limited to, corporate pension and profit sharing plans, so-called KEOGH
plans for self-employed individuals (including partners), simplified employee
pension plans and individual retirement accounts described in Section 408 of
the Code, medical benefit plans, and bank commingled trust funds and insurance
company separate accounts for such plans and accounts.

FIDUCIARY CONSIDERATIONS

Each Plan Fiduciary, before deciding to purchase Units, must be satisfied
that such an investment is a prudent investment for the Plan, that the
investments of the Plan, including an investment in Units, are diversified so
as to minimize the risks of large losses, that an investment in Units complies
with the documents of the Plan and related trust, and that an investment in
Units complies with any other applicable requirements of ERISA or the Code.
Plan Fiduciaries should also consider the discussion concerning federal income
taxes under "Certain Federal Income Tax Considerations" and the discussion
concerning Unitholders' liability for obligations of the Company under
"Investment Considerations--Considerations Relating to Partnership Structure
and Relationship to General Partner" and "Summary of the Partnership
Agreements--Limited Liability" which are relevant to any decision by a Plan
Fiduciary to purchase Units.

PROHIBITED TRANSACTION CONSIDERATIONS

Each Plan Fiduciary, before deciding to purchase Units, must also give
appropriate consideration as to whether a prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code would result from the Plan's
purchase of Units and, if so, the availability of an exemption. Those
prohibited transactions include various direct and indirect transactions, such
as sales and loans, between a Plan and any person who with respect to the Plan
is a "party in interest" as defined in Section 3(14) of ERISA or "disqualified
person" as defined in Section 4975 of the Code, the use of the Plan's assets
for the benefit of any such person, and any fiduciary of the Plan dealing with
the Plan's assets in the fiduciary's own interest. The consequences of any such
prohibited transaction, if no exemption applies, can include the imposition of
excise taxes on the party in interest or disqualified person, the persons
involved in the transaction having to rescind the transaction and pay an amount
to the Plan for any losses realized by the Plan or profits realized by such
persons, disqualification of any individual retirement account involved in the
transaction with adverse tax consequences to the owner of such account, and
other liabilities that can have a significant, adverse effect on such persons.
Each Plan Fiduciary should consult its own legal advisor as to whether a
prohibited transaction would result from that Plan's purchase of Units and, if
so, the availability of an exemption.

110

PLAN ASSET ISSUE

The following paragraphs describe the rules applicable in determining whether
the assets of the Company will for purposes of ERISA and Section 4975 of the
Code be considered assets of the Plans which purchase Units or for whose
benefit Units are purchased (i.e., whether Company assets will be considered
"Plan assets"). If the assets of the Company will be considered to be assets of
such Plans, a Plan Fiduciary must consider (i) whether a purchase of Units will
result in a violation of any of the fiduciary rules under ERISA and (ii) that
prohibited transactions within the meaning of Section 406 of ERISA or Section
4975 of the Code will occur if assets of the Company are involved in
transactions that include persons who are "parties in interest" as defined in
Section 3(14) of ERISA or "disqualified persons" as defined in Section 4975 of
the Code with respect to such Plans or if a person who manages or controls
assets of the Company deals with those assets in that person's own interest.
The possible consequences of any such prohibited transaction, if an exemption
does not apply, are described above in the first paragraph under the heading
"Prohibited Transaction Considerations" and can have a significant adverse
effect on the Company.

A regulation issued by the United States Department of Labor under ERISA (the
"Plan Asset Regulation") contains rules for determining when an investment by a
Plan or for the benefit of a Plan in an equity interest in an entity, such as
the Units, will result in the underlying assets of the entity being deemed
assets of the Plan for purposes of ERISA and Section 4975 of the Code. Those
rules provide that assets of the entity will not be assets of a Plan that
purchases an equity interest therein if the equity interest qualifies as a
"publicly-offered security" or any of certain other exceptions apply.

Under the Plan Asset Regulation, a "publicly-offered security" is a security
that is (i) "freely transferable", (ii) part of a class of securities that is
"widely-held", and (iii) either (a) part of a class of securities that is
registered under Section 12(b) or 12(g) of the Exchange Act or (b) sold to a
Plan as part of an offering of securities to the public pursuant to an
effective registration statement under the Securities Act and the class of
securities of which such security is a part is registered under the Exchange
Act within 120 days (or such later time as may be allowed by the Securities and
Exchange Commission) after the end of the fiscal year of the issuer during
which the offering of such securities to the public occurred. Whether a
security is considered "freely transferable" depends on the facts and
circumstances of each case. If the security is part of an offering of which the
minimum investment is $10,000 or less, the following factors ordinarily will
not adversely affect a determination that the security is freely transferrable:
(i) any prohibition against any transfer or assignment of such security or the
rights in respect thereof to an ineligible or unsuitable investor, (ii) any
restriction or prohibition against any transfer or assignment which would
result in a termination or reclassification of the entity for federal or state
tax purposes or which would violate any law, (iii) any requirement that advance
notice of transfer or assignment be given to the entity and any requirement
regarding execution of documentation evidencing such transfer or assignment
(including written representations as to the compliance with any restriction
listed above or requiring compliance with the entity's governing instruments)
for such transfer or assignment to be effective, (iv) any administrative
procedure which establishes a date prior to which a transfer or assignment will
not be effective and (v) any restriction on substitution of an assignee as a
limited partner, including a requirement that the general partner consent
thereto, as long as the economic benefits of ownership of the assignor can be
transferred or assigned without regard to such restriction or consent (other
than compliance with any of the other restrictions listed above). A class of
securities is considered "widely-held" only if it is a class of securities that
is owned by 100 or more investors independent of the issuer and of one another.
A class of securities will not fail to be widely-held solely because after the
initial offering the number of independent investors falls below 100 as a
result of events beyond the control of the issuer.

The General Partner believes that the Units to be sold pursuant to this
offering will meet the criteria to be "publicly-offered securities" so that
assets of the Company should not be deemed assets of the Plans purchasing
Units. First, the General Partner believes that the Units will be considered to
be freely transferable, as the minimum investment is less than $10,000 and
Unitholders may assign their economic interests in the Company by giving
written notice to the General Partner and the assignee executing the

111

Transfer Application, provided such assignment would not be to an Ineligible
Person and would not result in any termination or reclassification of the
Company for federal or state tax purposes. Second, the General Partner expects
the Units to immediately after this offering be held by substantially more than
100 investors and at least 100 or more of such investors to be independent of
the Company and of one another. Third, the Units are (i) part of a class of
securities that is registered under Section 12(b) or 12(g) of the Exchange Act
and (ii) are being sold pursuant to this offering as part of an offering of
securities to the public pursuant to an effective registration statement under
the Securities Act and the class of securities of which the Units are a part is
registered under the Exchange Act within 120 days after the end of the year of
the Company during which the offering of such securities to the public occurs.

NEITHER THE GENERAL PARTNER NOR THE COMPANY REPRESENT THAT A PURCHASE OF
UNITS MEETS THE RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO OR IS APPROPRIATE
FOR ANY PARTICULAR "EMPLOYEE BENEFIT PLAN" AS DEFINED IN ERISA OR ANY "PLAN" AS
DEFINED IN SECTION 4975 OF THE CODE. THE FIDUCIARY WITH INVESTMENT DISCRETION
CONCERNING ANY EMPLOYEE BENEFIT PLAN OR PLAN SHOULD CONSULT WITH ITS OWN LEGAL
ADVISOR AND OTHER APPROPRIATE ADVISORS REGARDING SPECIFIC CONSIDERATIONS
ARISING UNDER ERISA, SECTION 4975 OF THE CODE AND STATE AND OTHER LAW WITH
RESPECT TO THE PURCHASE, OWNERSHIP OR SALE OF UNITS BY SUCH EMPLOYEE BENEFIT
PLAN OR PLAN IN LIGHT OF THE CIRCUMSTANCES OF THAT PARTICULAR EMPLOYEE BENEFIT
PLAN OR PLAN.

112

UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated , 1994 (the "Underwriting Agreement"), the
Underwriters below (the "Underwriters"), for whom CS First Boston Corporation
and PaineWebber Incorporated are acting as representatives (the
"Representatives"), have severally but not jointly agreed to purchase from the
Company the following respective numbers of Units:

NUMBER OF
UNDERWRITER UNITS
----------- ----------

CS First Boston Corporation...................................
PaineWebber Incorporated......................................
----------
Total.....................................................
==========

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all of the Units offered hereby (other than those Units
covered by the over-allotment option described below) if any are purchased. The
Underwriting Agreement provides that, in the event of a default by an
Underwriter, in certain circumstances the purchase commitments of non-
defaulting Underwriters may be increased or the Underwriting Agreement may be
terminated.

The Company has granted to the Underwriters an option, expiring at the close
of business on the 30th day after the date of this Prospectus, to purchase up
to 600,000 additional Units at the initial public offering price less the
underwriting discounts and commissions, all as set forth on the cover page of
this Prospectus. The Underwriters may exercise such option only to cover over-
allotments in the sale of the Units. To the extent such option is exercised,
each Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional Units as it was
obligated to purchase pursuant to the Underwriting Agreement.

The Company has been advised by the Representatives that the Underwriters
propose to offer the Units to the public initially at the public offering price
set forth on the cover page of this Prospectus and, through the
Representatives, to certain dealers at such price less a concession of
$ per Unit, and the Underwriters and such dealers may allow a
discount of $ per Unit on sales to certain other dealers. After the
initial public offering, the public offering price and concession and discount
to dealers may be changed by the Representatives.

The Company has agreed that it will not offer, sell, contract to sell, pledge
or otherwise dispose of, directly or indirectly, or file with the Commission a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") relating to, any additional Units or securities convertible
or exchangeable into or exercisable for Units without the prior written consent
of CS First Boston Corporation for a period of 180 days after the date of this
Prospectus.

The Company, the Operating Company and BCPM have agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities under the
Securities Act, or contribute to payments which the Underwriters may be
required to make in respect thereof.

As the National Association of Securities Dealers, Inc. ("NASD") views the
Units offered hereby as interests in a direct participation program, the
offering is being made in compliance with Section 34 of the NASD's Rules of
Fair Practice. Investor suitability with respect to the Units should be judged
similarly to the suitability of other securities that are listed for trading on
a national securities exchange. No NASD

113

member intends to confirm sales to any accounts over which it exercises
discretionary authority without the prior written approval of the transaction
by the customer.

CS First Boston Corporation has provided financial advisory and other
investment banking services to the Company, BCPM and Borden from time to time
and has received customary fees for such services. CS First Boston Corporation
has been engaged by the Company as its financial advisor in connection with the
Acquisition and, in connection therewith, will receive customary fees and
expense reimbursement. CS First Boston Corporation is serving as financial
advisor to Borden in connection with the sale of Borden and, in connection
therewith, will receive customary fees and expense reimbursement. In addition,
CS First Boston expects to act as sole underwriter for the Notes offering. CS
First Boston will also receive customary fees in connection therewith.

114

LEGAL OPINIONS

The validity of the Units will be passed upon for the Company by Sidley &
Austin, New York, New York. Certain legal matters will be passed on for the
Underwriters by Andrews & Kurth L.L.P., New York, New York. Sidley & Austin has
in the past, and may in the future, from time to time provide legal services to
the Company, the Operating Company, BCPM, Borden, and various affiliates of
Borden; Sidley & Austin is representing the Operating Company and Finance Corp.
in the offering of the Notes. Andrews & Kurth L.L.P. is representing the
underwriter, CS First Boston Corporation, in the offering of the Notes. Sidley
& Austin will rely on the opinion of Richards, Layton & Finger, P.A. as to
certain matters of Delaware law.

EXPERTS

The consolidated financial statements of the Company as of December 31, 1993,
and 1992, and for each of the three years in the period ended December 31,
1993, included in this Prospectus have been so included in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of that firm as experts in auditing and accounting.

The financial statements of the Addis Plant of OxyChem as of December 31,
1993 and 1992 and for the years then ended included in this Prospectus have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form S-
3 (the "Registration Statement", which term shall include all amendments,
exhibits and schedules thereto), pursuant to the Securities Act, and the rules
and regulations promulgated thereunder, with respect to the Units offered
hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission, and to which reference is hereby made.

The Company is subject to the information and reporting requirements of the
Exchange Act, and in accordance therewith files periodic reports and other
information with the Commission. The Registration Statement, as well as such
reports and other information filed by the Company with the Commission, may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at 7 World
Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Such reports and other information concerning the Company are also
available for inspection at the offices of the NYSE, 20 Broad Street, New York,
New York 10005.

Statements made in this Prospectus concerning the provisions of any contract,
agreement or other document referred to herein are not necessarily complete.
With respect to each such statement concerning a contract, agreement or other
document filed as an exhibit to or incorporated by reference as an exhibit to
the Registration Statement or otherwise filed with the Commission, reference is
made to such exhibit or other filing for a more complete description of the
matter involved, and each such statement is qualified in its entirety by such
reference.

115

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents have been filed by the Company with the Commission
and are incorporated herein by reference:

1. Annual Report on Form 10-K of the Company for the fiscal year ended
December 31, 1993;

2. Quarterly Reports on Form 10-Q of the Company for the quarters ended
March 23, 1994;June 24, 1994; and September 23, 1994;

3. Current Reports on Form 8-K of the Company dated May 5, 1994, and July
19, 1994; and

4. The description of the Units contained in the Company's Registration
Statement on Form 8-A dated November 17, 1988 and as amended December 1,
1988 and December 19, 1988.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Units made hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.

COPIES OF THE ABOVE DOCUMENTS MAY BE OBTAINED UPON REQUEST WITHOUT CHARGE
FROM: BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP C/O BCP MANAGEMENT,
INC., 180 EAST BROAD STREET, COLUMBUS, OHIO 43215 (TELEPHONE NUMBER 614-225-
4000), ATTENTION: LAWRENCE L. DIEKER.

116

GLOSSARY OF TERMS

The following terms used in this Prospectus have the meanings set forth
below:

Acquisition: Has the meaning set forth in "Prospectus Summary--The
Acquisition".

Addis Assets: Has the meaning set forth in "Prospectus Summary--The
Acquisition".

Addis Facility: Has the meaning set forth in "Prospectus Summary--The
Company".

Additional Units: Has the meaning set forth in "Investment Considerations--
Considerations Relating to Partnership Structure and Relationship to General
Partner--Issuance of Additional Units May Cause Dilution to Existing
Unitholders".

Available Cash: means with respect to any quarter within any calendar year
(i) the sum of (a) all cash receipts of the Company during such quarter from
all sources (including distributions of cash received from the Operating
Company) and (b) any reduction in reserves established in prior quarters, less
(ii) the sum of (aa) all cash disbursements of the Company during such quarter,
including, without limitation, disbursements for operating expenses, taxes, if
any (including income taxes payable by the Company beginning in 1998), debt
service (including the payment of principal, premium and interest), capital
items and contributions, if any, to the Operating Company, (bb) any reserves
established in such quarter in such amounts as the General Partner shall deem
to be necessary or appropriate in its reasonable discretion (x) to provide for
the proper conduct of the business of the Company or the Operating Company
(including reserves for future capital expenditures) and (y) to avoid
interruptions in distributions or fluctuations in the amount of distributions
with respect to any one or more of any remaining quarters within such calendar
year and the first quarter of the following year (and, if such quarter is the
third or fourth quarter of a calendar year, with respect to the second quarter
of the following calendar year) as a result of the changes in cash flow which
the General Partner determines to be probable or reasonably possible, and (cc)
any other reserves established in such
quarter in such amounts as are necessary in the reasonable discretion of the
General Partner because the distribution of such amounts would be prohibited by
applicable law or by any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which the Company is a party or
by which it is bound or its assets are subject. Notwithstanding the foregoing,
"Available Cash" shall not include any cash receipts or reductions in reserves
or take into account any disbursements made or reserves established after
commencement of the dissolution and liquidation of the Company.

BCPM: BCP Management, Inc., a Delaware corporation and a wholly owned
subsidiary of Borden. BCPM is the general partner of the Company and the
Operating Company.

Borden: Borden, Inc., a New Jersey corporation.

Borden Delaware: BDH One, Inc., a Delaware corporation, previously named
Borden Delaware Holdings, Inc., and a wholly owned subsidiary of Borden.

Borden Purchase Obligation: Has the meaning set forth in "Prospectus
Summary--Notes Offering".

Calendar quarter or quarter: Any calendar quarter or, at the election of the
General Partner, (i) any period commencing on January 1 and comprised of not
less than 12 nor more than 13 weeks as determined by the General Partner, (ii)
any period commencing on the day next following any period referred to in
clause (i) and comprised of approximately 13 weeks, as determined by the
General Partner, (iii) any period commencing on the day next following any
period referred to in clause (ii) and comprised of approximately 13 weeks, as
determined by the General Partner and (iv) any period commencing on the day
next following any period referred to in clause (iii) and ending on the next
following December 31.

117

Cash from Interim Capital Transactions: means (a) borrowings and sales of
debt securities (other than for working capital purposes) by the Company and
Operating Company, (b) sales of equity interests by the Company and the
Operating Company, and (c) sales or other voluntary or involuntary dispositions
of any assets of the Company and the Operating Company (other than (w) sales or
other dispositions of inventory in the ordinary course of business, (x) sales
or other dispositions of other current assets including receivables and
accounts or (y) sales or other dispositions of assets as a part of normal
retirements or replacements), in each case prior to the commencement of the
dissolution and liquidation of the Company and the Operating Company.

Cash from Operations: means at any date within any calendar year but prior to
the commencement of the dissolution and liquidation of the Company, on a
cumulative basis, all cash receipts of the Company and Operating Company
(excluding any cash proceeds from any Interim Capital Transactions) during the
period since the commencement of operations by the Company through such date,
less the sum of (a) all cash operating expenditures of the Company and the
Operating Company during such period including, without limitation, taxes, if
any, (b) all cash debt service payments of the Company and the Operating
Company during such period (other than payments or prepayments of principal and
premium required by reason of loan agreements (including covenants and default
provisions therein), or by lenders, in each case in connection with sales or
other dispositions of assets or made in connection with refinancings or
refundings of indebtedness), (c) all cash capital expenditures of the Company
and the Operating Company during such period (other than (i) cash capital
expenditures made to increase materially the stated productive capacity
(assuming normal operating conditions, including downtime and maintenance) of
the assets of the Company and Operating Company from the stated productive
capacity (assuming normal operating conditions, including downtime and
maintenance) existing immediately prior to such capital expenditures and (ii)
cash expenditures made in payment of transaction expenses relating to Interim
Capital Transactions), (d) any reserves outstanding as of such date which the
General Partner shall deem to be necessary or appropriate in its reasonable
discretion to provide for the future cash payment of items of the type referred
to in (a) through (c) above, and (e) any reserves outstanding as of such date
established in such amounts as the General Partner shall deem to be necessary
or appropriate in its reasonable discretion to avoid interruptions in
distributions or fluctuations in the amount of distributions with respect to
any one or more of the remaining quarters within such calendar year and the
first quarter of the following year (and, if such quarter is the third or
fourth quarter of a calendar year, with respect to the second quarter of the
following year) as a result of changes in cash flow which the General Partner
determines to be probable or reasonably possible, all as determined on a
consolidated basis and after elimination of intercompany items and of the
General Partner's interest therein attributable to its 1% general partner
interest in the Operating Company. Where cash capital expenditures are made in
part to increase materially the productive capacity and in part for other
purposes, the General Partner's good faith allocation thereof between the
portion increasing capacity and the portion for other purposes shall be
conclusive.

CERCLA: Federal Comprehensive Environmental Response, Compensation and
Liability Act.

Change of Control Premium: Has the meaning set forth in "Prospectus Summary--
Notes Offering".

Code: Internal Revenue Code of 1986, as amended.

Commission: Securities and Exchange Commission.

Common Units: Units representing common limited partner interests in the
Company (including common limited partner interests in the Company that, prior
to December 31, 1992, constituted Preference Units).

118

Company: Borden Chemicals and Plastics Limited Partnership, a Delaware
limited partnership, and, in the applicable contexts, Borden Chemicals and
Plastics Operating Limited Partnership, a Delaware limited partnership.

Delaware Act: Delaware Revised Uniform Limited Partnership Act.

Depositary: Society National Bank, as depositary under the Deposit Agreement,
and its successors and assigns.

Depositary Receipts: Receipts received by holders of record of Units to
evidence their ownership of Units.

Depositary Units: Units deposited by the Company with the Depositary pursuant
to the Deposit Agreement and represented by Depositary Receipts.

Direct Payment Agreement: Has the meaning set forth in "Description of
Depositary Units and the Deposit Agreement--Combination of Units and
Elimination of Distribution Support".

Distribution Support Agreement: Has the meaning set forth in "Description of
Depositary Units and the Deposit Agreement--Combination of Units and
Elimination of Distribution Support".

DOJ: United States Department of Justice.

Environmental Indemnity Agreement: Has the meaning set forth in "Prospectus
Summary--Relationship with Borden".

EPA: United States Environmental Protection Agency.

Exchange Act: Securities Exchange Act of 1934, as amended.

Finance Corp.: Has the meaning set forth in "Prospectus Summary--The
Acquisition".

General Partner: The general partner of the Company and the Operating
Company.

Independent Committee: Has the meaning set forth in "Prospectus Summary--
Notes Offering".

Intercompany Agreement: Has the meaning set forth in "Prospectus Summary--
Relationship with Borden".

KKR: Kohlberg Kravis Roberts & Co.

LDEQ: Louisiana Department of Environmental Quality.

Limited Partners: Limited partners of the Company.

Majority Interest: Has the meaning set forth in "Investment Considerations--
Considerations Relating to Partnership Structure and Relationship to General
Partner--Management and Control by the General Partner; Difficulty in Removing
General Partner".

Merger Agreement: Has the meaning set forth in "Prospectus Summary--
Relationship with Borden".

MTBE: Methyl tertiary butyl ether.

NASD: National Association of Securities Dealers, Inc.

Note Agreement: Has the meaning set forth in "Prospectus Summary--Notes
Offering".

119

Notes: Has the meaning set forth in "Prospectus Summary--The Acquisition".

NYSE: New York Stock Exchange, Inc.

Old Noteholders: Has the meaning set forth in "Prospectus Summary--Notes
Offering".

Old Notes: Has the meaning set forth in "Prospectus Summary--Notes Offering".

Operating Company: Borden Chemicals and Plastics Operating Limited
Partnership, a Delaware limited partnership.

Operating Partnership: Borden Chemicals and Plastics Operating Limited
Partnership, a Delaware limited partnership.

Operating Partnership Agreement: Amended and Restated Agreement of Limited
Partnership of the Operating Company.

OxyChem: Occidental Chemical Corporation, a New York corporation.

Partner: a partner in the Company.

Partnership: Individually and collectively Borden Chemicals and Plastics
Limited Partnership, a Delaware limited partnership, and Borden Chemicals and
Plastics Operating Limited Partnership, a Delaware limited partnership.

Partnership Agreement: Amended and Restated Agreement of Limited Partnership
of the Company.

Partnership Agreements: The Partnership Agreement and Operating Partnership
Agreement.

Partnerships: the Partnership and the Operating Partnership.

Preference Units: Preference limited partner interests in the Company. The
differences and distinctions between the Preference Units and the Common Units
were eliminated effective December 31, 1992.

Prepayment Premium: Has the meaning set forth in "Prospectus Summary--Notes
Offering".

Processing Agreements: Has the meaning set forth in "Prospectus Summary--
Relationship with Borden".

Purchase Agreements: Has the meaning set forth in "Prospectus Summary--
Relationship with Borden".

PVC: Polyvinyl chloride.

RCRA: Federal Resource Conservation and Recovery Act.

Registration Statement: Registration Statement of which this Prospectus is a
part, and includes all amendments, exhibits and schedules thereto.

Representatives: CS First Boston Corporation and PaineWebber Incorporated.

Securities Act: Securities Act of 1933, as amended.

Settlement Agreement: Has the meaning set forth in "Investment
Considerations--Considerations Relating to the Company's Business--Potential
Environmental Liabilities".

Special Approval: Has the meaning set forth in "Prospectus Summary--Notes
Offering".

120

Target Distribution: Has the meaning set forth in "Prospectus Summary--Cash
Distributions".

Transfer Application: Has the meaning set forth in "Description of Depositary
Units and the Deposit Agreement--General".

Underwriters: The underwriters as defined under "Underwriting" in the
Prospectus.

Underwriting Agreement: The agreement between the Company and CS First Boston
and PaineWebber, as Representative, regarding the underwriting for the Units
offered hereby.

Unitholders: The record holders of Units.

Units: Depositary units representing common limited partner interests in the
Company.

VCM: Vinyl chloride monomer.

121

INDEX TO FINANCIAL STATEMENTS

PAGE
----

Borden Chemicals and Plastics Limited Partnership:
Consolidated Financial Statements:
Report of Independent Accountants....................................... F-2
Consolidated Statements of Operations for the years ended December 31,
1993, 1992, and 1991................................................... F-3
Consolidated Statements of Cash Flows for the years ended December 31,
1993, 1992, and 1991................................................... F-4
Consolidated Balance Sheets as of December 31, 1993 and 1992............ F-5
Consolidated Statements of Changes in Partners' Capital for the years
ended December 31, 1993, 1992, and 1991................................ F-6
Notes to Consolidated Financial Statements.............................. F-7
Interim Consolidated Financial Statements:
Consolidated Statements of Operations for the nine months ended
September 23, 1994 and September 24, 1993.............................. F-11
Consolidated Statements of Cash Flows for the nine months ended
September 23, 1994 and September 24, 1993.............................. F-12
Consolidated Balance Sheets as of September 23, 1994 and December 31,
1993................................................................... F-13
Consolidated Statements of Changes in Partners' Capital for the nine
months ended September 23, 1994 and September 24, 1993................. F-14
Notes to Interim Consolidated Financial Statements...................... F-15
Addis Plant:
Financial Statements:
Reports of Independent Accountants...................................... F-17
Statements of Operations and Changes in Owner's Investment for the nine
months ended
September 30, 1994 and 1993 and for the years ended December 31, 1993
and 1992............................................................... F-19
Statements of Cash Flows for the nine months ended September 30, 1994
and 1993 and for the years ended December 31, 1993 and 1992............ F-20
Balance Sheets as of September 30, 1994 and as of December 31, 1993 and
1992................................................................... F-21
Notes to Financial Statements........................................... F-22
Pro Forma Combined Financial Statements (Unaudited):
Introductory Description................................................ F-28
Combined Balance Sheet as of September 23, 1994......................... F-29
Combined Statement of Operations for the nine months ended September 23,
1994................................................................... F-30
Combined Statement of Operations for the year ended December 31, 1993... F-31
Notes to the Pro Forma Combined Financial Statements.................... F-32

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Partners of Borden Chemicals
and Plastics Limited Partnership

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in partners' capital and of
cash flows present fairly, in all material respects, the financial position of
Borden Chemicals and Plastics Limited Partnership at December 31, 1993 and
1992, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Partnership's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

Price Waterhouse LLP

Columbus, Ohio

January 18, 1994

F-2

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS EXCEPT PER UNIT DATA)

YEAR ENDED DECEMBER 31,
----------------------------
1993 1992 1991
-------- -------- --------

Revenues
Net trade sales................................ $349,200 $328,343 $328,069
Net affiliated sales........................... 84,097 73,460 81,936
-------- -------- --------
Total revenues............................. 433,297 401,803 410,005
-------- -------- --------
Expenses
Cost of goods sold
Trade........................................ 321,966 274,505 253,319
Affiliated................................... 75,805 63,477 64,185
Marketing, general and administrative expenses. 18,993 18,118 18,578
Interest expense............................... 16,356 16,340 16,340
General Partner incentive...................... 2,146 5,497
Other (income) and expense, including minority
interest...................................... 1,612 132 533
-------- -------- --------
Total expenses............................. 434,732 374,718 358,452
-------- -------- --------
Net (loss) income................................ (1,435) 27,085 51,553
Less 1% General Partner interest............... 14 (271) (515)
-------- -------- --------
Net (loss) income applicable to Limited Partners'
interest........................................ $ (1,421) $ 26,814 $ 51,038
======== ======== ========
Net (loss) income per Unit....................... $ (.04) $ .73 $ 1.39
======== ======== ========
Average number of Units outstanding during the
year............................................ 36,750 36,750 36,750
======== ======== ========
Cash distributions declared per Unit............. $ .78 $ 1.59 $ 1.98
======== ======== ========

See notes to consolidated financial statements

F-3

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

YEAR ENDED DECEMBER 31,
-------------------------
1993 1992 1991
------- ------- -------

Cash Flows From Operations
Net (loss) income................................. $(1,435) $27,085 $51,553
Adjustments to reconcile
Net income to net cash provided by operating
activities:
Depreciation.................................. 42,946 43,584 42,505
(Increase) decrease in receivables............ (11,821) (3,398) 5,173
(Increase) decrease in inventories............ (5,418) (996) 7,604
Increase (decrease) in payables............... 13,698 5,887 (14,486)
Decrease in incentive distribution payable.... (1,607) (154)
Other, net.................................... 517 (6,618) (693)
------- ------- -------
38,487 63,937 91,502
------- ------- -------
Cash Flows From Investing Activities
Capital expenditures.............................. (15,041) (10,534) (17,975)
------- ------- -------
Cash Flows From Financing Activities
Cash distributions paid........................... (33,781) (66,856) (73,558)
------- ------- -------
Decrease in cash and equivalents.................... (10,335) (13,453) (31)
Cash and equivalents at beginning of year........... 19,389 32,842 32,873
------- ------- -------
Cash and equivalents at end of year................. $ 9,054 $19,389 $32,842
======= ======= =======
Supplemental Disclosures of Cash Flow Information
Interest paid during the year..................... $16,356 $16,340 $16,340
======= ======= =======

See notes to consolidated financial statements

F-4

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

DECEMBER 31, DECEMBER 31,
1993 1992
------------ ------------
ASSETS
------

Cash and equivalents................................. $ 9,054 $ 19,389
Accounts receivable (less allowance for doubtful
accounts of $768 and $477, respectively)
Trade.............................................. 48,990 41,711
Affiliated......................................... 18,267 13,725
Inventories
Finished goods..................................... 21,499 19,209
Raw materials...................................... 7,758 4,630
Other current assets................................. 2,182 1,912
-------- --------
Total current assets............................. 107,750 100,576
-------- --------
Investments in and advances to affiliated companies.. 3,623 2,787
Other assets......................................... 26,956 28,230
-------- --------
30,579 31,017
-------- --------
Land................................................. 12,051 11,960
Buildings............................................ 35,955 36,012
Machinery and equipment.............................. 505,236 492,593
-------- --------
553,242 540,565
Less accumulated depreciation...................... (247,267) (205,429)
-------- --------
305,975 335,136
-------- --------
$444,304 $466,729
======== ========

LIABILITIES AND PARTNERS' CAPITAL
---------------------------------

Accounts and drafts payable.......................... $ 44,408 $ 30,710
Cash distributions payable........................... 6,682 11,508
Accrued interest..................................... 1,845 1,845
Other accrued liabilities............................ 8,515 9,966
-------- --------
Total current liabilities........................ 61,450 54,029
-------- --------
Long-term debt....................................... 150,000 150,000
Minority interest in consolidated subsidiary......... 1,795 2,105
Postretirement benefit obligation.................... 854
-------- --------
152,649 152,105
-------- --------
Partners' capital
Preference Unitholders............................. 210,923
Common Unitholders................................. 228,862 48,025
General Partner.................................... 1,343 1,647
-------- --------
Total partners' capital.......................... 230,205 260,595
-------- --------
$444,304 $466,729
======== ========

See notes to consolidated financial statements

F-5

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

(IN THOUSANDS)

PREFERENCE COMMON GENERAL
UNITHOLDERS UNITHOLDERS PARTNER TOTAL
----------- ----------- ------- --------

Balances at December 31, 1990........ $ 251,749 $ 60,545 $2,264 $314,558
Net income........................... 39,059 11,979 515 51,553
Cash distributions declared.......... (55,688) (17,078) (790) (73,556)
--------- -------- ------ --------
Balances at December 31, 1991........ 235,120 55,446 1,989 292,555
Net income........................... 20,521 6,293 271 27,085
Cash distributions declared.......... (44,718) (13,714) (613) (59,045)
--------- -------- ------ --------
Balances at December 31, 1992........ 210,923 48,025 1,647 260,595
Combination of Preference and Common
units............................... (210,923) 210,923
Net loss............................. (1,421) (14) (1,435)
Cash distributions declared.......... (28,665) (290) (28,955)
--------- -------- ------ --------
Balances at December 31, 1993........ $ -0- $228,862 $1,343 $230,205
--------- -------- ------ --------

See notes to consolidated financial statements

F-6

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS EXCEPT UNIT AND PER UNIT DATA)

1. ORGANIZATION

Borden Chemicals and Plastics Limited Partnership (the Partnership), a
Delaware limited partnership, was formed in 1987 when the Partnership, through
its subsidiary operating partnership, acquired the basic chemicals and
polyvinyl chloride (PVC) resins operations of Borden, Inc. (Borden). The
operations are comprised of highly integrated plants in Geismar, Louisiana,
which produce basic petrochemical products, PVC resins and industrial gases and
a PVC resins plant located in Illiopolis, Illinois. The Partnership conducts
its activities through Borden Chemicals and Plastics Operating Limited
Partnership (the Operating Partnership). The Partnership, as the sole limited
partner, owns a 98.9899% interest and BCP Management, Inc. (BCPM), a Delaware
corporation and wholly-owned subsidiary of Borden, owns a 1.0101% interest as
the sole general partner (General Partner) in the Operating Partnership. The
General Partner's interest in the Operating Partnership is reflected in the
accompanying consolidated financial statements as minority interest.

Borden and its affiliates contributed the basic chemicals and PVC resins
operations to the Partnership in exchange for 28,125,000 Preference Units,
8,625,000 Enhanced Common Units, the general partner interest in each of the
partnerships, the net proceeds of $150,000 aggregate principal amount of Notes
issued by the Operating Partnership and the assumption by the Operating
Partnership of substantially all of the liabilities of Borden related to the
basic chemicals and PVC resins operations.

In 1987 Borden and its affiliates sold the Preference Units representing a
75% interest in the partnerships and in 1988 sold the Enhanced Common Units
representing a 23% interest in the partnerships. Borden retains, through BCPM's
general partner interest, the remaining 2% interest in the partnerships. With
the payments of the fourth quarter distribution on February 12, 1993, all
differences between the Preference Units and Enhanced Common Units ceased and
all units are now Common Units.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies summarized below are in conformity with
generally accepted accounting principles; however, this will not be the basis
for reporting taxable income to Unitholders.

Principles of Consolidation--The consolidated financial statements include
the accounts of the Partnership and the Operating Partnership after elimination
of interpartnership accounts and transactions. The Partnership's proportionate
ownership of a joint venture that provides utilities to the Geismar complex is
accounted for by the equity method. Utilities provided by the joint venture are
allocated to the joint venture partners at cost. The cost of the Partnership's
proportionate share of utilities is included in cost of goods sold.

Revenues--Sales and related cost of sales are recognized upon shipment of
products. Net trade and net affiliated sales are net of sales discounts and
product returns and allowances.

Cash Equivalents--The Partnership considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.

Inventories--Inventories are stated at the lower of cost or market. Cost is
determined using the average cost and first-in, first-out methods.

Property and Equipment--The amount of the purchase price originally allocated
by the Partnership to land, buildings, and machinery and equipment was based
upon their relative fair values. Expenditures made subsequent to the formation
of the Partnership have been capitalized at cost.

Depreciation is recorded on the straight-line basis by charges to costs and
expenses at rates based on the estimated useful lives of the properties
(average rates for buildings--4%; machinery and equipment--8%).

F-7

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Major renewals and betterments are capitalized. Maintenance, repairs and
minor renewals totaling $29,905 in 1993, $29,302 in 1992 and $30,763 in 1991
were expensed as incurred. When properties are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
accounts.

Income Taxes--The Partnership is not a separate taxable entity for federal
and state and local income tax purposes. Accordingly, any taxable income or
loss, which may vary substantially from income or loss reported under generally
accepted accounting principles, is included in the tax returns of the
individual partners. Under current tax law the Partnership will be treated as a
partnership until December 31, 1997; thereafter, it will be taxed as a
corporation. Effective January 1, 1993 the Partnership adopted statement of
Financial Accounting Standard (SFAS) No. 109 "Accounting for Income Taxes." The
adoption of this statement did not have a material effect on 1993 results.

3. RELATED PARTY TRANSACTIONS

The Partnership is managed by the General Partner. Under certain agreements,
the General Partner and Borden are entitled to reimbursement of costs incurred
relating to the business activities of the Partnership. The Partnership is
engaged in various transactions with Borden and its affiliates in the ordinary
course of business. Such transactions include, among other things, the sharing
of certain general and administrative costs, sales of products to and purchases
of raw materials from Borden or its affiliates, and usage of railcars owned or
leased by Borden.

The employees of BCPM operate the Partnership and participate in various
Borden benefit plans including pension, retirement savings, and health and life
insurance. Employee benefit plan expenses are determined by Borden's actuary
based on annual employee census data. The Partnership is charged for general
insurance expense, which includes liability and property damage insurance,
based on calculations made by Borden's Risk Management Department. Under its
risk retention program, Borden maintains deductibles of $2,500 and $500 per
occurrence for property and related damages at the Geismar and Illiopolis
facilities, respectively, and deductibles ranging from $1,000 to $3,000 per
event for liability insurance. The Partnership has first dollar liability
insurance coverage from Borden. The cost of Borden's corporate information
services and corporate staff department services is allocated to the
Partnership based on usage of resources such as personnel and data processing
equipment.

The Partnership has no direct liability for postretirement benefits since the
Partnership does not directly employ any of the persons responsible for
managing and operating the Partnership, but instead reimburses Borden for their
services. As a result of Borden's adoption of SFAS No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions", 1993 charges to
the Partnership for such services were actuarially determined. The Partnership
expensed the full amount of such charges but only reimbursed Borden for actual
postretirement benefits paid. The difference between cash payments to Borden
and postretirement expense is accrued on the Partnership's books. In 1992 the
Partnership was charged and reimbursed Borden for other postretirement benefits
on a cash basis.

Benefit plan and general insurance expenses, and allocation for usage of
resources such as personnel and data processing equipment were $9,506 in 1993,
$10,319 in 1992 and $10,610 in 1991. Management believes these allocations
reasonably reflect the usage of Borden's resources by BCP. Although no specific
analysis has been undertaken, if the Partnership were to directly provide such
services and resources at the same cost as Borden, management believes the
allocations would be indicative of costs that would be incurred on a stand-
alone basis.

The Partnership sells methanol, ammonia, urea and PVC resins to, and
processes formaldehyde and urea-formaldehyde concentrate for, Borden and its
affiliates at prices which approximate market.

The Partnership is party to long-term agreements with Borden which require
Borden to purchase from the Partnership at least 85% of Borden's requirements
for PVC resins, ammonia, urea and methanol and to

F-8

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
utilize specified percentages of the Partnership's capacity to process
formaldehyde and urea-formaldehyde concentrate.

4. DEBT

At December 31, 1993 and 1992 long-term debt consists of the following:

10.7% Note due 1997...................... $ 90,000
11.1% Note due 1999...................... 60,000
--------
$150,000
========

On November 30, 1987, the Operating Partnership issued $150,000 aggregate
principal amount of Notes in a private placement. The gross proceeds were
reduced by $1,600 of expenses associated with the borrowing. These expenses
have been deferred and are being amortized over the term of the debt.

The Operating Partnership is obligated to redeem $30,000 of the 10.7% Note
due 1997 in each of 1995 and 1996 and to redeem $30,000 of the 11.1% Note due
1999 in 1998. The Notes provide that no recourse is available against the
General Partner.

The aggregate fair value of the Partnership's outstanding debt was $183,586
at December 31, 1993 and $180,362 at December 31, 1992, which was calculated
based on current yields for debt with similar characteristics.

The Partnership has a short-term unsecured working capital facility of up to
$20,000 under a revolving credit agreement. There were no significant
borrowings under the revolving credit agreement at December 31, 1993 and 1992,
or during the 1993 and 1992 period. There were also no amounts outstanding at
any month end during 1993 and 1992. A commitment fee of 1/4% per annum is
payable on the unused portion. Borrowings under the revolving credit agreement
bear interest at rates fixed at the time of each borrowing. It provides that no
recourse is available against the General Partner.

5. ALLOCATION OF INCOME AND LOSS

Income and loss of the Partnership is allocated in proportion to the
partners' percentage interests in the Partnership, provided that at least 1% of
the income or loss of the Partnership and Operating Partnership is allocated to
the General Partner. For income tax purposes, certain items are specially
allocated to account for differences between the tax basis and fair market
value of property contributed to the Partnership by Borden and to facilitate
uniformity of Units. In addition, the Partnership Agreement generally provides
for an allocation of gross income to the Unitholders and the General Partner to
reflect disproportionate cash distributions, on a per Unit basis.

6. CASH DISTRIBUTIONS

The Partnership makes quarterly distributions to Unitholders and the General
Partner of 100% of its Available Cash. Available Cash each quarter generally
consists of cash receipts less cash disbursements (excluding cash distributions
to Unitholders and the General Partner) and reserves.

On February 12, 1993, which was the payment date for the 1992 fourth quarter
distribution, Borden's obligations under the Guarantee Agreement to ensure
minimum quarterly distributions under the Preference Unit Distribution Support
Agreement and Common Unit Direct Payment Agreement were extinguished, and all
differences between the Preference Units and Enhanced Common Units ceased. All
Units are now Common Units.

F-9

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. CONTINGENCIES

The Louisiana Department of Environmental Quality has determined that a
production unit at the Geismar facility should be subject to state hazardous
waste regulations. While the Partnership has appealed the decision, the outcome
of such decision is uncertain and if upheld, the Partnership could be required
to incur significant expenditures which at this time cannot be estimated, and
could be subject to the Environmental Indemnity Agreement (EIA) discussed
below.

In addition, the Partnership is subject to various other legal proceedings
and claims which arise in the ordinary course of business. In the opinion of
the management, based upon the information it presently possesses, the amount
of the ultimate liability of these other matters, taking into account insurance
coverage, including its risk retention program and EIA with Borden, would not
have a material adverse effect on the financial position and results of
operations of the Partnership.

Under the EIA, Borden has agreed, subject to certain specified limitations,
to indemnify the Partnership in respect of environmental liabilities arising
from facts or circumstances that existed and requirements in effect prior to
the date of the initial public offering of Preference Units. The Partnership is
responsible for environmental liabilities arising from facts or circumstances
that existed and requirements that become effective on or after such date. With
respect to certain environmental liabilities that may arise from facts or
circumstances that existed and requirements in effect both prior to and after
such date, Borden and the Partnership will share liabilities on an equitable
basis.

F-10

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

----------------

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
(IN THOUSANDS EXCEPT PER UNIT DATA)

NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 23, 1994 SEPTEMBER 24, 1993
------------------ ------------------

Revenues
Net trade sales........................ $345,422 $248,113
Net affiliated sales................... 92,711 59,463
-------- --------
Total revenues..................... 438,133 307,576
-------- --------
Expenses
Cost of goods sold
Trade................................ 258,793 232,024
Affiliated........................... 67,432 54,863
Marketing, general and administrative
expenses................................ 15,298 14,153
Interest expense......................... 12,009 12,066
General Partner incentive................ 8,751
Other (income) and expense, including
minority interest....................... 6,312 530
-------- --------
Total expenses..................... 368,595 313,636
-------- --------
Net income (loss)........................ 69,538 (6,060)
Less 1% General Partner interest....... (695) 61
-------- --------
Net income (loss) applicable to Limited
Partners' interest...................... $ 68,843 $ (5,999)
======== ========
Net income (loss) per Unit............... $ 1.87 $ (.16)
======== ========
Average number of Units outstanding
during the period....................... 36,750 36,750
======== ========
Cash distributions declared per Unit..... $ 1.88 $ .60
======== ========

F-11

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

----------------

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)
(IN THOUSANDS)

NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 23, 1994 SEPTEMBER 24, 1993
------------------ ------------------

Cash Flows From Operations
Net income (loss)........................ $ 69,538 $ (6,060)
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation......................... 32,941 32,171
Increase in receivables.............. (34,305) (12,269)
Decrease (increase) in inventories... 3,389 (2,581)
Increase in payables................. 3,348 11,574
Increase in incentive distribution
payable............................. 6,097
Increase in accrued interest......... 3,825 3,870
Other, net........................... 8,524 (1,208)
-------- --------
93,357 25,497
-------- --------
Cash Flows From Investing Activities
Capital expenditures................... (14,215) (7,991)
-------- --------
Cash Flows From Financing Activities
Cash distributions paid................ (38,633) (29,326)
-------- --------
Increase (decrease) in cash and
equivalents............................. 40,509 (11,820)
Cash and equivalents at beginning of
period.................................. 9,054 19,389
-------- --------
Cash and equivalents at end of period.... $ 49,563 $ 7,569
======== ========
Supplemental Disclosure of Cash Flow
Information
Interest paid during the period........ $ 8,184 $ 8,196
======== ========

F-12

BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP

----------------

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)
(IN THOUSANDS)

SEPTEMBER 23, DECEMBER 31,
ASSETS 1994 1993
------ ------------- ------------

Cash and equivalents................................ $ 49,563 $ 9,054
Accounts receivable (less allowance for doubtful
accounts of $510 and $768, respectively)
Trade............................................. 71,719 48,990
Affiliated........................................ 29,843 18,267
Inventories
Finished goods.................................... 18,025 21,499
Raw materials..................................... 7,843 7,758
Other current assets................................ 2,687 2,182
--------- ---------
Total current assets............................ 179,680 107,750
--------- ---------
Investments in and advances to affiliated companies. 3,742 3,623
Other assets........................................ 27,781 26,956
--------- ---------
31,523 30,579
--------- ---------
Land................................................ 12,051 12,051
Buildings........................................... 36,418 35,955
Machinery and equipment............................. 517,530 505,236
--------- ---------
565,999 553,242
Less accumulated depreciation..................... (279,364) (247,267)
--------- ---------
286,635 305,975
--------- ---------
$ 497,838 $ 444,304
========= =========

LIABILITIES AND PARTNERS' CAPITAL
---------------------------------

Accounts and drafts payable......................... $ 47,756 $ 44,408
Cash distributions payable.......................... 37,925 6,682
Incentive distribution payable to General Partner... 6,097
Accrued interest.................................... 5,670 1,845
Other accrued liabilities........................... 13,595 8,515
--------- ---------
Total current liabilities....................... 111,043 61,450
--------- ---------
Long-term debt...................................... 150,000 150,000
Minority interest in consolidated subsidiary........ 1,791 1,795
Post retirement benefit obligation ................. 5,137 854
--------- ---------
156,928 152,649
--------- ---------
Partners' capital
Common Unitholders................................ 228,615 228,862
General Partner................................... 1,252 1,343
--------- ---------
Total partners' capital......................... 229,867 230,205
--------- ---------
$ 497,838 $ 444,304
========= =========

F-13

BORDEN CHEMICALS AND PLASTICS LIMITED

----------------

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

(UNAUDITED)
(IN THOUSANDS)

PREFERENCE COMMON GENERAL
UNITHOLDERS UNITHOLDERS PARTNER TOTAL
----------- ----------- ------- --------

Balances at December 31, 1992........ $ 210,923 $ 48,025 $1,647 $260,595
Combination of preference and common
Units............................... (210,923) 210,923
Net loss............................. (5,999) (61) (6,060)
Cash distributions declared.......... (22,050) (223) (22,273)
--------- -------- ------ --------
Balances at September 24, 1993....... $ -0- $230,899 $1,363 $232,262
========= ======== ====== ========
Balances at December 31, 1993........ $228,862 $1,343 $230,205
Net income........................... 68,843 695 69,538
Cash distributions declared.......... (69,090) (786) (69,876)
-------- ------ --------
Balances at September 23, 1994....... $228,615 $1,252 $229,867
======== ====== ========

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. ACQUISITION

On August 12, 1994, Borden Chemicals and Plastics Operating Limited
Partnership (the "Operating Partnership") entered into an agreement with
Occidental Chemical Corporation to purchase its Addis, Louisiana PVC
manufacturing facility. The Addis facility has an annual proven production
capacity of 450 million pounds per year, which will increase the Operating
Partnership's stated annual capacity for the production of PVC resins by over
50 percent. The cash purchase price for the Addis assets is $104.3 million,
subject to certain customary post-closing adjustments. The acquisition is
subject to certain conditions, including approval by the U.S. Federal Trade
Commission, an environmental assessment of the real estate upon which the Addis
facility is located and the financing of the acquisition.

2. NEW OFFERING OF UNITS AND NOTES

On October 7, 1994, Borden Chemicals and Plastics Limited Partnership (the
"Partnership") filed a registration statement on Form S-3 (File No. 33-55863)
with the Securities and Exchange Commission ("SEC") relating to the offering of
up to 4.0 million Depositary Units (excluding an over-allotment option for
600,000 additional Units) representing common limited partner interests in the
Partnership. The net proceeds of this offering will be used to fund a portion
of the purchase price of the Addis facility.

On October 14, 1994 the Operating Partnership filed a registration statement
on Form S-1 (File No. 33-85186) with the SEC relating to the offering of $200
million of Senior Notes. The Senior Notes offering is contingent upon
negotiation by the Operating Partnership of a right of prepayment with holders
of the Operating Partnership's existing Notes, due November 30, 1997 and
November 30, 1999. Management expects that the prepayment price will involve
payment by the Operating Partnership of a prepayment premium. The Operating
Partnership intends to use the net proceeds from the sale of the Senior Notes
first to prepay the currently outstanding $150.0 million principal amount of
existing Notes. The remaining proceeds would be used to provide funds for the
remaining purchase price of the Addis facility and other permitted partnership
purposes.

3. INTERIM FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements contain
all adjustments, consisting only of normal recurring adjustments, which in the
opinion of BCP Management, Inc. (the "General Partner") are necessary for a
fair statement of the results for the interim periods. Results for the interim
periods are not necessarily indicative of the results for the full year.

4. COMBINATION OF PREFERENCE AND COMMON UNITS

With the payment of the 1992 fourth quarter distribution on February 12,
1993, all differences between the Preference and Common Units ceased and all
units became Common Units.

5. CONTINGENCIES

As a result of a Complaint filed on October 27, 1994 by the U.S. Department
of Justice ("DOJ") on behalf of the Environmental Protection Agency ("EPA")
against the Partnership, significant penalties and costs for obtaining permits
and performing environmental cleanup and investigation at the Geismar, La.
facility, may be incurred (depending on the outcome of the litigation),
portions of which could be subject to the Environmental Indemnity Agreement
("EIA") discussed below (see "Legal Proceedings").

F-15

Under the EIA, Borden has agreed, subject to certain specified limitations,
to indemnify the Partnership in respect of environmental liabilities arising
from facts or circumstances that existed and requirements in effect prior to
November 30, 1987, the date of the initial sale of the Geismar and Illiopolis
plants to the Partnership. The Partnership is responsible for environmental
liabilities arising from facts or circumstances that existed and requirements
that become effective on or after such date. With respect to certain
environmental liabilities that may arise from facts or circumstances that
existed and requirements in effect both prior to and after such date, Borden
and the Partnership will share liabilities on an equitable basis considering
all of the facts and circumstances including, but not limited to, the relative
contribution of each to the matter and the amount of time each has operated the
assets in question (to the extent relevant). No claims can be made under the
EIA after November 30, 2002, and no claim can, with certain exceptions, be made
with respect to the first $0.5 million of liabilities which Borden would
otherwise be responsible for thereunder in any year, but such excluded amounts
shall not exceed $3.5 million in the aggregate. Excluded amounts under the EIA
have aggregated approximately $2.0 million through September 23, 1994.

In connection with potential environmental matters, a $4.0 million provision
has been included in the Partnership's third quarter financial statements.

F-16

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Borden Chemicals and Plastics Limited Partnership:

We have audited the accompanying balance sheets of the Addis Plant (as
defined in Note 1) of Occidental Chemical Corporation, an indirect wholly-owned
subsidiary of Occidental Petroleum Corporation, as of December 31, 1993 and
1992, and the related statements of operations and changes in owner's
investment and cash flows for the years then ended. These financial statements
are the responsibility of Occidental Chemical Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Addis Plant of Occidental
Chemical Corporation as of December 31, 1993 and 1992, and the results of its
operations and changes in owner's investment and its cash flows for the years
then ended in conformity with generally accepted accounting principles.

As discussed in Note 3 to the financial statements, effective January 1,
1992, the Addis Plant changed its method of accounting for postretirement
benefits other than pensions.

Arthur Andersen LLP

Dallas, Texas

September 16, 1994

F-17

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Borden Chemical and Plastics Limited Partnership:

We have reviewed the accompanying balance sheet of the Addis Plant (as
defined in Note 1) of Occidental Chemical Corporation as of September 30, 1994,
and the related statements of operations and changes in owner's investment and
cash flows for the nine-month periods ended September 30, 1994 and 1993. These
financial statements are the responsibility of Occidental Chemical
Corporation's management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of obtaining an understanding of the
system for the preparation of interim financial information, applying
analytical review procedures to financial data, and making inquiries of persons
responsible for financial and accounting matters. These procedures are
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.

Arthur Andersen LLP

Dallas, Texas

November 15, 1994

F-18

OCCIDENTAL CHEMICAL CORPORATION

ADDIS PLANT

STATEMENTS OF OPERATIONS AND CHANGES IN OWNER'S INVESTMENT

(IN THOUSANDS)

FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------------- --------------------
1994 1993 1993 1992
------------ ------------ --------- ---------
(UNAUDITED)

EXTERNAL SALES, net.......... $ 74,563 $ 52,648 $ 68,176 $ 65,452
SALES TO OWNER AT MARKET VAL-
UE.......................... 25,103 19,531 27,986 25,335
------------ ------------ --------- ---------
TOTAL SALES, net............. 99,666 72,179 96,162 90,787
OPERATING COSTS AND EXPENSES:
Cost of sales.............. 91,839 68,530 92,397 89,682
Selling, general and admin-
istrative expenses........ 1,561 1,371 1,825 2,198
Other operating (income)
expense................... 119 (68) 644 115
------------ ------------ --------- ---------
OPERATING INCOME (LOSS)...... 6,147 2,346 1,296 (1,208)
INTEREST AND OTHER EXPENSE:
Interest expense, affili-
ates...................... 591 591 788 788
Other...................... 102 99 132 132
------------ ------------ --------- ---------
INCOME (LOSS) BEFORE TAXES... 5,454 1,656 376 (2,128)
Income tax expense (bene-
fit)...................... 2,093 923 462 (765)
------------ ------------ --------- ---------
INCOME (LOSS) BEFORE CUMULA-
TIVE EFFECT OF CHANGE IN AC-
COUNTING PRINCIPLE.......... 3,361 733 (86) (1,363)
Cumulative effect of change
in accounting principle,
net....................... -- -- -- (543)
------------ ------------ --------- ---------
NET INCOME (LOSS)............ 3,361 733 (86) (1,906)
INCREASE (DECREASE) IN OWN-
ER'S INVESTMENT............. (10,342) 1,216 1,679 1,577
OWNER'S INVESTMENT, beginning
of period................... 38,737 37,144 37,144 37,473
------------ ------------ --------- ---------
OWNER'S INVESTMENT, end of
period...................... $ 31,756 $ 39,093 $ 38,737 $ 37,144
============ ============ ========= =========

The accompanying notes are an integral part of these statements.

F-19

OCCIDENTAL CHEMICAL CORPORATION

ADDIS PLANT

STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------------- --------------------
1994 1993 1993 1992
------------ ------------ --------- ---------
(UNAUDITED)

CASH FLOW FROM OPERATING AC-
TIVITIES:
Net income (loss).......... $ 3,361 $ 733 $ (86) $(1,906)
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Cumulative effect of
change in accounting
principle, net.......... -- -- -- 543
Depreciation and amorti-
zation.................. 3,413 3,099 4,071 4,006
Deferred income taxes.... 105 221 354 (443)
Changes in operating as-
sets and liabilities:
Decrease (increase) in
inventories........... 4,644 (2,617) (3,636) 745
Decrease (increase) in
other current
assets................ (152) (583) (135) 136
Increase (decrease) in
accounts payable and
accrued liabilities... (229) (253) 87 (1,347)
Other, net............... (22) 6 576 (179)
------------ ------------ --------- ---------
Net cash provided by operat-
ing activities.............. 11,120 606 1,231 1,555
------------ ------------ --------- ---------
CASH FLOW FROM INVESTING AC-
TIVITIES:
Capital expenditures....... (778) (1,822) (2,910) (3,132)
------------ ------------ --------- ---------
Net cash used by investing
activities.................. (778) (1,822) (2,910) (3,132)
------------ ------------ --------- ---------
CASH FLOW FROM FINANCING AC-
TIVITIES:
Increase (decrease) in own-
er's investment........... (10,342) 1,216 1,679 1,577
------------ ------------ --------- ---------
Net cash provided (used) by
financing activities........ (10,342) 1,216 1,679 1,577
------------ ------------ --------- ---------
Increase in cash............. -- -- -- --
Cash--beginning of period.... 2 2 2 2
------------ ------------ --------- ---------
Cash--end of period.......... $ 2 $ 2 $ 2 $ 2
============ ============ ========= =========

The accompanying notes are an integral part of these statements.

F-20

OCCIDENTAL CHEMICAL CORPORATION

ADDIS PLANT

BALANCE SHEETS

(IN THOUSANDS)

DECEMBER 31,
---------------
SEPTEMBER 30, 1994 1993 1992
------------------ ------- -------
(UNAUDITED)

CURRENT ASSETS:
Cash...................................... $ 2 $ 2 $ 2
Inventories............................... 6,500 11,144 7,508
Deferred income taxes..................... 105 -- 171
Other current assets...................... 311 159 24
------- ------- -------
Total current assets.................... 6,918 11,305 7,705
PROPERTY, PLANT AND EQUIPMENT, at cost, net
of accumulated depreciation of $46,533 as
of September 30, 1994 and $43,219 and
$41,883 as of December 31, 1993 and 1992... 44,980 47,518 49,129
OTHER ASSETS................................ 1,818 1,702 1,703
------- ------- -------
TOTAL ASSETS............................ $53,716 $60,525 $58,537
======= ======= =======
CURRENT LIABILITIES:
Accounts payable.......................... $ 1,228 $ 1,511 $ 1,380
Accrued liabilities....................... 376 322 366
------- ------- -------
Total current liabilities............... 1,604 1,833 1,746
------- ------- -------
DEFERRED INCOME TAXES....................... 11,999 11,808 11,625
OTHER LIABILITIES........................... 1,357 1,147 1,022
NOTE PAYABLE TO AFFILIATE................... 7,000 7,000 7,000
------- ------- -------
Total liabilities....................... 21,960 21,788 21,393
------- ------- -------
COMMITMENTS AND CONTINGENCIES
OWNER'S INVESTMENT.......................... 31,756 38,737 37,144
------- ------- -------
TOTAL LIABILITIES AND OWNER'S INVESTMENT.... $53,716 $60,525 $58,537
======= ======= =======

The accompanying notes are an integral part of these statements.

F-21

OCCIDENTAL CHEMICAL CORPORATION

ADDIS PLANT

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 1994 AND 1993 (UNAUDITED) AND DECEMBER 31, 1993 AND 1992

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--

Organization, business and basis of presentation--The accompanying financial
statements present the financial position, results of operations and cash flows
of the Addis Plant of Occidental Chemical Corporation (OCC), a New York
corporation. All of the outstanding common shares of OCC are owned indirectly
by Occidental Petroleum Corporation (Occidental). The financial statements are
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in a Form 8-K and a
registration statement of Borden Chemicals and Plastics Limited Partnership
(Borden) in connection with its acquisition of the Addis Plant (see Note 10).
Certain amounts in the accompanying financial statements have been allocated in
a reasonable and consistent manner in order to depict the financial position,
results of operations and cash flows of the Addis Plant on a stand-alone basis.

The Addis Plant, located in Addis, Louisiana, manufactures and sells
commodity grade PVC suspension resins from raw materials purchased primarily
from OCC. Additionally, the Addis Plant participates in a variety of operating
and sales contracts administered by OCC. These include national sales
agreements as well as purchase and energy agreements.

Occidental utilizes a centralized cash management system for its operations,
including the Addis Plant. Cash distributed to or advanced from Occidental has
been reflected in Owner's investment in the accompanying balance sheets. In
addition, settlements of transactions with other Occidental affiliates are
recorded through Owner's investment.

Interim period presentation--The financial statements as of September 30,
1994 and for the nine months ended September 30, 1994 and 1993 (unaudited)
include all normal, recurring adjustments which, in the opinion of management,
are necessary for a fair presentation of the financial position and results of
operations for such periods.

Supplemental cash flow information--For the years ended December 31, 1993 and
1992 and for the nine months ended September 30, 1994 and 1993, all cash
payments for income taxes were made by Occidental. For the same periods, there
were no cash payments for interest.

As of September 30, 1994 and December 31, 1993 and 1992, trade receivables of
$11,906,000, $7,749,000, and $6,092,000, respectively, were transferred to an
affiliate (see Note 2).

Property, plant and equipment--Property additions, major renewals and
improvements are capitalized at cost. Maintenance and repair costs are charged
to expense as incurred. The cost and related accumulated depreciation,
depletion and amortization of properties sold or retired are removed from the
property accounts and any resulting gain or loss is recorded.

Depreciation of plant and equipment has been provided using the units-of-
production method.

Other assets--Goodwill with a basis of $3,296,000 represents the excess of
cost over fair value of net assets at acquisition date and is amortized on the
straight-line basis over 25 years. The accumulated amortization was $1,824,000,
$1,725,000 and $1,593,000 at September 30, 1994 and December 31, 1993 and 1992,
respectively.

Environmental costs--Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate. Expenditures that relate
to existing conditions caused by past operations, and that do not contribute to
current or future revenue generation, are expensed. No such costs were incurred
at the

F-22

OCCIDENTAL CHEMICAL CORPORATION

ADDIS PLANT

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

SEPTEMBER 30, 1994 AND 1993 (UNAUDITED) AND DECEMBER 31, 1993 AND 1992

Addis Plant during 1994, 1993, or 1992. Reserves for estimated costs are
recorded when environmental remedial efforts are probable and the costs can be
reasonably estimated. In determining the reserves, OCC uses the most current
information available, including similar past experiences, available
technology, regulations in effect, the timing of remediation and cost-sharing
arrangements.

The Addis Plant's estimated operating expenses relating to compliance with
environmental laws and regulations governing ongoing operations were
approximately $3,400,000 and $3,300,000 in 1993 and 1992, respectively. In
addition, estimated capital expenditures for environmental compliance in 1993
and 1992 were approximately $200,000 and $100,000, respectively. Management has
not identified any material environmental matter, nor has the Addis Plant been
identified as a potentially responsible party in connection with any such
matter. At September 30, 1994 and December 31, 1993 and 1992, there are no
environmental reserves related to the Addis Plant.

Income taxes--The Addis Plant uses the asset and liability method required by
Statement of Financial Accounting Standards (SFAS) No. 109 "Accounting for
Income Taxes" (see Note 7). Deferred income taxes are recorded at enacted rates
to recognize the future effects of temporary differences which arise between
financial statement assets and liabilities and their basis for income tax
reporting purposes. Income tax expense and deferred income tax liabilities are
determined as though the Addis Plant filed separate U.S. federal and state
corporate income tax returns. Current income tax liabilities determined on a
separate return basis are included in Owner's investment in the accompanying
financial statements.

OCC includes the Addis Plant's operations in determining its taxable income,
and joins with Occidental in filing a consolidated U.S. federal income tax
return.

Significant customers--Three customers accounted for 19%, 12% and 11% of
external sales in 1993. These same customers accounted for 17%, 14% and 12% in
1992.

(2) RECEIVABLES

As of September 30, 1994, and December 31, 1993 and 1992, OCC transferred to
an Occidental affiliate trade receivables of the Addis Plant under a revolving
sale program amounting to $11,906,000, $7,749,000 and $6,092,000, respectively,
with recourse, in connection with the ultimate sale for cash of such
receivables. OCC transferred the receivables to the affiliate in a noncash
transaction that was reflected as a reduction in the Addis Plant's Owner's
investment. OCC has retained the collection responsibility with respect to the
receivables sold. An interest in new receivables is transferred monthly
representing the net difference between newly created receivables and
collections made from customers.

(3) ACCOUNTING CHANGES

Effective January 1, 1992, the Addis Plant adopted SFAS No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions" on the immediate
recognition basis. This statement required that the cost of these benefits,
which are primarily health care related, be recognized in the financial
statements during the employees' active working careers. The Addis Plant
recorded a charge of $543,000, which is net of a $350,000 income tax benefit,
as of January 1, 1992 to reflect the cumulative effect of the change in
accounting principle (see Note 8).

In December 1992, the Financial Accounting Standards Board issued SFAS No.
112 "Employers' Accounting for Postemployment Benefits," which substantially
changed the existing method of accounting for employer benefits provided to
inactive or former employees after employment but before retirement. This
statement requires that the cost of postemployment benefits be recognized in
the financial statements during employees' active working careers. OCC adopted
SFAS No. 112, effective January 1, 1994, but the adoption did not have a
material impact on the Addis Plant's financial position or results of
operations.

F-23

OCCIDENTAL CHEMICAL CORPORATION

ADDIS PLANT

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

SEPTEMBER 30, 1994 AND 1993 (UNAUDITED) AND DECEMBER 31, 1993 AND 1992
(4) INVENTORIES

Inventories are valued at the lower of cost or market. The last-in, first-out
(LIFO) cost method was used in determining the costs of raw materials and
finished goods. Materials and supplies inventories were determined using the
weighted average cost method. The valuation of LIFO inventories for September
30, 1994 is based on management estimates of year-end inventory levels and
costs. Inventories consisted of the following (in thousands):

DECEMBER 31,
---------------
SEPTEMBER 30, 1994 1993 1992
------------------ ------- ------
(UNAUDITED)

Raw materials............................. $1,629 $ 1,461 $1,470
Materials and supplies.................... 1,367 1,165 1,140
Finished goods............................ 4,438 8,990 4,636
------ ------- ------
7,434 11,616 7,246
LIFO/lower of cost or market reserve...... (934) (472) 262
------ ------- ------
Inventory at lower of cost or market...... $6,500 $11,144 $7,508
====== ======= ======

During 1993 and 1992, certain inventory quantities carried at LIFO were
reduced. This reduction resulted in a liquidation of LIFO inventory quantities
carried at higher costs prevailing in prior years as compared with the cost of
1993 and 1992 purchases, the effect of which increased cost of sales by
approximately $183,000 and $20,000, respectively.

(5) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (in thousands):

DECEMBER 31,
----------------
SEPTEMBER 30, 1994 1993 1992
------------------ ------- -------
(UNAUDITED)

Land and land improvements.............. $ 4,115 $ 4,115 $ 3,992
Buildings............................... 7,498 7,445 7,086
Machinery and equipment................. 78,860 77,023 74,669
Construction in progress................ 1,040 2,154 5,265
------- ------- -------
91,513 90,737 91,012
Accumulated depreciation................ (46,533) (43,219) (41,883)
------- ------- -------
$44,980 $47,518 $49,129
======= ======= =======

(6) LEASE COMMITMENTS

At December 31, 1993, future minimum lease payments under noncancelable
operating leases were as follows (in thousands):

1994................................................................ $1,263
1995................................................................ 827
1996................................................................ 646
1997................................................................ 601
1998................................................................ 334
Thereafter.......................................................... 64
------
Total minimum lease payments........................................ $3,735
======

F-24

OCCIDENTAL CHEMICAL CORPORATION

ADDIS PLANT

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

SEPTEMBER 30, 1994 AND 1993 (UNAUDITED) AND DECEMBER 31, 1993 AND 1992
Rental expense totaled approximately $1,474,000 and $1,712,000 for the years
ended December 31, 1993 and 1992, respectively.

(7) INCOME TAXES

Income tax expense (benefit) consists of the following (in thousands):

NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
------------------- -------------
1994 1993 1993 1992
--------- -------- ------ ------
(UNAUDITED)

Current U.S. federal........................ $ 1,704 $ 604 $ 92 $ (279)
Current state............................... 284 98 16 (43)
Deferred U.S. federal....................... 84 (37) 69 (353)
Deferred tax charge due to federal income
tax rate change............................ -- 268 268
Deferred state.............................. 21 (10) 17 (90)
--------- ------- ----- ------
$ 2,093 $ 923 $ 462 $ (765)
========= ======= ===== ======

The following table reconciles the maximum statutory U.S. federal income tax
rate multiplied by the Addis Plant's income (loss) before taxes to the recorded
income tax expense (benefit) (in thousands):

NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
------------------- -------------
1994 1993 1993 1992
--------- -------- ------ ------
(UNAUDITED)

U.S. federal income tax at 35% (34% at
September 30, 1993 and December 31, 1992).. $ 1,909 $ 580 $ 132 $ (724)
State income tax expense, net of U.S.
federal benefit............................ 198 57 21 (88)
Goodwill amortization and other
nondeductible expenses..................... 36 36 47 47
Current benefit from graduated U.S. federal
rates...................................... (50) (18) (6) --
Deferred U.S. federal income tax expense
resulting from rate increase on August 10,
1993....................................... -- 268 268 --
--------- ------- ----- ------
$ 2,093 $ 923 $ 462 $ (765)
========= ======= ===== ======

As discussed in Note 1, the Addis Plant accounts for income taxes on a
separate return basis under SFAS No. 109. Temporary differences are associated
with the financial statement assets and liabilities shown in the table below.
Deferred income tax assets and liabilities have been recorded in the following
amounts (in thousands):

SEPTEMBER 30, 1994 DECEMBER 31, 1993 DECEMBER 31, 1992
------------------ ------------------ ------------------
DEFERRED TAX DEFERRED TAX DEFERRED TAX
ASSETS LIABILITIES ASSETS LIABILITIES ASSETS LIABILITIES
------ ----------- ------ ----------- ------ -----------
(UNAUDITED)

Inventories............. $ -- $ -- $ -- $ -- $ 183 $ --
Property, plant and
equipment.............. -- (13,351) -- (13,068) -- (12,859)
Other assets............ -- (68) -- (56) -- --
Accrued liabilities..... 113 -- -- -- -- --
Other liabilities....... 584 -- 493 -- 429 --
Deferred state income
tax.................... 828 -- 823 -- 793 --
------ -------- ------ -------- ------ --------
$1,525 $(13,419) $1,316 $(13,124) $1,405 $(12,859)
====== ======== ====== ======== ====== ========

F-25

OCCIDENTAL CHEMICAL CORPORATION

ADDIS PLANT

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

SEPTEMBER 30, 1994 AND 1993 (UNAUDITED) AND DECEMBER 31, 1993 AND 1992
(8) RETIREMENT PLANS AND POSTRETIREMENT BENEFITS

The Addis Plant participates in defined contribution retirement plans
sponsored by Occidental for all of its salaried employees that provide for
periodic contributions by OCC based on the base salary and age level of the
eligible employees. Such contributions are invested in guaranteed-investment
contracts with insurance companies and in other high-quality fixed-income
investments. The Addis Plant expensed $245,000 and $236,000 under the
provisions of these plans during the years ended December 31, 1993 and 1992,
respectively.

OCC provides medical, dental and life insurance for certain active, retired,
and disabled employees and their eligible dependents. Beginning in 1993,
certain salaried participants pay for all medical cost increases in excess of
increases in the Consumer Price Index (CPI). The benefits generally are funded
by OCC as the benefits are paid during the year. The cost of providing these
benefits is based on claims filed and insurance premiums paid for the period.

The 1993 and 1992 postretirement benefits costs of $134,000 and $129,000, as
discussed in the table below, are based on an allocation of the OCC actuarial
study using participant counts as of January 1, 1994.

As discussed in Note 3, effective January 1, 1992, OCC adopted SFAS No. 106.
This statement required that the cost of postretirement benefits other than
pensions, which are primarily for health care, be accrued as a form of deferred
compensation earned during the period that employees render service, rather
than the previously permitted practice of accounting for such costs as claims
were paid. OCC elected immediate recognition of the net obligation at January
1, 1992. The related charge for the Addis Plant included an allocation of OCC's
previously unrecognized accumulated postretirement benefit obligation of
$543,000, which is net of a $350,000 income tax benefit. These allocations are
also based on participant counts as of January 1, 1994.

The postretirement benefit obligation as of December 31, 1993 and 1992 was
determined by application of the terms of medical, dental, and life insurance
plans, including the effect of established maximums on covered costs, together
with relevant actuarial assumptions and health-care cost trend rates projected
at a CPI increase of 4 percent. Because salaried participants pay for all
medical cost increases in excess of increases in the CPI, there is no effect of
a 1 percent annual increase in these assumed cost trend rates on the
accumulated postretirement benefit obligation or the annual service and
interest costs in 1993. The weighted average discount rates used in determining
the accumulated postretirement benefit obligation as of December 31, 1993 and
1992 were 7.5 and 8.5 percent, respectively. The plans are unfunded.

The following table sets forth the accrued postretirement benefit costs at
December 31, 1993 and 1992 (in thousands):

1993 1992
------ ------

Accumulated postretirement benefit obligation:
Retirees................................................... $ 137 $ 64
Fully eligible active plan participants.................... 482 400
Other active plan participants............................. 857 558
------ ------
Total accumulated postretirement benefit obligation.......... 1,476 1,022
Unrecognized net loss........................................ (329) --
------ ------
Accrued postretirement benefit cost.......................... $1,147 $1,022
====== ======

F-26

OCCIDENTAL CHEMICAL CORPORATION

ADDIS PLANT

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

SEPTEMBER 30, 1994 AND 1993 (UNAUDITED) AND DECEMBER 31, 1993 AND 1992

Net periodic postretirement benefit cost included the following components
for the years ended December 31, 1993 and 1992 (in thousands):

1993 1992
---- ----

Service cost-benefits attributed to service during the period...... $ 49 $ 53
Interest cost on accumulated postretirement benefit obligation..... 85 76
---- ----
Net periodic postretirement benefit cost........................... $134 $129
==== ====

(9) RELATED PARTY TRANSACTIONS

Transactions with other plants and affiliates of OCC included purchases of
feedstocks of $67,932,000 in 1993 and $58,885,000 in 1992. These purchases are
recorded at market value.

The Addis Plant has been charged for certain financial and operational
support services provided by OCC. Charges for such support services included in
cost of sales and selling, general and administrative costs in the accompanying
statements of operations totaled $3,564,000 and $3,636,000 in 1993 and 1992,
respectively, and $3,123,000 and $2,765,000 for the nine months ended September
30, 1994 and 1993, respectively. These charges were allocated based on ratios
including such factors as revenues, operating income, fixed assets, and working
capital in a reasonable and consistent manner.

Included in the above allocations are research and development costs, which
are charged to operations by OCC as incurred, and were $226,000 and $408,000 in
1993 and 1992, respectively, and $289,000 and $174,000 for the nine months
ended September 30, 1994 and 1993, respectively. These charges are included in
selling, general and administrative costs in the accompanying financial
statements.

The Addis Plant incurred $788,000 in 1993 and 1992 of interest expense on a
note payable to an affiliate due on November 30, 1995 with an outstanding
balance of $7 million and an interest rate of 11.25 percent. Other net advances
from owner and affiliates included in Owner's investment in the accompanying
Balance Sheets bear no interest.

(10) SALE OF ADDIS PLANT

In 1986, the Federal Trade Commission (FTC) initiated an administrative
proceeding against OCC alleging that its acquisition of facilities from Tenneco
Polymers, Inc. in Pasadena, Texas and Burlington, New Jersey, violated
antitrust laws. The administrative complaint sought rescission of the
acquisition agreement and divestiture of the acquired assets. In 1993, the FTC
issued an opinion and final order of divestiture. OCC petitioned for review to
the U.S. Court of Appeals for the Second Circuit (Second Circuit). A settlement
was subsequently reached under which OCC agreed to divest its facilities in
Burlington and, in lieu of Pasadena, Addis, Louisiana, and refrain from
acquiring polyvinyl chloride assets for a period of 10 years without FTC
approval. The Second Circuit approved the settlement in January 1994.

Borden has agreed to purchase selected assets and liabilities of the Addis
Plant, primarily including, but not limited to, property, plant and equipment
and inventories. The assets and liabilities included in these financial
statements are those required to present the Addis Plant as a stand-alone
entity and include certain assets and liabilities that are not included in the
sale to Borden.

F-27

PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)

On August 12, 1994 Borden Chemicals and Plastics Limited Partnership
(Partnership) through Borden Chemicals and Plastics Operating Limited
Partnership (Operating Partnership) entered into an agreement with Occidental
Chemical Corporation (OxyChem) to purchase its Addis, Louisiana PVC resin
production facility and certain related assets (the Addis Assets) and assume
certain obligations relating to the Addis Assets. The purchase price for the
Addis Assets is $104.3 million, subject to certain customary post-closing
adjustments.

The purchase price for the Addis Assets will be financed in part by the
proceeds of an offering of depositary units representing common limited partner
interests (Units) by the Partnership. The remaining purchase price will be
financed through a concurrent offering of senior unsecured notes (Senior Notes)
by the Operating Partnership or, in the event such offering is not completed,
through short-term borrowings, cash on hand or a combination thereof. The
following pro forma financial statements assume the acquisition of the Addis
Assets, the issuance of 4.0 million Units with net proceeds to the Partnership
of $18.57 per Unit, the issuance of $200.0 million of Senior Notes expected to
mature in 2001 and to bear interest at 9.75%, and the retirement of the
existing $150.0 million of notes (Notes) of the Operating Partnership
(collectively, the Transactions).

The following pro forma combined financial statements give effect to the
acquisition of the Addis Assets under the purchase method of accounting. The
pro forma combined financial statements are based on the historical financial
statements of the Partnership and of the Addis Plant of OxyChem (Addis Plant)
and the estimates and assumptions set forth herein and on page F-32. The data
presented herein is not necessarily indicative of the results of operations or
financial position that the Partnership would have obtained had such events
occurred at the beginning of the period, as assumed, or of the future results
of the Partnership.

The pro forma combined balance sheet as of September 23, 1994 combines the
Addis Plant September 30, 1994 balance sheet with the Partnership's September
23, 1994 balance sheet, assuming the Transactions occurred as of September 23,
1994, which was the end of the Partnership's latest fiscal period. The pro
forma combined statements of income combine the historical statements of
operations for the Addis Plant and the Partnership for the year ended December
31, 1993 and the nine months ended September 30, 1994 and September 23, 1994
for the Addis Plant and the Partnership, respectively, assuming the
Transactions occurred as of January 1, 1993.

F-28

PRO FORMA COMBINED BALANCE SHEET (UNAUDITED)

AS OF SEPTEMBER 23, 1994

(IN THOUSANDS)

ADDIS PRO FORMA PRO FORMA
A S S E T S PARTNERSHIP PLANT ADJUSTMENTS COMBINED
----------- ----------- ------- ----------- ---------

Cash............................. $ 49,563 $ 2 $ (2)(a) $ 49,584
21 (b)
Accounts receivable.............. 101,562 101,562
Inventories...................... 25,868 6,500 32,368
Other current assets............. 2,687 416 (416)(a) 2,687
-------- ------- -------- --------
Total current assets........... 179,680 6,918 (397) 186,201
Property and equipment, net...... 286,635 44,980 94,600 (b) 381,235
(44,980)(c)
Other assets..................... 31,523 1,818 (1,818)(a) 36,523
5,000 (b)
-------- ------- -------- --------
Total assets................... $497,838 $53,716 $ 52,405 $603,959
======== ======= ======== ========

L I A B I L I T I E S A N D
O W N E R ' S E Q U I T Y
-----------------------------

Accounts and drafts payable...... $ 47,756 $ 1,228 $ (1,228)(a) $ 47,756
Other current liabilities........ 63,287 376 (376)(a) 57,617
(5,670)(b)
-------- ------- -------- --------
Total current liabilities...... 111,043 1,604 (7,274) 105,373
-------- ------- -------- --------
Long-term debt................... 150,000 7,000 50,000 (b) 200,000
(7,000)(a)
Other liabilities................ 6,928 13,356 (13,356)(a) 7,553
766 (b)
(141)(d)
-------- ------- -------- --------
Total other liabilities........ 156,928 20,356 30,269 207,553
-------- ------- -------- --------
Owner's Investment--Addis........ 31,756 (31,756)(a) 0
Partners' Capital:
Common unitholders............. 228,615 74,275 (b) 289,170
(13,720)(d)
General partner................ 1,252 750 (b) 1,863
(139)(d)
-------- ------- -------- --------
Total partners' capital....... 229,867 0 61,166 291,033
-------- ------- -------- --------
Total liabilities & owners'
equity....................... $497,838 $53,716 $ 52,405 $603,959
======== ======= ======== ========

F-29

PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 23, 1994

(IN THOUSANDS, EXCEPT PER UNIT DATA)

ADDIS PRO FORMA PRO FORMA
PARTNERSHIP PLANT ADJUSTMENTS COMBINED
----------- ------- ----------- ---------

Net trade sales..................... $438,133 $99,666 $537,799
-------- ------- --------
Expenses:
Cost of goods sold................ 326,225 91,839 (1,562)(e) 417,413
911 (f)
Marketing, general and administra-
tive expense..................... 15,298 1,561 (1,374)(e) 15,485
Interest expense.................. 12,009 591 (591)(e) 14,264
2,255 (g)
Incentive to General Partner...... 8,751 8,751
Other (income) and expense includ-
ing minority interest............ 6,312 221 536 (h) 7,210
141 (i)
-------- ------- ------ --------
Total expenses.................. 368,595 94,212 316 463,964
-------- ------- ------ --------
Income before taxes................. 69,538 5,454 (316) 74,676
Income tax expense.................. 0 2,093 (2,093)(e) 0
-------- ------- ------ --------
Net income.......................... 69,538 3,361 1,777 74,676
======= ======
Less 1% General Partner interest.. (695) (747)
-------- --------
Net income applicable to Limited
Partners' interest................. $ 68,843 $ 73,289
======== ========
$ 1.87 $ 1.81
======== ========
Average number of Units outstanding
during the period.................. 36,750 4,000 40,750
======== ====== ========

F-30

PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE YEAR ENDED DECEMBER 31, 1993

(IN THOUSANDS, EXCEPT PER UNIT DATA)

ADDIS PRO FORMA PRO FORMA
PARTNERSHIP PLANT ADJUSTMENTS COMBINED
----------- ------- ----------- ---------

Net trade sales.................... $433,297 $96,162 $529,459
-------- ------- --------
Expenses:
Cost of goods sold............... 397,771 92,397 (1,739)(e) 490,123
1,694 (f)
Marketing, general and
administrative expense.......... 18,993 1,825 (1,575)(e) 19,243
Interest expense................. 16,356 788 (788)(e) 19,500
3,144 (g)
Other (income) and expense,
including minority interest..... 1,612 776 714 (h) 3,092
(10)(i)
-------- ------- ------ --------
Total expenses................. 434,732 95,786 1,440 531,958
-------- ------- ------ --------
Income (loss) before taxes......... (1,435) 376 (1,440) (2,499)
Income tax expense................. 0 462 (462)(e) 0
-------- ------- ------ --------
Net income (loss).................. (1,435) (86) (978) (2,499)
======= ======
Less 1% General Partner interest. 14 25
-------- --------
Net income (loss) applicable to
Limited Partners' interest........ $ (1,421) $ (2,474)
======== ========
Net income (loss) per Unit......... $ (0.04) $ (0.06)
======== ========
Average number of Units outstanding
during the period................. 36,750 4,000 40,750
======== ====== ========

F-31

NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS

(a) Reflects the elimination of certain historical assets and liabilities of
the Addis Plant excluded from the acquisition transaction, as well as of
OxyChem's historical investment.
(b) Reflects the acquisition of the Addis Assets and the effects of the debt
and equity offerings as follows:

Net proceeds from sale of 4.0 million Units.................. $ 74,275
Additional capital contribution by General Partner to Operat-
ing Partnership included in Minority Interest in Consoli-
dated Subsidiary............................................ 766
Additional capital contribution by General Partner to Part-
nership..................................................... 750
Proceeds from issuance of $200.0 million of Senior Notes net
of repayments of Notes...................................... 50,000
Payment of debt issuance costs of the Senior Notes of $5.0
million, payment of accrued interest as of September 23,
1994 on the Notes of $5.67 million, and payment of the pre-
mium on the prepayment of the Notes of $14.0 million........ (24,670)
--------
101,121
Cash acquisition price of $104.3 million net of purchase
price adjustment of $3.2 million based on September 30, 1994
inventory values............................................ 101,100
--------
Net proceeds in excess of acquisition price.................. $ 21
========
The cash acquisition price has been allocated for pro forma
purposes based upon the General Partner's preliminary esti-
mate of the fair market value of the assets acquired:
Inventories................................................ $ 6,500
Property, plant and equipment.............................. 94,600
--------
$101,100
========

(d) Reflects the effect of the payment of a premium related to the prepayment
of the Notes. The prepayment premium would be accounted for as an
extraordinary loss on early extinguishment of debt; as such, it is
reflected as a reduction of Minority Interest in Consolidated Subsidiary
and Partners' Capital in the pro forma balance sheet as of September 23,
1994. The prepayment premium is not reflected in the pro forma statements
of income due to its nonrecurring nature. The prepayment premium amount
($14.0 million) represents an approximate amount calculated as of November
18, 1994 on the assumption that the premium will be the excess of (i) the
remaining scheduled principal and interest payments on the Notes discounted
to present value at applicable Treasury rates over (ii) the outstanding
principal of and accrued interest on the Notes. The holders of the Notes
have not agreed to prepayment of the Notes or to any prepayment formula,
although discussions have begun. Accordingly, the prepayment premium is
likely to vary from $14.0 million based on the results of the negotiation
as well as the actual timing of any payment and prevailing interest rates.
In addition, as discussed under "Use of Proceeds", Borden has advised the
Partnership that it will pay a portion of the prepayment premium. The
prepayment premium set forth herein has not been reduced to reflect payment
of a portion of the same by Borden since such amount has not been
negotiated.
(e) Reflects the elimination of certain OxyChem costs (interest, taxes and
certain corporate expenses allocated to depict the Addis Plant on a stand-
alone basis and which are considered to substantially duplicate existing
Partnership functions) that would not have been incurred under ownership by
the Partnership, net of anticipated corporate costs of $0.25 million
annually that are estimated to be allocated from the General Partner based
on customary methods for the expected incremental activity related to the
Addis Assets.
(f) Reflects the net increase in depreciation over historical Addis Plant
depreciation using the increased basis in fixed assets and depreciable
lives of 30 years and 15 years for buildings and equipment, respectively.
(g) Reflects the net additional interest from the issuance of $200.0 million of
Senior Notes (at 9.75%) over the interest on the $150.0 million of Notes
assumed to be retired in the pro forma financial statements.
(h) Reflects the amortization of debt issuance costs related to the Senior
Notes.
(i) Reflects effect of the Addis Plant and pro forma adjustments on Minority
Interest in Consolidated Subsidiary.

F-32

- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRE- SENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSE-
QUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE SUCH DATE.

------------

TABLE OF CONTENTS

PAGE
----

Prospectus Summary........................................................ 3
Investment Considerations................................................. 13
Partnership Structure..................................................... 23
The Acquisition........................................................... 24
Use of Proceeds........................................................... 26
Capitalization............................................................ 27
Price Range of Units and Distributions.................................... 28
Cash Distributions........................................................ 29
Selected Consolidated Historical and Combined Pro Forma Financial Data.... 33
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 35
Business and Properties................................................... 42
Management................................................................ 58
Legal Proceedings......................................................... 60
Conflicts of Interest and Fiduciary Responsibility........................ 63
Description of Depositary Units and the Deposit Agreement................. 67
Summary of the Partnership Agreements..................................... 73
Summary of the Financing Documents........................................ 82
Allocations of Income and Loss............................................ 90
Certain Federal Income Tax Considerations................................. 90
ERISA and Other Considerations Concerning Employee Benefit Plans and
Retirement Accounts...................................................... 110
Underwriting.............................................................. 113
Legal Opinions............................................................ 115
Experts................................................................... 115
Available Information..................................................... 115
Incorporation of Certain Documents by Reference........................... 116
Glossary of Terms......................................................... 117
Index to Financial Statements............................................. F-1

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

Borden Chemicals and Plastics
Limited Partnership

4,000,000 Depositary Units
Representing
Common Limited Partner Interests

PROSPECTUS

CS First Boston
PaineWebber Incorporated

- -------------------------------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS
TO REGISTRATION STATEMENT
ON FORM S-3 OF BORDEN CHEMICALS AND
PLASTICS LIMITED PARTNERSHIP (THE "COMPANY")

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following sets forth the estimated expenses and costs in connection with
issuance and distribution of the securities being registered, other than
underwriting discounts and commissions, all of which shall be paid by the
Company.

Securities and Exchange Commission Registration Fee........... $ 21,850
National Association of Securities Dealers Filing Fee......... 11,425
Printing and Expenses......................................... 350,000
Legal Fees and Expenses....................................... 720,000
Accounting Fees and Expenses.................................. 125,000
Blue Sky expenses and counsel fees............................ 15,000
Miscellaneous................................................. 50,000
----------
Total..................................................... $1,293,275
==========

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 17-108 of the Delaware Revised Uniform Limited Partnership Act
provides that subject to such standards and restrictions, if any, as are set
forth in its partnership agreement, a limited partnership may and shall have to
power to indemnify and hold harmless any partner or other person from and
against any and all claims and demands whatsoever.

Section 6.7 of the Partnership Agreement provides that the Company will to
the fullest extent permitted by law, indemnify the General Partner (as defined
in the Partnership Agreement), any Departing Partner (as defined in the
Partnership Agreement) and their respective affiliates and the officers,
directors, employees, partners, agents and trustees of the General Partner, any
Departing Partner or any such affiliate as an officer, director, employee,
partner, agent or trustee of another person from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, settlements and other amounts
arising from any and all claims, demands, actions, suits, or proceedings,
civil, criminal, administrative, or investigative, in which any such
indemnified person may be involved, or is threatened to be involved, as a party
or otherwise, by reason of its status as the General Partner, a Departing
Partner or an affiliate thereof, an officer, director, partner, employee, agent
or trustee of the General Partner, any Departing Partner or affiliate thereof,
or a person serving at the request of the Company in another entity in a
similar capacity, if such person acted in good faith and in a manner which such
person in good faith believed to be in, or not opposed to, the best interests
of the Company, and, with respect to any criminal proceeding, had no reasonable
cause to believe its conduct was unlawful. Any indemnification under this
provision will be limited to the assets of the Company.

Section 6.7 of the partnership agreement for the Operating Company provides
that the Operating Partnership will, to the fullest extent permitted by law,
indemnify the General Partner (as defined in such Partnership Agreement), any
Departing Partner (as defined in such Partnership Agreement) and their
respective affiliates and the officers, directors, employees, partners, agents
and trustees of the General Partner, and Departing Partner or any such
affiliate and persons serving at the request of the General Partner or any
Departing partner or any such affiliate as an officer, director, employee,
partner, agent or trustee of another person from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, settlements and other amounts
arising from any and all claims,

II-1

demands, actions, suits or proceedings, civil, criminal, administrative or
investigative, in which any such indemnified person may be involved, or is
threatened to be involved, as a party or otherwise, by reason of its status as
the General Partner, a Departing Partner or an affiliate thereof, an officer,
director, partner, employee, agent or trustee of the General Partner, any
Departing Partner or affiliate thereof, or a person serving at the request of
the Operating Partnership, and, with respect to any criminal proceeding, had no
reasonable cause to believe its conduct was unlawful. Any indemnification under
this provision will be limited to the assets of the Operating Partnership.

The Company and Operating Company are authorized to purchase and maintain
insurance, on behalf of the General Partner (as defined in each of the
Partnership Agreements) for the Partnership and the Operating Partnership as
applicable and such other persons as the General Partner shall determine,
against liabilities and expenses incurred by such person in connection with the
Company's and Operating Company's activities as applicable, whether or not the
Company or the Operating Company, as applicable, would have the power to
indemnify such person against such liabilities or expenses under the provisions
of the Partnership Agreement of the Company and the Operating Company as
applicable.

The form of Underwriting Agreement contains provisions by which the
Underwriters severally agree to indemnify the Company and the General Partner,
their directors, each of their officers who signs the Registration Statement of
the Company, and each person who controls the General Partner, with respect to
information furnished in writing by the Underwriters for use in the
Registration Statement.

Section 145 of the Delaware General Corporation Law sets forth the extent to
which a person who is a director or officer of a Delaware corporation or serves
at the request of a Delaware corporation as a director, officer, employee or
agent of any other enterprise may be indemnified against any liabilities they
may incur in their capacity as such. Article Eleventh of the General Partner's
Certificate of Incorporation and Section 7 of Article V of the General
Partner's Bylaws provide for the indemnification of directors and officers of
the General Partner and such directors and officers who serve at the request of
the General Partner as directors, officers, employees, or agents of any other
enterprise against certain liabilities under certain circumstances. In
addition, the General Partner has provided for the indemnification of the
General Partner's directors (to the extent permitted under Delaware law).

ITEM 16. EXHIBITS

The registrant hereby agrees to provide the Commission, upon
request, copies of any
omitted schedules required by Item 601(b)(2) of Regulation S-K

4.1/1/ Amended and Restated Certificate of Limited Partnership of the
Company
4.2/1/ Amended and Restated Certificate of Limited Partnership of the
Operating Company
4.3/1/ Amended and Restated Agreement of Limited Partnership of the
Company dated as of December 15, 1988
4.4/2/ Amended and Restated Agreement of Limited Partnership of the
Operating Company dated as of November 30, 1987
4.5 ** Form of Depositary Receipt for Units

II-2

4.6** Form of Third Amended and Restated Deposit Agreement dated as of
, 1994 among the Company, General Partner, Borden, Inc. and
Society National Bank
5.1 Opinions of Sidley & Austin and Richards, Layton & Finger re
legality
8.1 Opinion of Sidley & Austin re tax matters
23.1 Consents of Sidley & Austin and Richards, Layton & Finger
(contained in Exhibit 5.1)
23.2 Consent of Price Waterhouse LLP, dated November , 1994
23.3 Consent of Arthur Andersen LLP, dated November , 1994
24.1*** Powers of Attorney

- --------

* confidential treatment requested

** to be filed by amendment

*** previously filed
/1/ Filed as an exhibit to the joint Registration Statement on Form S-1 and
Form S-3 of the Company, Borden, Inc. and Borden Delaware Holdings, Inc.
(File No. 33-25371) and incorporated herein by reference in this
Registration Statement.
/2/ Filed as an exhibit to the Company's Registration Statement on Form S-1
(File No. 33-18938) and incorporated herein by reference in this
Registration Statement.
/3/ Filed as an exhibit to the Company's 1992 Form 10-K Annual Report and
incorporated herein by reference in this Registration Statement.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchanges Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1993 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

The registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it is declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON NOVEMBER 17,
1994.

Borden Chemicals and Plastics
Limited Partnership

By BCP Management, Inc., in its
capacity as General Partner of
Borden Chemicals and Plastics
Limited Partnership

/s/ David A. Kelly*
By: _________________________________
Name:
(David A. Kelly, Treasurer and
Principal Financial Officer)

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED (WITH BCP MANAGEMENT INC., GENERAL PARTNER) ON NOVEMBER
17, 1994.

SIGNATURE TITLE
--------- -----

/s/ Joseph M. Saggese*
- ------------------------------------
(Joseph M. Saggese) Chairman of the Board of
Directors, President and
Chief Executive Officer and
Director
/s/ James O. Stevning*
- ------------------------------------
(James O. Stevning) Controller and Principal
Accounting Officer
/s/ David A. Kelly*
- ------------------------------------
(David A. Kelly) Treasurer and Principal
Financial Officer and
Director
/s/ Edward H. Jennings*
- ------------------------------------
(Edward H. Jennings) Director
/s/ George W. Koch*
- ------------------------------------
(George W. Koch) Director
/s/ John P. Stapleton*
- ------------------------------------
(John P. Stapleton) Director
/s/ Ronald P. Wiles*
- ------------------------------------
(Ronald P. Wiles) Director

/s/ Lawrence L. Dieker
*By: __________________________
Name:
(Lawrence L. Dieker, Attorney-
In-Fact)

II-4

GRAPHICS APPENDIX LIST

PAGE WHERE
GRAPHIC
APPEARS DESCRIPTION OF GRAPHIC OR CROSS-REFERENCE
- --------------------------------------------------------------------------------
23 - Borden, Inc. owns 100% of the common shares of BCP Management, Inc.
- BCP Management, Inc. is the sole general partner of each of Borden
Chemicals and Plastics Limited Partnership and Borden Chemicals and
Plastics Operating Limited Partnership
- BCP Management, Inc. owns a 1% general partner interest in Borden
Chemicals and Plastics Limited Partnership
- BCP Management, Inc. owns a 1.0101% general partner interest in
Borden Chemicals and Plastics Operating Limited Partnership
- Borden Chemicals and Plastics Limited Partnership owns a 98.9899%
limited partner interest in Borden Chemicals and Plastics Operating
Limited Partnership
- Public Unitholders, in the aggregate, own a 99% limited partner
interest in Borden Chemicals and Plastics Limited Partnership
- Public Unitholders own 40,750,000 Common Units after giving effect
to the sale of the Units offered hereby and assuming the
Underwriters' over-allotment option is not exercised.

- --------------------------------------------------------------------------------
43 - The three primary raw materials used by the Company are natural
gas, ethylene, and chlorine. Ethylene and chlorine are used
exclusively in the ethylene-base vinyl chloride monomer ("VCM")
plant which produces VCM and by product hydrochloric acid.

- Natural gas is used in four primary ways: a) as a fuel in the
cogeneration units to produce steam and electricity for plant-wide
use; b) as a fuel and raw material in the acetylene plant which
produces acetylene and acetylene off-gas; c) as a fuel and raw
material in the methanol plant which produces methanol; and, d) as
a fuel and raw material in the ammonia plant which produces ammonia
and by product carbon dioxide.

- Because of the design and integration of the plant each of the
above noted products are further used by the Company to produce
other downstream products. Acetylene and by product hydrochloric
acid from the ethylene-based VCM plant are combined to produce
acetylene-based VCM. The VCM from both the ethylene-based and
acetylene-based VCM plants is then further used to produce
polyvinyl chloride (PVC) resins. Acetylene off-gas is used to
produce methanol and also may be cryogenically separated to produce
carbon monoxide and hydrogen. Methanol is also further used to
produce formaldehyde and urea-formaldehyde concentrate. Ammonia and
its by product carbon dioxide are used to produce urea. The above
description is designed to describe the integrated processes by
which three primary raw materials: natural gas, ethylene, and
chlorine are converted into the major end products produced by the
Company: PVC resins, methanol, formaldehyde and urea-formaldehyde
concentrate, ammonia, and urea.

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----

1.1 Form of Underwriting Agreement dated as of ,
1994 among Borden Chemicals and Plastics Limited Partnership
(the "Company"), Borden Chemicals and Plastics Operating
Limited Partnership (the "Operating Company"), BCP
Management, Inc. ("General Partner"), CS First Boston
Corporation and PaineWebber Incorporated
2.1* Asset Transfer Agreement dated as of August 12, 1994 between
the Operating Company and OxyChem Chemical Corporation
The registrant hereby agrees to provide the Commission, upon
request, copies of any omitted schedules required by Item
601(b)(2) of Regulation S-K
4.1/1/ Amended and Restated Certificate of Limited Partnership of
the Company
4.2/1/ Amended and Restated Certificate of Limited Partnership of
the Operating Company
4.3/1/ Amended and Restated Agreement of Limited Partnership of the
Company dated as of December 15, 1988
4.4/2/ Amended and Restated Agreement of Limited Partnership of the
Operating Company dated as of November 30, 1987
4.5** Form of Depositary Receipt for Units
4.6** Form of Third Amended and Restated Deposit Agreement dated as
of , 1994 among the Company, General Partner, Borden,
Inc. and Society National Bank
5.1 Opinions of Sidley & Austin and Richards, Layton & Finger re
legality
8.1 Opinion of Sidley & Austin re tax matters
23.1 Consents of Sidley & Austin and Richards, Layton & Finger
(contained in Exhibit 5.1)
23.2 Consent of Price Waterhouse LLP, dated November , 1994
23.3 Consent of Arthur Andersen LLP, dated November , 1994
24.1*** Powers of Attorney

- --------

* confidential treatment requested

** to be filed by amendment