SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): JUNE 3, 2004
NORTHERN BORDER PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 1-12202 93-1120873
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
13710 FNB PARKWAY
OMAHA, NEBRASKA 68154-5200
(Address of principal executive offices) (Zip Code)
(402) 492-7300
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
As previously reported in Northern Border Partners, L.P. Form 10-K for
the year ended December 31, 2003, on December 31, 2003, Enron filed a motion
seeking approval of the Bankruptcy Court to provide additional funding to, and
for authority to terminate, the Enron Corp. Cash Balance Plan ("Cash Balance
Plan") and certain other defined benefit plans of Enron's affiliates
(collectively the "Plans") in "standard terminations" within the meaning of
Section 4041 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Such standard terminations would satisfy all of the obligations of
Enron and its affiliates with respect to funding liabilities under the Plans. In
addition, a standard termination would eliminate the contingent claims of the
Pension Benefit Guaranty Corporation ("PBGC") against Enron and its affiliates
with respect to funding liabilities under the Plans. On January 30, 2004, the
Bankruptcy Court entered an order authorizing the termination, additional
funding and other actions necessary to effect the relief requested. Pursuant to
the Bankruptcy Court order, any contributions to the Plans are subject to the
prior receipt of a favorable determination by the Internal Revenue Service that
the Plans are tax-qualified as of their respective dates of termination.
On June 2, 2004, the PBGC issued a notice to Enron stating that it had
determined that the Plans will be unable to pay benefits when due and should be
terminated in order to protect the interests of the participants in the Plans,
and/or that the risk of loss to the PBGC would increase unreasonably if the
Plans were not so terminated. On June 3, 2004, the PBGC filed a complaint in the
District Court for the Southern District of Texas against Enron as the sponsor
and/or administrator of the Plans (the "Action"). By filing the Action, the PBGC
is seeking an order (i) terminating the Plans; (ii) appointing the PBGC the
statutory trustee of the Plans; (iii) requiring transfer to the PBGC of all
records, assets or other property of the Plans required to determine the
benefits payable to the Plans' participants; and (iv) establishing June 2, 2004
as the termination date of the Plans.
Enron management previously informed Northern Plains Natural Gas
Company and NBP Services Corporation that Enron will seek funding contributions
from each member of its ERISA controlled group of corporations that employs, or
employed, individuals who are, or were, covered under the Cash Balance Plan.
Northern Plains and NBP Services previously advised us that each is a member of
Enron's ERISA controlled group of corporations and that an amount of
approximately $6.2 million had been estimated for Northern Plains' and NBP
Services' proportionate share of the up to $200 million estimated termination
costs for the Plans authorized by the Bankruptcy Court order. Under the
operating agreements with Northern Plains and the administrative services
agreement with NBP Services, these costs may be our responsibility. In December
of 2003 we accrued $6.2 million to satisfy claims of reimbursement for these
termination costs.
The PBGC's Action and the possible consequences of an adverse
determination of the Action have the potential to increase the costs of the
termination of the Plans and potentially the estimated share of Northern Plains'
and NBP Services' termination costs to an amount in excess of the current $6.2
million accrual. Enron and its affiliates
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have taken certain steps to protect non-debtor interests and the acquirers of
such interests that should limit the impact of the PBGC's Action on Northern
Plains and NBP Services. First, pursuant to the modified Fifth Amended Joint
Plan of Reorganization, filed with the Bankruptcy Court on June 1, 2004, Enron
and its affiliated debtors have agreed to escrow $200 million for the costs
associated with the termination of the Plans. Second, pursuant to the Amended
and Restated Contribution and Separation Agreement dated as of March 31, 2004,
which provided for the contribution of certain equity interests to CrossCountry
Energy, LLC, Enron and its affiliated debtors have agreed to indemnify Northern
Plains and NBP Services against claims of any joint and several liability for
the termination costs of the Cash Balance Plan.
Additionally, in the agreement for the sale of CrossCountry Energy to
NuCoastal LLC, Enron agreed with NuCoastal that Enron would require no further
contributions in connection with the Cash Balance Plan from CrossCountry Energy,
including Northern Plains and NBP Services, in excess of the amount already
contributed by those entities. Further, upon payment of the purchase price by
NuCoastal, Enron has agreed that the contribution obligations of CrossCountry
Energy, including Northern Plains and NBP Services, will be deemed fully
satisfied, as the purchase price is deemed to include all contributions that
otherwise would have been allocable to Northern Plains and NBP Services.
NuCoastal may seek reimbursement from Northern Plains and NBP Services for the
satisfaction of these liabilities, and some or all of such reimbursement may be
our responsibility. However, the purchase agreement between Enron and NuCoastal
is subject to, among other things, approval of the Bankruptcy Court. There can
be no assurance that the NuCoastal transaction will close, the purchase price
paid, or that the purchase agreement with NuCoastal will not be terminated or
amended.
We do not believe at this time that we will be subject to any increased
liability as a result of the PBGC's filing of the Action; however, we cannot now
determine the effect, if any, on us if the PBGC receives a favorable ruling on
its Action. Furthermore, while the final amounts chargeable to us under the
operating and administrative services agreements for the termination of the Cash
Balance Plan cannot be determined at this time, we believe the ultimate
settlement of this matter will not have a material effect on our results of
operations.
This Form 8-K includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Although Northern Border Partners, L.P. believes that these
expectations are based on reasonable assumptions, there is no assurance that
such expectations will be achieved. Important factors that could cause actual
results to differ materially from those in the forward-looking statements
include developments in Enron's voluntary petition for bankruptcy including
Bankruptcy Court approval of the sale of CrossCountry Energy and the outcome of
Enron's Chapter 11 process; Enron's ability to resolve the PGBC's Action in a
favorable manner; and the success in obtaining all necessary regulatory and
governmental approvals.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Northern Border Partners, L.P.
(A Delaware Limited Partnership)
Dated: June 8, 2004 By: /s/ Jerry L. Peters
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Jerry L. Peters
Chief Financial and Accounting Officer
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