SCHEDULE 14A
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PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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BUCKEYE PARTNERS, L.P.
(Name of Registrant as Specified in its Charter)
BUCKEYE PARTNERS, L.P.
(Name of Person(s) Filing Proxy Statement)
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[BUCKEYE LOGO AND LETTERHEAD]
April __, 1998
Dear Unitholder:
As we previously reported to you, 1997 was an excellent year for the
Partnership. We are determined to maintain this positive momentum into 1998 and
the years ahead.
One of our principal objectives for 1998 is to better position the
Partnership to participate in an increasing competitive environment for oil
pipelines. In the Consent Solicitation materials that are enclosed, we propose
several amendments to the Buckeye Partnership Agreement that will eliminate
restrictions on our ability to issue additional LP Units, incur debt and spend
capital. These amendments will provide the Partnership with the financial
flexibility to pursue growth and expansion opportunities in a timely and cost-
effective manner. These amendments will also make our Partnership Agreement
comparable to the partnership agreements of other publicly traded petroleum
products pipeline partnerships, none of which have similar restrictions on the
issuance of equity or debt or on capital spending.
We believe that these amendments are critical to our efforts to generate
increased cash flow for the Partnership and to build long-term value for our
Unitholders. The Board of Directors of the General Partner has recommended
unanimously that you approve the Proposed Amendments.
We urge you to read the Consent Solicitation materials carefully. Your
vote is extremely important. We must receive the affirmative consent of at
least two-thirds of the Unitholders for the amendments to be approved.
Thank you for your support. We look forward to the opportunity to continue
to build long-term value for our Unitholders.
Sincerely,
A. W. Martinelli
Chairman and Chief Executive Officer
Buckeye Management Company,
as General Partner
Enclosure
[BUCKEYE LOGO AND LETTERHEAD]
April ____, 1998
NOTICE OF
CONSENT SOLICITATION
To our Unitholders:
We are soliciting your consent to amend certain provisions of the Amended
and Restated Agreement of Limited Partnership, dated as of December 23, 1986, as
amended (the "Partnership Agreement"), of BUCKEYE PARTNERS, L.P., a Delaware
limited partnership (the "Partnership").
We are proposing three amendments (the "Proposed Amendments") that require
the approval of the limited partners of the Partnership ("Unitholders"). The
Proposed Amendments would:
(1) remove the limitation on the number of limited partnership units
of the Partnership ("LP Units") that may be issued without the approval of
the Unitholders;
(2) eliminate the restrictions on the amount of debt that may be
incurred by the Partnership or its operating limited partnerships (the
"Operating Partnerships"); and
(3) remove the limitation on the amount of capital expenditures that
may be made by the Partnership and the Operating Partnerships in any
calendar year.
The Proposed Amendments are described in more detail in the accompanying Consent
Solicitation Statement.
Unitholders of record at the close of business on ____________, 1998, are
entitled to receive notice of and to vote in the Consent Solicitation. We are
asking the Unitholders to consider and vote on the Proposed Amendments as a
single proposal that will require the approval of Unitholders holding two-thirds
of the limited partnership units ("LP Units") outstanding. THE BOARD OF
DIRECTORS OF THE GENERAL PARTNER HAS VOTED UNANIMOUSLY TO RECOMMEND THAT THE
UNITHOLDERS VOTE FOR THE PROPOSED AMENDMENTS.
The Proposed Amendments can only be adopted following the approval by two-
thirds of the Unitholders. YOUR VOTE IS IMPORTANT. Failure to return the
enclosed Consent form will have the same effect as a vote against the Proposed
Amendments. We encourage you, therefore, to review the enclosed Consent
Solicitation materials and to complete, date, sign and mail your Consent in the
enclosed postage-paid envelope, or forward the enclosed letter of instruction to
your broker or nominee, as soon as possible.
This Consent Solicitation will expire at 5:00 p.m., eastern standard time,
on June 15, 1998, (the "Expiration Date"). The Consent Solicitation may be
extended by the General Partner for a specified period of time or on a daily
basis until the Consents necessary to adopt the Proposed Amendments have been
received. You may revoke your Consent at any time up to the Expiration Date.
Stephen C. Muther
Secretary
Buckeye Management Company,
as General Partner
[LOGO] BUCKEYE PARTNERS, L.P.
CONSENT SOLICITATION STATEMENT
TO APPROVE PARTNERSHIP AGREEMENT AMENDMENTS
Buckeye Partners, L.P. (the "Partnership") is furnishing this Consent
Solicitation Statement to the holders of the Partnership's limited partnership
units (the "Unitholders") as of __________, 1998, in connection with the
solicitation (the "Solicitation") of the consent (the "Consent") of the
Unitholders to approve certain amendments (the "Proposed Amendments") to the
Amended and Restated Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement"). The Proposed Amendments have been approved
unanimously by the Board of Directors of Buckeye Management Company, the
Partnership's general partner (the "General Partner"), as being in the best
interests of the Partnership and the Unitholders.
The Proposed Amendments will
(1) remove the limitation on the number of limited partnership units of the
Partnership ("LP Units") that may be issued without the approval of the
Unitholders;
(2) eliminate the restrictions on the amount of debt that can be incurred by
the Partnership or its four operating limited partnerships (the "Operating
Partnerships"); and
(3) remove the limitations on the amount of capital expenditures that can be
made by the Partnership and the Operating Partnerships in any calendar year.
The Proposed Amendments will be considered and voted on by Unitholders as a
single proposal. A copy of the Partnership Agreement containing the Proposed
Amendments is attached to this Consent Solicitation Statement as Appendix A.
Only Unitholders of record at the close of business on ____________, 1998 (the
"Record Date"), are entitled to vote on the Proposed Amendments. Adoption of
the Proposed Amendments requires the affirmative vote of Unitholders holding
two-thirds of the LP Units outstanding.
THE BOARD OF DIRECTORS OF THE GENERAL PARTNER UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR THE PROPOSED AMENDMENTS.
This Consent Solicitation will expire at 5:00 p.m., Eastern Standard Time, on
June 15, 1998 (the "Expiration Date"). The General Partner may extend this
Consent Solicitation for a specified period of time or on a daily basis until
the Consents necessary to adopt the Proposed Amendments have been received. You
may revoke your consent at any time before the Expiration Date.
If you have any questions about this Consent Solicitation Statement, please
call 1-800-628-8509.
This Consent Solicitation Statement is dated April __, 1998. The Consent
Solicitation Statement and the related form of Consent are being mailed to
Unitholders on or about May ___, 1998.
TABLE OF CONTENTS
Page
----
SUMMARY................................................ 4
BACKGROUND AND REASONS FOR THE
AMENDMENTS............................................ 6
The Partnership........................................ 6
The General Partner and the Manager.................... 6
Consideration of Proposed Amendments to the
Partnership Agreement................................. 6
Text of the Amended and Restated Partnership
Agreement............................................. 8
Vote Required for Approval of the Proposed
Amendments............................................ 9
General Partner Recommendation......................... 9
THE SOLICITATION....................................... 10
Voting Securities, Record Date and
Outstanding LP Units.................................. 10
Consent and Revocation of Consent...................... 10
Required Vote.......................................... 10
Solicitation of Consents............................... 11
No Appraisal Rights.................................... 11
Notice to Unitholders.................................. 11
BENEFITS OF THE PROPOSED
AMENDMENTS TO THE GENERAL PARTNER -
CONFLICTS OF INTEREST................................. 12
FEDERAL INCOME TAX CONSEQUENCES
OF THE PROPOSED AMENDMENTS............................ 12
PRICE RANGE OF LP UNITS AND
DISTRIBUTIONS......................................... 13
DESCRIPTION OF THE LP UNITS............................ 14
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT...................... 15
WHERE YOU CAN FIND MORE
INFORMATION........................................... 16
APPENDIX A -
PARTNERSHIP AGREEMENT............................ A-1
APPENDIX B -
FORM OF CONSENT.................................. B-1
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended, that are
subject to risks and uncertainties. Forward-looking statements include certain
information relating to the financing of possible future expansion and growth
opportunities for the Partnership's operations and the Partnership's financing
alternatives generally. Forward-looking statements also include information in
this Consent Solicitation Statement where statements are preceded by, followed
by or include the words "projects," "estimates," "believes," "expects,"
"assumes," "anticipates" or similar expressions. For such statements the
Partnership claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
Actual events or results may differ materially from those discussed in forward-
looking statements as a result of various factors, including, without
limitation, those discussed elsewhere in this Consent Solicitation Statement.
3
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
Proposed Amendments fully and for a more complete description of the specific
steps involved, you should read this entire document carefully (including its
appendices) and the documents that have been incorporated by reference in this
Consent Solicitation Statement. See "Where You Can Find More Information." (See
page 18).
THE PARTNERSHIP (SEE PAGE 6)
Buckeye Partners, L.P.
3900 Hamilton Boulevard
Allentown, Pennsylvania 18103
(610) 770-4000
The Partnership provides pipeline transportation service for refined petroleum
products, with approximately 3,500 miles of pipeline serving ten states. The
Partnership conducts its business through four operating limited partnerships
(the "Operating Partnerships").
THE GENERAL PARTNER AND THE MANAGER
(SEE PAGE 6)
The General Partner of the Partnership is Buckeye Management Company. The
general partner and manager of the Operating Partnerships is Buckeye Pipe Line
Company (the "Manager"), which is a wholly-owned subsidiary of the General
Partner.
THE PROPOSED AMENDMENTS (SEE PAGE 6)
The Proposed Amendments would amend the Partnership Agreement to:
(1) remove the limitation on the number of LP Units that may be issued by the
General Partner without the approval of the Unitholders;
(2) eliminate the restrictions on the amount of debt that can be incurred by
the Partnership or the Operating Partnerships; and
(3) remove the limitation on the amount of capital expenditures that can be
made by the Partnership and the Operating Partnerships in any calendar year.
GENERAL PARTNER RECOMMENDATION
(SEE PAGE 9)
The Board of Directors of the General Partner believes that the Proposed
Amendments are in your best interests and recommends that you vote FOR the
Proposed Amendments.
BENEFITS OF THE PROPOSED AMENDMENTS TO THE GENERAL PARTNER - CONFLICTS OF
INTEREST
(SEE PAGE 12)
The General Partner believes that the adoption of the Proposed Amendments
creates no actual or potential conflicts of interest between the General Partner
and the Partnership or the Unitholders.
FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED AMENDMENTS (SEE PAGE 12)
Counsel to the General Partner has rendered its opinion that the Proposed
Amendments to the Partnership Agreement will not result in the loss of limited
liability of any limited partner or cause the Partnership or any Operating
Partnership to be treated as a corporation for federal income tax purposes.
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QUESTIONS AND ANSWERS
ABOUT THE PROPOSED AMENDMENTS
Q. WHAT IS THE PURPOSE OF THE PROPOSED AMENDMENTS?
A. The Proposed Amendments will eliminate limitations on issuing additional LP
Units, borrowing funds and making capital expenditures. As one of the
original master limited partnerships in 1986, the Partnership was organized
with restrictions on issuing additional LP Units, borrowing funds and making
capital expenditures above specified amounts. Subsequently formed master
limited partnerships in the oil pipeline industry are not subject to these
restrictions. As a consequence, the General Partner believes that the
Partnership is at a competitive disadvantage in its ability to take advantage
of expansion and growth opportunities and to raise capital in the most
efficient and cost-effective manner.
Q. WHY ARE THE PROPOSED AMENDMENTS BEING CONSIDERED BY THE PARTNERSHIP NOW?
The General Partner believes that the adoption of the Proposed Amendments is
necessary now to ensure that the Partnership remains competitive with other
oil pipeline partnerships and to maximize value to Unitholders. The General
Partner believes that current economic and industry conditions are likely to
result in expansion and growth opportunities becoming available to the
Partnership, but the Partnership's ability to raise capital in the most
efficient and cost-effective manner to take advantage of these opportunities
could be impaired unless the Proposed Amendments are approved by the
Unitholders.
Q. WHAT ARE THE BENEFITS OF THE PROPOSED AMENDMENTS TO THE PARTNERSHIP?
A. The Partnership should have the flexibility to finance expansion and growth
opportunities in the most efficient and cost-effective manner available given
the conditions that exist in the financial markets at the time those
opportunities arise. The Partnership also needs to be able to adjust its
capital structure from time to time to ensure continued availability of
capital at competitive rates. The existing restrictions on issuing additional
LP Units, borrowing funds and making capital expenditures potentially impair
the Partnership's ability to achieve these objectives. The Proposed
Amendments will also conform the Partnership Agreement with the partnership
agreements of other publicly traded petroleum products pipelines, none of
which have similar restrictions on the issuance of debt or equity or on
capital spending.
Q. WHAT ARE THE BENEFITS OF THE PROPOSED AMENDMENTS TO THE UNITHOLDERS?
A. The General Partner believes the Proposed Amendments will enhance the
Partnership's ability to remain competitive and to pursue expansion and other
opportunities that provide the prospect of increasing net income and cash
flow of the Partnership, and ultimately the level of cash distributions paid
to the Unitholders.
Q. WHAT ARE THE DISADVANTAGES OF THE PROPOSED AMENDMENTS TO UNITHOLDERS?
The removal of the limitation on the number of LP Units that may be issued
without the approval of the Unitholders may potentially result in dilution to
the interests of present Unitholders, if and when the Partnership issues
additional LP Units. The removal of the restrictions on the amount of debt
that can be incurred by the Partnership or the Operating Partnerships may
result in increased indebtedness of the Partnership and an increase in
interest expense and related debt service costs, if and when the Partnership
issues additional debt. However, the General Partner believes that the
Proposed Amendments will provide the Partnership with the flexibility to
pursue expansion and growth opportunities that will maximize value to
Unitholders and offset any potential disadvantages.
Q. WHAT ARE THE COSTS TO THE PARTNERSHIP AND THE UNITHOLDERS?
A. The General Partner believes the Proposed Amendments will not result in any
costs to the Partnership or the Unitholders, other than the costs of this
Consent Solicitation.
5
BACKGROUND AND REASONS FOR THE AMENDMENTS
THE PARTNERSHIP
The Partnership provides pipeline transportation service for refined
petroleum products. The Partnership owns and operates one of the largest and
oldest independent refined petroleum products pipeline systems in the United
States, with approximately 3,500 miles of pipeline serving ten states. The
Partnership also provides bulk storage service through leased facilities with an
aggregate capacity of 257,000 barrels of refined petroleum products. The
Partnership conducts all its operations through four subsidiary limited
partnerships (the "Operating Partnerships"). The Partnership owns a 99% limited
partnership interest in each of the Operating Partnerships.
The Partnership is a Delaware limited partnership formed in 1986 pursuant
to the Amended and Restated Agreement of Limited Partnership, dated as of
December 23, 1986, as amended (the "Partnership Agreement"). Limited partnership
interests in the Partnership are represented by publicly traded LP Units (the
"LP Units") and the limited partners are Unitholders (the "Unitholders").
THE GENERAL PARTNER AND THE MANAGER
The sole general partner of the Partnership is Buckeye Management Company
(the "General Partner"). The General Partner owns approximately a 1% general
partnership interest in the Partnership. The General Partner is a wholly-owned
subsidiary of Glenmoor, Ltd. ("Glenmoor"). A wholly-owned subsidiary of the
General Partner, Buckeye Pipe Line Company (the "Manager"), serves as the sole
general partner and manager of each Operating Partnership. The Manager owns
approximately a 1% general partnership interest in each of the Operating
Partnerships.
CONSIDERATION OF PROPOSED AMENDMENTS TO THE PARTNERSHIP AGREEMENT
As one of the original master limited partnerships in 1986 and the first
petroleum pipeline master limited partnership, the Partnership was organized
with restrictions on issuing additional LP Units, borrowing funds and making
capital expenditures above specified levels. Subsequently formed master limited
partnerships in the petroleum pipeline industry are not subject to these
restrictions. As a consequence, the General Partner believes that the
Partnership is at a competitive disadvantage in its ability to take advantage of
expansion and growth opportunities and to raise capital in the most efficient
and cost-effective manner. The General Partner believes that current economic
and industry conditions are likely to result in expansion and growth
opportunities becoming available to the Partnership, but the Partnership will
only be able to raise adequate capital to take advantage of these opportunities
if the Proposed Amendments are approved by the Unitholders.
REMOVAL OF THE LIMITATION ON THE ISSUANCE OF LP UNITS
General
Section 17.1 of the Partnership Agreement currently provides that, without
the prior approval of a two-thirds vote of the Unitholders, the General Partner
will not cause the Partnership to issue more than 9,600,000 additional LP Units
(after giving effect to the two-for-one split of the LP Units effective January
29, 1998) or issue any class or series of LP Units having preferences or other
special or senior rights over the LP Units. After subtracting the number of LP
Units issued to the Buckeye Pipe Line Services Company Employee Stock Ownership
Plan (the "ESOP") and the LP Units reserved for issuance under the Unit Option
and Distribution Equivalent Plan, the General Partner presently could issue up
to 6,306,854 additional LP Units without Unitholder approval. At the most recent
available market price of the LP Units, the maximum amount of capital that could
be raised by the Partnership from the sale of additional LP Units would be
approximately $180 million.
The amendment would not eliminate the restrictions currently contained in
Section 17.1 prohibiting the issuance of LP Units having preferences or other
special or senior rights over the outstanding LP Units. Additionally, the
amendment would not affect the provisions of Section 17.1 (b) which prevents the
Partnership from issuing LP Units to the General Partner for consideration less
than "Net Agreed Value" (as defined in the Partnership Agreement), unless
approved by a two-thirds vote of the Unitholders.
6
Proposal
Section 17.1 of the Partnership Agreement will be amended to remove the
limitation on the number of additional LP Units that may be issued without the
approval of the Unitholders.
Factors Considered by the Board
The Board believes that the removal of the limitation will provide the
General Partner with the flexibility to consider all available financing
alternatives in pursuing potential growth opportunities for the Partnership and
will facilitate raising capital for pipeline expansion, acquisitions or other
Partnership purposes. The Board considered that the issuance of additional LP
Units was potentially dilutive to current Unitholders, but noted that
under applicable legal principles, the issuance of additional LP Units must be
for adequate consideration. The Board also noted that none of the other
publicly traded petroleum pipeline partnerships have restrictions on the
issuance of additional limited partnership interests in their partnership
agreements. The Board believes that in order to be competitive with these other
partnerships, the Partnership should have full access to the capital markets
without arbitrary restrictions on the number of additional LP Units that may
be issued.
Finally, the Board considered that the General Partner has managed the
Partnership's pipeline system in a prudent and responsible manner since 1986
when the Partnership was formed. The General Partner has demonstrated a fiscally
conservative approach in connection with capital projects and expansion
opportunities. The Board determined, therefore, that providing the General
Partner with the flexibility to issue additional LP Units, without the present
restriction, would be in the best long-term interests of the Partnership and its
Unitholders, and any immediate impact of dilution would be offset by the
potential long-term benefits to the Unitholders.
ELIMINATION OF THE RESTRICTIONS ON INDEBTEDNESS
General
Section 17.2 of the Partnership Agreement currently provides that, without
the approval of a two-thirds vote of the Unitholders, the General Partner may
not permit the Partnership or the Operating Partnerships to incur indebtedness
for borrowed money, except for (1) Senior Notes issued by Buckeye Pipe Line
Company, L.P., (2) any additional indebtedness of the Operating Partnerships
permitted by the Senior Note Indenture, (3) inter-company indebtedness, and (4)
additional indebtedness in an aggregate consolidated principal amount not to
exceed $25,000,000, plus an amount equal to the aggregate proceeds from the sale
of the additional LP Units.
Proposal
Section 17.2 of the Partnership Agreement will be amended to remove the
limitation on the amount of indebtedness that can be incurred by the Partnership
and the Operating Partnerships.
Factors Considered by the Board
The Board believes that the elimination of the restrictions on the amount
of debt that can be incurred by the Partnership and the Operating Partnership
will provide the General Partner with the flexibility to consider all available
financing alternatives in pursuing potential expansion and growth opportunities
for the Partnership. The current restrictions potentially impair the
Partnership's ability to raise capital for pipeline expansion, acquisitions and
other Partnership purposes in the most cost-effective manner. In certain
circumstances, these restrictions could cause the Partnership to forego such
opportunities or render them economically less attractive to the Partnership.
For example, the current debt restrictions could force the Partnership to raise
capital by issuing additional equity securities when it would be more efficient,
timely and cost-effective, based on conditions in the
7
financial markets at the time, to borrow additional funds. The current debt
restrictions may also impair the Partnership's ability to adjust the
Partnership's capital structure from time to time to take advantage of market
conditions.
The Board considered that the removal of the restrictions on the amount of
debt that can be incurred by the Partnership may result in increased
indebtedness of the Partnership and an increse in interest expense and related
debt service costs. The Board concluded that the ability to incur additional
debt for expansion and acquisition opportunities which have the potential to
increase long-term value to the Unitholders outweighed the potential negative
impact of additional debt.
Finally, the Board also considered, as in the case of the equity
restrictions discussed above, that none of the other publicly traded petroleum
pipeline partnerships have similar restrictions with respect to the type and
amount of debt that may be incurred.
REMOVAL OF THE LIMITATION ON CAPITAL EXPENDITURES
General
Section 17.3 of the Partnership Agreement currently provides that the
Partnership and the Operating Partnerships may not make capital expenditures
during any calendar year in excess of 20% of the sum of the Partnership's
consolidated operating income and depreciation and amortization for such year,
except to the extent that, in the good faith opinion of the General Partner,
capital expenditures in excess of such limit are required to sustain or improve
existing operations of the Partnership and the Operating Partnerships. If the
capital expenditure limit is exceeded, the General Partner is obligated to use
its best efforts to finance at least the amount of such excess within six months
through the issuance of additional LP Units not prohibited by Section 17.1 or
additional borrowings not prohibited by Section 17.2
Proposal
Section 17.3 of the Partnership Agreement will be amended to remove the
limitation on the amount of capital expenditures that can be made in any
calendar year.
Factors Considered by the Board
The Board believes that the current limitation has the effect of preventing
significant asset acquisitions and expansion of the Partnership's pipeline
system. Expenditures relating to acquisitions may be deemed to be capital
expenditures, which, when added to normal sustaining capital expenditures, may
exceed the capital expenditure restriction in any calendar year. The Board
considers the current limitation to be an unnecessary restriction. The amount of
capital expenditures that are appropriate and in the best interests of the
Partnership in any calender year are unrelated to the Partnership's operating
income for such year.
The Board believes that the limitation on capital expenditures, as in the
case of the equity and debt restrictions referred to above, impairs the
Partnership's ability to compete with the other publicly traded petroleum
pipeline partnerships for acquisitions and other expansion and growth
opportunities.
AMENDMENT AND RESTATEMENT OF THE PARTNERSHIP AGREEMENT
In connection with the adoption of the Proposed Amendments, the Partnership
Agreement will be amended and restated in its entirety to incorporate the
amendments.
TEXT OF THE AMENDED AND RESTATED PARTNERSHIP AGREEMENT
The full text of the Partnership Agreement, as amended and restated to
include all amendments to date and showing the Proposed Amendments separately,
is attached as Appendix A to this Consent Solicitation Statement. THE
----------
STATEMENTS MADE IN THIS CONSENT SOLICITATION STATEMENT WITH RESPECT TO THE
PROPOSED AMENDMENTS SHOULD BE READ IN CONJUNCTION WITH, AND ARE QUALIFIED IN
THEIR ENTIRETY BY REFERENCE TO THE FULL
8
TEXT OF THE PARTNERSHIP AGREEMENT ATTACHED AS APPENDIX A TO THIS CONSENT
----------
SOLICITATION STATEMENT.
VOTE REQUIRED FOR APPROVAL OF THE PROPOSED AMENDMENTs
Because the Board has determined that the Proposed Amendments will be
presented to the Unitholders as a single proposal, the adoption of the Proposed
Amendments requires the approval of the holders of two-thirds of the outstanding
LP Units. As required by Section 15.3 of the Partnership Agreement, the
Partnership has obtained an opinion of counsel to the General Partner that the
Proposed Amendments will not result in the loss of limited liability of any
Unitholder or result in the Partnership or any Operating Partnership being
taxable as a corporation for federal income tax purposes.
GENERAL PARTNER RECOMMENDATION
The Proposed Amendments and the subsequent amendment and restatement of the
Partnership Agreement will become effective if approved by the holders of two-
thirds of the outstanding LP Units. THE BOARD OF DIRECTORS OF THE GENERAL
PARTNER UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED AMENDMENTS.
9
THE SOLICITATION
VOTING SECURITIES, RECORD DATE AND OUTSTANDING LP UNITS
This Consent Solicitation is being made pursuant to the provisions of
Section 16.4 of the Partnership Agreement and is subject to the conditions in
this Consent Solicitation Statement and the accompanying form of Consent. No
meeting of the Unitholders is contemplated to be held for the purpose of
considering the Proposed Amendments. Only Unitholders who are record holders of
LP Units on the Record Date will be taken into account for the purpose of
determining whether the requisite approval of the Proposed Amendments has been
obtained. Each record holder of a LP Unit has a vote according to his
percentage interest in the Partnership.
On the Record Date, there were a total of 26,731,006 LP Units outstanding,
which were held by approximately 17,500 Unitholders.
CONSENT AND REVOCATION OF CONSENT
The General Partner will accept forms of Consent at any time before the
Expiration Date, which is June 15, 1998. The enclosed form of Consent, when
properly completed and returned, will constitute a Unitholder's consent, or the
withholding of consent, to the approval of the Proposed Amendments in accordance
with the instructions contained therein. If a Unitholder executes and returns a
form of Consent and does not specify otherwise, the LP Units represented by such
form of Consent will be voted "for" approval of the Proposed Amendments in
accordance with the recommendation of the General Partner.
A Unitholder who has executed and returned a form of Consent may revoke it
at any time before the Expiration Date by (i) executing and returning a form of
Consent bearing a later date, or (ii) filing written notice of such revocation
with the Secretary of the General Partner stating that the form of Consent is
revoked. Any such written notice or later dated form of Consent should be sent
to the principal executive offices of the Partnership at 3900 Hamilton
Boulevard, Allentown, Pennsylvania 18103, Attention: Stephen C. Muther, Senior
Vice President, General Counsel and Secretary.
REQUIRED VOTE
Pursuant to the Partnership Agreement, the Proposed Amendments require the
approval of holders of two-thirds of the outstanding LP Units as of the close of
business on the Record Date.
Because the approval of holders of two-thirds of the outstanding LP Units
is required to approve the Proposed Amendments, NOT RETURNING THE FORM OF
CONSENT WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE PROPOSED AMENDMENTS.
Buckeye Pipe Line Services Company ("Services Company"), which is owned by
the Buckeye Pipe Line Services Company Employee Stock Ownership Plan, owned
2,573,146 LP Units as of February 17, 1998 (approximately 9.6 percent of the LP
Units outstanding). Services Company has advised the General Partner that it
intends to consent, as to the LP Units owned by Services Company, to the
Proposed Amendments. The executive officers and directors of the General
Partner owned 90,680 LP Units (approximately 0.3 percent of the LP Units
outstanding) as of February 17, 1998, and they have advised the Partnership that
they each intend to consent, as to their LP Units, to the Proposed Amendments.
For further information concerning the ownership of LP Units by the General
Partner's affiliates, executive officers and directors, see "Security Ownership
of Certain Beneficial Owners and Management."
10
SOLICITATION OF CONSENTS
The cost of soliciting Consents will be borne by the Partnership. To
assist in the solicitation of Consents, the Partnership has engaged D.F. King &
Co., Inc. for a fee of approximately $8,000, plus reasonable out-of-pocket
expenses. In addition, the Partnership will reimburse brokers, banks and other
persons holding LP Units in their names, or in the names of nominees, for their
expenses in sending these Consent Solicitation materials to beneficial owners.
Other than as discussed above, the Partnership has made no arrangements and
has no understanding with any independent dealer, salesman or other person
regarding the solicitation of Consents hereunder, and no person has been
authorized by the Partnership to give any information or to make any
representation in connection with the solicitation of Consents to the Proposed
Amendments, other than those contained herein and, if given or made, such other
information or representations must not be relied upon as having been
authorized. In addition to solicitations by mail, consents may be solicited by
directors, officers and other employees of the General Partner, who will receive
no additional compensation therefor, and by representatives of D.F. King & Co.,
Inc. The delivery of this Consent Solicitation Statement shall not, under any
circumstances, create any implication that the information herein is correct as
of any time subsequent to the date hereof.
NO APPRAISAL RIGHTS
Holders of LP Units who object to the Proposed Amendments and the resulting
changes to the Partnership Agreement will have no appraisal, dissenters' or
similar rights (i.e., the right, instead of receiving LP Units, to seek a
judicial determination of the "fair value" of their LP Units and to compel the
purchase of their LP Units for cash in that amount) under Delaware law or the
Partnership Agreement, nor will such rights be voluntarily accorded to holders
of LP Units by the Partnership. Thus, approval of the Proposed Amendments by
holders of two-thirds of the outstanding LP Units will be binding on all holders
of LP Units, and objecting holders of LP Units will have no alternative other
than selling their LP Units prior to the effective date of the Proposed
Amendments.
NOTICE TO UNITHOLDERS
The General Partner will notify Unitholders of the results of this Consent
Solicitation promptly after the Expiration Date.
YOUR CONSENT IS IMPORTANT, REGARDLESS OF THE NUMBER OF LP UNITS YOU OWN.
ACCORDINGLY, PLEASE COMPLETE, SIGN AND RETURN YOUR CONSENT PROMPTLY.
11
BENEFITS OF THE PROPOSED AMENDMENTS
TO THE GENERAL PARTNER - CONFLICTS OF INTEREST
The General Partner does not believe that adoption of the Proposed
Amendments and the amendment and restatement of the Partnership Agreement will
create any potential or actual conflicts of interest between the General Partner
and the Partnership or the Unitholders.
FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED AMENDMENTS
At the time of the original issuance of the LP Units, and, based upon
certain representations of the General Partner, counsel to the Partnership
rendered its opinion that under then current law and regulations, which are
subject to change, the Partnership and each Operating Partnership would be
classified as partnerships for federal income tax purposes. Upon the mailing of
this Consent Solicitation Statement to Unitholders, Morgan, Lewis & Bockius LLP,
counsel to the General Partner ("Counsel"), will deliver an opinion to the
Partnership that the Proposed Amendments will not result in the loss of limited
liability of any limited partner or result in the Partnership or any Operating
Partnership being treated as an association taxable as a corporation for federal
income tax purposes.
12
PRICE RANGE OF LP UNITS AND DISTRIBUTIONS
The LP Units of the Partnership are listed and traded principally on the
New York Stock Exchange under the symbol "BPL." The following table presents
for the periods indicated the cash distributions declared on LP Units and the
high and low sales prices of the LP Units, as reported on the New York Stock
Exchange Composite Tape.
PRICE RANGE /1/
-----------------
HIGH LOW CASH DISTRIBUTIONS /1/
-------- ------ ----------------------
1995:
First quarter........................ $18.50 $16.00 $ 0.35
Second quarter....................... 18.00 15.00 0.35
Third quarter........................ 18.12 16.93 0.35
Fourth quarter....................... 18.37 16.81 0.35
1996:
First quarter........................ $19.88 $17.13 $0.375
Second quarter....................... 19.44 18.63 0.375
Third quarter........................ 19.81 18.81 0.375
Fourth quarter....................... 21.44 19.19 0.375
1997:
First quarter........................ $22.94 $20.13 $0.375
Second quarter....................... 22.63 21.25 $0.375
Third quarter........................ 26.75 22.56 $0.440
Fourth quarter....................... 30.00 24.69 $0.525
1998:
Second quarter (through April __, 1998).. $0.525
The closing price of the LP Units on the New York Stock Exchange on April
__, 1998, the most recent available price prior to mailing this Consent
Solicitation Statement, was $_________________ per LP Unit.
In general, the Partnership makes quarterly cash distributions of
substantially all of its available cash less permitted retentions. On January
20, 1998, the General Partner announced that its Board of Directors unanimously
approved a two-for-one split of LP Units of the Partnership, distributable to
all Unitholders of record at the close of business on January 29, 1998. On
February 5, 1998, the Partnership declared a regular quarterly cash distribution
of $0.525 per LP Unit payable on February 27, 1998.
- ------------------------
/1/ All prices for LP Units and cash distributions have been adjusted for the
two-for-one split of LP Units, which was effective on January 29, 1998
13
DESCRIPTION OF THE LP UNITS
As of February 17, 1998, there are issued and outstanding 26,731,006 LP
Units representing an aggregate of approximately 99% limited partnership
interest in the Partnership. The LP Units and the 243,914 GP Units generally
participate pro rata in the Partnership's income, gains, losses, deductions,
credits and distributions.
The General Partner has the authority to issue additional LP Units, subject
to certain restrictions set forth in the Partnership Agreement, which is
attached as Appendix A to this Consent Solicitation Statement. The Partnership
----------
has a Unit Option and Distribution Equivalent Plan which authorizes the granting
of options to purchase up to 720,000 LP Units to selected employees of the
General Partner and the Manager. At February 17, 1998, there were 211,740 LP
Units issuable upon the exercise of options granted under the Plan.
In the event of a liquidation, dissolution and winding up of the
Partnership, the LP Units, along with the GP Units, will be entitled to receive
pro rata, to the extent of positive balances in their respective capital
accounts, any assets remaining after satisfaction of Partnership liabilities and
establishment of reasonable reserves.
The LP Units are registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Partnership is subject to the reporting
and proxy solicitation requirements of the Exchange Act and the rules and
regulations promulgated thereunder.
The Partnership has issued certificates ("LP Certificates") to evidence LP
Units. The LP Units are freely transferable by assignment of LP Certificates
except as restricted by federal or state securities laws. The Partnership is
entitled to treat the record holder of the LP Certificates as the owner for all
purposes.
No person is entitled to preemptive rights in respect of issuances of
securities by the Partnership.
The transfer agent and registrar for the LP Units is First Chicago Trust
Company of New York.
For additional description of the rights of Unitholders, see the full text
of the Partnership Agreement, as amended and restated to date, attached as
Appendix A to this Consent Solicitation Statement.
- ----------
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
No person or group, other than the Buckeye Pipe Line Services Company, is
known to be the beneficial owner of more than 5% of the LP Units as of February
17, 1998.
The following table sets forth certain information, as of February 17,
1998, concerning the beneficial ownership of LP Units by each director and
executive officer of the General Partner, and by all directors and executive
officers of the General Partner and the Manager as a group. Such information is
based on data furnished by the persons named. Based on information furnished to
the General Partner by such persons, no director or executive officer of the
General Partner or the Manager owned beneficially, as of February 17, 1998, more
than 1% of any class of equity securities of the Partnership or any of its
subsidiaries outstanding at that date.
The ownership information presented in the following table reflects the
two-for-one split of LP Units of the Partnership, which was effective at the
close of business on January 29, 1998.
NAME NUMBER OF LP UNITS(1)
---- ---------------------
Brian F. Billings...................................... 15,000(2)
Michael P. Epperly..................................... 80(2)
Neil M. Hahl........................................... 2,000(2)
Edward F. Kosnik....................................... 10,000(2)
Alfred W. Martinelli................................... 9,000(2)
Stephen C. Muther...................................... 9,400
Jonathan O'Herron...................................... 14,800
William C. Pierce...................................... 1,600(2)
Steven C. Ramsey....................................... 1,600(2)
William H. Shea, Jr.................................... 4,200(2)
Ernest R. Varalli...................................... 13,000(2)
C. Richard Wilson...................................... 5,000
Robert H. Young........................................ 5,000
All directors and executive officers as a group
(consisting of 14 persons, including those
named above).......................................... 90,680
__________
(1) Unless otherwise indicated, the persons named above have sole voting and
investment power over the LP Units reported.
(2) The LP Units owned by the persons indicated have shared voting and
investment power with their respective spouses.
15
WHERE YOU CAN FIND MORE INFORMATION
The Partnership files annual, quarterly and special reports and other
information with the Securities and Exchange Commission ("SEC"). These filings
are also available to the public at the SEC, from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov."
The SEC allows the Partnership to "incorporate by reference," which means
that important information may be disclosed to you by referring you to another
document filed separately by the Partnership with the SEC. The information
incorporated by reference is considered to be part of this Consent Solicitation
Statement, except for any information superseded by information in this Consent
Solicitation Statement. This Consent Solicitation Statement incorporates by
reference the documents set forth below that the Partnership has previously
filed with the SEC. These documents contain important information about the
Partnership and its finances.
SEC FILING PERIOD
---------- ------
Annual Report on Form 10-K Year ended December 31, 1997
Annual Report on Form 10-K/A Year ended December 31, 1997
Quarterly Report on Form 10-Q Quater ended March 31, 1998
The Partnership is also incorporating by reference additional documents
that are filed with the SEC between the date of this Consent Solicitation
Statement and the Expiration Date.
If you are a Unitholder, the Partnership may have already sent you some of
the documents incorporated by reference, but you can obtain any of them through
the Partnership or the SEC. A Unitholder may obtain documents incorporated by
reference without charge by calling or writing to the attention of Stephen C.
Muther, Senior Vice President, General Counsel and Secretary, at the following
address:
Buckeye Pipe Line Company
3900 Hamilton Boulevard
Allentown, PA 18103
Tel: (610) 770-4000
If you would like to request documents from the Partnership, please do so
by May 31, 1998, to receive them before the Expiration Date.
PLEASE NOTE:
Attached as Appendix A is a copy of the Amended and Restated Agreement of
Limited Partnership of the Partnership, as amended and restated through February
25, 1998, marked with traditional blacklining marks to show the Proposed
Amendments.
The blacklining shows text proposed to be deleted with a line through it
and the proposed new text underlined.
16
APPENDIX A
[PARTNERSHIP AGREEMENT PREVIOUSLY FILED]
A-1
[PARTNERSHIP AGREEMENT PREVIOUSLY FILED]
APPENDIX B
FORM OF CONSENT
BUCKEYE PARTNERS, L.P.
3900 Hamilton Boulevard
Allentown, Pennsylvania 18103
CONSENT AND VOTE FOR ADOPTION
OF PROPOSED AMENDMENTS TO THE
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
The undersigned Unitholder of Buckeye Partners, L.P., a Delaware limited
partnership, hereby revokes all prior consents given with respect to the matters
covered hereunder, and acknowledges receipt of the Consent Solicitation
Statement dated April __, 1998.
THE LP UNITS REPRESENTED BY THIS SIGNED CONSENT WILL BE TREATED AS HAVING
CAST A VOTE IN ACCORDANCE WITH THE BOX YOU MARK ON THE REVERSE SIDE.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS CONSENT USING THE ENVELOPE PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
THE GENERAL PARTNER RECOMMENDS Please mark your votes as /X/
A VOTE FOR THE PROPOSAL indicated in this example
Proposal: To amend and restated the Amended and Restated Agreement of
Limited Partnership by approving and adopting the proposed amendments described
in the Consent Solicitation Statement to the Amended and Restated Agreement of
Limited Partnership. A copy of the Amended and Restated Agreement of Limited
Partnership is included in the accompanying Consent Solicitation Statement as
Appendix A.
FOR AGAINST
/ / / /
If no box is marked above, but this Consent is otherwise properly completed and
signed, the LP Units will be voted "for" the Proposal.
The solicitation of Consents will expire at 5:00 p.m., Eastern Standard Time, on
June __, 1998, unless extended. Failure to return this Consent will have the
same effect as a vote against the Proposal.
Dated ______________________, 1998
Signature
---------------------------------
Title or Authorization
(if signing in a representative
capacity)
---------------------------------
Signature if jointly held
B-1
Please execute this consent as your name appears on this form. When partnership
units are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
B-2