Plains All American Pipeline closes simplification transactions

In order to satisfy one of the conditions required for the closing of the simplification transactions, PAGP also announced that certain holders voted in favour of a proposal to approve the simplification agreement and transactions. The holders in question were those holding approximately 579.8 million Class A and Class B shares and who voted at a meeting representing approximately 90.3% of the aggregate number of Class A and Class B shares outstanding and who were entitled to vote as of the 30 September.

In addition, 99.8% of the Class A shares that voted, voted in favour of such aproposal, which shares constituted approximately 77.2% of the aggregate number of Class A shares outstanding and entitled to vote as of such record date.

The simplification transactions included the following:

• The permanent elimination of PAA's incentive distribution rights and the economic rights associated with PAA's 2% general partner interest in exchange for the issuance by PAA to Plains AAP, L.P. (AAP) of 245 500 000 PAA common units.
• The execution by PAGP of a reverse split of its Class A and Class B shares at a ratio of approximately 1 for 2.663.
• The implementation of a unified governance structure pursuant to which the board of directors of PAGP's general partner has assumed oversight responsibility over both PAA and PAGP. The board of PAA's general partner has been eliminated and the size of the PAGP board has expanded to 10 members, including three members of the former PAA board who were not already serving on the PAGP board.
• Classification of the PAGP board (excluding the CEO) into three classes with initial terms expiring in 2018, 2019 and 2020, with each class having a three year term following its initial term.
• Provision for shareholder election of certain directors with expiring terms beginning in 2018 and the participation of PAA's common unitholders in such elections through PAA's ownership of newly issued Class C shares in PAGP, which provide PAA, as the sole holder, the right to vote in elections of eligible PAGP directors together with the holders of PAGP Class A and Class B shares. Additionally, the granting to holders of AAP Class A units (other than PAGP) of the right to cause AAP to redeem such Class A units in exchange for an equivalent number of PAA common units held by AAP, subject to certain limitations.

"We are pleased with the overwhelming support of the simplification transactions by PAGP's shareholders," stated Greg Armstrong, Chairman and CEO of Plains All American. "The closing of the simplification transactions simplifies our capital structure, better aligns the interests of our equity stakeholders, streamlines our governance structure, improves PAA's overall credit profile, reduces PAA's cost of equity capital and improves its distribution coverage, while allowing us to maintain the tax efficient flexibility of our current organisational structure."

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