Attached files
| file | filename |
|---|---|
| EX-31.1 - EXHIBIT 31.1 - CPG OpCo GP LLC | opcogp-2016930xex311.htm |
| EX-32.2 - EXHIBIT 32.2 - CPG OpCo GP LLC | opcogp-2016930xex322.htm |
| EX-32.1 - EXHIBIT 32.1 - CPG OpCo GP LLC | opcogp-2016930xex321.htm |
| EX-31.2 - EXHIBIT 31.2 - CPG OpCo GP LLC | opcogp-2016930xex312.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-209653-1
CPG OpCo GP LLC
(Exact name of registrant as specified in its charter)
Delaware | 51-0658513 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
5151 San Felipe St., Suite 2500 Houston, Texas | 77056 | |
(Address of principal executive offices) | (Zip Code) | |
(713) 386-3701
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ¨ No þ*
*Columbia Pipeline Group, Inc.'s registration statement on Form S-4 relating to its outstanding senior notes, which CPG OpCo GP LLC guarantees, became effective on April 14, 2016 and, accordingly, we have not been subject to the reporting requirements under Section 13 or 15(d) of the Securities Act of 1934 as amended.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)
Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer þ (Do not check if a smaller reporting company) Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes þ No ¨
At October 31, 2016, Columbia Pipeline Partners LP owns 100% of the ownership interest in CPG OpCo GP LLC. There is no market for CPG OpCo GP LLC units.
REDUCED DISCLOSURE FORMAT
This Quarterly Report on Form 10-Q filed by CPG OpCo GP LLC meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore being filed with the reduced disclosure format allowed under that General Instruction.
CPG OpCo GP LLC
FORM 10-Q QUARTERLY REPORT
FOR THE QUARTER ENDED SEPTEMBER 30, 2016
Table of Contents
Page | |||
PART I | FINANCIAL INFORMATION | ||
Item 1. | Financial Statements - unaudited | ||
Item 2. | |||
Item 3. | * | ||
Item 4. | |||
PART II | OTHER INFORMATION | ||
Item 1. | |||
Item 1A. | |||
Item 2. | * | ||
Item 3. | * | ||
Item 4. | |||
Item 5. | |||
Item 6. | |||
* This item has been omitted pursuant to the reduced disclosure format as set forth in General Instruction (H)(2) of Form 10-Q.
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DEFINED TERMS The following is a list of frequently used abbreviations or acronyms that are found in this report: | |
Affiliates and Subsidiaries of CPG OpCo GP LLC | |
CEG | Columbia Energy Group |
Columbia OpCo | CPG OpCo LP |
CPG | Columbia Pipeline Group, Inc. |
CPPL | Columbia Pipeline Partners LP |
MLP GP | CPP GP LLC |
Abbreviations | |
ASC | Accounting Standards Codification |
VIE | Variable Interest Entity |
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CPG OpCo GP LLC Balance Sheets (unaudited) | |||||||
(in millions) | September 30, 2016 | December 31, 2015 | |||||
ASSETS | |||||||
Total Assets | $ | — | $ | — | |||
LIABILITIES AND EQUITY | |||||||
Total Liabilities | $ | — | $ | — | |||
Commitments and Contingencies (Refer to Note 2) | |||||||
Total Equity | — | — | |||||
Total Liabilities and Equity | $ | — | $ | — | |||
The accompanying Notes to Financial Statements (unaudited) are an integral part of these statements.
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ITEM 1. FINANCIAL STATEMENTS (continued)
CPG OpCo GP LLC
Notes to Financial Statements (unaudited)
1. Basis of Accounting Presentation
CPG OpCo GP LLC ("OpCo GP") is a subsidiary of CPG formed in Delaware on December 5, 2007. Through the registration of CPG's senior notes, OpCo GP, as a guarantor of the notes, must comply with the reporting requirements of Rule 3-10 of Regulation S-X. OpCo GP has not had any assets, liabilities, operations or cash flows since its formation date.
The formation transactions that occurred as part of the initial public offering of CPPL resulted in OpCo GP becoming the general partner of Columbia OpCo. Columbia OpCo owns substantially all of CPG's natural gas transmission and storage assets. CPPL owns a 15.7% limited partner interest in Columbia OpCo. The remaining 84.3% limited partner interest in Columbia OpCo is owned by CEG, a 100% owned subsidiary of CPG.
Consolidation of Columbia OpCo
Under ASC 810, Columbia OpCo is determined to be a VIE. Additionally, it is determined that OpCo GP is not the primary beneficiary of Columbia OpCo because OpCo GP lacks a direct economic interest in Columbia OpCo and the various related party limited partner interest holders were determined not to be so closely associated that they should be aggregated. As CPPL has a significant economic interest in Columbia OpCo and has the power to direct the activities of Columbia OpCo through that interest and its 100% ownership interest in OpCo GP, CPPL is determined to be the primary beneficiary of Columbia OpCo and consolidates Columbia OpCo in its financial statements.
Merger. On March 17, 2016, CPG entered into an Agreement and Plan of Merger (the “Merger Agreement”), among CPG, TransCanada PipeLines Limited, a Canadian corporation (“Parent”), TransCanada PipeLine USA Ltd., a Nevada corporation and a wholly owned subsidiary of Parent (“US Parent”), Taurus Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of US Parent (“Merger Sub”), and, solely for purposes of Section 3.02, Section 5.02, Section 5.09 and Article VIII of the Merger Agreement, TransCanada Corporation, a Canadian corporation and the direct parent company of Parent (“TransCanada”). Upon the terms and subject to the conditions set forth in the Merger Agreement, effective July 1, 2016, Merger Sub was merged with and into CPG (the “Merger”) with CPG surviving the Merger as an indirect, wholly owned subsidiary of TransCanada. The Merger did not affect the ownership of OpCo GP, but OpCo GP is indirectly managed by TransCanada after the Merger.
2. Other Commitments and Contingencies
Guarantees and Indemnities. OpCo GP entered into various agreements providing financial or performance assurance to third parties on behalf of CPG. Such agreements include guarantees and stand-by letters of credit. These agreements are entered into primarily to support or enhance the creditworthiness otherwise attributed to the parent on a stand-alone basis, thereby facilitating the extension of sufficient credit to accomplish the parent's intended commercial purposes. The total guarantees and indemnities in existence at September 30, 2016 and the years in which they expire were:
(in millions) | Total | 2016 | 2017 | 2018 | 2019 | 2020 | After | ||||||||||||||
Guarantees of debt | $ | 2,750.0 | $ | — | $ | — | $ | 500.0 | $ | — | $ | 750.0 | $ | 1,500.0 | |||||||
Guarantees of Debt. OpCo GP and Columbia OpCo (together with CEG, the "Guarantors") have guaranteed payment of $2,750.0 million in aggregated principal amount of CPG's senior notes. Each Guarantor is required to comply with covenants under the debt indenture and in the event of default the Guarantors would be obligated to pay the debt's principal and related interest. OpCo GP does not anticipate that any of the Guarantors will have any difficulty maintaining compliance. The guarantees of any Guarantor may be released under certain circumstances.
Lines and Letters of Credit. CPPL maintained a $500.0 million senior revolving credit facility, of which $50.0 million was available for issuance of letters of credit. OpCo GP, together with CPG, CEG and Columbia OpCo, each fully guaranteed the CPPL credit facility. On June 29, 2016, in anticipation of the Merger, all outstanding borrowings, facility fees and interest were paid in full and the revolving credit facility was terminated. CPG maintained a $1,500.0 million senior revolving credit facility, of which $250.0 million in letters of credit was available. OpCo GP, together with CEG and Columbia OpCo, each fully guaranteed the CPG credit facility. On July 1, 2016, in connection with the Merger, all existing letters of credit were migrated to a TransCanada credit facility and the CPG revolving credit facility was terminated.
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ITEM 1. FINANCIAL STATEMENTS (continued)
CPG OpCo GP LLC
Notes to Financial Statements (unaudited) (continued)
CPG's commercial paper program (the “Program”) had a Program limit of up to $1,000.0 million. OpCo GP, together with CEG and Columbia OpCo, each agreed, jointly and severally, unconditionally and irrevocably to guarantee payment in full of the principal of and interest (if any) on the promissory notes. On June 30, 2016, in anticipation of the Merger, the Program was terminated. CPG had no promissory notes outstanding under the Program at the time of termination.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CPG OpCo GP LLC
Executive Overview
OpCo GP is a subsidiary of CPG formed in Delaware on December 5, 2007. Through the registration of CPG's senior notes, OpCo GP, as a guarantor of the notes, must comply with the reporting requirements of Rule 3-10 of Regulation S-X. OpCo GP has not had any assets, liabilities, operations or cash flows since its formation date.
The formation transactions that occurred as part of the initial public offering of CPPL resulted in OpCo GP becoming the general partner of Columbia OpCo. Columbia OpCo owns substantially all of CPG's natural gas transmission and storage assets. CPPL owns a 15.7% limited partner interest in Columbia OpCo. The remaining 84.3% limited partner interest in Columbia OpCo is owned by CEG, a 100% owned subsidiary of CPG.
On March 17, 2016, CPG entered into an Agreement and Plan of Merger (the “Merger Agreement”), among CPG, TransCanada PipeLines Limited, a Canadian corporation (“Parent”), TransCanada PipeLine USA Ltd., a Nevada corporation and a wholly owned subsidiary of Parent (“US Parent”), Taurus Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of US Parent (“Merger Sub”), and, solely for purposes of Section 3.02, Section 5.02, Section 5.09 and Article VIII of the Merger Agreement, TransCanada Corporation, a Canadian corporation and the direct parent company of Parent (“TransCanada”). Upon the terms and subject to the conditions set forth in the Merger Agreement, effective July 1, 2016, Merger Sub was merged with and into CPG (the “Merger”) with CPG surviving the Merger as an indirect, wholly owned subsidiary of TransCanada. The Merger did not affect the ownership of OpCo GP, but OpCo GP is indirectly managed by TransCanada after the Merger.
Proposed Merger of CPPL by CPG: On November 1, 2016, CPPL announced that it had entered into an agreement and plan of merger with CPG, Pony Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of CPG (“Pony Merger Sub”) and MLP GP.
The conflicts committee of the board of directors of MLP GP (the “GP Conflicts Committee”) and the board of directors of the MLP GP (the "GP Board") approved the merger agreement and transactions contemplated by the merger agreement and determined that the merger agreement and the merger transactions are fair and reasonable to and in the best interests of CPPL and to the holders of CPPL common units unaffiliated with CPG, CEG and MLP GP (collectively, the “CPPL unaffiliated unitholders”). The GP Conflicts Committee recommended the the GP Board approve the merger agreement and the merger transactions. The GP Board resolved that the merger agreement and the merger transactions be submitted to the unitholders of CPPL at a special meeting of the unitholders for approval. The GP Board recommended that the unitholders of CPPL vote in favor of the proposal to approve the merger agreement and the merger transactions at the special meeting of the unitholders.
CPG indirectly owns, through its ownership of CEG, 100% of the membership interests in MLP GP. CEG owns all of the subordinated units (“CPPL subordinated units”) representing a 46.5% limited partner interest in CPPL. Pursuant to the merger agreement, Pony Merger Sub will merge with and into CPPL at the effective time of the merger, with CPPL surviving, such that following the merger, MLP GP will remain a wholly owned subsidiary of CPG and the sole general partner of CPPL, and CPG and CEG will be the only limited partners of CPPL. Each CPPL common unit issued and outstanding as of immediately prior to at the effective time of the merger will be converted into the right to receive (i) $17.00 per CPPL common unit in cash without any interest thereon plus (ii) an additional amount of cash per CPPL common unit without any interest thereon equal to the product of (x) the number of days from and including the first day of the quarter in which the closing occurs through and including the closing date multiplied by (y) $0.00217 per CPPL common Unit (a daily distribution rate equal to the quotient of $0.1975 divided by ninety-one (91)), plus (iii) an amount equal to $0.1975 per CPPL common unit in cash without any interest thereon if the record date for the CPPL’s quarterly cash distribution with respect to the quarter immediately preceding the quarter in which the closing occurs shall not have occurred prior to the effective time of the merger (the "Merger Consideration"). Incentive distribution rights of CPPL, which are owned by CEG, will be unchanged and remain outstanding as incentive distribution rights of the surviving entity, and no consideration will be delivered in respect thereof. CPPL subordinated units, which are owned by CEG, will also be unchanged and remain outstanding as CPPL subordinated units of the surviving entity, and no consideration will be delivered in respect thereof. CPG will be issued CPPL common units at the effective time of the merger equal to the number of public common units being converted into the right to receive the Merger Consideration. The parties anticipate that the merger will close in the first quarter of 2017 and that CPPL will pay the regular quarterly cash distributions to unitholders at the quarterly per unit distribution rate of $0.1975, with the declaration date and record date for each quarterly distribution to occur no later than 30 days and 42 days, respectively, after the end of each fiscal quarter.
Completion of the merger is conditioned upon, among other things: (1) approval of the merger agreement and the transactions contemplated by the merger agreement, including the merger, by the affirmative vote or consent of holders, as of the record date
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CPG OpCo GP LLC
of the special meeting of CPPL’s unitholders (including CEG), of (a) a majority of the outstanding CPPL common units, voting as a class, (b) a majority of the CPPL common units held by the CPPL unaffiliated unitholders, and (c) a majority of the outstanding CPPL subordinated units, voting as a class; (2) all required filings, consents, approvals, permits and authorizations in connection with the merger having been made or obtained; and (3) the absence of legal injunctions or impediments prohibiting the merger transactions.
Pursuant to the merger agreement, CEG delivered a consent to voting the CPPL subordinated units owned beneficially or of record by it or any of its subsidiaries in favor of the merger proposal, including the 46,811,398 CPPL subordinated units currently held by CEG, which units represent 100% of the outstanding CPPL subordinated units.
The merger agreement contains provisions granting both CPPL and CPG the right to terminate the merger Agreement for certain reasons, including, among others, if: (1) the merger is not completed on or before August 1, 2017; (2) any governmental authority has issued a final and nonappealable statute, rule, order, decree or regulation enjoining or prohibiting consummation of the merger; (3) under certain conditions, there has been a material breach of any of the representations, warranties, covenants or agreements set forth in the merger agreement by a party to the merger agreement which is not cured within 30 days following receipt by the breaching party of written notice from the non-breaching party (a “terminable breach”); (4) CPPL does not obtain the requisite unitholder approval of the merger agreement and the merger transactions at a special meeting of unitholders; or (5) either the GP Board, in accordance with the merger agreement, withdraws, modifies or qualifies, or proposes to publicly withdraw, modify or qualify, in a manner adverse to CPG its recommendation to the unitholders of CPPL (the “CPPL Board Recommendation”) or fails to include the CPPL Board Recommendation in the proxy statement to be filed by CPPL in connection with the merger (that taking of any such action being referred to as a “CPPL Change in Recommendation”).
All costs and expenses incurred in connection with the merger agreement and the merger transactions will be paid by the party incurring such costs and expenses, except that (1) CPG and CPPL shall each bear and pay one half of the expenses incurred in connection with the proxy statement and Schedule 13E-3 filings, (2) if (a) CPG terminates the merger agreement due to a CPPL Change in Recommendation, (b) either party terminates the merger agreement due to the failure to obtain the requisite unitholder approval of the merger agreement and the merger transactions at a special meeting of unitholders of CPPL and prior to such special meeting, a CPPL Change in Recommendation has occurred, or if CPG terminates the merger agreement due to a terminable breach by CPPL, CPPL will pay the expenses incurred by CPG up to a maximum of $10 million, and (3) if CPPL terminates the merger agreement due to a terminable breach by CPG, CPG will pay the expenses incurred by CPPL.
Consolidation of Columbia OpCo
Under ASC 810, Columbia OpCo is determined to be a VIE. Additionally, it is determined that OpCo GP is not the primary beneficiary of Columbia OpCo because OpCo GP lacks a direct economic interest in Columbia OpCo and the various related party LP interest holders were determined not to be so closely associated that they should be aggregated. As CPPL has a significant economic interest in Columbia OpCo and has the power to direct the activities of Columbia OpCo through that interest and its 100% ownership interest in OpCo GP, CPPL is determined to be the primary beneficiary of Columbia OpCo and consolidates Columbia OpCo in its financial statements.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The principal executive officer and principal financial officer of the general partner of CPPL, our sole member, performed an evaluation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including the principal executive officer and principal financial officer of the general partner of CPPL, our sole member, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, the principal executive officer and principal financial officer of the general partner of CPPL, our sole member, have concluded that our disclosure controls and procedures are effective as of September 30, 2016.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting during the fiscal quarter covered by this Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
CPG OpCo GP LLC
In the normal course of its business, OpCo GP has been named as a defendant in various legal proceedings. In the opinion of OpCo GP, the ultimate disposition of these currently asserted claims will not have a material impact on OpCo GP’s financial statements.
ITEM 1A. RISK FACTORS
Our business has many risks. Factors that could materially adversely affect our business, financial condition, operating results or liquidity are described in Item 1A. “Risk Factors” in Columbia Pipeline Group, Inc. and Columbia Pipeline Partners LP’s Annual Reports on Form 10-K for the year ended December 31, 2015 filed with the United States Securities and Exchange Commission (the “SEC”) on February 18, 2016, which material has been incorporated by reference and was filed as Exhibit 99.1 and 99.2, respectively, to our Quarterly Report on Form 10-Q filed with the SEC on May 3, 2016 pursuant to Rule 12b-23(a) of the Exchange Act of 1934, as amended. This information should be considered carefully, together with other information in this report and other reports and materials we file with the SEC.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
CPG OpCo GP LLC
Exhibits designated by an asterisk (*) are filed herewith and those designated with asterisks (**) are furnished herewith; all exhibits not so designated are incorporated herein by reference to a prior filing as indicated.
(3.1) | Certificate of Formation of CPG OpCo GP LLC (Incorporated by reference to Exhibit 3.1 of the OpCo GP’s Quarterly Report on Form 10-Q (File No. 333-209653-01) filed on May 3, 2016). |
(3.2) | Certificate of Amendment to Certificate of Formation of CPG OpCo GP LLC (Incorporated by reference to Exhibit 3.2 of the OpCo GP’s Quarterly Report on Form 10-Q (File No. 333-209653-01) filed on May 3, 2016). |
(3.3) | Limited Liability Company Agreement of CPG OpCo GP LLC (Incorporated by reference to Exhibit 3.3 of the OpCo GP’s Quarterly Report on Form 10-Q (File No. 333-209653-01) filed on May 3, 2016). |
(3.4) | Amendment No. 1 to the Limited Liability Company Agreement of CPG OpCo GP LLC (Incorporated by reference to Exhibit 3.4 of the OpCo GP’s Quarterly Report on Form 10-Q (File No. 333-209653-01) filed on May 3, 2016). |
(31.1)* | Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
(31.2)* | Certification of Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
(32.1)** | Certification of Chief Executive Officer, pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(32.2)** | Certification of Chief Financial Officer, pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(99.1) | “Risk Factors” section excerpted and incorporated by reference from Columbia Pipeline Group, Inc.’s Annual Report on Form 10-K filed with the SEC on February 18, 2016 for the fiscal year ended December 31, 2015 filed herewith pursuant to Rule 12b-23(a)(3) (Incorporated by reference to Exhibit 99.1 of the OpCo GP’s Quarterly Report on Form 10-Q (File No. 333-209653-01) filed on May 3, 2016). |
(99.2) | “Risk Factors” section excerpted and incorporated by reference from Columbia Pipeline Partners LP’s Annual Report on Form 10-K filed with the SEC on February 18, 2016 for the fiscal year ended December 31, 2015 filed herewith pursuant to Rule 12b-23(a)(3) (Incorporated by reference to Exhibit 99.2 of the OpCo GP’s Quarterly Report on Form 10-Q (File No. 333-209653-01) filed on May 3, 2016). |
(101.INS)* | XBRL Instance Document |
(101.SCH)* | XBRL Schema Document |
(101.CAL)* | XBRL Calculation Linkbase Document |
(101.LAB)* | XBRL Labels Linkbase Document |
(101.PRE)* | XBRL Presentation Linkbase Document |
(101.DEF)* | XBRL Definition Linkbase Document |
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SIGNATURE
CPG OpCo GP LLC
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.
CPG OpCo GP LLC | |||
(Registrant) | |||
By: | Columbia Pipeline Partners LP, its sole member | ||
By: | CPP GP LLC, its general partner | ||
Date: | November 1, 2016 | By: | /s/ Nathaniel A. Brown |
Nathaniel A. Brown | |||
Controller and Principal Financial Officer (Principal Accounting Officer and Duly Authorized Officer) | |||
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