Taylor NGL Limited Partnership

Taylor NGL Limited Partnership

March 02, 2005 15:10 ET

Taylor NGL Limited Partnership Announces Acquisition of the Harmattan Gas Processing Complex and Bought Deal Financing




MARCH 2, 2005 - 15:10 ET

Taylor NGL Limited Partnership Announces Acquisition
of the Harmattan Gas Processing Complex and Bought
Deal Financing

CALGARY, ALBERTA--(CCNMatthews - March 2, 2005) - Taylor NGL Limited
Partnership (TSX:TAY.UN) ("Taylor", or the "Partnership") announced
today that it has entered into an agreement to acquire the Harmattan Gas
Processing Complex through the purchase of all the outstanding shares of
a private company for $189 million, prior to working capital and other
adjustments. The Harmattan Gas Processing Complex, which includes a 400
MMscf/day gas processing facility and associated gas gathering systems,
a deep cut NGL extraction facility, and NGL fractionation and
terminalling facilities. The complex is located approximately 100 km
north of Calgary, Alberta. The transaction will have an effective date
of March 1, 2005 and is expected to close on March 22, 2005, subject to
customary regulatory approvals and closing conditions.

The acquisition will be financed by a public offering of partnership
units and convertible debentures, and a credit facility. Taylor has
entered into a bought deal financing agreement with a syndicate of
underwriters, pursuant to which it will issue 13,000,000 units at $9.25
per unit and $50 million of 5.85% unsecured subordinated debentures to
raise total gross proceeds of approximately $170 million.

The acquisition is expected to result in an immediate increase in cash
available for distribution. On a per unit basis, management expects that
distributions can be increased by up to 10%. Any increase in
distributions per unit is expected to begin with the April distribution,
which, if declared by the Board of Directors of the General Partner, is
expected to be paid on April 15, 2005 to unitholders of record on April
8, 2005.

"Taylor is very pleased to add a high quality, strategic facility such
as the Harmattan Complex to its asset base. In addition to being
significantly accretive to distributions per unit, this acquisition
provides a predominantly fee-for-service and fixed margin revenue stream
that further diversifies the Partnership's business and significantly
increases its market capitalization", noted Taylor President & CEO Bob
Pritchard. "The Harmattan Complex is an excellent fit for Taylor, as it
derives revenue from natural gas gathering and processing as well as
deep cut NGL extraction, activities in which Taylor has established
expertise and a presence in the industry."

Asset Overview

Taylor's purchase of the Harmattan Complex will result in 100% effective
ownership of the following facilities:

- The 400 MMscf/day capacity Harmattan natural gas processing plant that
removes and recovers sulphur and natural gas liquids from raw natural

- A gas gathering system and compressor station that moves raw gas from
the Caroline area to the plant for processing;

- A deep cut NGL extraction facility that recovers ethane, propane,
butane and condensate, and related product pipelines that interconnect
with regional infrastructure;

- NGL fractionation and terminalling facilities;

- A carbon dioxide recovery and liquification plant; and

- Frac oil production and storage facilities.

The Harmattan Complex is located in a multi-zone, natural gas prone area
and has a capture area encompassing approximately 1,750 square
kilometres accessed by 500 kilometres of owned and third party raw gas
gathering pipelines. The Harmattan Complex is one of the lowest
operating cost facilities in the area, and as such is well positioned to
capture incremental throughput volumes that are expected to result from
both drilling activity and consolidation opportunities with other
natural gas processing facilities.

The acquisition of the Harmattan Complex will result in a 74% increase
in the total licensed natural gas processing capacity of the Partnership
to 1,155 MMscf/day and a 112% increase in the Partnership's net NGL
production capacity to 62,100 bbls/day.

Approximately 93% of the revenue of the Harmattan Complex is derived
from fee-for-service or fixed margin commodity sales arrangements.

Benefits of the Acquisition

The acquisition of the Harmattan Complex has a number of significant
benefits to the Partnership.

- The acquisition is expected to be immediately accretive to cash flow
available for distribution. On a per unit basis, management expects that
distributions could be increased by approximately 10%;

- Taylor has identified a number of organic growth opportunities and
synergies with its existing operations, that, if pursued, would further
enhance the accretion of the acquisition;

- The acquisition adds a long-life asset that provides low-risk revenue
from commercial arrangements that are predominantly fee-for-service and
fixed margin in nature; and

- The acquisition increases the scale of the Partnership's operations
and provides facility and geographic diversification, thereby enhancing
the stability of the Partnership's cash flows and improving Taylor's
competitive position.

Transaction Financing

To fund the transaction, Taylor has entered into an agreement to sell,
to a syndicate of underwriters led by CIBC World Markets Inc. and
including Clarus Securities Inc., National Bank Financial Inc., RBC
Capital Markets, Peters & Co. Limited and First Associates Investments
Inc., 13,000,000 limited partnership units at a price of $9.25 per unit
and $50 million principal amount of 5.85% convertible unsecured
subordinated debentures, on a bought deal basis. The debentures will pay
interest semi-annually, have a maturity date of September 10, 2010, and
will be convertible, at the option of the holder, at any time into fully
paid partnership units at a conversion price of $10.35 per unit. The
partnership units and convertible debentures will be offered in all
provinces of Canada, except Quebec, through a short form prospectus.
Closing of the offering is expected to occur concurrently with the
acquisition, on or about March 22, 2005, subject to regulatory approval.

The public offering is expected to generate gross proceeds of
approximately $170 million. The balance of the acquisition purchase
price will be funded through debt facilities that have been arranged
with CIBC, and which will replace Taylor's existing debt facilities.

Other than completion of the financing, there are no outstanding
conditions to the acquisition, and Taylor has completed all of its due
diligence reviews.

Peters & Co. Limited acted as financial advisor to Taylor on the

This press release contains forward-looking statements, which are
subject to certain assumptions, risks and uncertainties that could cause
actual results to differ materially from those contemplated in the
forward-looking statements. Taylor disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. These risks,
uncertainties and other factors include, among others, those discussed
in more detail under the heading "Risk Factors" in the preliminary
prospectus filed with the securities regulatory authorities throughout

The securities offered have not been and will not be registered under
the United States Securities Act of 1933, as amended (the "U.S.
Securities Act"), and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons.

Taylor NGL Limited Partnership units trade on the Toronto Stock Exchange
under the symbol TAY.UN. The Partnership owns and operates the Joffre
Extraction Plant in Alberta, the Younger Extraction Plant in British
Columbia, and the RET Complex in southeastern Alberta. The Partnership
also owns two natural gas liquids pipelines in Alberta, the Ethylene
Delivery System and the Joffre Feedstock Pipeline. Both the Joffre and
Younger plants are natural gas liquids extraction facilities that
produce ethane, propane, butane and condensate. The RET Complex consists
of three interconnected natural gas processing facilities and their
associated gathering systems. The Ethylene Delivery System is used to
transport ethylene from NOVA Chemicals Corporation's Joffre
petrochemical complex to industrial customers and storage facilities in
Fort Saskatchewan and Prentiss, Alberta. The Joffre Feedstock Pipeline,
which is currently under construction and nearing completion, will
transport natural gas liquids from Fort Saskatchewan to the NOVA
Chemicals Corporation's Joffre petrochemical complex.


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