Taylor NGL Limited Partnership
TSX : TAY.UN
TSX : TAY.DB

Taylor NGL Limited Partnership

June 28, 2005 10:41 ET

Taylor NGL Limited Partnership Announces Acquisition of Taylor Management Company Inc. Assets

CALGARY, ALBERTA--(CCNMatthews - June 28, 2005) - Taylor Gas Liquids Ltd., general partner of Taylor NGL Limited Partnership (TSX:TAY.UN) (TSX:TAY.DB) (the "Partnership"), is pleased to announce that agreement has been reached with Taylor Management Company Inc. ("TMCI") for the acquisition of interests and assets that relate to the Partnership's business for consideration of $12MM. TMCI will receive $7.1MM in cash and $4.9MM in Partnership units with the units subject to escrow terms of one to three years. The transaction is expected to close on June 29th, 2005 with the cash portion funded from the Partnership's existing credit facility.

This transaction simplifies the Partnership's structure and is immediately accretive to cash available for distribution per unit as it eliminates both the management fees and TMCI's participation in facilities owned by the Partnership.

Transaction Details

The transaction results in the Partnership acquiring the following assets from TMCI effective January 1, 2005:

- the general partner interest in the Taylor Gas Liquids Limited Partnership, the partnership that owns the Partnership's interest in the Younger Extraction Plant;

- the general partner interest in the Taylor Gas Processing Limited Partnership, the partnership that owns the Partnership's interest in the RET Complex;

- the general partner interest in the Joffre Gas Liquids Limited Partnership, the partnership that owns the Partnership's interest in the Joffre Extraction Plant, the Ethylene Delivery System and the Joffre Feedstock Pipeline;

- a limited partner interest in the Taylor Gas Liquids Limited Partnership that provides the holder with the right to participate in capital projects undertaken at the Younger Extraction Plant; and

- all assets, licenses and equipment owned by TMCI that are required for managing the Partnership's business, as well, TMCI will relinquish the right to select one nominee to the Board of Directors of Taylor Gas Liquids Ltd.

Integral to the transaction, TMCI will assign the 2001 Administration Agreement to the Partnership effective January 1, 2005. The 2001 Administration Agreement provides TMCI with the following payments from the Partnership:

- recovery of all general and administrative expenses incurred in managing the Partnership's business;

- a base management fee equal to 2.75% of the Partnership's cash available for distribution less the distribution to the Partnership from Taylor Gas Liquids Limited Partnership; and

- an annual incentive fee equal to 15% of cash available for distribution above $0.70 per unit, 25% of cash available for distribution above $0.805 per unit and 35% of cash available for distribution above $1.085 per unit.

TMCI will also, concurrent with this transaction, convert its' Class A Expansion Units in Taylor Gas Liquids Limited Partnership into Partnership units. This conversion option is being done effective December 31, 2004 and will result in TMCI being issued approximately 98,000 Partnership units.

Background

In September 2004 an independent committee of the Board of Directors of Taylor Gas Liquids Ltd. (the "Committee") was formed to evaluate options with respect to the arrangement between the Partnership and TMCI. The Committee retained PricewaterhouseCoopers LLP to assist in the valuation of the assets of TMCI and to provide a fairness opinion to the Committee and the Board of Directors. The Committee also retained Towers Perrin, to provide advice on executive compensation, and independent counsel, to review legal matters and compliance with regulations. The Committee was charged with achieving the following goals:

- retain management;

- simplify the Partnership's structure;

- develop a more transparent relationship between management, the Board of Directors and the Partnership's unitholders; and

- improve the Board of Directors' effectiveness in the areas of governance and oversight of management.

The Committee unanimously recommended approval of the transaction and the resulting restructuring of management to the Board of Directors. The Board of Directors has unanimously approved this recommendation. In approving the transaction, the Board of Directors gave particular attention to the importance of alignment of the interests of management and unitholders as well as PricewaterhouseCoopers' assessment of the value of the assets being acquired by the Partnership. The approval of the transaction by the Partnership's unitholders is not required by regulatory authorities nor under the partnership agreement that governs the Partnership.

In the opinion of the Board of Directors and management, the transaction has the following benefits to the Partnership's unitholders:

- the transaction is immediately accretive to cash available for distribution by $0.01 to $0.02 per unit per year as it eliminates all management fees and minority interest payments made by the Partnership to TMCI;

- the additional level of management ownership in the Partnership further aligns management's interest with unitholders;

- the Partnership's structure is simplified as all minority interests are removed;

- the transaction confirms senior management's commitment to the Partnership;

- the long-term cost structure and competitiveness of the Partnership is improved as a result of removal of an escalating management fee; and

- corporate governance is more effective and transparent.

Don Nelson, Chairman of the Board of Directors, stated "Taylor's enterprise value has increased ten-fold since the 2001 Administration Agreement was implemented. This arrangement has served the Partnership well, but for Taylor to continue to grow, a new management structure is required. This simplification of Taylor's structure has positive implications to unitholders; the transaction is accretive and management has been retained and incented. This restructuring is an example of how both the Board of Directors and management are continually improving the way Taylor is governed".

Future Structure

Immediately after closing, all current TMCI employees will take up positions with Taylor Gas Liquids Ltd. identical to their current assignments. Barry O'Brien will be continuing in his role as CFO, but has elected to retire and pursue other opportunities effective July 27, 2005. Barry joined Taylor in 1999, becoming Chief Financial Officer in 2001. Bob Pritchard, CEO of Taylor Gas Liquids Ltd., commented that "Management, and the Board of Directors, thank Barry for the tremendous contribution he has made to Taylor as it has grown from owning a single plant to having a diverse portfolio of high quality infrastructure assets.

Over the last 18 years, Barry has been actively involved in the midstream and infrastructure sector of the energy business. During his six years with Taylor, he was a key member of the executive team that has delivered exceptional value to the Partnership's unitholders."

In conjunction with this restructuring of management, the Board of Directors has struck a Governance and Compensation Committee that is chaired by Mr. Val Mirosh and includes Mr. David Cornhill and Mr. James Davie. All three committee members are independent. With Taylor Gas Liquids Ltd. being the future employer of management, the Governance and Compensation Committee will oversee the implementation of a long-term incentive program that is consistent with current industry standards.

The Partnership owns and operates the RET Complex, the Harmattan Complex and the Joffre Extraction Plant, all in Alberta, and the Younger Extraction Plant in British Columbia. The Partnership also owns two natural gas liquids pipelines in Alberta, the Ethylene Delivery System and the Joffre Feedstock Pipeline, both of which move products between Joffre, Alberta and Fort Saskatchewan, Alberta. The Joffre and Younger plants are natural gas liquids extraction facilities that produce ethane, propane, butane and condensate. The RET Complex and the Harmattan Complex are natural gas processing facilities that provide services to oil and gas producers.

This press release contains forward-looking statements, which are subject to certain assumptions, risks and uncertainties that could cause actual results and events to differ materially from those contemplated in the forward-looking statements.

Taylor NGL Limited Partnership (www.taylorngl.com) units and convertible debentures trade on the Toronto Stock Exchange under the symbol TAY.UN and TAY.DB, respectively.

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