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Debt | 12 Months Ended
--- | ---
Dec. 31, 2012
Debt |
Debt | Note 9—Debt Debt consisted of the following (in millions):
|  | December 31, |  | December 31, |
|  | 2012 |  | 2011 |
SHORT-TERM DEBT |  |  |  |  |
Credit Facilities (1): |  |  |  |  |
PAA senior secured hedged inventory facility, bearing a weighted-average interest rate of 1.6% and 1.5% at December 31, 2012 and December 31, 2011, respectively |  | $ | 665 |  | $ | 75 |
PAA senior unsecured revolving credit facility, bearing a weighted-average interest rate of 2.4% and 1.6% at December 31, 2012 and December 31, 2011, respectively (2) |  | 92 |  | 32 |
PNG senior unsecured revolving credit facility, bearing a weighted-average interest rate of 2.1% at both December 31, 2012 and December 31, 2011 (3) |  | 77 |  | 68 |
5.63% senior notes due December 2013 (4) |  | 250 |  | — |
4.25% senior notes due September 2012 (5) |  | — |  | 500 |
Other |  | 2 |  | 4 |
Total short-term debt |  | 1,086 |  | 679 |
LONG-TERM DEBT |  |  |  |  |
Senior Notes: |  |  |  |  |
5.63% senior notes due December 2013 (4) |  | — |  | 250 |
5.25% senior notes due June 2015 |  | 150 |  | 150 |
3.95% senior notes due September 2015 |  | 400 |  | 400 |
5.88% senior notes due August 2016 |  | 175 |  | 175 |
6.13% senior notes due January 2017 |  | 400 |  | 400 |
6.50% senior notes due May 2018 |  | 600 |  | 600 |
8.75% senior notes due May 2019 |  | 350 |  | 350 |
5.75% senior notes due January 2020 |  | 500 |  | 500 |
5.00% senior notes due February 2021 |  | 600 |  | 600 |
3.65% senior notes due June 2022 |  | 750 |  | — |
2.85% senior notes due January 2023 |  | 400 |  | — |
6.70% senior notes due May 2036 |  | 250 |  | 250 |
6.65% senior notes due January 2037 |  | 600 |  | 600 |
5.15% senior notes due June 2042 |  | 500 |  | — |
4.30% senior notes due January 2043 |  | 350 |  | — |
Unamortized discounts |  | (15 | ) | (13 | )
Senior notes, net of unamortized discounts |  | 6,010 |  | 4,262 |
Credit Facilities and Other: |  |  |  |  |
PNG senior unsecured revolving credit facility, bearing a weighted-average interest rate of 2.1% at both December 31, 2012 and December 31, 2011 (3) |  | 105 |  | 54 |
PNG GO Bond term loans, bearing a weighted-average interest rate of 1.5% at both December 31, 2012 and December 31, 2011 |  | 200 |  | 200 |
Other |  | 5 |  | 4 |
Total long-term debt |  | 6,320 |  | 4,520 |
Total debt (2) (3) (6) |  | $ | 7,406 |  | $ | 5,199 |
(1) During 2012 and 2011, we renewed, extended or refinanced our principal bank credit facilities, including PNG’s credit facility. See “Credit Facilities” below for further discussion. (2) We classify as short-term certain borrowings under our PAA senior unsecured revolving credit facility. These borrowings are primarily designated as working capital borrowings, must be repaid within one year and are primarily for hedged NGL and crude oil inventory and NYMEX and ICE margin deposits. (3) PNG classifies as short-term debt any borrowings under the PNG senior unsecured revolving credit facility that have been designated as working capital borrowings and must be repaid within one year. Such borrowings are primarily related to a portion of PNG’s hedged natural gas inventory. (4) Our $250 million 5.63% senior notes will mature in December 2013 and are thus classified as short-term at December 31, 2012. (5) Our $500 million 4.25% senior notes matured in September 2012 and were repaid with proceeds from our credit facilities. The proceeds from the issuance of these senior notes were used to supplement capital available from our hedged inventory facility, to fund working capital needs associated with base levels of waterborne cargos and for seasonal NGL inventory requirements. After the maturity of these senior notes, we are now using our expanded credit facilities for such purposes. (6) Our fixed-rate senior notes (including current maturities) had a face value of approximately $6.3 billion and $4.8 billion as of December 31, 2012 and 2011, respectively. We estimated the aggregate fair value of these notes as of December 31, 2012 and 2011 to be approximately $7.3 billion and $5.4 billion, respectively. Our fixed-rate senior notes are traded among institutions, and these trades are routinely published by a reporting service. Our determination of fair value is based on reported trading activity near year end. We estimate that the carrying value of outstanding borrowings under our credit facilities and agreements approximates fair value as interest rates reflect current market rates. The fair value estimates for both our senior notes and credit facilities are based upon observable market data and are classified within Level 2 of the fair value hierarchy. Credit Facilities PAA senior secured hedged inventory facility. In June 2012, we amended our senior secured hedged inventory facility which, among other things, increased the committed borrowing capacity from $850 million to $1.4 billion, of which $400 million (an increase from $250 million under the original facility) is available for the issuance of letters of credit. Subject to obtaining additional or increased lender commitments, the committed amount of the facility may be increased to $1.9 billion. The amendment also extended the maturity date of the facility by one year to August 2014 and provides for one or more one-year extensions, subject to applicable approval. Proceeds from the facility are being used to finance purchased or stored hedged inventory. Obligations under the committed facility are secured by the financed inventory and the associated accounts receivable and will be repaid from the proceeds of the sale of the financed inventory. Borrowings accrue interest based, at our election, on either the Eurocurrency Rate or the Base Rate, in each case plus a margin based on our credit rating at the applicable time. Amounts outstanding under this facility were approximately $665 million and $75 million at December 31, 2012 and December 31, 2011, respectively. PNG senior unsecured credit agreement. In June 2012, PNG partially exercised the accordion feature of its original senior unsecured credit agreement and increased from $250 million to $350 million the aggregate amount of revolving credit facility commitments. Also in June 2012, PNG amended this credit agreement to, among other things, provide for the further increase of the committed amount to $550 million, subject to obtaining additional or increased lender commitments. The amendment also provides for one or more one-year extensions of the revolving credit facility maturity date of August 2016 and the GO Bond mandatory put date of its two $100 million GO Bond term loans, as defined in such amendment, in each case subject to lender approvals. PNG’s revolving credit facility includes the ability to issue letters of credit. Borrowings under the revolving credit facility accrue interest, at PNG’s election, on either the Eurodollar Rate or the Base Rate, in each case plus an applicable margin. The GO Bond term loans accrue interest in accordance with the interest payable on the related GO Bonds purchased with respect thereto as provided in such GO Bonds and the GO Bonds Indenture pursuant to which such GO Bonds are issued and governed. Amounts outstanding under the credit agreement were approximately $382 million and $322 million at December 31, 2012 and December 31, 2011, respectively. PAA senior unsecured revolving credit facility. In August 2011, we entered into an unsecured revolving credit agreement with a committed borrowing capacity of $1.6 billion (including a $600 million Canadian sub-facility) which contains an accordion feature that enables us to increase the committed capacity to $2.1 billion, subject to obtaining additional or increased lender commitments. The credit agreement provides for the issuance of letters of credit and has a maturity date in August 2016. Borrowings accrue interest based, at our election, on the Eurocurrency Rate, the Base Rate or the Canadian Prime Rate, in each case plus a margin based on our credit rating at the applicable time. This facility replaced a similar $1.6 billion senior unsecured revolving credit facility that was scheduled to mature in July 2012. Amounts outstanding under this facility were approximately $92 million and $32 million at December 31, 2012 and December 31, 2011, respectively. Senior unsecured 364-day revolving credit agreement. In December 2011, we entered into a 364-day credit facility agreement with a borrowing capacity of $1.2 billion. Pursuant to its terms, we had the option to activate the facility at any time over a six-month period. In March 2012, we elected to terminate this credit agreement. Senior Notes Our senior notes are co-issued, jointly and severally, by Plains All American Pipeline, L.P. and a 100%-owned consolidated finance subsidiary (neither of which have independent assets or operations) and are unsecured senior obligations of such entities and rank equally in right of payment with existing and future senior indebtedness of the issuers. We may, at our option, redeem any series of senior notes at any time in whole or from time to time in part, prior to maturity, at the redemption prices described in the indentures governing the senior notes. In August 2011, as permitted under the indentures governing the senior notes, PAA released the guarantees of each subsidiary guarantor in conjunction with the refinancing of our credit facilities. As such, our senior notes are no longer guaranteed by any of our subsidiaries. Senior Notes Issuances In December 2012, we completed the sale and issuance of $400 million, 2.85% senior notes due January 31, 2023 and $350 million, 4.30% senior notes due January 31, 2043. The senior notes were sold at 99.752% and 99.925% of face value, respectively. Interest payments are due on January 31 and July 31 each year beginning on July 31, 2013. We used the net proceeds from these offerings to repay outstanding borrowings under our credit facilities and for general partnership purposes. In March 2012, we completed the sale and issuance of $750 million, 3.65% senior notes due June 1, 2022 and $500 million, 5.15% senior notes due June 1, 2042. The senior notes were sold at 99.823% and 99.755% of face value, respectively. Interest payments are due on June 1 and December 1 each year, which began on December 1, 2012. We used the net proceeds from these offerings to fund a portion of the consideration for the BP NGL Acquisition and for general partnership purposes. In January 2011, we completed the issuance of $600 million of 5.00% senior notes due February 1, 2021. The senior notes were sold at 99.521% of face value. Interest payments are due on February 1 and August 1 of each year, which began on August 1, 2011. We used the net proceeds from this offering to reduce outstanding borrowings under our credit facilities and for general partnership purposes. In July 2010, we completed the issuance of $400 million of 3.95% senior notes due September 15, 2015. The senior notes were sold at 99.889% of face value. Interest payments are due on March 15 and September 15 of each year, which began on September 15, 2010. We used the net proceeds from this offering to repay outstanding indebtedness under our credit facilities. Senior Note Repayments and Redemptions On September 4, 2012, we repaid our $500 million, 4.25% senior notes. We utilized cash on hand and available capacity under our credit facilities to repay these notes. On February 7, 2011, our $200 million 7.75% senior notes due 2012 were redeemed in full. In conjunction with the early redemption, we recognized a loss of approximately $23 million, recorded to “Other income/(expense), net” in our Consolidated Statement of Operations. We utilized cash on hand and available capacity under our credit facilities to redeem these notes. On September 15, 2010, our $175 million, 6.25% senior notes due 2015 were redeemed in full. In conjunction with the early redemption, we recognized a loss of approximately $6 million. We utilized cash on hand and available capacity under our credit facilities to redeem these notes. Maturities The weighted average life of our long-term debt outstanding at December 31, 2012 was approximately 12 years and the aggregate maturities for the next five years and thereafter are as follows (in millions):
Calendar Year |  | Payment |
2013 (1) |  | $ | — |
2014 |  | — |
2015 |  | 550 |
2016 |  | 480 |
2017 |  | 400 |
Thereafter |  | 4,900 |
Total (2) |  | $ | 6,330 |
(1) Our $250 million 5.63% senior notes will mature in December 2013 and thus are classified as short-term at December 31, 2012. (2) Excludes aggregate unamortized net discount of approximately $15 million and other long-term obligations of approximately $5 million. Covenants and Compliance Our credit agreements and the indentures governing the senior notes contain cross-default provisions. Our credit agreements prohibit declaration or payments of distributions on, or purchases or redemptions of, units if any default or event of default is continuing. In addition, the agreements contain various covenants limiting our ability to, among other things: · grant liens on certain property; · incur indebtedness, including capital leases; · sell substantially all of our assets or enter into a merger or consolidation; · engage in certain transactions with affiliates; and · enter into certain burdensome agreements. The PAA senior unsecured revolving credit facility and the PAA senior secured hedged inventory facility treat a change of control as an event of default and also require us to maintain a debt-to-EBITDA coverage ratio that will not be greater than 5.00 to 1.00 or 5.50 to 1.00 on all outstanding debt during an acquisition period (generally, the period consisting of three fiscal quarters following an acquisition greater than $150 million). For covenant compliance purposes, letters of credit and borrowings to fund hedged inventory and margin requirements are excluded when calculating the debt coverage ratio. A default under our credit facilities would permit the lenders to accelerate the maturity of the outstanding debt. As long as we are in compliance with our credit agreements, our ability to make distributions of available cash is not restricted. As of December 31, 2012, we were in compliance with the covenants contained in our credit agreements and indentures. PNG’s new credit agreement contains covenants and events of default provisions that are substantially consistent with those contained in PNG’s previous credit facility. This new agreement restricts, among other things, PNG’s ability to make distributions of available cash to unitholders if any default or event of default, as defined in the credit agreement, exists or would result therefrom. In addition, the credit agreement contains restrictive covenants, including those that restrict PNG’s ability to grant liens, incur additional indebtedness, engage in certain transactions with affiliates, engage in substantially unrelated businesses, sell substantially all of its assets or enter into a merger or consolidation, and enter into certain burdensome agreements. In addition, the credit agreement contains certain financial covenants which, among other things, require PNG to maintain a debt-to-EBITDA coverage ratio that will not be greater than 5.00 to 1.00 on outstanding debt (5.50 to 1.00 during an acquisition period) and also require that PNG maintain an EBITDA-to-interest coverage ratio that will not be less than 3.00 to 1.00, as such terms are defined in the credit agreement. Letters of Credit In connection with our crude oil supply and logistics activities, we provide certain suppliers with irrevocable standby letters of credit to secure our obligation for the purchase of crude oil. These letters of credit are issued under our PAA senior unsecured revolving credit facility, the PAA senior secured hedged inventory facility and PNG’s senior unsecured revolving credit facility, and our liabilities with respect to these purchase obligations are recorded in accounts payable on our balance sheet in the month the crude oil is purchased. Generally, these letters of credit are issued for periods of up to seventy days and are terminated upon completion of each transaction. At December 31, 2012 and 2011, we had outstanding letters of credit of approximately $24 million and $33 million, respectively.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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