S-1/A 1 h49597a3sv1za.htm AMENDMENT NO.3 TO FORM S-1 - REGISTRATION NO.333-146015 sv1za
Table of Contents

As filed with the Securities and Exchange Commission on January 8, 2008
Registration No. 333-146015
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
Amendment No. 3
to
Form S-1
 
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
 
 
Williams Pipeline Partners L.P.
(Exact name of registrant as specified in its charter)
 
         
Delaware   4922   26-0834035
(State or other jurisdiction of
incorporation or organization) 		  (Primary Standard Industrial
Classification Code Number) 		  (I.R.S. Employer
Identification Number)
 
One Williams Center
Tulsa, Oklahoma 74172-0172
(918) 573-2000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
 
James J. Bender
One Williams Center
Tulsa, Oklahoma 74172-0172
(918) 573-2000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
 
 
 
Copies to:
 
         
Holland & Hart LLP
555 17th Street, Suite 3200
Denver, Colorado 80202
(303) 295-8000
Attn: Lucy Schlauch
Attn: Gregory Lindley 		  Andrews Kurth LLP
1350 I Street, NW, Suite 1100
Washington, D.C. 20005
(202) 662-2700
Attn: William J. Cooper 		  Vinson & Elkins L.L.P.
First City Tower
1001 Fannin Street, Suite 2500
Houston, TX 77002-6760
(713) 758-2222
Attn: Dan Fleckman
 
 
 
 
Approximate date of commencement of proposed sale to the public:  As soon as practicable after this Registration Statement becomes effective.
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  o
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  o
 
 
 
 
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 

Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
Subject to Completion, dated January 8, 2008
PROSPECTUS
 
Williams Pipeline Partners LOGO
 
16,250,000 Common Units
Representing Limited Partner Interests
 
 
 
We are a limited partnership recently formed by The Williams Companies, Inc. This is the initial public offering of our common units. We expect the initial public offering price to be between $19.00 and $21.00 per common unit. Our common units have been approved for listing on the New York Stock Exchange, subject to official notice of issuance, under the symbol “WMZ.”
 
Investing in our common units involves risks. Please read “Risk Factors” beginning on page 17.
 
 
                 
    Per Common Unit     Total  
 
Initial public offering price
  $                       $                    
Underwriting discount(1)
  $       $    
Proceeds to Williams Pipeline Partners L.P. (before expenses)
  $       $  
 
 
(1) Excludes structuring fees of $          .
 
We have granted the underwriters a 30-day option to purchase up to an additional 2,437,500 common units from us on the same terms and conditions as set forth above if the underwriters sell more than 16,250,000 common units in this offering.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
 
The underwriters expect to deliver the common units on or about           , 2008.
 
 
Joint Book-Running Managers
Lehman Brothers Citi Merrill Lynch & Co.
 
 
 
 
Wachovia Securities  
  Goldman, Sachs & Co.  
  Morgan Stanley  
  UBS Investment Bank  
  Banc of America Securities LLC  
  JPMorgan
 
 
 
Raymond James RBC Capital Markets Stifel Nicolaus
 
          , 2008

Table of Contents

     
Williams Pipeline Partners LOGO  


Our initial asset will consist of a 35%
general partnership interest in Northwest.

Table of Contents

 
TABLE OF CONTENTS
 
         
    1  
    1  
    3  
    3  
    4  
    4  
    6  
    7  
    11  
    17  
    17  
    29  
    37  
    41  
    42  
    43  
    45  
    45  
    46  
    48  
    52  
    59  
    59  
    60  
    62  
    64  
    64  
    64  
    69  
    69  
    70  
    72  
    78  
    78  
    78  
    79  
    81  
    81  
    82  
    82  
    85  

Table of Contents

         
    88  
    90  
    91  
    91  
    91  
    92  
    92  
    92  
    93  
    93  
    93  
    95  
    95  
    96  
    98  
    98  
    99  
    101  
    102  
    104  
    104  
    107  
    107  
    107  
    113  
    113  
    114  
    114  
    115  
    115  
    116  
    117  
    117  
    117  
    117  
    118  
    119  
    120  
    122  
    122  
    123  
    123  
    124  

Table of Contents

         
    126  
    126  
    127  
    128  
    128  
    134  
    137  
    137  
    137  
    137  
    139  
    139  
    139  
    139  
    139  
    140  
    140  
    140  
    140  
    140  
    140  
    141  
    142  
    143  
    143  
    145  
    146  
    146  
    147  
    148  
    148  
    148  
    148  
    149  
    149  
    150  
    151  
    151  
    151  
    151  
    152  
    152  
    152  

Table of Contents

         
    153  
    154  
    154  
    156  
    156  
    161  
    162  
    164  
    164  
    165  
    166  
    167  
    168  
    169  
    169  
    170  
    170  
    171  
    171  
    171  
    171  
    172  
    172  
    172  
    172  
    173  
    173  
    173  
    173  
    174  
    F-1  
    A-1  
    B-1  
    C-1  
    D-1  
 Form of Underwriting Agreement
 Form of Limited Liability Company Agreement of Williams Pipeline GP LLC
 Opinion of Holland & Hart LLP
 Opinion of Andrews Kurth L.L.P.
 Form of Contribution, Conveyance and Assumption Agreement
 Form of Omnibus Agreement
 Administrative Services Agreement between Northwest Pipeline Services LLC and Northwest GP
 List of subsidiaries of Williams Pipeline Partners L.P.
 Consent of Ernst & Young LLP
 
 
Until          , 2007 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common units, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Table of Contents

 
SUMMARY
 
This summary provides a brief overview of information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including “Risk Factors” beginning on page 17 and the historical and pro forma financial statements. Unless indicated otherwise, the information presented in this prospectus assumes (i) an initial public offering price of $20.00 per common unit and (ii) that the underwriters do not exercise their option to purchase additional units. We include a glossary of some of the terms used in this prospectus as Appendix D.
 
You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by us or on our behalf. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
 
Williams Pipeline Partners L.P.
Overview
 
We are a growth-oriented limited partnership recently formed by The Williams Companies, Inc., or Williams, to own and operate natural gas transportation and storage assets. Our primary business objectives are to generate stable cash flows and, over time, to increase our quarterly cash distributions per unit. Our initial asset is a 35% general partnership interest in Northwest Pipeline GP, or Northwest, which owns an approximate 3,900-mile, bi-directional, interstate natural gas pipeline system that extends from the San Juan Basin in New Mexico, through the Rocky Mountains and to the Northwestern United States. Northwest also has working natural gas storage capacity of approximately 12.5 billion cubic feet, or Bcf.
 
The remaining 65% general partnership interest in Northwest is owned by Williams Gas Pipeline Company, LLC, or Williams Gas Pipeline, which is a subsidiary of Williams. As of December 31, 2006, Williams Gas Pipeline owned approximately 14,400 miles of interstate natural gas pipelines consisting of a 100% equity interest in Northwest and a 100% equity interest in Transcontinental Gas Pipe Line Corporation, which operates the Transcontinental pipeline system that extends from South Texas to the New York City metropolitan area. In addition, Williams Gas Pipeline owns a 50% equity interest in Gulfstream Natural Gas System, L.L.C., an approximate 690-mile interstate pipeline system that extends from the Mobile Bay area in Alabama across the Gulf of Mexico to markets in Florida. We intend to expand our asset base through both organic growth and acquisitions, including potential acquisitions from Williams and third parties. After this offering, Williams will own a 2% general partner interest and a 50.5% limited partner interest in us. We believe Williams’ continued ownership interest in us and our access to its experienced and proven management team will benefit us in the execution of our growth strategy.
 
Northwest’s System
 
Northwest owns and operates a natural gas pipeline system that extends from the San Juan Basin in northwestern New Mexico and southwestern Colorado through Colorado, Utah, Wyoming, Idaho, Oregon and Washington to a point on the Canadian border near Sumas, Washington. Northwest’s system includes approximately 3,900 miles of mainline and lateral transmission pipeline and 41 transmission compressor stations. Its compression facilities have a combined sea level-rated capacity of approximately 473,000 horsepower. At September 30, 2007, Northwest had long-term firm transportation contracts, including peaking service, with aggregate capacity reservations of approximately 3.4 Bcf of natural gas per day. Northwest also has approximately 12.5 Bcf of working natural gas storage capacity.
 
Northwest has access to multiple strategic natural gas supply basins, including basins in the Rocky Mountain region, the San Juan Basin and the Western Canadian Sedimentary Basin, or WCSB. Northwest provides natural gas transportation services for markets in Washington, Oregon, Idaho, Wyoming, Nevada, Utah, Colorado, New Mexico, California and Arizona, either directly or indirectly through interconnections


1

Table of Contents

with other pipelines. Northwest is the only interstate natural gas pipeline that currently provides service to certain key markets, including Seattle, Washington, Portland, Oregon and Boise, Idaho. In addition, we believe that Northwest provides competitively priced services in markets such as Reno, Nevada, Spokane, Washington and Medford, Oregon that are also served by other interstate natural gas pipelines.
 
Northwest transports and stores natural gas for a broad mix of customers, including local natural gas distribution companies, or LDCs, municipal utilities, direct industrial users, electric power generators and natural gas marketers and producers. For the year ended December 31, 2006, Northwest’s two largest customers were Puget Sound Energy, Inc. and Northwest Natural Gas Co., which accounted for approximately 19.9% and 10.9%, respectively, of its total operating revenues during that period. No other customer accounted for more than 10% of total operating revenues during that period.
 
Northwest’s Operations
 
Northwest’s rates are subject to the rate-making policies of the Federal Energy Regulatory Commission, or FERC. Northwest provides a significant portion of its transportation and storage services pursuant to long-term firm contracts. A “firm” contract obligates customers to pay Northwest a monthly capacity reservation fee, which is a fee that Northwest charges a customer to reserve an agreed upon amount of pipeline or storage capacity regardless of the amount of pipeline or storage capacity actually utilized by a customer. When a customer utilizes the capacity it has reserved under a firm transportation contract, Northwest also collects a volumetric fee based on the quantity of natural gas transported. These volumetric fees are typically a small percentage of the total fees received under a firm contract. Over 99% of Northwest’s long-term firm contracts are at the maximum rate allowed under Northwest’s tariff, as distinguished from discounted rates. For additional information about interstate pipeline rates, please see “Regulatory Matters — FERC Regulation.” Northwest also derives a small portion of its revenues from short-term firm and interruptible contracts under which customers pay fees for transportation, storage and other related services. The following table sets forth certain information regarding Northwest’s contracts and revenues, as of and for the nine months ended September 30, 2007:
 
             
Revenue Composition(1)   Weighted Average
Long-Term Firm Contracts   Short-Term
 		  Remaining Long-
Capacity
 		      Firm and
 		  Term Firm
Reservation
 		  Volumetric
 		  Interruptible
 		  Contract Life
Fees
  Fees   Services   (in years)(2)
 
90.9%
  4.8%   4.3%   8.23
 
(1) Excludes other revenues of $3.5 million for the nine months ended September 30, 2007 primarily associated with certain subleases of Northwest’s Salt Lake City office building and the FERC annual charge adjustment, or ACA, which is an annual charge collected and remitted to FERC for its administrative expenses.
 
(2) The weighted average long-term firm contract life was calculated based on the average annual reservation revenue under currently effective rates for each contract’s remaining life as of September 30, 2007. A long-term firm contract is a contract that has a term of one year or more.
 
The high percentage of Northwest’s revenue derived from capacity reservation fees helps mitigate the risk of revenue fluctuations caused by changing supply and demand conditions. For additional information about Northwest’s contracts, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — How We Evaluate Our Operations” and “Business — Regulatory Matters.”
 
Our Relationship with Williams
 
One of our principal attributes is our relationship with Williams, an integrated energy company with 2006 revenues in excess of $9 billion. Williams trades on the New York Stock Exchange, or NYSE, under the symbol “WMB.” Williams operates in numerous aspects of the energy industry, including natural gas exploration and production, midstream services and interstate natural gas transportation. Williams has owned or operated interstate natural gas transportation and storage assets for more than 23 years.


2

Table of Contents

 
Williams has a long history of successfully expanding its energy infrastructure businesses and consummating complementary acquisitions of energy assets and intends to use our partnership to own and grow its natural gas transportation and storage business. Although we expect to have the opportunity to make additional acquisitions directly from Williams in the future, we cannot say with any certainty which, if any, of these acquisition opportunities may be made available to us or if we will choose to pursue any such opportunities. In addition, through our relationship with Williams, we will have access to a significant pool of management talent and strong commercial relationships throughout the energy industry. Williams has significant experience in forming and managing master limited partnerships, having formed and managed Williams Energy Partners, L.P., now known as Magellan Midstream Partners, L.P., until its sale in 2003 and Williams Partners L.P., or Williams Partners, in which Williams currently owns a 23.1% limited partner interest and the 2% general partner interest. Williams Partners has closed four acquisitions of assets from Williams since its initial public offering in 2005 totaling approximately $2.4 billion.
 
While our relationship with Williams and its affiliates is a significant attribute, it is also a source of potential conflicts. For example, Williams is in the natural gas transportation and storage business and is not restricted from competing with us. Williams and its affiliates, including Williams Partners, which trades on the NYSE under the symbol “WPZ,” may compete with Northwest or us. Williams and its affiliates may acquire, construct or dispose of natural gas transportation, storage or other assets in the future, some or all of which may compete with our or Northwest’s assets, without any obligation to offer us or Northwest the opportunity to purchase or construct such assets. In addition, all of the executive officers and certain of the directors of Williams Pipeline GP LLC, our general partner, also serve as officers and/or directors of Williams and Williams Partners’ general partner, and these officers and directors face conflicts of interest. Please read “Conflicts of Interest and Fiduciary Duties.”
 
Upon the completion of this offering, Williams will indirectly own a 2% general partner interest in us, all of our incentive distribution rights and a 50.5% limited partner interest in us. We will enter into an omnibus agreement with Williams and certain of its affiliates, including our general partner, that will govern our relationship with them regarding certain reimbursement, indemnification and licensing matters. Please read “Certain Relationships and Related Party Transactions — Omnibus Agreement.”
 
Risk Factors
 
An investment in our common units involves risks associated with our business, our partnership structure and the tax characteristics of our common units that you should carefully consider before making an investment in our common units. Those risks are described under the caption “Risk Factors” beginning on page 17.
 
The Transactions and Partnership Structure
 
General
 
We have recently been formed as a Delaware limited partnership to own and operate certain natural gas transportation and storage assets. As is common with publicly traded partnerships and in order to maximize operational flexibility, we will conduct our operations through subsidiaries. We will have one direct operating subsidiary initially, Williams Pipeline Operating LLC, a Delaware limited liability company that will conduct business through itself and its subsidiaries and will indirectly hold our 35% general partnership interest in Northwest.
 
At the closing of this offering, the following transactions will occur:
 
  •  we will issue 16,250,000 common units to the public in this offering, representing a 47.5% limited partner interest in us, and will use the net proceeds from this offering to pay expenses and purchase from Northwest a 15.9% general partnership interest in Northwest;
 
  •  we will issue to our general partner 6,350,668 common units and 10,957,900 subordinated units representing an aggregate 50.5% limited partner interest in us, plus 684,869 general partner units representing a 2% general partner interest in us and all of our incentive distribution rights, which entitle


3

Table of Contents

  our general partner to increasing percentages of the cash we distribute in excess of $0.330625 per limited partner unit per quarter, in exchange for the contribution of a 19.1% general partnership interest in Northwest (which combined with the interest purchased directly from Northwest will result in our owning a 35% general partnership interest in Northwest);
 
  •  we will enter into an omnibus agreement with Williams and certain of its affiliates, including our general partner, that will govern our relationship with them regarding certain reimbursement, indemnification and licensing matters;
 
  •  Northwest will distribute $300.9 million to a subsidiary of Williams as a reimbursement for capital expenditures incurred with respect to Northwest’s assets; and
 
  •  we will enter into a working capital credit agreement with Williams as the lender, with a borrowing capacity of $20 million.
 
Management of Williams Pipeline Partners L.P.
 
Our general partner, Williams Pipeline GP LLC, has sole responsibility for conducting our business and managing our operations and activities, and its board of directors will make decisions on our behalf. Williams Gas Pipeline, as the sole member of our general partner, will elect all of the members to the board of directors of our general partner. All of the executive officers and certain of the directors of our general partner also serve as officers of Williams and Williams Partners’ general partner. For more information about these individuals, please read “Management — Directors and Executive Officers of Our General Partner.” Our general partner will be entitled to distributions with respect to its common and subordinated units, general partner units and, if specified requirements are met, with respect to its incentive distribution rights. Please read “Cash Distribution Policy and Restrictions on Distributions,” “Provisions of Our Partnership Agreement Relating to Cash Distributions” and “Certain Relationships and Related Party Transactions.”
 
Unlike shareholders in a publicly traded corporation, our unitholders will not be entitled to elect our general partner or its directors.
 
Principal Executive Offices and Internet Address
 
Our principal executive offices are located at One Williams Center, Tulsa, Oklahoma 74172-0172, and our telephone number is (918) 573-2000. Our website is located at www.williamspipelinepartners.com, and will be activated in connection with this offering. We expect to make our periodic reports and other information filed with or furnished to the Securities and Exchange Commission, or SEC, available, free of charge, through our website as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus.
 
Summary of Conflicts of Interest and Fiduciary Duties
 
Our general partner has a legal duty to manage us in a manner beneficial to holders of our limited partner units. This legal duty originates in statutes and judicial decisions and is commonly referred to as a “fiduciary” duty. However, because our general partner is indirectly wholly owned by Williams, the officers and directors of our general partner have fiduciary duties to manage the business of our general partner in a manner beneficial to Williams. Williams also owns the general partner of Williams Partners, and all of the executive officers and certain of the directors of our general partner also serve as officers and/or directors of Williams and Williams Partners’ general partner. As a result of these relationships, conflicts of interest may arise in the future between us and the holders of our limited partner units, on the one hand, and our general partner and its affiliates (including Williams Partners), on the other hand.
 
Our partnership agreement limits the liability and reduces the fiduciary duties of our general partner to holders of our limited partner units. Our partnership agreement also restricts the remedies available to holders of our limited partner units for actions that might otherwise constitute a breach of our general partner’s


4

Table of Contents

fiduciary duties owed to such holders. Our partnership agreement also provides that affiliates of our general partner, including Williams, Williams Partners and their affiliates, are not restricted from competing with Northwest or us.
 
For a more detailed description of the fiduciary duties and conflicts of interest of our general partner, please read “Risk Factors — Risks Inherent in an Investment in Us” and “Conflicts of Interest and Fiduciary Duties — Conflicts of Interest.”


5

Table of Contents

 
Organizational Structure and Ownership After the Transactions
 
The following diagram provides a simplified depiction of our organizational structure and ownership after giving effect to the transactions.
 
         
Public Common Units
    47.5 %
Williams and Subsidiaries Common and Subordinated Units
    50.5 %
General Partner Interest
    2.0 %