Plains GP Holdings LP, formed by Plains All American Pipeline LP to pay dividends on its behalf, closed unchanged in its first day of trading after the stock was priced at the lower end of its initial range.
Plains GP, which trades under the symbol PAGP, closed at $22 in New York. The company sold 128 million shares for $22 each, according to a company statement yesterday, after offering them for as much as $25 apiece.
Plains All American stores and transports crude oil and refined products and processes natural gas in the U.S. and Canada. Plains GP plans to use the IPO proceeds to buy a stake in the Houston-based partnership from sellers including Los Angeles-based exploration and production company Occidental Petroleum Corp. and Energy & Minerals Group, a Houston-based private-equity firm, according to a regulatory filing.
Plains GP shareholders will then receive a portion of earnings from Plains All American in the form of quarterly dividends. Shareholders of Plains GP will receive payments only after Plains All American meets minimum dividend-payment requirements to its holders, according to the filing. Plains GP expects its initial quarterly distribution to be 14.9 cents a share, the filing shows.
Plains GP will be treated as a corporation for U.S. federal income tax purposes, paying corporate income taxes on earnings before paying dividends, the filing showed. That differs from Plains All American and other pipeline companies including Kinder Morgan Energy Partners LP that are organized as master limited partnerships, distributing untaxed earnings on which shareholders pay income taxes.
Barclays Plc, Goldman Sachs Group Inc. and JPMorgan Chase & Co. led the offering.