Inter Pipeline management get rollover treatment on their $340 million consideration for agreeing to internalize management

Inter Pipeline, which is a TSX-listed LP, is being converted into a public company under an Alberta Plan of Arrangement.  The Plan entails the public transferring their units to a holding company for the GP, with the partnership being wound-up under s. 98(5) by virtue of the holding company then transferring those units to the GP.

Up until June 2013, management owned the parent (PAC) of the GP.  On June 1, the five managers sold PAC on a s. 85 rollover basis to a company controlled by the independent GP director in exchange for preferred shares with a redemption amount of $340 million or $240 million, depending on whether some projects come into production by 2017.  On the amalgamation under the Plan of Arrangement resulting in the public company, management will receive common shares, and shares convertible into common shares, of the public company in exchange for their preferred shares – also on a rollover basis.

Neal Armstrong.  Summary of Inter Pipeline Circular and Material Change Report under Other Public Transactions - LP Conversions.