2.2.0.7 false Members Capital and Distributions 0206 - Disclosure - Members Capital and Distributions true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 EPU Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Units Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Partners capital abstract 0 us-gaap_PartnersCapitalAbstract us-gaap true na duration No definition available. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string No definition available. false 3 Members' Capital and Distributions 1 cpno_MembersCapitalAndDistributions cpno false na duration Disclosures related to members' capital including types of outstanding equity units. Disclosures also identify and quantify... false false false false false false false false false false false verboselabel false 1 false false false false 0 0 Note 6 — Members' Capital and Distributions Series A Convertible Preferred Units On July 21, 2010, we issued 10,327,022 Series A convertible preferred units (“Series A preferred units”) in a private placement to TPG Copenhagen, L.P. (“TPG”), an affiliate of TPG Capital, L.P. for gross proceeds of $300 million. The preferred units were priced at $29.05 per unit, a 10% premium to the 30-day volume-weighted average closing price of our common units on July 19, 2010, two trading days before the date we issued the preferred units. We used $180.0 million of the net proceeds to repay the outstanding balance under our Credit Facility and expect to use the remaining net proceeds to fund our expansion strategy in the Eagle Ford Shale resource play and other growth initiatives in Texas and Oklahoma. The Series A preferred units are classified as permanent equity, as they do not meet the criteria of a liability within the scope of ASC 480-10 “Distinguishing Liabilities from Equity,” nor do they meet the criteria of the mezzanine level under ASC 815 “Accounting for Derivative Instruments and Hedging Activities.” Additionally, none of the identified embedded derivatives relating to the terms of the Series A preferred units requires bifurcation, as each embedded derivative was determined to be clearly and closely related to the host contract of the Series A preferred units under ASC 815-15 “Embedded Derivatives.” As discussed below, the distribution payment under the terms of the Series A preferred units is not discretionary during the first three years and, therefore, the commitment date was determined to be the date of original issuance under ASC 470-20-30 “Debt With Conversions and Other Options.” Further, the change of control provision under the agreement does not preclude the establishment of a commitment date, as it is outside the control of Copano and the Series A preferred unitholder. Distributions. The Series A preferred units are senior to our common units with respect to rights to distributions. For the first three years after the date on which they were issued, the Series A preferred units are entitled to quarterly distributions in kind (paid in the form of additional Series A preferred units). In-kind distributions will equal $0.72625 per preferred unit per quarter (or 10% per year of the purchase price of a Series A preferred unit) divided by the $29.05 issue price. Beginning with the distribution for the quarter ending September 30, 2013, and through the distribution for the quarter ending June 30, 2016, we are entitled to elect whether to pay preferred distributions in cash, in kind or in a combination of both. For quarters ending after June 30, 2016, we will be obligated to pay preferred distributions in cash unless our available cash (after reserves established by our Board of Directors) is not sufficient to fund the distribution or we and the preferred unitholder agree that a distribution will be paid in kind. Cash distributions on the Series A preferred units will equal the greater of $0.72625 per preferred unit per quarter or the quarterly per-unit distribution paid to our common unitholders for the applicable quarter. In kind distributions for the three months ended September 30, 2010 totaled $7,500,000. Voting Rights. Each Series A preferred unit entitles the holder to one vote. The Series A preferred units generally have voting rights identical to and vote as a single class with our common units, except that the number of Series A preferred units that may vote is limited to 19.9% of our total common units outstanding, which is the maximum amount our common unitholders can be diluted without a unitholder vote (the “common unit cap”). On November 17, 2010, we are holding a special meeting of common unitholders to approve the conversion provisions of the Series A preferred units. Conversion. Beginning on July 21, 2013, the Series A preferred units generally will become convertible into common units by us or by the preferred unitholder, subject to the limitations described below. After July 21, 2013, the preferred unitholder may elect to convert all or any portion of its Series A preferred units into common units at any time, but only to the extent that conversion will not cause our estimated ratio of total distributable cash flow to per-unit distributions (for all of our outstanding common and Series A preferred units) to fall below 100% over any of the forecasted succeeding four quarters. In addition, we will have the right to force conversion of all or any portion of the Series A preferred units if the daily volume-weighted average trading price and the average daily trading volume of our common units exceed $37.77 and 500,000 units, respectively, for 20 trading days out of the trailing 30-day period prior to our notice of conversion. On the date of conversion, the rights of the converting Series A preferred units will cease; the converting Series A preferred units will no longer be outstanding and will represent only the right to receive common units at the rate of one common unit for each preferred unit. Rights upon a Change of Control. The preferred unitholder has conversion rights with respect to certain change of control events. Before consummating a transaction in which any person, other than the preferred unitholder, becomes the beneficial owner, directly or indirectly, of more than 50% of our voting securities, we will make an irrevocable offer (a “change of control offer”) to the preferred unitholder to convert all, but not less than all, of such holder's Series A preferred units into common units, subject to certain conditions and limitations, including the common unit cap. Series A preferred units converting in the context of a change of control offer would not convert into common units on a one-for-one basis. Instead, the number of common units we would issue upon conversion of Series A preferred units would equal the quotient of (a) 110% of the aggregate preferred unit issue price for such preferred unitholder's converting Series A preferred units and all accrued and unpaid distributions on such Series A preferred units as of the date of the change of control offer, divided by (b) $29.05. The preferred unitholder is under no obligation to accept a change of control offer. Dissolution and Liquidation. The Series A preferred units are senior to our common units with respect to rights on dissolution and liquidation. Common units issued upon conversion of Series A preferred units will rank equally with the rest of our common units with respect to rights on dissolution and liquidation. Common Units In March 2010, we issued 7,446,250 common units in an underwritten public offering (including units issued upon the underwriters' exercise of their option to purchase additional units). We used the net proceeds from the offering to repay a portion of our then-outstanding indebtedness under our Credit Facility. Distributions. The following table summarizes our quarterly cash distributions during 2010: <div><table style="border-collapse:collapse;margin-top:20px;"><tr style="height: 16px"><td style="width: 125px; text-align:center;border-color:#000000;min-width:125px;"> </td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 87px; text-align:center;border-color:#000000;min-width:87px;">Distribution</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;"> </td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;"> </td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;"> </td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 80px; text-align:left;border-color:#000000;min-width:80px;"> </td></tr><tr style="height: 16px"><td style="width: 125px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:125px;">Quarter Ending </td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 87px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:87px;">Per Unit</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:110px;">Date Declared</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:110px;">Record Date</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:110px;">Payment Date</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 80px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:80px;">Amount</td></tr><tr style="height: 16px"><td style="width: 125px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:125px;">December 31, 2009 </td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 87px; border-top-style:solid;border-top-width:1px;text-align:center;border-color:#000000;min-width:87px;">$0.575</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; border-top-style:solid;border-top-width:1px;text-align:center;border-color:#000000;min-width:110px;">January 13, 2010</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; border-top-style:solid;border-top-width:1px;text-align:center;border-color:#000000;min-width:110px;">February 1, 2010</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; border-top-style:solid;border-top-width:1px;text-align:center;border-color:#000000;min-width:110px;">February 11, 2010</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 80px; border-top-style:solid;border-top-width:1px;text-align:right;border-color:#000000;min-width:80px;">$31,911,000</td></tr><tr style="height: 16px"><td style="width: 125px; text-align:left;border-color:#000000;min-width:125px;">March 31, 2010 </td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 87px; text-align:center;border-color:#000000;min-width:87px;">$0.575</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;">April 14, 2010</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;">April 30, 2010</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;">May 13, 2010</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 80px; text-align:right;border-color:#000000;min-width:80px;">$38,134,000</td></tr><tr style="height: 16px"><td style="width: 125px; text-align:left;border-color:#000000;min-width:125px;">June 30, 2010 </td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 87px; text-align:center;border-color:#000000;min-width:87px;">$0.575</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;">July 14, 2010</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;">August 2, 2010</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;">August 12, 2010</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 80px; text-align:right;border-color:#000000;min-width:80px;">$38,295,000</td></tr><tr style="height: 16px"><td style="width: 125px; text-align:left;border-color:#000000;min-width:125px;">September 30, 2010</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 87px; text-align:center;border-color:#000000;min-width:87px;">$0.575</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;">October 13, 2010</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;">November 1, 2010</td><td style="width: 10px; text-align:center;border-color:#000000;min-width:10px;"> </td><td style="width: 110px; text-align:center;border-color:#000000;min-width:110px;">November 11, 2010</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;"> </td><td style="width: 80px; text-align:right;border-color:#000000;min-width:80px;">$38,349,000</td></tr></table></div>Class D Units Class D units totaling 3,245,817 as of December 31, 2009 converted into our common units on a one-for-one basis in February 2010. Accounting for Equity-Based Compensation We use ASC 718, “Stock Compensation,” to account for equity-based compensation expense related to awards issued under our long-term incentive plan (“LTIP”). As of September 30, 2010, the number of units available for grant under our LTIP totaled 1,374,085, of which up to 804,535 units were eligible to be issued as restricted common units, phantom units or unit awards. Equity Awards. We recognized non-cash compensation expense of $5,790,000 and $5,476,000 related to the amortization of equity-based compensation under our LTIP during the nine months ended September 30, 2010 and 2009, respectively. See Item 8 in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2009 for details on our equity-based compensation. On May 10, 2010 and June 4, 2010, we granted employees a total of 180,000 phantom units with a fair value of $4,408,000. Each phantom unit grant vests in equal one-third annual installments commencing on May 15, 2011 or earlier upon change of control, death or disability. The compensation expense will be recognized over the vesting period. On June 4, 2010, we granted 83,000 performance-based phantom units to certain management employees. The number of performance-based phantom units to vest is dependent on the level of achievement of a specified performance goal during the period from the grant date through the cliff vesting date of May 15, 2013. The fair value of the number of awards expected to vest is $4,059,000 and will be recognized as compensation expense over the vesting period. Additionally, we will recognize cumulative adjustments for changes in the probability of the performance goal being met. For awards containing performance conditions that affect vesting, compensation expense is recognized equal to the ultimate outcome of the performance condition. Liability Awards. Since ASC 480, “Accounting for Certain Financial Instruments With Characteristics of Both Liabilities and Equity,” requires unconditional obligations in the form of units that the issuer must or may settle by issuing a variable number of units to be classified as a liability, we classify equity awards issued to settle Employee Incentive Compensation Program (“EICP”) and Management Incentive Compensation Plan (“MICP”) obligations as liability awards. During the nine months ended September 30, 2010, we issued 83,598 common units to settle our EICP and 2009 MICP obligations. As of September 30, 2010, we accrued $586,000 and $1,096,000 for the third quarter 2010 EICP bonuses and an estimate of the 2010 MICP incentive bonuses, respectively. As of September 30, 2010, the estimated unrecognized compensation costs related to these liability awards totaled $557,000 and $609,000 for the EICP and MICP, respectively, which are expected to be recognized as expense on a straight-line basis through December 2010 for EICP awards and through February 2011 for MICP awards. Note 6 — Members' Capital and Distributions Series A Convertible Preferred Units On July 21, 2010, we issued 10,327,022 false false false us-types:textBlockItemType textblock Disclosures related to members' capital including types of outstanding equity units. Disclosures also identify and quantify the distributions to members, equity-based compensation arrangements and other transactions that affect the equity structure. No authoritative reference available. false 1 2 false UnKnown UnKnown UnKnown false true