Long-Term Debt

9 Months Ended

Sep. 30, 2011

Long-Term Debt [Abstract]

Long-Term Debt

Note 5 — Long-Term Debt

	September 30,		December 31,
	2011		2010
	(In thousands)
Revolving credit facility	$	295,000	$	10,000
Senior Notes:
8.125% senior unsecured notes due 2016		—		332,665
Unamortized bond premium-senior notes due 2016		—		546
7.75% senior unsecured notes due 2018		249,525		249,525
7.125% senior unsecured notes due 2021		360,000		—
Total Senior Notes		609,525		582,736
Total long-term debt	$	904,525	$	592,736

Revolving Credit Facility

On June 10, 2011, we entered into a second amended and restated credit agreement (the “Amended Credit Agreement”) with Bank of America, N.A., as Administrative Agent, which increased our $550 million senior secured revolving credit facility to $700 million. The changes in the Amended Credit Agreement include:

•  The maturity date is extended from October 18, 2012 to June 10, 2016.

•  Interest is determined, at our election, by reference to (a) the British Bankers Association LIBOR rate, or LIBOR, plus an applicable rate between 2.0% and 3.25% per annum or (b) the highest of (1) the federal funds rate plus 0.50%, (2) the prime rate and (3) LIBOR plus 1.0%, plus, in each case, an applicable rate between 1.0% and 2.25% per annum. The applicable rates vary depending on our consolidated leverage ratio (as defined in the Amended Credit Agreement).

•  The quarterly commitment fee on the unused amount of the revolving credit facility is determined by reference to an applicable rate between 0.375% and 0.5% per annum. The applicable rate varies depending on our consolidated leverage ratio (as defined in the Amended Credit Agreement).

•  A sublimit of up to $100 million is available for letters of credit and a sublimit of up to $75 million is available for swing line loans.

As of September 30, 2011, we had no letters of credit outstanding.

The weighted average rate on borrowings under the revolving credit facility for the nine months ended September 30, 2011 and 2010 was 6.48% and 7.74%, respectively, and the quarterly commitment fee on the unused portion of the revolving credit facility for those periods was 0.375% and 0.25%, respectively. Interest and other financing costs related to the revolving credit facility totaled $5,468,000 and $4,709,000 for the nine months ended September 30, 2011 and 2010, respectively.

We incurred $7,833,000 in financing fees related to the Amended Credit Agreement. Because the borrowing capacity of the Amended Credit Agreement is greater than the borrowing capacity of the previous arrangement, our costs incurred in connection with the establishment of the Amended Credit Agreement are being amortized over its term in accordance with ASC 470-50-40-21, “Debt — Modifications and Extinguishments-Line-of-Credit Arrangements.” As of September 30, 2011, the unamortized portion of debt issue costs totaled $10,655,000.

The Amended Credit Agreement contains covenants (some of which require that we make certain subjective representations and warranties), including financial covenants that require us and our subsidiary guarantors, on a consolidated basis, to maintain specified ratios. We are in compliance with the financial covenants under the Amended Credit Agreement as of September 30, 2011.

Future borrowings under our revolving credit facility are available for acquisitions, capital expenditures, working capital and general corporate purposes, and the facility may be drawn on and repaid without restrictions so long as we are in compliance with its terms, including maximum leverage ratios (applicable to our secured debt and total debt) and a minimum interest coverage ratio.

Senior Notes

Senior Notes Offering and Tender Offer.  On April 5, 2011, we closed a public offering of $360,000,000 in aggregate principal amount of 7.125% senior unsecured notes due 2021 (the “2021 Notes”). We used the net proceeds to fund a tender offer for all of our outstanding 8.125% senior unsecured notes due 2016 (the “2016 Notes”) and a subsequent redemption of our 2016 Notes not tendered under the tender offer, and to provide additional working capital and for general corporate purposes. We recognized a loss on the tender and redemption of the 2016 Notes totaling $18,233,000, including $4,185,000 in remaining unamortized debt issue costs related to the 2016 Notes. Interest and other financing costs relating to the 2016 Notes totaled $7,664,000 and $20,852,000 for the nine months ended September 30, 2011 and 2010, respectively.

Interest and other financing costs relating to the 2021 Notes totaled $12,937,000 for the nine months ended September 30, 2011. Interest on the 2021 Notes is payable each April 1 and October 1. Costs of issuing the 2021 Notes are being amortized over the term of the 2021 Notes and, as of September 30, 2011, the unamortized portion of debt issue costs totaled $7,547,000.

7.75% Senior Notes Due 2018.  At September 30, 2011, the aggregate principal amount of 7.75% senior unsecured notes due 2018 (the “2018 Notes” and, together with the 2021 Notes, the “Senior Notes”) outstanding was $249,525,000.

Interest and other financing costs relating to the 2018 Notes totaled $14,912,000 for each of the nine months ended September 30, 2011 and 2010, respectively. Interest on the 2018 Notes is payable each June 1 and December 1. Costs of issuing the 2018 Notes are being amortized over the term of the 2018 Notes and, as of September 30, 2011, the unamortized portion of debt issue costs totaled $3,627,000.

General.  The indentures governing our Senior Notes restrict our ability to pay cash distributions. Before we can pay a distribution to our unitholders, we must demonstrate that our ratio of EBITDA to fixed charges (as defined in the Senior Notes indentures) is at least 1.75 to 1.0.

We are in compliance with the financial covenants under the Senior Notes indentures as of September 30, 2011.

Guarantor Financial Statements

Condensed consolidating financial information for Copano and its wholly owned subsidiaries is presented below.

	September 30, 2011																		December 31, 2010
										Investment in																		Investment in
							Guarantor			Non-Guarantor															Guarantor			Non-Guarantor
	Parent			Co-Issuer			Subsidiaries			Subsidiaries			Eliminations			Total			Parent			Co-Issuer			Subsidiaries			Subsidiaries		Eliminations			Total
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	4,142		$	—		$	49,392		$	—		$	—		$	53,534		$	9,650		$	—		$	50,280		$	—	$	—		$	59,930
Accounts receivable, net		2			—			108,337			—			—			108,339			14			—			96,648			—		—			96,662
Intercompany receivable		128,659			(1	)		(128,658	)		—			—			—			35,178			(1	)		(35,177	)		—		—			—
Risk management assets		—			—			12,101			—			—			12,101			—			—			7,836			—		—			7,836
Prepayments and other current assets		1,916			—			6,395			—			—			8,311			3,378			—			1,801			—		—			5,179
Total current assets		134,719			(1	)		47,567			—			—			182,285			48,220			(1	)		121,388			—		—			169,607
Property, plant and equipment, net		26			—			1,078,922			—			—			1,078,948			56			—			912,101			—		—			912,157
Intangible assets, net		—			—			179,992			—			—			179,992			—			—			188,585			—		—			188,585
Investments in unconsolidated affiliates		—			—			529,958			529,958			(529,958	)		529,958			—			—			604,304			604,304		(604,304	)		604,304
Investments in consolidated subsidiaries		1,683,951			—			—			—			(1,683,951	)		—			1,703,940			—			—			—		(1,703,940	)		—
Escrow cash		—			—			1,850			—			—			1,850			—			—			1,856			—		—			1,856
Risk management assets		—			—			17,128			—			—			17,128			—			—			11,943			—		—			11,943
Other assets, net		21,831			—			5,908			—			—			27,739			13,128			—			5,413			—		—			18,541
Total assets	$	1,840,527		$	(1	)	$	1,861,325		$	529,958		$	(2,213,909	)	$	2,017,900		$	1,765,344		$	(1	)	$	1,845,590		$	604,304	$	(2,308,244	)	$	1,906,993
LIABILITIES AND MEMBERS’/PARTNERS’ CAPITAL
Current liabilities:
Accounts payable	$	1,458		$	—		$	139,334		$	—		$	—		$	140,792		$	17		$	—		$	117,689		$	—	$	—		$	117,706
Accrued interest		19,945			—			—			—			—			19,945			10,621			—			—			—		—			10,621
Accrued tax liability		892			—			—			—			—			892			913			—			—			—		—			913
Risk management liabilities		—			—			7,285			—			—			7,285			—			—			9,357			—		—			9,357
Other current liabilities		5,343			—			28,605			—			—			33,948			4,266			—			10,229			—		—			14,495
Total current liabilities		27,638			—			175,224			—			—			202,862			15,817			—			137,275			—		—			153,092
Long-term debt		904,525			—			—			—			—			904,525			592,736			—			—			—		—			592,736
Deferred tax liability		2,048			—			87			—			—			2,135			1,848			—			35			—		—			1,883
Risk management and other noncurrent liabilities		88			—			2,062			—			—			2,150			186			—			4,339			—		—			4,525
Members’/Partners’ capital:
Series A convertible preferred units		285,168			—			—			—			—			285,168			285,172			—			—			—		—			285,172
Common units		1,164,399			—			—			—			—			1,164,399			1,161,652			—			—			—		—			1,161,652
Paid in capital		59,250			1			1,214,619			686,291			(1,900,911	)		59,250			51,743			1			1,162,543			602,055		(1,764,599	)		51,743
Accumulated deficit		(592,676	)		(2	)		479,246			(156,333	)		(322,911	)		(592,676	)		(313,454	)		(2	)		571,754			2,249		(574,001	)		(313,454	)
Accumulated other comprehensive loss		(9,913	)		—			(9,913	)		—			9,913			(9,913	)		(30,356	)		—			(30,356	)		—		30,356			(30,356	)
		906,228			(1	)		1,683,952			529,958			(2,213,909	)		906,228			1,154,757			(1	)		1,703,941			604,304		(2,308,244	)		1,154,757
Total liabilities and members’/partners’ capital	$	1,840,527		$	(1	)	$	1,861,325		$	529,958		$	(2,213,909	)	$	2,017,900		$	1,765,344		$	(1	)	$	1,845,590		$	604,304	$	(2,308,244	)	$	1,906,993

	Three Months Ended September 30, 2011																	Three Months Ended September 30, 2010
									Investment in																	Investment in
						Guarantor			Non-Guarantor														Guarantor			Non-Guarantor
	Parent			Co-Issuer		Subsidiaries			Subsidiaries			Eliminations			Total			Parent			Co-Issuer		Subsidiaries			Subsidiaries			Eliminations			Total
	(In thousands)
Revenue:
Natural gas sales	$	—		$	—	$	120,815		$	—		$	—		$	120,815		$	—		$	—	$	87,524		$	—		$	—		$	87,524
Natural gas liquids sales		—			—		191,370			—			—			191,370			—			—		118,999			—			—			118,999
Transportation, compression and processing fees		—			—		30,337			—			—			30,337			—			—		17,909			—			—			17,909
Condensate and other		—			—		11,169			—			—			11,169			—			—		13,272			—			—			13,272
Total revenue		—			—		353,691			—			—			353,691			—			—		237,704			—			—			237,704
Costs and expenses:
Cost of natural gas and natural gas liquids		—			—		281,858			—			—			281,858			—			—		174,461			—			—			174,461
Transportation		—			—		6,991			—			—			6,991			—			—		5,340			—			—			5,340
Operations and maintenance		—			—		16,091			—			—			16,091			—			—		13,004			—			—			13,004
Depreciation, amortization and impairment		10			—		21,901			—			—			21,911			10			—		15,208			—			—			15,218
General and administrative		4,460			—		5,571			—			—			10,031			4,692			—		5,177			—			—			9,869
Taxes other than income		—			—		1,502			—			—			1,502			—			—		1,315			—			—			1,315
Equity in loss (earnings) from unconsolidated affiliates		—			—		161,589			161,589			(161,589	)		161,589			—			—		(2,049	)		(2,049	)		2,049			(2,049	)
Total costs and expenses		4,470			—		495,503			161,589			(161,589	)		499,973			4,702			—		212,456			(2,049	)		2,049			217,158
Operating (loss) income		(4,470	)		—		(141,812	)		(161,589	)		161,589			(146,282	)		(4,702	)		—		25,248			2,049			(2,049	)		20,546
Other income (expense):
Interest and other income		—			—		16			—			—			16			—			—		15			—			—			15
Interest and other financing costs		(10,952	)		—		(128	)		—			—			(11,080	)		(11,725	)		—		(1,218	)		—			—			(12,943	)
(Loss) income before income taxes and equity in earnings from consolidated subsidiaries		(15,422	)		—		(141,924	)		(161,589	)		161,589			(157,346	)		(16,427	)		—		24,045			2,049			(2,049	)		7,618
Provision for income taxes		(365	)		—		(25	)		—			—			(390	)		(285	)		—		(35	)		—			—			(320	)
(Loss) income before equity in earnings from consolidated subsidiaries		(15,787	)		—		(141,949	)		(161,589	)		161,589			(157,736	)		(16,712	)		—		24,010			2,049			(2,049	)		7,298
Equity in (loss) earnings from consolidated subsidiaries		(141,948	)		—		—			—			141,948			—			24,010			—		—			—			(24,010	)		—
Net (loss) income		(157,735	)		—		(141,949	)		(161,589	)		303,537			(157,736	)		7,298			—		24,010			2,049			(26,059	)		7,298
Preferred unit distributions		(8,279	)		—		—			—			—			(8,279	)		(7,500	)		—		—			—			—			(7,500	)
Net (loss) income to common units	$	(166,014	)	$	—	$	(141,949	)	$	(161,589	)	$	303,537		$	(166,015	)	$	(202	)	$	—	$	24,010		$	2,049		$	(26,059	)	$	(202	)

	Nine Months Ended September 30, 2011																	Nine Months Ended September 30, 2010
									Investment in																	Investment in
						Guarantor			Non-Guarantor														Guarantor			Non-Guarantor
	Parent			Co-Issuer		Subsidiaries			Subsidiaries			Eliminations			Total			Parent			Co-Issuer		Subsidiaries			Subsidiaries			Eliminations			Total
															(In thousands)
Revenue:
Natural gas sales	$	—		$	—	$	348,538		$	—		$	—		$	348,538		$	—		$	—	$	292,559		$	—		$	—		$	292,559
Natural gas liquids sales		—			—		521,129			—			—			521,129			—			—		353,119			—			—			353,119
Transportation, compression and processing fees		—			—		82,706			—			—			82,706			—			—		47,539			—			—			47,539
Condensate and other		—			—		37,299			—			—			37,299			—			—		41,204			—			—			41,204
Total revenue		—			—		989,672			—			—			989,672			—			—		734,421			—			—			734,421
Costs and expenses:
Cost of natural gas and natural gas liquids		—			—		779,986			—			—			779,986			—			—		551,939			—			—			551,939
Transportation		—			—		19,202			—			—			19,202			—			—		16,619			—			—			16,619
Operations and maintenance		—			—		46,953			—			—			46,953			—			—		38,337			—			—			38,337
Depreciation, amortization and impairment		30			—		56,113			—			—			56,143			30			—		45,972			—			—			46,002
General and administrative		17,876			—		16,654			—			—			34,530			15,718			—		15,593			—			—			31,311
Taxes other than income		—			—		4,029			—			—			4,029			—			—		3,658			—			—			3,658
Equity in loss (earnings) from unconsolidated affiliates		—			—		158,581			158,581			(158,581	)		158,581			—			—		19,788			19,788			(19,788	)		19,788
Total costs and expenses		17,906			—		1,081,518			158,581			(158,581	)		1,099,424			15,748			—		691,906			19,788			(19,788	)		707,654
Operating (loss) income		(17,906	)		—		(91,846	)		(158,581	)		158,581			(109,752	)		(15,748	)		—		42,515			(19,788	)		19,788			26,767
Other income (expense):
Interest and other income		—			—		31			—			—			31			—			—		59			—			—			59
Loss on refinancing of unsecured debt		(18,233	)		—		—			—			—			(18,233	)		—			—		—			—			—			—
Interest and other financing costs		(33,579	)		—		(871	)		—			—			(34,450	)		(37,789	)		—		(3,450	)		—			—			(41,239	)
(Loss) income before income taxes and equity in earnings from consolidated subsidiaries		(69,718	)		—		(92,686	)		(158,581	)		158,581			(162,404	)		(53,537	)		—		39,124			(19,788	)		19,788			(14,413	)
Provision for income taxes		(1,105	)		—		(56	)		—			—			(1,161	)		(625	)		—		(35	)		—			—			(660	)
(Loss) income before equity in earnings from consolidated subsidiaries		(70,823	)		—		(92,742	)		(158,581	)		158,581			(163,565	)		(54,162	)		—		39,089			(19,788	)		19,788			(15,073	)
Equity in (loss) earnings from consolidated subsidiaries		(92,742	)		—		—			—			92,742			—			39,089			—		—			—			(39,089	)		—
Net (loss) income		(163,565	)		—		(92,742	)		(158,581	)		251,323			(163,565	)		(15,073	)		—		39,089			(19,788	)		(19,301	)		(15,073	)
Preferred unit distributions		(24,235	)		—		—			—			—			(24,235	)		(7,500	)		—		—			—			—			(7,500	)
Net (loss) income to common units	$	(187,800	)	$	—	$	(92,742	)	$	(158,581	)	$	251,323		$	(187,800	)	$	(22,573	)	$	—	$	39,089		$	(19,788	)	$	(19,301	)	$	(22,573	)

	Nine Months Ended September 30, 2011																	Nine Months Ended September 30, 2010
									Investment in																		Investment in
						Guarantor			Non-Guarantor															Guarantor			Non-Guarantor
	Parent			Co-Issuer		Subsidiaries			Subsidiaries			Eliminations			Total			Parent			Co-Issuer			Subsidiaries			Subsidiaries			Eliminations			Total
															(In thousands)
Cash Flows From Operating Activities:
Net cash (used in) provided by operating activities	$	(124,348	)	$	—	$	247,137		$	17,961		$	(17,961	)	$	122,789		$	(63,627	)	$	—		$	158,116		$	16,999		$	(16,999	)	$	94,489
Cash Flows From Investing Activities:
Additions to property, plant and equipment and intangibles		—			—		(180,639	)		—			—			(180,639	)		—			—			(103,524	)		—			—			(103,524	)
Acquisitions		—			—		(16,084	)		—			—			(16,084	)		—			—			—			—			—			—
Investments in unconsolidated affiliates		—			—		(105,111	)		(105,111	)		105,111			(105,111	)		—			—			(11,186	)		(11,186	)		11,186			(11,186	)
Distributions from unconsolidated affiliates		—			—		2,368			2,368			(2,368	)		2,368			—			—			2,555			2,555			(2,555	)		2,555
Investments in consolidated affiliates		(99,864	)		—		—			—			99,864			—			(61,832	)		1			—			—			61,831			—
Distributions from consolidated affiliates		48,775			—		—			—			(48,775	)		—			95,255			—			—			—			(95,255	)		—
Proceeds from sale of assets		—			—		248			—			—			248			—			—			279			—			—			279
Other		—			—		104			—			—			104			—			—			280			—			—			280
Net cash (used in) provided by investing activities		(51,089	)		—		(299,114	)		(102,743	)		153,832			(299,114	)		33,423			1			(111,596	)		(8,631	)		(24,793	)		(111,596	)
Cash Flows From Financing Activities:
Proceeds from long-term debt		725,000			—		—			—			—			725,000			80,000			—			—			—			—			80,000
Repayment of long-term debt		(412,665	)		—		—			—			—			(412,665	)		(350,000	)		—			—			—			—			(350,000	)
Deferred financing costs		(15,743	)		—		—			—			—			(15,743	)		(995	)		—			—			—			—			(995	)
Payments of premiums and expenses on redemption of unsecured debt		(14,572	)		—		—			—			—			(14,572	)		—			—			—			—			—			—
Distributions to unitholders		(114,834	)		—		—			—			—			(114,834	)		(107,612	)		—			—			—			—			(107,612	)
Proceeds from public offering of common units		—			—		—			—			—			—			164,786			—			—			—			—			164,786
Equity offering costs		(4	)		—		—			—			—			(4	)		(6,236	)		—			—			—			—			(6,236	)
Equity offering of Series A convertible preferred units		—			—		—			—			—			—			291,065			—			—			—			—			291,065
Contributions from parent		—			—		99,864			—			(99,864	)		—			—			—			61,831			—			(61,831	)		—
Distributions to parent		—			—		(48,775	)		—			48,775			—			—			—			(95,255	)		—			95,255			—
Other		2,747			—		—			(105,111	)		(105,111	)		2,747			3,188			—			—			11,186			(11,186	)		3,188
Net cash provided by (used in) financing activities		169,929			—		51,089			105,111			(156,200	)		169,929			74,196			—			(33,424	)		11,186			22,238			74,196
Net increase (decrease) in cash and cash equivalents		(5,508	)		—		(888	)		20,329			(20,329	)		(6,396	)		43,992			1			13,096			19,554			(19,554	)		57,089
Cash and cash equivalents, beginning of year		9,650			—		50,280			85,851			(85,851	)		59,930			3,861			(1	)		40,832			59,896			(59,896	)		44,692
Cash and cash equivalents, end of period	$	4,142		$	—	$	49,392		$	106,180		$	(106,180	)	$	53,534		$	47,853		$	—		$	53,928		$	79,450		$	(79,450	)	$	101,781