Partners’ Capital and Distributions

Shares Outstanding

The following tables present the activity for our Class A shares, Class B shares and Class C shares:



	Class A Shares	Class B Shares		Class C Shares
Outstanding at December 31, 2016	101,206,526	138,043,486		491,910,863
Conversion of AAP Management Units ⁽¹⁾	—	1,557,860		—
Exchange Right exercises ⁽¹⁾	3,231,281	(3,231,281	)	—
Redemption Right exercises ⁽¹⁾	—	(4,959,861	)	4,959,861
Sales of Class A shares	50,086,326	—		—
Sales of common units by a subsidiary	—	—		4,033,567
Issuance of common units by a subsidiary in connection with acquisition of interest in Advantage Joint Venture (Note 6)	—	—		1,252,269
Issuances of Series A preferred units by a subsidiary	—	—		3,941,096
Other	19,060	—		603,497
Outstanding at September 30, 2017	154,543,193	131,410,204		506,701,153



	Class A Shares	Class B Shares
Outstanding at December 31, 2015	86,099,037	141,485,588
Conversion of AAP Management Units ⁽¹⁾	—	13,567,916
Exchange Right exercises ⁽¹⁾	14,665,076	(14,665,076	)
Issuance of Class A shares under LTIP	7,811	—
Outstanding at September 30, 2016	100,771,924	140,388,428

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⁽¹⁾	See Note 11 to our Consolidated Financial Statements included in Part IV of our 2016 Annual Report on Form 10-K for information regarding conversions of AAP Management Units, Exchange Rights and Redemption Rights.

Distributions

On August 25, 2017, PAA announced its intention to reset its annualized distribution to $1.20 per common unit, beginning with the third-quarter distribution payable November 14, 2017. The amount of cash available to distribute to our Class A shareholders is completely dependent upon the amount of cash distributed by PAA to AAP in respect of its common units; therefore, any change in the distribution level on PAA's common units has a corresponding impact on the distribution level on our Class A shares. See “—Subsidiary Distributions” below for additional information.

The following table details the distributions paid to our Class A shareholders during or pertaining to the first nine months of 2017 (in millions, except per share data):



Distribution Payment Date	Distributions to Class A Shareholders		Distributions per Class A Share
November 14, 2017 ⁽¹⁾	$	46	$	0.30
August 14, 2017	$	84	$	0.55
May 15, 2017	$	84	$	0.55
February 14, 2017	$	57	$	0.55

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⁽¹⁾	Payable to shareholders of record at the close of business on October 31, 2017 for the period July 1, 2017 through September 30, 2017.

Sales of Class A Shares

The following table summarizes our sales of Class A shares during the nine months ended September 30, 2017, all of which occurred in the first four months of the year (net proceeds in millions):



Type of Offering	Class A Shares Issued	Net Proceeds ⁽¹⁾
Continuous Offering Program	1,786,326	$	61	⁽²⁾
Underwritten Offering	48,300,000	1,474
	50,086,326	$	1,535


⁽¹⁾	Amounts are net of costs associated with the offerings.


⁽²⁾	We pay commissions to our sales agents in connection with issuances of Class A shares under our Continuous Offering Program. We paid $1 million of such commissions during the nine months ended September 30, 2017.

Pursuant to the Omnibus Agreement entered into by the Plains Entities in connection with the Simplification Transactions, we used the net proceeds from the sale of our Class A shares, after deducting the sales agents’ commissions and offering expenses, to purchase from AAP a number of AAP units equal to the number of Class A shares sold in such offering at a price equal to the net proceeds from such offering. Also pursuant to the Omnibus Agreement, immediately following such purchase and sale, AAP used the net proceeds it received from such sale of AAP units to us to purchase from PAA an equivalent number of common units of PAA. See “—Subsidiary Sales of Units” below.

The cash purchase by PAGP of additional units issued by AAP and corresponding cash purchase by AAP of additional common units issued by PAA results in the allocation of the fair value of the proceeds between controlling and noncontrolling interests in AAP and PAA based on their respective ownership percentages. Additionally, in accordance with ASC 810, an adjustment in partners' capital based on historical carrying value is recognized by PAGP’s Class A shareholders on their increase in ownership of subsidiary entities and a corresponding adjustment is recognized in partners' capital by PAGP’s noncontrolling interests due to the dilution of their ownership interest. The allocation to noncontrolling interests results from the difference between the fair value per unit of the additional units issued and the historical carrying value per unit. Such amounts are reflected in “Sales of Class A shares” on our Condensed Consolidated Statements of Changes in Partners' Capital.

Consolidated Subsidiaries

Noncontrolling Interests in Subsidiaries

As of September 30, 2017, noncontrolling interests in our subsidiaries consisted of (i) a 64% limited partner interest in PAA, (ii) an approximate 46% limited partner interest in AAP and (iii) a 25% interest in SLC Pipeline LLC.

Subsidiary Sales of Units

Issuance of Series B Preferred Units

On October 10, 2017, PAA issued 800,000 Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units representing limited partner interests in PAA (the “Series B preferred units”) at a price to the public of $1,000 per unit. PAA used the net proceeds of $788 million, after deducting the underwriters’ discounts and offering expenses, from the issuance of the Series B preferred units to repay amounts outstanding under its credit facilities and commercial paper program and for general partnership purposes.

The Series B preferred units represent perpetual equity interests in PAA, and they have no stated maturity or mandatory redemption date and are not redeemable at the option of the holders under any circumstances. Holders of the Series B preferred units generally have no voting rights, except for limited voting rights with respect to (i) potential amendments to PAA's partnership agreement that would have a material adverse effect on the existing preferences, rights, powers or duties of the Series B preferred units, (ii) the creation or issuance of any parity securities if the cumulative distributions payable on then outstanding Series B preferred units are in arrears, (iii) the creation or issuance of any senior securities and (iv) the payment of distributions to PAA's common unitholders out of capital surplus. The Series B preferred units rank, as to the payment of distributions and amounts payable on a liquidation event, on par with PAA's outstanding Series A preferred units.

The Series B preferred units have a liquidation preference of $1,000 per unit. Holders of PAA's Series B preferred units are entitled to receive, when, as and if declared by its general partner out of legally available funds for such purpose, cumulative semiannual or quarterly cash distributions, as applicable. Distributions on the Series B preferred units accrue and are cumulative from October 10, 2017, the date of original issue, and are payable semiannually in arrears on the 15th day of May and November through and including November 15, 2022, and after November 15, 2022, quarterly in arrears on the 15th day of February, May, August and November of each year. The initial distribution rate for the Series B preferred units from and including October 10, 2017 to, but not including, November 15, 2022 is 6.125% per year of the liquidation preference per unit (equal to $61.25 per unit per year). On and after November 15, 2022, distributions on the Series B preferred units will accumulate for each distribution period at a percentage of the liquidation preference equal to the then-current three-month LIBOR plus a spread of 4.11%. PAA will pay a pro-rated initial distribution on the Series B preferred units on November 15, 2017 to holders of record at the close of business on November 1, 2017 in an amount equal to approximately $5.9549 per unit (a total distribution of approximately $5 million).

Upon the occurrence of certain rating agency events, PAA may redeem the Series B preferred units, in whole but not in part, at a price of $1,020 (102% of the liquidation preference) per Series B preferred unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, whether or not declared. In addition, at any time on or after November 15, 2022, PAA may redeem the Series B preferred units, at its option, in whole or in part, at a redemption price of $1,000 per Series B preferred unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, whether or not declared.

Issuance of Common Units

Continuous Offering Program. During the nine months ended September 30, 2017, PAA issued an aggregate of approximately 4.0 million common units under its continuous offering program, generating proceeds of $129 million, net of $1 million of commissions paid to its sales agents.

The proceeds from the issuance of PAA common units were allocated among all of PAA’s common unitholders, including AAP, based on their percentage ownership of common units. Additionally, PAA’s capital attributable to AAP was adjusted based on historical carrying value, in accordance with ASC 810, to reflect the dilution of its interest in PAA as a result of the issuance of additional common units to the public unitholders. These adjustments were recognized by PAGP in proportion to PAGP’s ownership interest in AAP, which resulted in a net increase in partners’ capital attributable to PAGP resulting from the difference between the fair value per unit of the additional units issued and the historical carrying value per unit. Such amounts are reflected in “Sales of common units by a subsidiary” on our Condensed Consolidated Statements of Changes in Partners' Capital.

Omnibus Agreement. During the nine months ended September 30, 2017, pursuant to the Omnibus Agreement discussed above, PAA sold (i) approximately 1.8 million common units to AAP in connection with our issuance of Class A shares under our Continuous Offering Program and (ii) 48.3 million common units to AAP in connection with our March 2017 underwritten offering.

Deferred Tax Asset Impact from the Sale of Subsidiary Units

In connection with the sales of AAP units and PAA common units referenced above, a deferred asset was created. The tax basis of PAGP’s purchase of the additional units was accounted for at fair market value for U.S. federal income tax purposes, but the GAAP basis was impacted by the adjustments that are based on historical carrying value. The resulting basis difference resulted in a deferred tax asset that was recorded as a component of partner’s capital as it results from transactions with shareholders.

Subsidiary Distributions

PAA Common Unit Distributions. During the third quarter of 2017, PAA’s management engaged in discussions with our Board of Directors regarding a reassessment of PAA’s approach to distributions, with a focus on resetting PAA’s common unit distribution to a level supported by the distributable cash flow from its fee-based Transportation and Facilities segments. On August 25, 2017, PAA announced its intention to reset its annualized distribution to $1.20 per common unit, beginning with the third-quarter distribution payable November 14, 2017. On October 10, 2017, the PAGP GP Board declared a distribution of $1.20 (annualized) per common unit payable on November 14, 2017 to common unitholders of record as of October 31, 2017.

The following table details the distributions to PAA’s common unitholders paid in cash during or pertaining to the first nine months of 2017 (in millions, except per unit data):



	Distributions						Cash Distribution per Common Unit
	Common Unitholders				Total Cash Distribution
Distribution Payment Date	Public		AAP		Total Cash Distribution
November 14, 2017 ⁽¹⁾	$	132	$	86	$	218	$	0.30
August 14, 2017	$	240	$	159	$	399	$	0.55
May 15, 2017	$	240	$	159	$	399	$	0.55
February 14, 2017	$	237	$	134	$	371	$	0.55


⁽¹⁾	Payable to unitholders of record at the close of business on October 31, 2017 for the period July 1, 2017 through September 30, 2017.

PAA Series A Preferred Unit Distributions. With respect to any quarter ending on or prior to December 31, 2017 (the “Initial Distribution Period”), PAA may elect to pay distributions on the PAA Series A preferred units in additional preferred units, in cash or a combination of both. With respect to any quarter ending after the Initial Distribution Period, PAA must pay distributions on the PAA Series A preferred units in cash. On February 14, 2017, PAA issued 1,287,773 Series A preferred units in lieu of a cash distribution of $34 million on PAA's Series A preferred units outstanding as of the record date for such distribution. On May 15, 2017, PAA issued 1,313,527 Series A preferred units in lieu of a cash distribution of $34 million on PAA's Series A preferred units outstanding as of the record date for such distribution. On August 14, 2017, PAA issued 1,339,796 Series A preferred units in lieu of a cash distribution of $35 million on PAA's Series A preferred units outstanding as of the record date for such distribution.

On November 14, 2017, PAA will issue 1,366,593 Series A preferred units in lieu of a cash distribution of $36 million on PAA's Series A preferred units outstanding as of October 31, 2017, the record date for such distribution.

PAA Series B Preferred Unit Distributions. For its Series B preferred units issued on October 10, 2017, PAA will pay a pro-rated initial distribution on November 15, 2017. See “—Subsidiary Sales of Units” above for additional information.

AAP Distributions. The following table details the distributions paid to AAP’s partners during or pertaining to the first nine months of 2017 from distributions received from PAA (in millions):



	Distribution to AAP's Partners
Distribution Payment Date	Noncontrolling Interests		PAGP		Total Cash Distributions
November 14, 2017⁽¹⁾	$	40	$	46	$	86
August 14, 2017	$	75	$	84	$	159
May 15, 2017	$	75	$	84	$	159
February 14, 2017	$	77	$	57	$	134

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⁽¹⁾	Payable to unitholders of record at the close of business on October 31, 2017 for the period July 1, 2017 through September 30, 2017.

Other Distributions. During the nine months ended September 30, 2017, distributions of $2 million were paid to noncontrolling interests in SLC Pipeline LLC.