Plains All American Pipeline, L.P. (PAA) announced that it has commenced the process of an underwritten public offering of 5.0 million of its common units representing limited partner interests. The partnership will allow the underwriters of the issue a window of 30 days to purchase up to 750,000 additional common units to cover over-allotments, if necessary. The partnership has fixed the unit price at $80.03.

The partnership intends to utilize the net proceeds of the issue, including proceeds from any exercise of the over-allotment option, to fund a portion of its $1.67 billion acquisition cost of BP Canada Energy Company and the balance to repay debts and for general partnership purposes. However, if the partnership fails to acquire BP Plc.‘s (BP) unit, it will use the proceeds for general partnership reasons and to make strategic future acquisitions.

The partnership from time to time issues units to fund its capital requirements. In the fourth quarter of 2011, the partnership had issued 6 million common units at a price of $65.03 per unit. The net proceeds of the issue were $386 million and were used by the partnership to reduce outstanding borrowings under its credit facilities, make future acquisition and for general partnership purposes.

The partnership ended the fourth quarter of 2011 with 154 million outstanding units compared with 139 million at the end of the fourth quarter of 2010. The company is also servicing its increasing number of unitholders through a regular increase in the quarterly distribution rate. The present quarterly distribution rate of $1.025 per unit represents a 3% growth from the previous quarterly distribution.

Plains All American Pipeline currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. The partnership competes with Enterprise Products Partners LP (EPD) and Sunoco Logistics Partners L.P. (SXL)

Houston, Texas based Plains All American Pipeline owns assets strategically located in well-established oil producing regions, catering to major U.S. refinery and distribution markets. Other than organic growth opportunities, the partnership also relies on acquisitions to spur growth.

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