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Plains All American Pipeline, Plains GP Holdings cut quarterly distributions

Plains All American Pipeline LP and Plains GP Holdings LP declared quarterly distributions which represent a 45% decrease compared to the distributions paid in the previous quarter.

Plains All American declared a quarterly cash distribution of 30 cents per common unit, or $1.20 per unit on an annualized basis. Meanwhile, Plains GP Holdings declared a cash distribution of 30 cents per class A share or $1.20 per class A share on an annualized basis.

Plains All American had earlier announced its plans to cut its cash distributions after reporting unfavorable second-quarter financial results. The cash retained will be used to reduce indebtedness, according to an Oct. 10 news release.

With respect to Plains All American's series A preferred units, the partnership announced a payment-in-kind of the quarterly distribution, which will result in the issuance of an additional 1,366,593 of such units. The payment-in-kind equates to a distribution of 52.5 cents per unit, or $2.10 annualized, payable on Nov. 14 to holders of record at the close of business on Oct. 31.

For its series B preferred units issued on Oct. 10, Plains All American announced an initial partial-period distribution of $5.9549 per unit, payable on Nov. 15 to holders of record at the close of business on Nov. 1.

Meanwhile, the Plains GP Holdings distribution is expected to be a nontaxable return of capital to the extent of a class A shareholder’s tax basis in each Plains GP Holdings class A share and a reduction in the tax basis of that class A share, the release said. Should any cash distribution exceed a class A shareholder’s tax basis, it should be taxable as capital gains.