On April 27, 2009, the board of Hiland Partners GP Holdings, LLC, the general partner of Hiland Holdings announced its decision to delay quarterly distributions on its common units beginning with the first quarter of 2009 resulting from the quarterly distribution suspension announced by Hiland Partners, LP (Hiland Partners). Hiland Holdings sole cash generating assets are its 2% general partner interest, 2,321,471 common units and 3,060,000 subordinated units in Hiland Partners, LP, and the incentive distribution rights of Hiland Partners, LP.
As per the terms of the Hiland Partners’ partnership agreement, the Hiland Partners common units will carry an arrearage of $0.45 per unit, representing the minimum quarterly distribution to the Hiland Partners’ common units for the first quarter of 2009 that must be paid before Hiland Partners can make distributions to the Hiland Partners subordinated units. Hiland Holdings owns 3,060,000 of the Hiland Partners subordinated units which will not receive a cash distribution until the distribution arrearage to the Hiland Partners’ common units is paid.
“The continued weakness in commodity prices, specifically realized prices for natural gas and natural gas liquids, had a profound impact on Hiland’s cash flows for the first quarter of 2009. In addition, the dramatic drop in the price of natural gas has caused a substantial decline in upstream activity in our service territories,” said Joseph L. Griffin, president and chief executive officer. “This reduced upstream activity will negatively impact our current and projected throughput volumes,” added Griffin.
