CenterPoint Energy 2015 Annual Report Download - page 33

• Enable’sjointventurepartnersmaynotpaytheirshareofthejointventure’sobligations,leavingEnableliablefortheirsharesofjointventureliabilities;
• Enablemaybeunabletocontroltheamountofcashitwillreceivefromthejointventure;
• Enablemayincurliabilitiesasaresultofanactiontakenbyitsjointventurepartners;
•Enablemayberequiredtodevotesignificantmanagementtimetotherequirementsofandmattersrelatingtothejointventures;
• Enable’sinsurancepoliciesmaynotfullycoverlossordamageincurredbybothEnableanditsjointventurepartnersincertaincircumstances;
• Enable’sjointventurepartnersmaybeinapositiontotakeactionscontrarytoitsinstructionsorrequestsorcontrarytoitspoliciesorobjectives;and
• disputesbetweenEnableanditsjointventurepartnersmayresultindelays,litigationoroperationalimpasses.
TherisksdescribedaboveorthefailuretocontinueEnable’sjointventuresortoresolvedisagreementswithitsjointventurepartnerscouldadverselyaffectits
abilitytotransactthebusinessthatisthesubjectofsuchjointventure,whichwouldinturnnegativelyaffectEnable’sfinancialcondition,resultsofoperationsand
distributablecashflows.TheagreementsunderwhichEnableformedcertainjointventuresmaysubjectittovariousrisks,limittheactionsitmaytakewithrespect
totheassetssubjecttothejointventureandrequireEnabletograntrightstoitsjointventurepartnersthatcouldlimititsabilitytobenefitfullyfromfuturepositive
developments.SomejointventuresrequireEnabletomakesignificantcapitalexpenditures.IfEnabledoesnottimelymeetitsfinancialcommitmentsorotherwise
doesnotcomplywithitsjointventureagreements,itsrightstoparticipate,exerciseoperatorrightsorotherwiseinfluenceorbenefitfromthejointventuremaybe
adverselyaffected.Certain ofEnable’sjointventurepartnersmayhavesubstantiallygreaterfinancialresourcesthanEnablehasandEnablemaynotbeableto
securethefundingnecessarytoparticipateinoperationsitsjointventurepartnerspropose,therebyreducingitsabilitytobenefitfromthejointventure.
Enable’s ability to grow is dependent on its ability to access external financing sources.
Enableexpectsthat it will distribute allofits “available cash” to itsunitholders.Asa result, Enable isexpectedtorely primarily upon external financing
sources,includingcommercialbankborrowingsandtheissuanceofdebtandequitysecurities,tofundacquisitionsandexpansioncapitalexpenditures.Asaresult,
to the extent Enable is unable to finance growth externally, Enable’s cash distribution policy will significantly impair its ability to grow. In addition, because
Enableisexpectedtodistributeallofitsavailablecash,itsgrowthmaynotbeasfastasbusinessesthatreinvesttheiravailablecashtoexpandongoingoperations.
To the extent Enable issues additional units in connection with any acquisitions orexpansion capital expenditures, the payment of distributions on those
additionalunitsmayincreasetheriskthatEnablewillbeunabletomaintainorincreaseitsperunitdistributionlevel,whichinturnmayimpacttheavailablecash
thatithas to distribute oneachunit.There are nolimitationsinEnable’spartnership agreement on its ability toissueadditional units, including units ranking
seniortothecommonunits.TheincurrenceofadditionalcommercialborrowingsorotherdebtbyEnabletofinanceitsgrowthstrategywouldresultinincreased
interestexpense,whichinturnmaynegativelyimpacttheavailablecashthatEnablehastodistributetoitsunitholders.
Enabledependsonaccesstothecapitalmarketstofunditsexpansioncapitalexpenditures.Historically,unitpricesofmidstreammasterlimitedpartnerships
haveexperiencedperiodsofvolatility.Inaddition,becauseEnable’scommonunitsareyield-basedsecurities,risingmarketinterestratescouldimpacttherelative
attractivenessofitscommonunitstoinvestors.Asaresultofcapitalmarketvolatility,Enablemaybeunabletoissueequityordebtonsatisfactoryterms,oratall,
whichmaylimititsabilitytoexpanditsoperationsormakefutureacquisitions.
If Enable does not make acquisitions or is unable to make acquisitions on economically acceptable terms, its future growth will be adversely affected.
Enable’sgrowthstrategyincludes,inpart,theabilitytomakeacquisitionsthatresultinanincreaseinitscashgeneratedfromoperations.IfEnableisunableto
maketheseaccretiveacquisitionseitherbecause:(i)itisunabletoidentifyattractiveacquisitiontargetsoritisunabletonegotiatepurchasecontractsonacceptable
terms,(ii)itisunabletoobtainacquisitionfinancingoneconomicallyacceptableterms,or(iii)itisoutbidbycompetitors,thenitsfuturegrowthandabilityto
increasedistributionswillbeadverselyaffected.
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