Kaneb Services Inc., Dallas, Tex., will distribute its pipeline, terminaling, and product marketing business to its shareholders as a limited liability company. Shareholders will retain their stake in Kaneb Services' technology and technical services businesses.
The new company will own the general partner interest and 5.1 million limited partner units of Kaneb Pipe Line Partners LP that Kaneb Services now owns, plus Kaneb Services' wholly owned petroleum product marketing subsidiary.
President and CEO John R. Barnes said, "We have elected to create this entity in the form of an LLC, which will be treated as a partnership for federal income tax purposes."
A Kaneb statement said the planned distribution of pro-rata shares in the new company will be taxed at the capital gains rate, and the rate will apply only to part of the value distributed to shareholders.
Kaneb intends to complete the action by midyear 2001. It also intends to apply for a listing on the New York Stock Exchange for the new company.
