Plains All American Pipeline LP opened a private placement for the purchase of about $1.5 billion of equity capital, the company said Jan. 12.

Primary purchasers include affiliates of EnCap Investments LP, EnCap Flatrock Midstream, The Energy Minerals Group, Kayne Anderson Capital Advisors LP and First Reserve Advisors LLC.

Purchasers will acquire about 56 million units of a newly authorized series of 8% Series A perpetual convertible preferred units priced at $26.25 each. They can be converted into common units on a one-for-one basis after two years, Plains said.

Net proceeds will be about $1.5 billion, and will support capex, debt repayment and general partnership purposes. The transaction is scheduled to close at the end of January.

Greg Armstrong, chairman and CEO, said that the transaction will enable the company to strengthen its balance sheet and liquidity, reinforce its commitment to maintaining mid-to-high BBB and Baa credit ratings, fund the capital program, meet equity financing needs for 2016 and 2017, resolve investor concerns about access to equity markets and insulate the company from capital market disruptions.

Reuters said that same day that the financing will help ease investors' fears that Plains All American would cut shareholder payouts due to low oil prices. Reuters also said the investors paid a 20% premium over the company's 20-day volume-weighted average share price, and that this demonstrates confidence in the company because the amount was higher than in a traditional equity offering.

Plains All American Pipeline LP is based in Houston.