Subject: NBP Underwriting Group
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked], [email-masked]
Date: Thu, 12 Apr 2001 09:39:50 -0700 (PDT)

Attached is a short memo on our selection rationale for the underwriting group for a planned (mid-May) equity offering of about $130 - $150 million for Northern Border Partners.  Some of these firms may be contacting you, so this should be helpful in fielding those calls.  With this group we are attempting to balance our placement into firms that have substantial NBP holdings (UBS Warburg, AGE) and diversify and expand holdings in other major systems (SSB, Banc of America, First Union).  Please note that for the firms not selected, i.e. Lehman, Goldman and Merrill, part of our rationale was to hold these systems for a potential offering later in 2001 that could be accomplished on a sole-managed basis for up to about $50 million.

Kelly:  As Ben requested, the underwriting fees are expected to be about 4.25% and the breakdown by firm will be provided when we have determined the allocations.

Let me know ASAP if you have any questions or concerns as we will begin discussions with these firms tomorrow.

 -----Original Message-----
From: 	Jesse, John  
Sent:	Thursday, April 12, 2001 8:03 AM
To:	Peters, Jerry
Subject:	NBP Underwriting Group
Importance:	High

The following provides the rationale supporting the recommended underwriter group for Northern Border Partner's upcoming equity offering.  Please note that underlying the entire selection process is the fact that MLP units are a specialized product sold to a more limited group of investors vis-?-vis common stock.  Thus, sheer underwriting bulk or equity league table position of a given firm does not necessarily indicate the expected performance of such firm in an NBP offering. 

Lead Manager - Salomon Smith Barney
SSB controls an impressive retail distribution system that has a strong appetite of MLP offerings.  The visibility of NBP within their system has increased recently as their MLP analyst has raised his rating on NBP to "Outperform".  SSB has served as a co-manager in past NBP offerings and has performed well.  Furthermore, due to their comparatively small allocations in these deals as a co-manager, we are confident that their system has significant untapped demand for NBP units.

Joint Lead Manager - UBS Warburg (f/k/a PaineWebber)
UBS has served a lead manager for the last two NBP offerings that were conducted via the rapid placement (limited marketing) process, so they are very familiar with NBP and provide very good analyst coverage.  While we are still confident that UBS will perform well and place a large number of units, their allocations as lead manager in our past deals probably soaked up a great deal of demand for NBP units within their system.  Therefore, rather than placing UBS in a situation where they would have to stretch to put away a lead manager allocation, it was deemed prudent to slot them in the joint lead role.

Co-Managers
Dain Rauscher and A.G. Edwards
Both firms have a strong mid-market presence and have demonstrated their ability to place a significant number of NBP units in past offerings.  These firms have not participated in an NBP deal since 1997, so this offering should generate strong demand.  Also, Dain Rauscher was recently acquired by Royal Bank of Canada, which provides commercial bank lending to NBP and NBPL, so NBP will be able to leverage DR's participation in future debt transactions.

Bank of America and First Union
Bank of America has been a significant provider of commercial banking services to NBP and NBPL over many years, while First Union recently became an NBP lender in the March 2001 transaction.  Both have retail distribution systems available which currently hold a limited number of NBP units.  Both have participated in past MLP offerings, with Bank of America serving as a joint lead for highly successful Williams MLP IPO.

Other institutions considered but not selected
Goldman Sachs & Lehman Brothers - Both firms support the MLP product reasonably well and have demonstrated adequate coverage of NBP.  Their systems are geared towards institutional sales and high net-worth clients, so their breadth of distribution for MLP units is more limited as compared to SSB or UBS.

Merrill Lynch - Historically, this firm has not supported the MLP product despite its natural appeal to Merrill's average customer.  Admittedly, their new analyst has taken a more positive approach, but Merrill has not participated in any meaningful way in several of the recent MLP offerings.

MSDW - NBP receives no coverage on the investment banking side and their analyst has a "Hold" rating on the units.