Transaction Expected to be Immediately
Accretive to SXL Distributable Cash Flow
Sunoco Logistics Partners L.P. (NYSE: SXL) and Energy
Transfer Partners, L.P. (NYSE: ETP) today announced that they
have entered into a merger agreement providing for the acquisition
of ETP by SXL in a unit-for-unit transaction. The transaction was
approved by the boards of directors and conflicts committees of
both partnerships and is expected to close in the first quarter of
2017, subject to receipt of ETP unitholder approval and other
customary closing conditions.
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Under the terms of the transaction, ETP unitholders will receive
1.5 common units of SXL for each common unit of ETP they own. This
equates to a 10% premium to the volume weighted average pricing of
ETP’s common units for the last 30 trading days immediately prior
to the announcement of the transaction.
As SXL will be the acquiring entity, the existing incentive
distribution rights provisions in the SXL partnership agreement
will continue to be in effect, and Energy Transfer Equity, L.P.
(NYSE: ETE) will own the incentive distribution rights of SXL
following the closing of the transaction. As part of this
transaction, ETE has agreed to continue to provide all the
incentive distribution right subsidies that are currently in effect
with respect to both partnerships. The transaction is expected to
be immediately accretive to SXL’s distributable cash flow per
common unit and is also expected to allow the combined partnership
to be in position to achieve near-term distribution increases in
the low double digits and a more than 1.0x distribution coverage
ratio.
The transaction is expected to provide significant benefits for
SXL and ETP unitholders as the combined partnership will have
increased scale and diversification across multiple producing
basins and will have greater opportunities to more closely
integrate SXL’s natural gas liquids business with ETP’s natural gas
gathering, processing and transportation business. With this
transaction, SXL and ETP expect to build upon their experience
working together as partners in several joint ventures to pursue
commercial opportunities and to achieve cost savings while
enhancing the service capabilities for their customers. SXL and ETP
expect that the transaction will allow for commercial synergies and
costs savings in excess of $200 million annually by 2019.
The transaction is also expected to strengthen the balance sheet
of the combined organization by utilizing cash distribution savings
to reduce debt and to fund a portion of the growth capital
expenditure programs of the two partnerships. ETP and SXL have
spent approximately $15 billion in organic growth capital over the
past several years, and these expenditures, combined with the
completion of other major capital projects currently in progress,
are expected to continue to generate strong distributable cash flow
growth.
Both ETP and SXL management teams are pleased to be able to
bring two strong partnerships together in this strategic
transaction that combines the premier crude oil midstream MLP with
the premier natural gas midstream MLP. The combined partnership is
expected to be the second largest MLP as measured by enterprise
value.
At the closing of the transaction, the Chief Executive Officer,
Chief Commercial Officer, President and Chief Financial Officer of
the combined partnership will be Kelcy Warren, Mackie McCrea, Matt
Ramsey and Tom Long, respectively, and it is expected that Mike
Hennigan and other members of the SXL management team will continue
in leading management roles of the combined company with the SXL
business headquartered in Philadelphia.
SXL and ETP will hold a joint conference call to discuss the
transaction details on Monday, November 21, 2016 at 3:00 p.m.
Central Time (4:00 p.m. Eastern Time). An investor presentation
will be posted to the partnerships’ websites and filed with the SEC
on a Form 8-K.
The dial-in number for the call is 1-877-524-8416. The investor
presentation and a live webcast of the call may be accessed on the
investor relations page of SXL’s website at www.sunocologistics.com
or ETP’s website at www.energytransfer.com. The call will be
available for replay on those sites or by dialing 1-877-660-6853. A
replay of the broadcast will also be available on SXL’s and ETP’s
websites for a limited time.
Advisors
Latham & Watkins LLP acted as legal counsel to ETP. Vinson
& Elkins LLP acted as legal counsel to SXL. Barclays acted as
financial advisor and Potter Anderson & Corroon LLP acted as
legal counsel to ETP’s conflicts committee. Citi acted as financial
advisor and Richards Layton & Finger, P.A. acted as legal
counsel to SXL’s conflicts committee.
About Energy Transfer Partners
Energy Transfer Partners, L.P. (NYSE: ETP) is a master limited
partnership that owns and operates one of the largest and most
diversified portfolios of energy assets in the United States. ETP’s
subsidiaries include Panhandle Eastern Pipe Line Company, LP (the
successor of Southern Union Company) and Lone Star NGL LLC, which
owns and operates natural gas liquids storage, fractionation and
transportation assets. In total, ETP currently owns and operates
more than 62,500 miles of natural gas and natural gas liquids
pipelines. ETP also owns the general partner, 100% of the incentive
distribution rights, and approximately 67.1 million common units in
Sunoco Logistics Partners L.P. (NYSE: SXL), which operates a
geographically diverse portfolio of crude oil and refined products
pipelines, terminalling and crude oil acquisition and marketing
assets. ETP’s general partner is owned by Energy Transfer Equity,
L.P. For more information, visit the Energy Transfer Partners, L.P.
website at www.energytransfer.com.
Sunoco Logistics Partners L.P. (NYSE: SXL) is a master limited
partnership that owns and operates a logistics business consisting
of a geographically diverse portfolio of complementary pipeline,
terminalling, and acquisition and marketing assets which are used
to facilitate the purchase and sale of crude oil, refined products,
and natural gas liquids, and refined products. SXL’s general
partner is a consolidated subsidiary of Energy Transfer Partners,
L.P. (NYSE: ETP). For more information, visit the Sunoco Logistics
Partners L.P. website at www.sunocologistics.com.
Energy Transfer Equity, L.P. (NYSE: ETE) is a master limited
partnership that owns the general partner and 100% of the incentive
distribution rights (IDRs) of Energy Transfer Partners, L.P. (NYSE:
ETP) and Sunoco LP (NYSE: SUN). ETE also owns approximately 2.6
million ETP common units and approximately 81.0 million ETP Class H
Units, which track 90% of the underlying economics of the general
partner interest and IDRs of Sunoco Logistics Partners L.P. (NYSE:
SXL). On a consolidated basis, ETE’s family of companies owns and
operates approximately 71,000 miles of natural gas, natural gas
liquids, refined products, and crude oil pipelines. For more
information, visit the Energy Transfer Equity, L.P. website at
www.energytransfer.com.
Forward-Looking Statements
This release includes “forward-looking” statements.
Forward-looking statements are identified as any statement that
does not relate strictly to historical or current facts. Statements
using words such as “anticipate,” “believe,” “intend,” “project,”
“plan,” “expect,” “continue,” “estimate,” “goal,” “forecast,” “may”
or similar expressions help identify forward-looking statements.
ETP and SXL cannot give any assurance that expectations and
projections about future events will prove to be correct.
Forward-looking statements are subject to a variety of risks,
uncertainties and assumptions. These risks and uncertainties
include the risks that the proposed transaction may not be
consummated or the benefits contemplated therefrom may not be
realized. Additional risks include: the ability to obtain requisite
regulatory and unitholder approval and the satisfaction of the
other conditions to the consummation of the proposed transaction,
the ability of SXL to successfully integrate ETP’s operations and
employees and realize anticipated synergies and cost savings, the
potential impact of the announcement or consummation of the
proposed transaction on relationships, including with employees,
suppliers, customers, competitors and credit rating agencies, and
the ability to achieve revenue, DCF and EBITDA growth, and
volatility in the price of oil, natural gas, and natural gas
liquids. Actual results and outcomes may differ materially from
those expressed in such forward-looking statements. These and other
risks and uncertainties are discussed in more detail in filings
made by ETP and SXL with the Securities and Exchange Commission
(the “SEC”), which are available to the public. ETP and SXL
undertake no obligation to update publicly or to revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
The information contained in this press release is available on
ETP’s website at www.energytransfer.com and on the SXL website at
www.sunocologistics.com.
Additional Information and Where to Find It
SECURITY HOLDERS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND THE REGISTRATION STATEMENT REGARDING THE
TRANSACTION CAREFULLY WHEN IT BECOMES AVAILABLE. These documents
(when they become available), and any other documents filed by ETP
or SXL with the SEC, may be obtained free of charge at the SEC’s
website, at www.sec.gov. In addition, investors and security
holders will be able to obtain free copies of the registration
statement and the proxy statement/prospectus by phone, e-mail or
written request by contacting the investor relations department of
ETP or SXL at the following:
Energy TransferInvestor Relations:Lyndsay Hannah,
214-981-0795Brent Ratliff, 214-981-0795orGranado Communications
GroupMedia Relations:Vicki Granado, 214-599-8785Cell:
214-498-9272orSunoco LogisticsInvestor Relations:Peter Gvazdauskas,
215-977-6322orMedia Relations:Jeff Shields, 215-977-6056
Participants in the Solicitation
ETP, SXL and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies in
connection with the proposed merger. Information regarding the
directors and executive officers of ETP is contained in ETP’s Form
10-K for the year ended December 31, 2015, which was filed with the
SEC on February 29, 2016. Information regarding the directors and
executive officers of SXL is contained in SXL’s Form 10-K for the
year ended December 31, 2015, which was filed with the SEC on
February 26, 2016. Additional information regarding the interests
of participants in the solicitation of proxies in connection with
the proposed merger will be included in the proxy
statement/prospectus.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161121005638/en/
Energy TransferInvestor Relations:Lyndsay Hannah,
214-981-0795orBrent Ratliff, 214-981-0795orGranado Communications
GroupMedia Relations:Vicki Granado, 214-599-8785Cell:
214-498-9272orSunoco LogisticsInvestor Relations:Peter Gvazdauskas,
215-977-6322orMedia Relations:Jeff Shields, 215-977-6056
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