Streamlines organizational structure and
eliminates IDR burden
Energy Transfer Equity, L.P. (NYSE: ETE)
and Energy Transfer Partners, L.P. (NYSE:
ETP) today announced that they have entered into a
definitive agreement providing for the merger of ETP with a
wholly-owned subsidiary of ETE in a unit-for-unit exchange. In
connection with the transaction, ETE’s incentive distribution
rights (IDRs) in ETP will be cancelled. The transaction, which was
approved by the boards of directors and conflicts committees of
both partnerships, is expected to close in the fourth quarter of
2018, subject to the approval by a majority of the unaffiliated
unitholders of ETP and other customary closing conditions. ETE
currently owns the general partner of ETP.
Under the terms of the transaction, ETP unitholders (other than
ETE and its subsidiaries) will receive 1.28 common units of ETE for
each common unit of ETP they own.
The transaction is expected to provide significant benefits for
the partnerships, including:
- providing a premium to the current ETP
common unit trading price while being immediately accretive to
ETE’s distributable cash flow per unit;
- improving the combined partnership’s
equity cost of capital through the elimination of ETE’s IDRs in
ETP, which in turn is expected to enhance the combined
partnership’s cash accretion from investments in organic growth
projects and strategic M&A following the closing of the
transaction;
- further aligning the economic interests
within the Energy Transfer family;
- simplifying the overall structure,
which reduces complexity and improves transparency for investors;
and
- increasing cash distribution coverage
and retained cash flow, which will allow the combined partnership
to reduce its leverage ratio as well as reduce the need for equity
issuances to fund organic growth.
The transaction is expected to strengthen the balance sheet of
the combined organization by utilizing cash distribution savings to
reduce debt and to fund a portion of ETP’s robust growth capital
expenditure program. The completion of major capital projects
currently in progress is expected to continue to generate strong
distributable cash flow growth for the combined partnership
following the transaction. The partnerships expect to maintain
investment grade credit ratings for the combined partnership.
In connection with the simplification transaction, ETE’s general
partner has agreed to waive its existing contractual preemptive
right with respect to the issuance of ETE common units in the
merger that, if otherwise exercised, would entitle ETE’s general
partner to purchase additional ETE common units to maintain its and
its affiliates’ percentage ownership interest in ETE. In partial
consideration for that waiver, ETE’s general partner will be issued
a newly created series of Class A units that will result in ETE’s
general partner and its affiliates maintaining the same relative
voting interest in ETE that the general partner and its affiliates
had prior to the merger.
ETE and ETP will hold a joint conference call to discuss the
transaction details on Thursday, August 2,
2018 at 9:00 a.m. Central Time (10:00 a.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 877-709-8150 or 201-689-8354.
To participate by telephone, please call approximately 15 minutes
before the 9:00 a.m. Central Time (10:00 a.m. Eastern Time) start
time and ask for the Energy Transfer call. The investor
presentation and a live webcast of the call may be accessed on the
investor relations page of ETE’s and ETP’s website
at www.energytransfer.com. The call will be available for
replay for a limited time by dialing 877-660-6853 or 201-612-7415,
Conference ID 13682328. A replay of the broadcast will also be
available on ETE’s and ETP’s website for a limited time.
A more detailed description of the merger agreement and the
terms of the Class A units will be set forth in a Current Report on
Form 8-K that ETE expects to file with the Securities and Exchange
Commission on August 2, 2018.
Advisors
Latham & Watkins LLP acted as legal counsel to
ETE. Vinson & Elkins LLP acted as legal counsel to
ETP. Citi acted as financial advisor and Potter Anderson
& Corroon LLP acted as legal counsel to ETE’s conflicts
committee. Barclays acted as financial advisor
and Richards Layton & Finger, P.A. acted as legal
counsel to ETP’s conflicts committee.
About Energy Transfer
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 Lake Charles LNG
Company and the general partner of USA Compression Partners, LP
(NYSE: USAC). On a consolidated basis, ETE’s family of companies
owns and operates a diverse portfolio of natural gas, natural gas
liquids, crude oil and refined products assets, as well as retail
and wholesale motor fuel operations and LNG terminalling.
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.
Strategically positioned in all of the major U.S. production
basins, ETP’s operations include complementary natural gas
midstream, intrastate and interstate transportation and storage
assets; crude oil, natural gas liquids (NGL) and refined product
transportation and terminalling assets; NGL fractionation; and
various acquisition and marketing assets. ETP’s general partner is
owned by Energy Transfer Equity, L.P. (NYSE: ETE).
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.
ETE and ETP 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 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 ETE and ETP with the Securities and Exchange
Commission (the “SEC”), which are available to the public. ETE
and ETP 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
ETE’s and ETP’s website at www.energytransfer.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 ETE
or ETP 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 ETE or ETP at the numbers and addresses set forth
below.
Participants in the Solicitation
ETE, ETP 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 ETE is contained in ETE’s Form
10-K for the year ended December 31, 2017, which was filed
with the SEC on February 23, 2018. Information
regarding the directors and executive officers of ETP is contained
in ETP’s Form 10-K for the year ended December 31, 2017, which
was filed with the SEC on February 23, 2018.
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.
No Offer or Solicitation
This communication is for informational purposes only and does
not constitute an offer to sell or the solicitation of an offer to
buy any securities or a solicitation of any vote or approval, in
any jurisdiction, pursuant to the proposed merger or otherwise, nor
shall there be any sale, issuance, exchange or transfer of the
securities referred to in this document in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180801006096/en/
Energy TransferInvestor Relations:Lyndsay Hannah,
214-981-0795orBrent Ratliff, 214-981-0795orVicki Granado,
214-840-5820
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