8-KMaterial AgreementsSecurities & ListingOther Events+1

ENTERPRISE PRODUCTS PARTNERS L.P. 8-K Report, Material Agreement (Sep 4, 2009)

Filed September 4, 2009For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) filed an 8-K on September 4, 2009, to disclose a material definitive agreement for the private placement of $150.0 million of newly-issued common units to EPCO Holdings, Inc. EPCO Holdings is an affiliate controlled by Dan L. Duncan, Chairman of EPD's general partner. This transaction was approved by EPD's Audit, Conflicts and Governance Committee and the Board of Directors and is exempt from registration under the Securities Act of 1933, pursuant to Section 4(2). The common units were issued at a price of $25.25 per unit, representing a 5% discount to the five-day volume weighted average price (VWAP) of $26.58. EPD intends to use the net proceeds from this private placement to reduce borrowings under its revolving credit facility and for general partnership purposes. This private placement strengthens the balance sheet by reducing debt and indicates continued financial commitment from a major shareholder.

Key Highlights

  • 1EPD entered into a private placement agreement to sell $150.0 million of common units to EPCO Holdings, Inc.
  • 2EPCO Holdings, Inc. is an affiliate controlled by Dan L. Duncan, Chairman of EPD's general partner.
  • 3The transaction was approved by EPD's Board of Directors and relevant committees.
  • 4The sale is exempt from registration requirements under Section 4(2) of the Securities Act of 1933.
  • 5Common units were issued at $25.25 per unit, a 5% discount to the 5-day VWAP of $26.58.
  • 6Proceeds will be used to reduce debt under a revolving credit facility and for general partnership purposes.
  • 7Mr. Duncan and his affiliates beneficially owned approximately 31.9% of outstanding common units prior to this transaction.

Frequently Asked Questions

EPD is issuing new common units in a private placement to raise $150.0 million. The proceeds are intended to reduce borrowings under its revolving credit facility and for general partnership purposes, which can strengthen its financial position and liquidity.

EPCO Holdings, Inc. is a privately-held affiliate of EPD controlled by Dan L. Duncan, who is also the Chairman and a director of EPD's general partner. This transaction represents a significant capital injection from a closely associated entity.

The common units were issued at a price of $25.25 per unit. This price was set at a 5% discount to the five-day volume weighted average price (VWAP) of EPD's common units as reported by the NYSE on September 4, 2009, which was $26.58.

This transaction dilutes existing shareholders' ownership percentage due to the issuance of new units. However, it also strengthens EPD's balance sheet by reducing debt, which can be viewed positively by investors. The price was determined through a formula based on market trading, and the transaction was approved by the Board, indicating it was deemed fair to the partnership.