Summary
Energy Transfer Equity, L.P. (ET) announced a significant amendment and restatement of its senior secured revolving credit facility, increasing its borrowing capacity. The existing $500 million five-year senior secured revolving credit facility was amended to include a new $150 million senior secured term loan facility, bringing the total senior secured debt capacity to $650 million. This expanded credit facility is secured by substantially all of the Partnership's tangible and intangible assets, including significant stakes in its subsidiary Energy Transfer Partners, L.P. (ETP). The proceeds from the new term loan facility were primarily used to fund the acquisition of approximately $238 million of ET's own common units from a unitholder. This move may indicate a strategy to enhance unitholder value or manage its capital structure. Investors should note the inclusion of robust financial covenants, such as leverage ratios and interest coverage ratios, which are standard for such credit agreements but underscore the company's commitment to financial discipline.
Key Highlights
- 1Amendment and restatement of existing $500 million senior secured revolving credit agreement.
- 2Addition of a new $150 million senior secured term loan facility, increasing total senior secured debt capacity to $650 million.
- 3Credit facility matures in five years, with the revolving portion maturing February 8, 2011, and the term loan maturing February 8, 2012.
- 4Borrowings are secured by all tangible and intangible assets of the Partnership and its subsidiaries, including significant holdings in Energy Transfer Partners, L.P. (ETP).
- 5Proceeds from the term loan facility were used to purchase approximately $238 million of ET's own common units.
- 6Credit Agreement includes standard financial covenants such as maximum leverage ratios, minimum interest coverage ratio, and minimum loan to value ratio.
- 7Key lenders include Wachovia Bank, National Association (administrative agent), Bank of America, N.A., Citicorp North America, Inc., BNP Paribas, and The Royal Bank of Scotland PLC.