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Energy Transfer LP 8-K Report, Material Agreement (Feb 28, 2013)

Filed February 28, 2013For Securities:ETET-PI

Summary

This 8-K filing from Energy Transfer Equity, L.P. (ETE) on February 27, 2013, announces a significant transaction involving its affiliate, Energy Transfer Partners, L.P. (ETP), and Regency Energy Partners LP (Regency). Specifically, Southern Union Company, an ETP affiliate, has entered into a definitive agreement to contribute all its membership interests in Southern Union Gathering Company, LLC and its subsidiaries to Regency. This strategic move is valued at approximately $1.5 billion and involves a combination of Regency common units, Class F units, and cash. The transaction aims to consolidate ETE's midstream assets under Regency, enhancing operational synergies and simplifying the corporate structure. A notable aspect is ETE's agreement to forego incentive distribution rights (IDRs) on the newly issued Regency units for the first eight quarters, aligning ETE's interests with Regency's unitholders during the initial integration period. The transaction is expected to close in the second quarter of 2013, subject to customary closing conditions, including regulatory approval.

Key Highlights

  • 1Energy Transfer Partners (ETP) affiliate Southern Union Company to contribute gathering assets to Regency Energy Partners (Regency) for $1.5 billion.
  • 2Consideration includes Regency common units, Class F units, and cash, to be received by Southern Union.
  • 3Energy Transfer Equity (ETE) will waive its incentive distribution rights (IDRs) on newly issued Regency units for the first eight quarters post-closing.
  • 4Class F units will automatically convert into common units after eight quarters.
  • 5The transaction is expected to close in the second quarter of 2013.
  • 6The ETE Conflicts Committee reviewed and approved the transaction due to potential conflicts of interest.
  • 7Ancillary agreements include a registration rights agreement, review of shared services, and potential new debt financing for Regency.

Frequently Asked Questions

The main purpose is for Southern Union Company, an affiliate of Energy Transfer Partners (ETP), to contribute its gathering assets to Regency Energy Partners (Regency). This transaction is part of a broader strategy to consolidate midstream assets within the Energy Transfer family and enhance operational efficiencies.

The contribution of assets is valued at approximately $1.5 billion. This value is composed of Regency common units, Regency Class F units, and cash.

ETE, which owns the general partner and incentive distribution rights (IDRs) of Regency, has agreed to forego all distributions from its Regency IDRs related to the units issued in this transaction for the first eight consecutive quarters following the closing. This is intended to align ETE's interests with Regency's unitholders during the initial integration period.

The transaction is anticipated to close in the second quarter of 2013, subject to the satisfaction of customary closing conditions, including regulatory approvals.