8-KMaterial AgreementsFinancial EventsExhibits & Filings

Energy Transfer LP 8-K Report, Material Agreement (Apr 2, 2013)

Filed April 2, 2013For Securities:ETET-PI

Summary

This 8-K filing from Energy Transfer Equity, L.P. (ETE) on April 2, 2013, details the completion of a significant transaction: the redemption of all 3,000,000 outstanding Series A Convertible Preferred Units held by Regency GP Acquirer L.P. for a total cash payment of $305,866,667. This redemption effectively settled ETE's obligations related to these preferred units and also involved a prior payment of $40,000,000 to GE Regency for relinquishing premium rights on future redemption or conversion. To finance a portion of this redemption and associated costs, ETE entered into a $275,000,000 senior secured bridge term loan credit agreement with Credit Suisse AG. The bridge loan is secured by ETE's assets, matures on June 28, 2013, and carries interest rates based on LIBOR or base rate plus applicable margins. Covenants and financial ratios, including a maximum debt-to-EBITDA of 5.5:1.0 (potentially increasing to 6.0:1.0) and a minimum EBITDA-to-fixed-charges ratio of 1.5:1.0, are in place. Investors should note the short-term nature of the bridge financing and the covenant structure, which are typical for such transactions.

Key Highlights

  • 1ETE completed the redemption of all 3,000,000 Series A Convertible Preferred Units from GE Regency for $305.87 million in cash.
  • 2A separate $40 million payment was made to GE Regency for the relinquishment of premium rights on these preferred units.
  • 3ETE secured a $275 million senior secured bridge term loan to finance a portion of the redemption costs.
  • 4The bridge loan facility has a maturity date of June 28, 2013, indicating short-term financing.
  • 5The bridge loan is secured by substantially all assets of ETE and certain subsidiaries.
  • 6Key financial covenants include a maximum Debt to EBITDA ratio of 5.5x (subject to increase) and a minimum EBITDA to Fixed Charges ratio of 1.5x.
  • 7The transaction was finalized on April 1, 2013.

Frequently Asked Questions

The primary purpose of this filing was to report the completion of Energy Transfer Equity, L.P.'s (ETE) redemption of all its outstanding Series A Convertible Preferred Units from Regency GP Acquirer L.P. (GE Regency) and to disclose the entry into a new bridge loan credit agreement used to finance a portion of this redemption.

ETE paid $305,866,667 in cash to GE Regency for the redemption of the preferred units. Additionally, ETE entered into a $275,000,000 bridge loan agreement to help finance these redemption costs and related expenses.

The bridge loan matures on June 28, 2013, making it a short-term financing instrument. It is a senior secured facility, meaning it is collateralized by ETE's assets. Interest rates are based on LIBOR or a base rate plus applicable margins, and there are no amortization payments required until maturity, though mandatory prepayments are triggered by certain events like asset sales or new debt/equity issuances.

The bridge loan agreement includes covenants such as maintaining a maximum Debt to EBITDA ratio of 5.5 to 1.0 (with a potential increase to 6.0 to 1.0 in specific acquisition scenarios) and a minimum EBITDA to consolidated fixed charges ratio of 1.5 to 1.0.