8-KMaterial AgreementsExhibits & Filings

Energy Transfer LP 8-K Report, Material Agreement (Nov 21, 2013)

Filed November 21, 2013For Securities:ETET-PI

Summary

On November 19, 2013, Energy Transfer Equity (ETE) and Energy Transfer Partners (ETP) entered into a Redemption and Transfer Agreement, a significant event for investors in both entities. ETP will redeem and cancel a substantial portion of its common units held by ETE in exchange for ETE's entire ownership stake in Trunkline LNG Company, LLC (TLNG). This transaction is expected to close in early February 2014, with an effective date of January 1, 2014. This agreement also includes a reduction in incentive distributions ETE receives from ETP over several years, starting in 2016. Additionally, ETE will adjust its payments to ETP for corporate business development services related to TLNG and the Trunkline crude oil conversion project. These changes impact the financial relationship and cash flows between ETE and ETP, requiring investor attention.

Key Highlights

  • 1ETP to redeem 18,710,000 common units from ETE.
  • 2ETE will transfer 100% of its interest in Trunkline LNG Company, LLC (TLNG) to ETP.
  • 3The transaction is expected to close in early February 2014, effective January 1, 2014.
  • 4ETP's Partnership Agreement will be amended to reduce ETE's incentive distributions over an extended period (2016-2021).
  • 5A Shared Services Agreement amendment will alter fees ETE pays ETP for services related to TLNG and a crude oil conversion project.
  • 6The agreement details a shift in asset ownership and a modification of the financial arrangements between the related entities, ETE and ETP.

Frequently Asked Questions

The primary purpose is to simplify the corporate structure and reallocate certain assets and financial arrangements. ETP will acquire full ownership of Trunkline LNG Company, LLC (TLNG) from ETE in exchange for ETP units held by ETE, and the incentive distribution and service fee structures between the two entities are being modified.

ETE's incentive distributions from ETP will be reduced in phases starting in January 2016. Specific quarterly reductions are outlined: $12.50 million for eight quarters, followed by $11.25 million for four quarters, and then $8.75 million for another four quarters.

The amendment alters the fees ETE pays ETP for corporate business development services. ETE will pay ETP a fixed annual fee of $20 million for three years starting April 1, 2013, and an additional fixed annual fee of $75 million for two years starting January 1, 2014.

TLNG is a key asset being transferred from ETE to ETP. The transaction also involves amendments to service agreements related to TLNG and another project, indicating its importance to the ongoing operations and financial arrangements of both ETE and ETP.