8-KMaterial AgreementsExhibits & Filings

Energy Transfer LP 8-K Report, Material Agreement (Jun 5, 2014)

Filed June 5, 2014For Securities:ETET-PI

Summary

This 8-K filing from Energy Transfer LP (ET) on June 5, 2014, reports a significant transaction involving its wholly owned subsidiary, ETE Common Holdings, LLC. The subsidiary purchased approximately $400 million worth of common units in Regency Energy Partners LP (RGP) through a private placement. This strategic acquisition, priced at $27.78 per unit based on a 10-day volume-weighted average trading price, increases Energy Transfer's stake in Regency, a company of which Energy Transfer is already the general partner. This transaction underscores Energy Transfer's commitment to consolidating and strengthening its position within its midstream operations, particularly through its relationship with Regency Energy Partners. Investors should note that while the purchase price is tied to market performance, the acquired units are unregistered and subject to resale restrictions under the Securities Act, with registration rights provided to Energy Transfer. This move signals continued integration and potential operational synergies between the two entities.

Key Highlights

  • 1Energy Transfer LP's subsidiary, ETE Common Holdings, LLC, acquired 14,398,848 common units of Regency Energy Partners LP (RGP).
  • 2The transaction involved a private placement for cash consideration of approximately $400 million.
  • 3The purchase price per unit was $27.78, determined by the volume-weighted average trading price of RGP units over the 10 days preceding June 3, 2014.
  • 4Energy Transfer LP is the owner of the general partner of RGP, indicating a strategic consolidation or strengthening of control.
  • 5The acquired common units are unregistered under the Securities Act of 1933, imposing resale restrictions.
  • 6A Registration Rights Agreement was entered into, granting Energy Transfer LP rights to register the purchased common units.

Frequently Asked Questions

The primary purpose appears to be increasing Energy Transfer LP's ownership and control over Regency Energy Partners LP (RGP), a related entity where Energy Transfer already holds the general partner interest. This strategic move could lead to greater operational integration and potential synergies.

The fact that the acquired RGP common units are unregistered means that Energy Transfer LP cannot freely sell them in the United States without registering them with the SEC or qualifying for an exemption. The Registration Rights Agreement provides Energy Transfer LP with the right to demand that RGP register these units, which would allow for their future sale on the public market.

The purchase price was set at $27.78 per common unit, which was equal to the volume-weighted average trading price of RGP's common units during the 10 trading days ending on June 3, 2014. This method aims to reflect the prevailing market value of RGP's units at the time of the agreement.

Yes, it strengthens Energy Transfer LP's existing relationship. By increasing its common unit holdings in RGP, Energy Transfer LP consolidates its position and potentially enhances its influence and operational oversight over Regency Energy Partners, given that ET owns RGP's general partner.