8-KRegulation FDExhibits & Filings

Energy Transfer LP 8-K Report, Regulation FD Disclosure (Nov 18, 2014)

Filed November 18, 2014For Securities:ETET-PI

Summary

This 8-K filing from Energy Transfer Equity, L.P. (ETE) on November 18, 2014, announces a significant transaction with Energy Transfer Partners, L.P. (ETP), valued at approximately $3.75 billion. The deal involves ETE transferring ETP common units and its stake in the Bakken pipeline project to ETP in exchange for newly issued Class H Units of ETP. These Class H Units will entitle ETE to approximately 40% of the economic attributes related to ETP's general partner interest and incentive distribution rights in Sunoco Logistics Partners L.P. (SXL). This strategic move aims to consolidate ETE's ownership and economic exposure to SXL's incentive distribution rights and general partner interests, projecting it to approximately 90% upon closing. The transaction is expected to be neutral to ETP's distributable cash flow per unit in 2015 and accretive thereafter, while being slightly dilutive to ETE in 2015 and accretive in 2016. ETP anticipates benefits from reduced unit count and improved ownership in the Bakken pipeline, while ETE reinforces its long-term strategy of controlling general partner interests and IDRs in its portfolio of master limited partnerships.

Key Highlights

  • 1ETE and ETP announce a $3.75 billion transaction involving the exchange of ETP units and Bakken pipeline interest for ETP's Class H Units.
  • 2ETE will increase its economic exposure to Sunoco Logistics Partners L.P. (SXL) general partner interest and incentive distribution rights (IDRs) to approximately 90% upon transaction close.
  • 3ETP will receive capital for growth projects, including its stake in the Bakken pipeline, and reduce its outstanding common units.
  • 4The transaction is expected to be neutral to ETP's distributable cash flow per unit in 2015 and accretive thereafter.
  • 5ETE anticipates the transaction to be slightly dilutive to its distributable cash flow per unit in 2015, becoming accretive in 2016 and beyond.
  • 6The deal is expected to be credit neutral for both ETE and ETP.
  • 7Transaction agreements are targeted for negotiation and execution by the end of 2014, with closing anticipated in Q1 2015, subject to board and conflicts committee approvals.

Frequently Asked Questions

The primary purpose is for ETE to increase its overall economic ownership and control over the general partner interest and incentive distribution rights (IDRs) of Sunoco Logistics Partners L.P. (SXL). For ETP, it aims to reduce outstanding units, fund growth projects, and increase its stake in the Bakken pipeline project.

ETP expects the transaction to be neutral to its distributable cash flow per unit in 2015 and accretive thereafter. This is partly due to the elimination of quarterly distribution obligations for the redeemed common units.

ETE anticipates the transaction to be slightly dilutive to its distributable cash flow per unit in 2015, with expectations of becoming accretive in 2016 and beyond. This reflects ETE's strategic goal of benefiting from the long-term growth of its controlled partnerships.

ETE is transferring 30.8 million ETP common units and its 45% interest in the Bakken pipeline project to ETP. In return, ETE will receive newly issued Class H Units of ETP, which provide a significant economic interest in ETP's SXL general partner and IDRs.