8-KAcquisitions & Dispositions

Energy Transfer LP 8-K Report, Acquisition Completed (Aug 27, 2015)

Filed August 27, 2015For Securities:ETET-PI

Summary

This 8-K filing by Energy Transfer LP (ET) details a significant transaction that occurred on August 21, 2015, involving Energy Transfer Equity (ETE) and Energy Transfer Partners (ETP). ETE acquired the incentive distribution rights (IDRs) and general partner (GP) interests of Sunoco LP (SUN) from ETP. In exchange, ETP received 21.0 million ETP common units from ETE. This exchange effectively consolidates certain assets and liabilities within the Energy Transfer corporate structure. Furthermore, the filing outlines an amendment to ETP's limited partnership agreement, which will reduce quarterly distributions to ETP's IDR holders by $8.75 million per quarter, starting in Q3 2015 and continuing until Q2 2017. This reduction, along with the termination of a previously agreed-upon IDR subsidy from ETE related to the Susser Holdings acquisition, signifies a shift in the distribution policy and financial obligations for ETP. Investors should note the implications of these changes on future distributions and the overall corporate control and economic interests within the Energy Transfer entities.

Key Highlights

  • 1ETE acquired 100% of Sunoco LP's (SUN) incentive distribution rights (SUN IDRs) and general partner interests (SUN GP Interests) from ETP.
  • 2ETP received 21.0 million ETP common units in exchange for the SUN assets.
  • 3A significant amendment to ETP's partnership agreement reduces quarterly distributions to ETP IDR holders by $8.75 million, effective Q3 2015 through Q2 2017.
  • 4The existing $35.0 million annual IDR subsidy from ETE related to the Susser Holdings acquisition has been terminated.
  • 5Following the transaction, ETE's indirect ownership in ETP includes common units, GP interests, ETP IDRs, and the newly acquired SUN IDRs and SUN GP Interests.
  • 6The transaction aims to simplify and potentially re-align the corporate structure and financial flows within the Energy Transfer family of companies.

Frequently Asked Questions

The primary transaction involved Energy Transfer Equity (ETE) acquiring the incentive distribution rights and general partner interests of Sunoco LP (SUN) from Energy Transfer Partners (ETP). In return, ETP received 21.0 million common units of ETP.

Yes, the transaction includes an amendment to ETP's partnership agreement that reduces quarterly distributions to ETP's incentive distribution rights holders by $8.75 million per quarter, effective from the quarter ending September 30, 2015, through the quarter ending June 30, 2017. Additionally, a previously agreed-upon IDR subsidy from ETE is terminated.

By acquiring these assets, ETE gains greater control and economic benefit from Sunoco LP's operations and distribution streams. This move appears to be part of a broader strategy to consolidate or re-align assets and cash flows within the Energy Transfer structure.

Following the exchange, ETE's indirect ownership in ETP has been enhanced. ETE now holds a significant number of ETP common units, all equity interests in ETP GP, all ETP IDRs, and has also acquired the SUN IDRs and SUN GP Interests, consolidating more economic and control aspects under ETE.