8-KSecurities & ListingCorporate ChangesOther Events+1

Energy Transfer LP 8-K Report, Unregistered Securities Sale (Mar 9, 2016)

Filed March 9, 2016For Securities:ETET-PI

Summary

Energy Transfer Equity, L.P. (ET) filed an 8-K on March 8, 2016, announcing the completion of a private offering of Series A Convertible Preferred Units. These units were issued to "accredited investor" common unitholders who elected to participate in a plan to forgo a portion of their future cash distributions for up to nine fiscal quarters, beginning Q1 2016, in exchange for these Convertible Units. This initiative aims to bolster the Partnership's liquidity and maintain its credit rating, particularly in anticipation of its proposed acquisition of The Williams Companies, Inc. (WMB) and potential financial support for Energy Transfer Partners, L.P. (ETP). The offering resulted in the issuance of 329,299,267 Convertible Units, representing participation by approximately 31.5% of ET's outstanding common units. Notably, Chairman Kelcy Warren participated significantly, receiving 187,313,942 Convertible Units. The net proceeds are intended for general partnership purposes, including potential debt repayment related to the WMB acquisition or support for ETP. The company believes this plan has garnered favorable reactions from credit rating agencies.

Key Highlights

  • 1Completion of a private offering of 329,299,267 Series A Convertible Preferred Units.
  • 2Units issued to accredited common unitholders who elected to forgo future cash distributions.
  • 3The plan to forgo distributions will last up to nine fiscal quarters, starting Q1 2016.
  • 4Proceeds will be used for general partnership purposes, including WMB acquisition financing and ETP support.
  • 5Chairman Kelcy Warren participated significantly, receiving 187,313,942 Convertible Units.
  • 6The offering was conducted privately due to an inability to obtain consent from WMB's auditor for a public offering registration statement.
  • 7The Convertible Units will automatically convert into common units at the end of the plan period.

Frequently Asked Questions

The primary purpose of the private offering is to enhance Energy Transfer Equity's (ET) liquidity and support its credit rating. The net proceeds are intended for general partnership purposes, which include potentially financing part of the acquisition of The Williams Companies, Inc. (WMB) and providing financial support to Energy Transfer Partners, L.P. (ETP).

The Convertible Units were issued to certain common unitholders who are accredited investors and elected to participate in a plan. These participating unitholders agreed to forgo a portion of their future potential cash distributions on their common units for up to nine fiscal quarters, starting with the distribution for the quarter ending March 31, 2016. In return, they received one Convertible Unit for each common unit they committed to the plan.

The offering was conducted privately because The Williams Companies, Inc. (WMB), which ET is seeking to acquire, declined to allow its independent registered accounting firm to provide the necessary consent for a registration statement for a public offering. This consent was required by the merger agreement between ET and WMB.

At the end of the plan period, each Series A Convertible Unit will automatically convert into common units. The number of common units received will be determined by dividing the 'Conversion Value' of the unit at the end of the plan period by a fixed 'Conversion Price' of $6.56, which was 95% of the five-day volume-weighted average closing price of ET's common units prior to the offering.