8-KMaterial AgreementsRegulation FDExhibits & Filings

Energy Transfer LP 8-K Report, Material Agreement (Jan 16, 2018)

Filed January 16, 2018For Securities:ETET-PI

Summary

Energy Transfer LP (ET) announced significant strategic transactions on January 15, 2018, detailed in an 8-K filing dated January 16, 2018. The company entered into a Purchase Agreement to acquire all outstanding limited liability company interests in USA Compression GP, LLC, and 12,466,912 common units of USA Compression Partners, LP (USAC) for $250 million. This acquisition, along with a concurrent Contribution Agreement and an Equity Restructuring Agreement, aims to consolidate control and streamline operations related to compression services. The overall transaction involves a substantial $1.7 billion contribution of compression assets by Energy Transfer Partners, L.P. (ETP) to USAC, and a restructuring of USAC's equity. This includes the cancellation of incentive distribution rights and the conversion of economic general partner interests, ultimately leading to ET gaining increased control and economic benefit from its USAC investment. The transactions are expected to close in the first half of 2018, subject to customary conditions.

Key Highlights

  • 1Energy Transfer LP (ET) entered into a Purchase Agreement to acquire all outstanding LLC interests in USA Compression GP, LLC and 12,466,912 common units of USA Compression Partners, LP (USAC) for $250 million.
  • 2A separate Contribution Agreement will see Energy Transfer Partners, L.P. (ETP) contribute compression assets valued at approximately $1.7 billion to USAC.
  • 3An Equity Restructuring Agreement will cancel incentive distribution rights in USAC and convert economic general partner interests into a non-economic general partner interest, in exchange for 8,000,000 USAC Common Units.
  • 4These transactions are intended to enhance ET's control and economic interest in its USAC investment.
  • 5The overall transactions are expected to close in the first half of 2018, contingent on customary closing conditions.
  • 6The agreements include customary representations, warranties, covenants, and indemnification provisions between the parties.
  • 7ET will be subject to a holding period (18 months or until USAC Holdings owns less than 1 million units) on the resale of acquired USAC Common Units.

Frequently Asked Questions

The announcement details three key agreements: a Purchase Agreement to acquire USAC GP and USAC common units, a Contribution Agreement to transfer significant compression assets to USAC, and an Equity Restructuring Agreement to simplify USAC's capital structure and enhance ET's control.

ET is paying $250 million for the GP interest and common units in USAC. Separately, ETP is contributing compression assets valued at approximately $1.7 billion to USAC.

The transactions are anticipated to close in the first half of 2018, subject to the satisfaction of customary closing conditions.

The transactions are designed to consolidate ET's control over its compression business through USAC, simplify the ownership structure, and likely improve operational efficiencies and financial alignment. It also involves restructuring USAC's incentive distribution rights and general partner interests.