Summary
Energy Transfer LP (ET), through its subsidiary Energy Transfer Operating, L.P. (ETO), has entered into a new $2 billion, three-year unsecured term loan credit facility maturing on October 17, 2022. This facility is available for working capital and general business purposes, providing ETO with significant financial flexibility. The loan is guaranteed by Sunoco Logistics Partners Operations L.P. until ETO acquires substantially all of Sunoco's assets and liabilities. This move suggests a strategic step towards integrating or consolidating operations within the Energy Transfer structure. Investors should note the pricing mechanism for the loan, which is tied to ETO's credit ratings, with margins varying based on the type of interest rate and the loan's duration. The agreement includes standard covenants, such as limitations on liens and new business lines, and a financial covenant requiring a Consolidated Funded Indebtedness to Consolidated EBITDA ratio not to exceed 5.00 to 1.00, which can be increased to 5.50 to 1.00 in connection with certain acquisitions. This indicates a commitment to maintaining a healthy leverage profile while allowing for strategic growth.
Key Highlights
- 1Energy Transfer Operating, L.P. (ETO) secured a new $2 billion, three-year term loan credit facility.
- 2The new facility matures on October 17, 2022.
- 3Proceeds from the term loan are available for working capital and general business purposes.
- 4The loan is unsecured and guaranteed by Sunoco Logistics Partners Operations L.P. until certain asset/liability acquisitions are completed.
- 5Interest rates are variable, based on either a Eurodollar or base rate plus an applicable margin tied to ETO's credit ratings.
- 6The agreement includes a financial covenant limiting the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA to not exceed 5.00:1.00 (or 5.50:1.00 with acquisitions).
- 7Customary representations, warranties, covenants, and events of default are included in the agreement.