DISPOSAL AND RELATED TRANSACTIONS:
On April 30, 2013, the Company completed its contribution to Regency of all of the membership interest in Southern Union Gathering Company, LLC, and its subsidiaries, including SUGS (the “SUGS Contribution”). The general partner and IDRs of Regency are owned by ETE. The consideration paid by Regency in connection with this transaction consisted of (i) the issuance of approximately 31.4 million Regency common units to the Company, (ii) the issuance of approximately 6.3 million Regency Class F units to the Company, (iii) the distribution of $463 million in cash to the Company, net of closing adjustments, and (iv) the payment of $30 million in cash to a subsidiary of ETP. This transaction was between commonly controlled entities; therefore, the amounts recorded in the consolidated balance sheet for the investment in Regency and the related deferred tax liabilities were based on the historical book value of SUGS. The Company used a portion of the cash consideration to pay down $240 million in outstanding borrowings on the Southern Union Credit Facility. In addition, PEPL Holdings, a wholly-owned subsidiary of the Company, provided a guarantee of collection with respect to the payment of the principal amounts of Regency’s debt related to the SUGS Contribution, as further discussed in Note 10. The Regency Class F units have the same rights, terms and conditions as the Regency common units, except that Southern Union will not receive distributions on the Regency Class F units for the first eight consecutive quarters following the closing, and the Regency Class F units will thereafter automatically convert into Regency common units on a one-for-one basis. The Company has not presented SUGS as discontinued operations due to the expected continuing involvement with SUGS through affiliate relationships, as well as the direct investment in Regency common and Class F units received, which has been accounted for using the equity method.
In December 2012, the Company entered into a purchase and sale agreement with The Laclede Group, Inc. pursuant to which Laclede Missouri has agreed to acquire the assets of the Missouri Gas Energy division and Laclede Massachusetts has agreed to acquire the assets of the New England Gas Company division (together, the “LDC Disposal Group”) for approximately $1.04 billion, subject to customary closing adjustments. In February 2013, The Laclede Group, Inc. entered into an agreement with APUC that will allow a subsidiary of APUC to assume the rights of The Laclede Group, Inc. to purchase the assets of New England Gas Company, subject to certain approvals. The sale of Missouri Gas Energy is expected to close on or after September 1, 2013, and the sale of New England Gas Company is expected to close in the fourth quarter of 2013. All periods reflected herein have been restated to present the LDC Disposal Group’s operations as discontinued operations in the condensed consolidated statements of operations. The LDC Disposal Group’s assets and liabilities have been reported as assets and liabilities held for sale as of June 30, 2013 and December 31, 2012.
Summarized financial information for Southern Union’s LDC Disposal Group is as follows:
Three Months Ended
Six Months Ended
June 30, 2013
Period from Acquisition (March 26, 2012) to June 30, 2012
Period from January 1, 2012 to March 25, 2012
Revenue from discontinued operations
Net income of discontinued operations, excluding effect of taxes and overhead allocations
The goodwill allocated to the LDC Disposal Group was $133 million at June 30, 2013.