Transaction Expected to be Immediately Accretive to SXL Distributable
NEWTOWN SQUARE, Pa. & DALLAS--(BUSINESS WIRE)--Nov. 21, 2016--
Sunoco Logistics Partners L.P. (NYSE: SXL) and Energy Transfer
Partners, L.P. (NYSE: ETP) today announced that they have entered
into a merger agreement providing for the acquisition of ETP by SXL in a
unit-for-unit transaction. The transaction was approved by the boards of
directors and conflicts committees of both partnerships and is expected
to close in the first quarter of 2017, subject to receipt of ETP
unitholder approval and other customary closing conditions.
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Under the terms of the transaction, ETP unitholders will receive 1.5
common units of SXL for each common unit of ETP they own. This equates
to a 10% premium to the volume weighted average pricing of ETP’s common
units for the last 30 trading days immediately prior to the announcement
of the transaction.
As SXL will be the acquiring entity, the existing incentive distribution
rights provisions in the SXL partnership agreement will continue to be
in effect, and Energy Transfer Equity, L.P. (NYSE: ETE) will own the
incentive distribution rights of SXL following the closing of the
transaction. As part of this transaction, ETE has agreed to continue to
provide all the incentive distribution right subsidies that are
currently in effect with respect to both partnerships. The transaction
is expected to be immediately accretive to SXL’s distributable cash flow
per common unit and is also expected to allow the combined partnership
to be in position to achieve near-term distribution increases in the low
double digits and a more than 1.0x distribution coverage ratio.
The transaction is expected to provide significant benefits for SXL and
ETP unitholders as the combined partnership will have increased scale
and diversification across multiple producing basins and will have
greater opportunities to more closely integrate SXL’s natural gas
liquids business with ETP’s natural gas gathering, processing and
transportation business. With this transaction, SXL and ETP expect to
build upon their experience working together as partners in several
joint ventures to pursue commercial opportunities and to achieve cost
savings while enhancing the service capabilities for their customers.
SXL and ETP expect that the transaction will allow for commercial
synergies and costs savings in excess of $200 million annually by 2019.
The transaction is also expected to strengthen the balance sheet of the
combined organization by utilizing cash distribution savings to reduce
debt and to fund a portion of the growth capital expenditure programs of
the two partnerships. ETP and SXL have spent approximately $15 billion
in organic growth capital over the past several years, and these
expenditures, combined with the completion of other major capital
projects currently in progress, are expected to continue to generate
strong distributable cash flow growth.
Both ETP and SXL management teams are pleased to be able to bring two
strong partnerships together in this strategic transaction that combines
the premier crude oil midstream MLP with the premier natural gas
midstream MLP. The combined partnership is expected to be the second
largest MLP as measured by enterprise value.
At the closing of the transaction, the Chief Executive Officer, Chief
Commercial Officer, President and Chief Financial Officer of the
combined partnership will be Kelcy Warren, Mackie McCrea, Matt Ramsey
and Tom Long, respectively, and it is expected that Mike Hennigan and
other members of the SXL management team will continue in leading
management roles of the combined company with the SXL business
headquartered in Philadelphia.
SXL and ETP will hold a joint conference call to discuss the transaction
details on Monday, November 21, 2016 at 3:00 p.m. Central Time (4:00
p.m. Eastern Time). An investor presentation will be posted to the
partnerships’ websites and filed with the SEC on a Form 8-K.
The dial-in number for the call is 1-877-524-8416. The investor
presentation and a live webcast of the call may be accessed on the
investor relations page of SXL’s website at www.sunocologistics.com
or ETP’s website at www.energytransfer.com.
The call will be available for replay on those sites or by dialing
1-877-660-6853. A replay of the broadcast will also be available on
SXL’s and ETP’s websites for a limited time.
Latham & Watkins LLP acted as legal counsel to ETP. Vinson & Elkins LLP
acted as legal counsel to SXL. Barclays acted as financial advisor and
Potter Anderson & Corroon LLP acted as legal counsel to ETP’s conflicts
committee. Citi acted as financial advisor and Richards Layton & Finger,
P.A. acted as legal counsel to SXL’s conflicts committee.
About Energy Transfer Partners
Energy Transfer Partners, L.P. (NYSE: ETP) is a master limited
partnership that owns and operates one of the largest and most
diversified portfolios of energy assets in the United States. ETP’s
subsidiaries include Panhandle Eastern Pipe Line Company, LP (the
successor of Southern Union Company) and Lone Star NGL LLC, which owns
and operates natural gas liquids storage, fractionation and
transportation assets. In total, ETP currently owns and operates more
than 62,500 miles of natural gas and natural gas liquids pipelines. ETP
also owns the general partner, 100% of the incentive distribution
rights, and approximately 67.1 million common units in Sunoco Logistics
Partners L.P. (NYSE: SXL), which operates a geographically diverse
portfolio of crude oil and refined products pipelines, terminalling and
crude oil acquisition and marketing assets. ETP’s general partner is
owned by Energy Transfer Equity, L.P. For more information, visit the
Energy Transfer Partners, L.P. website at www.energytransfer.com.
Sunoco Logistics Partners L.P. (NYSE: SXL) is a master limited
partnership that owns and operates a logistics business consisting of a
geographically diverse portfolio of complementary pipeline,
terminalling, and acquisition and marketing assets which are used to
facilitate the purchase and sale of crude oil, refined products, and
natural gas liquids, and refined products. SXL’s general partner is a
consolidated subsidiary of Energy Transfer Partners, L.P. (NYSE: ETP).
For more information, visit the Sunoco Logistics Partners L.P. website
Energy Transfer Equity, L.P. (NYSE: ETE) is a master limited partnership
that owns the general partner and 100% of the incentive distribution
rights (IDRs) of Energy Transfer Partners, L.P. (NYSE: ETP) and Sunoco
LP (NYSE: SUN). ETE also owns approximately 2.6 million ETP common units
and approximately 81.0 million ETP Class H Units, which track 90% of the
underlying economics of the general partner interest and IDRs of Sunoco
Logistics Partners L.P. (NYSE: SXL). On a consolidated basis, ETE’s
family of companies owns and operates approximately 71,000 miles of
natural gas, natural gas liquids, refined products, and crude oil
pipelines. For more information, visit the Energy Transfer Equity, L.P.
website at www.energytransfer.com.
This release includes “forward-looking” statements. Forward-looking
statements are identified as any statement that does not relate strictly
to historical or current facts. Statements using words such as
“anticipate,” “believe,” “intend,” “project,” “plan,” “expect,”
“continue,” “estimate,” “goal,” “forecast,” “may” or similar expressions
help identify forward-looking statements. ETP and SXL cannot give any
assurance that expectations and projections about future events will
prove to be correct. Forward-looking statements are subject to a variety
of risks, uncertainties and assumptions. These risks and uncertainties
include the risks that the proposed transaction may not be consummated
or the benefits contemplated therefrom may not be realized. Additional
risks include: the ability to obtain requisite regulatory and unitholder
approval and the satisfaction of the other conditions to the
consummation of the proposed transaction, the ability of SXL to
successfully integrate ETP’s operations and employees and realize
anticipated synergies and cost savings, the potential impact of the
announcement or consummation of the proposed transaction on
relationships, including with employees, suppliers, customers,
competitors and credit rating agencies, and the ability to achieve
revenue, DCF and EBITDA growth, and volatility in the price of oil,
natural gas, and natural gas liquids. Actual results and outcomes may
differ materially from those expressed in such forward-looking
statements. These and other risks and uncertainties are discussed in
more detail in filings made by ETP and SXL with the Securities and
Exchange Commission (the “SEC”), which are available to the public. ETP
and SXL undertake no obligation to update publicly or to revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
The information contained in this press release is available on ETP’s
website at www.energytransfer.com
and on the SXL website at www.sunocologistics.com.
Additional Information and Where to Find It
SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND
THE REGISTRATION STATEMENT REGARDING THE TRANSACTION CAREFULLY WHEN IT
BECOMES AVAILABLE. These documents (when they become available), and any
other documents filed by ETP or SXL with the SEC, may be obtained free
of charge at the SEC’s website, at www.sec.gov.
In addition, investors and security holders will be able to obtain free
copies of the registration statement and the proxy statement/prospectus
by phone, e-mail or written request by contacting the investor relations
department of ETP or SXL at the following:
Brent Ratliff, 214-981-0795
Peter Gvazdauskas, 215-977-6322
Jeff Shields, 215-977-6056
Participants in the Solicitation
ETP, SXL and their respective directors and executive officers may be
deemed to be participants in the solicitation of proxies in connection
with the proposed merger. Information regarding the directors and
executive officers of ETP is contained in ETP’s Form 10-K for the year
ended December 31, 2015, which was filed with the SEC on February 29,
2016. Information regarding the directors and executive officers of SXL
is contained in SXL’s Form 10-K for the year ended December 31, 2015,
which was filed with the SEC on February 26, 2016. Additional
information regarding the interests of participants in the solicitation
of proxies in connection with the proposed merger will be included in
the proxy statement/prospectus.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161121005638/en/
Source: Energy Transfer Partners, L.P. and Sunoco Logistics Partners L.P.
Brent Ratliff, 214-981-0795
Peter Gvazdauskas, 215-977-6322
Jeff Shields, 215-977-6056