Energy Transfer Equity to Combine with Williams
Anticipated Commercial Synergies Exceed
Up to
Williams’ Stockholders Can Elect to Receive Shares Issued by New ETE C-corp and/or Cash, Subject to Proration If Either is Oversubscribed
Transaction is Immediately Accretive to Cash Flow and Distributions for Both ETE and WMB
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Under the terms of the transaction,
ETC will be treated as a corporation for U.S. federal income tax
purposes, and holders of ETC common shares will therefore receive an
To address any uncertainty as to how the newly listed ETC common shares, as a new security, will trade relative to ETE common units, ETE has agreed that, as part of the merger consideration, each ETC share will have attached to it one contingent consideration right (“CCR”). In the event the ETC common shares trade at a discount to the ETE common units on a daily volume-weighted average basis over the 23-month period following the 20th trading day after the closing of the transaction, ETC will make a one-time payment in an amount equal to such volume-weighted price differential (the “Shortfall Amount”). Any Shortfall Amount will be settled in ETC common shares (at the then current value) or cash at ETE’s election, and ETE will issue a proportionate amount of Class E common units to ETC. If ETC common shares trade at a premium to ETE common units over the same 23-month period, the CCR will expire with no value and a portion of the ETE Class E common units held by ETC will be cancelled based on the volume weighted average price differential, thereby reducing ETC’s ownership interest in ETE. There is also an automatic termination provision of the CCR if ETC trades above ETE on a daily VWAP basis for 20 consecutive trading days and there is no Shortfall Amount outstanding at the end of that 20 trading day period.
The transaction is expected to be tax-free to Williams’ stockholders,
except with respect to any cash received. The parties believe that all
stakeholders will benefit from the cash flow diversification associated
with ownership in three large investment grade MLPs (
During the course of its diligence process over the last ten weeks, the
As part of the merger, WPZ will retain its current name and remain a
publicly traded partnership headquartered with a meaningful ongoing
presence in
ETE and Williams believe there are numerous meaningful benefits from a proposed combination:
ETE Stakeholders
- At closing, the transaction will be immediately accretive to distributable cash flow and distributions per unit for ETE and is expected to be credit positive to ETE’s credit ratings;
- ETE’s distribution growth rate is expected to remain at its current level;
- as a result of diligence, the size of both the expected cost savings and the anticipated commercial synergies exceeds ETE’s previous expectations and will help ensure that the duration of ETE’s distribution growth rate will be longer as a result of the transaction;
- the introduction of cash into the transaction consideration has reduced the ETC share issuance by over 260 million shares (or approximately 18.5% of the overall ETC share issuance);
-
the number of possible opportunities to migrate assets within the
Energy Transfer family and find additional commercial opportunities, not currently quantified, within the expanded asset base will increase significantly, thereby creating more value for ETP, SXL, WPZ and SUN, which in turn will result in increased cash flow growth for ETE; - the ability of ETE to broaden its overall shareholder base through the ETC structure; and
- the creation of ETC will result in increased liquidity for ETE unitholders because of the option for ETE unitholders to exchange ETE common units for ETC common shares.
WMB Stakeholders
-
A compelling transaction that provides Williams’ stockholders with:
- an attractive premium to the implied trading price of WMB assuming WMB traded in line with either the Alerian index or its midstream peers since the date of ETE’s initial offer;
- a pro forma level of dividend per ETC common shares received that will exceed the 2016 dividend per WMB share that Williams had forecast on a pro forma basis for the Williams/WPZ merger;
- ETC dividend growth superior to that of Williams on a pro forma basis for the proposed Williams/WPZ merger;
-
the option to elect cash in the transaction will allow Williams’
stockholders to monetize, on a taxable basis, all or some of their
investment in WMB, subject only to the aggregate
$6.05 billion pool of cash consideration being fully utilized; - the exchange of WMB shares for ETC common shares is expected to be tax free to WMB stockholders, except with respect to cash received;
- for each outstanding ETC common share, ETC will receive from ETE the same cash distribution per quarter as ETE distributes with respect to each ETE common unit;
- ETC will benefit from a dividend equalization agreement through calendar 2018 that ensures that ETC shareholders will receive the identical cash dividend as an ETE unitholder;
- the CCR is intended to address any trading price differences between ETC and ETE during the two-year period following closing;
- ETE will become co-obligor of Williams’ existing debt and Williams’ credit facility will be terminated at closing; and
-
ETC common shares are expected to have tremendous liquidity, a strong
growth profile and the potential for inclusion in the
S&P 500 index (similar to WMB’s current inclusion in that index).
WPZ Stakeholders
- There is no expected impact to WPZ’s credit ratings as a result of the ETE/Williams combination;
-
WPZ unitholders will have greater distributable cash flow from
material cost savings and synergies of up to
$400 million per annum with WPZ joining theEnergy Transfer shared service model; -
the combination will create new commercial opportunities for WPZ,
including the potential to acquire assets from the overall
Energy Transfer group, that will improve WPZ’s business outlook, cash flow growth and overall financial profile; -
WPZ unitholders will benefit from having a general partner, ETE, that,
based on the unique intrinsic financial and strategic optionality in
the
Energy Transfer family, will be in a position to help WPZ fully realize its long-term growth potential; and -
WPZ will receive a
$428 million break-up fee for the termination of its merger agreement with WMB payable to all outstanding limited partnership units of WPZ including WMB’s approximate 60 percent ownership.
Regulatory Process and Transaction Timing
The closing of the transaction is subject to customary conditions,
including the receipt of approval of the merger from Williams’
stockholders and all required regulatory approvals, including approval
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(“HSR”). ETE and Williams anticipate that the transaction will be
completed in the first half of 2016. There is no requirement for an ETE
unitholder vote, providing additional deal certainty to Williams’
stockholders. The parties intend to commence the integration planning
process immediately following receipt of HSR clearance to ensure that
the implementation of the shared service model between
Investor Conference Call
The dial-in number for the call is 1-866-700-5192 in
Forward-looking Statements
This communication may contain forward-looking statements. These
forward-looking statements include, but are not limited to, statements
regarding the merger of ETE and Williams, the expected future
performance of the combined company (including expected results of
operations and financial guidance), and the combined company's future
financial condition, operating results, strategy and plans.
Forward-looking statements may be identified by the use of the words
"anticipates," "expects," "intends," "plans," "should," "could,"
"would," "may," "will," "believes," "estimates," "potential," "target,"
"opportunity," "designed," "create," "predict," "project," "seek,"
"ongoing," "increases" or "continue" and variations or similar
expressions. These statements are based upon the current expectations
and beliefs of management and are subject to numerous assumptions, risks
and uncertainties that change over time and could cause actual results
to differ materially from those described in the forward-looking
statements. These assumptions, risks and uncertainties include, but are
not limited to, assumptions, risks and uncertainties discussed in the
most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q
for each of ETE, ETP, SXL, SUN, WMB and WPZ filed with the U.S.
Securities and Exchange Commission (the "
Additional Information
This communication does not constitute an offer to buy or solicitation
of an offer to sell any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements
of Section 10 of the U.S. Securities Act of 1933, as amended. This
communication relates to the entry by ETE and Williams into definitive
agreements for a combination of the two companies. In furtherance of
this proposal and subject to future developments, ETE, ETC and Williams
may file one or more registration statements, proxy statements or other
documents with the SEC. This communication is not a substitute for any
proxy statement, registration statement, prospectus or other document
ETE, ETC or Williams may file with the SEC in connection with the
proposed transaction. INVESTORS AND SECURITY HOLDERS OF ETE AND WILLIAMS
ARE URGED TO READ THE PROXY STATEMENT(S), REGISTRATION STATEMENT,
PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR
ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION
TRANSACTION. Any definitive proxy statement(s) (if and when available)
will be mailed to stockholders of Williams. Investors and security
holders will be able to obtain free copies of these documents (if and
when available) and other documents filed with the SEC by ETE, ETC and
Williams through the web site maintained by the SEC at http://www.sec.gov.
Copies of the documents filed by ETE and ETC with the
ETE and its directors, executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information regarding the directors and officers of ETE’s general
partner is contained in ETE’s Annual Report on Form 10-K filed with the
Williams and its directors, executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information regarding the directors and officers of Williams is
contained in Williams’ Annual Report on Form 10-K filed with the
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Source:
Energy Transfer Equity, L.P.
Investor
Relations:
Brent Ratliff, 214-981-0795
or
Lyndsay Hannah,
214-840-5477
or
Media Relations:
Granado Communications
Group
Vicki Granado, 214-599-8785
mobile: 214-498-9272
or
Brunswick
Group
Steve Lipin, 212-333-3810
or
Mark Palmer,
214-254-3790
or
The Williams Companies,
Inc.
Investor Relations:
John Porter, 918-573-0797
or
Brett
Krieg, 918-573-4614
or
Media Relations:
Lance Latham,
918-573-9675
or
Joele Frank, Wilkinson Brimmer Katcher
Dan
Katcher, Andrew Siegel or Dan Moore, 212-355-4449