Transaction Expected to be Breakeven to ETP’s Distributable Cashflow
in 2015 and Accretive Thereafter
Transaction Expected to be Credit Neutral to ETP’s Investment Grade
Ratings and Credit Positive for Regency
While the Industrial Logic for Combination has Always Existed, the
Timing for the Merger is Right
This Merger takes ETP to the Next Level and Reinforces its Position
As One of the Strongest and Most Diversified Energy Midstream
Companies in the U.S.
Transaction Expected to Close in Second Quarter 2015
DALLAS--(BUSINESS WIRE)--Jan. 26, 2015--
Energy Transfer Partners, L.P. (NYSE: ETP) and Regency Energy
Partners LP (NYSE: RGP) (“Regency”) today announced they have
entered into a definitive merger agreement.
This merger will be a unit-for-unit transaction, plus a one-time cash
payment to Regency unit holders, that collectively implies a value for
Regency of approximately $18.0 billion, including the assumption of net
debt and other liabilities of $6.8 billion. The transaction is expected
to close in the second quarter of 2015.
Under the terms of the merger agreement, which has been approved by the
Boards of Directors and Conflicts Committees of both ETP and Regency,
the unitholders of Regency will receive 0.4066 ETP common units and a
cash payment of $0.32 for each common unit of Regency, implying an
all-in price for Regency common units of $26.89 per unit based on ETP’s
closing price on January 23, 2015. The consideration to be received by
Regency common unitholders represents an approximately 13% premium to
the closing price of Regency’s common units of $23.75 on January 23,
2015, and an approximately 15% premium to the volume weighted average
price of Regency’s common units for the last 3 trading days ending
January 23, 2015.
In addition, Energy Transfer Equity, L.P. (NYSE: ETE), which owns the
general partner and 100% of the incentive distribution rights (IDRs) of
both Regency and ETP, has agreed to reduce the incentive distributions
it receives from ETP by a total of $320 million over a five year period.
The IDR subsidy will be $80 million in the first year post closing and
$60 million per year for the following four years.
The proposed merger has been discussed with the ratings agencies and it
is anticipated that the merger will have no impact to ETP’s credit
ratings and that Regency’s ratings will be put on review for upgrade.
Pro forma for the merger, ETP will be the second largest MLP and will be
well diversified both geographically, with operations in substantially
all major producing areas in the United States, and across business
lines, with a unique franchise across the energy midstream value chain.
This merger will create substantial cost savings, capital efficiencies
and valuable ancillary benefits for both Regency’s and ETP’s
unitholders. It will also strengthen the overall growth platform for the
combined company.
ETP and Regency expect to capitalize on the full breadth of the combined
gathering and processing platforms in several prolific producing
regions, including the Permian Basin and Eagle Ford Shale. Among the
numerous benefits of this merger is the likelihood of further liquids
volume growth for Lone Star, which is ETP and Regency’s NGL joint
venture, and also the expected increase in natural gas volumes into
ETP’s intrastate pipeline system. The exciting opportunities from this
merger include not only the broader midstream footprint in Texas, but
also the Marcellus and Utica shale plays in Appalachia, where Regency’s
extremely attractive and well-positioned operations and growth projects
complement ETP’s Rover interstate gas pipeline (currently under
construction), which will create over 3 Bcf/day of natural gas takeaway
capacity from these plays. The presence of ETP and Regency in these
shales will also be complemented by the significant activity of Sunoco
Logistics Partners, L.P, (NYSE: SXL), another member of the Energy
Transfer family, as it builds on its asset base in that area. Overall,
ETP intends to become a major player in the Marcellus and Utica shales
and believes that pro forma this merger, it is ideally positioned to
achieve that goal in the near term.
“I am very proud of the entire team at Regency and am honored to have
been able to lead some of the finest people in the industry,” said Mike
Bradley, Regency’s Chief Executive Officer. “Together, we have built
Regency into one of the largest gathering and processing MLPs in the
U.S. over the last several years. In light of the current volatility in
commodity prices and the changes in the capital markets, it became
apparent over the last several months that Regency needed more scale and
diversification, along with an investment grade balance sheet, to
continue its growth. As a result, the combination with ETP became a
logical transaction, as we believe that this merger will create
significant immediate and long-term value for our unitholders. The
merger will also allow Regency and ETP to consolidate our complementary
midstream operations in the Permian and West Texas areas. The ability to
bring those operations together under one roof is expected to create
tremendous value for the unitholders of the combined partnerships.”
Advisors
Latham & Watkins LLP acted as legal counsel to ETP. Baker Botts L.L.P.
acted as legal counsel to Regency. Barclays acted as financial advisor
and Richards Layton & Finger acted as legal counsel to ETP’s conflicts
committee. J.P. Morgan Securities LLC acted as financial advisor and
Akin Gump Strauss Hauer & Feld LLP acted as legal counsel to Regency’s
conflicts committee.
Required Approvals
Completion of the merger is subject to customary closing conditions,
including approval of the respective ETP and Regency unitholders and
observation of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act, if applicable. The required threshold for approval of
each partnerships unitholders is a simple majority of issued and
outstanding units. Under the terms of the merger agreement, ETE and ETP
have agreed to vote their respective Regency common units and Class F
units in favor of the merger.
Energy Transfer Partners, L.P. (NYSE: ETP) is a master limited
partnership owning and operating one of the largest and most diversified
portfolios of energy assets in the United States. ETP currently owns and
operates approximately 35,000 miles of natural gas and natural gas
liquids pipelines. ETP also owns 100% of Panhandle Eastern Pipe Line
Company, LP (the successor of Southern Union Company) and a 70% interest
in Lone Star NGL LLC, a joint venture that owns and operates natural gas
liquids storage, fractionation and transportation assets. 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 owns 100% of Sunoco, Inc. and 100%
of Susser Holdings Corporation. Additionally ETP owns the general
partner, 100% of the incentive distribution rights and approximately 43%
of the limited partnership interests in Sunoco LP (formerly Susser
Petroleum Partners LP) (NYSE: SUN), a wholesale fuel distributor and
convenience store operator. ETP’s general partner is owned by ETE. For
more information, visit the Energy Transfer Partners, L.P. web site at www.energytransfer.com.
Regency Energy Partners LP (NYSE:RGP) is a growth-oriented,
master limited partnership engaged in the gathering and processing,
compression, treating and transportation of natural gas; the
transportation, fractionation and storage of natural gas liquids; the
gathering, transportation and terminaling of oil (crude and/or
condensate) received from producers; and the management of coal and
natural resource properties in the United States. Regency’s general
partner is owned by Energy Transfer Equity, L.P. (NYSE: ETE). For more
information, please visit Regency’s website at www.regencyenergy.com.
Energy Transfer Equity, L.P. (NYSE: ETE) is a master limited
partnership which owns the general partner and 100% of the incentive
distribution rights (IDRs) of Energy Transfer Partners, L.P. (NYSE:
ETP), approximately 30.8 million ETP common units, and approximately
50.2 million ETP Class H Units, which track 50% of the underlying
economics of the general partner interest and IDRs of Sunoco Logistics
Partners L.P. (NYSE: SXL). ETE also owns the general partner and 100% of
the IDRs of Regency Energy Partners LP (NYSE: RGP) and approximately
57.2 million RGP common units. 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. web site at www.energytransfer.com.
Forward Looking Statements
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 Regency 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 ETP to
successfully integrate Regency’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 Regency with the Securities and
Exchange Commission, which are available to the public. ETP and Regency
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 RGP’s website at www.regencyenergy.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 Regency 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 Regency at the following:
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Energy Transfer Partners, L.P.
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Regency Energy Partners LP
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3738 Oak Lawn Ave.
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2001 Bryan Street, Suite 3700
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Dallas, TX 75219
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Dallas, TX 75201
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Attention: Investor Relations
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Attention: Investor Relations
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Phone: 214-981-0700
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Phone: 214-840-5477
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Participants in the Solicitation
ETP, Regency 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, 2013, which was filed with the SEC on February
27, 2014. Information regarding the directors and executive officers of
Regency is contained in Regency’s Form 10-K for the year ended December
31, 2013, which was filed with the SEC on February 27, 2014. 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.
Photos/Multimedia Gallery Available: http://www.businesswire.com/multimedia/home/20150126005717/en/
Source: Energy Transfer Partners, L.P. and Regency Energy Partners LP
Investor Relations:
Energy Transfer
Brent Ratliff,
214-981-0700
Vice President, Investor Relations
or
Regency
Energy Partners
Lyndsay Hannah, 214-840-5477
Director, Finance
& Investor Relations
or
Media Relations:
Granado
Communications Group
Vicki Granado, 214-599-8785
Cell:
214-498-9272