S-4
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As filed with the Securities and Exchange Commission on March 18, 2021

Registration No. 333-                

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

ENERGY TRANSFER LP

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   4922   30-0108820

(State or other jurisdiction of Incorporation or Organization)

  (Primary Standard Industrial
Classification Code Number)
 

(I.R.S. Employer

Identification Number)

8111 Westchester Drive, Suite 600

Dallas, Texas 75225

(214) 981-0700

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Thomas E. Long

Co-Chief Executive Officer

Energy Transfer LP

8111 Westchester Drive, Suite 600

Dallas, Texas 75225

(214) 981-0700

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

Thomas P. Mason

Executive Vice President, General Counsel and President - LNG

Energy Transfer LP

8111 Westchester Drive,

Suite 600

Dallas, Texas 75225

(214) 981-0700

 

William N. Finnegan IV

Kevin M. Richardson

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002

(713) 546-5400

 

Mark C. Schroeder

Executive Vice President, General Counsel and Chief Ethics and Compliance Officer

Enable Midstream Partners, LP

910 Louisiana Street, Suite 4800

Houston, Texas 77002

(713) 207-3395

  

David P. Oelman

Stephen M. Gill

Scott D. Rubinsky

Vinson & Elkins LLP

1001 Fannin Street

Houston, Texas 77002

(713) 758-2222

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions to the closing of the merger described herein.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of

securities to be registered

 

Amount

to be

registered(1)

 

Proposed

maximum

offering price

per share

 

Proposed

maximum

aggregate

offering price

 

Amount of

registration fee(4)

Common Units representing limited partner interests

  376,063,314   N/A   $3,054,010,388.90(2)   $333,192.53

7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units

  384,780   N/A   $384,780,000.00(3)   $41,979.50

Total

              $375,172.03

 

 

(1)

Represents the maximum number of common units representing limited partner interests in the registrant (the “Energy Transfer common units”) and 7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units (the “Energy Transfer Series G Preferred Units”) estimated to be issuable upon the completion of the merger with Enable Midstream Partners, LP (“Enable”) described herein.

(2)

Pursuant to Rule 457(c) and 457(f)(1) under the Securities Act of 1933, as amended (the “Securities Act”), and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is equal to the product of (a) $6.98, the average of the high and low prices per unit of Enable common units, as reported on the New York Stock Exchange on March 17, 2021 and (b) 437,537,305, the estimated maximum number of Enable common units that may be converted into the securities being registered.

(3)

Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee of Energy Transfer Series G Preferred Units, the proposed aggregate maximum offering price is the product of (a) $1,000 (the liquidation preference of the Energy Transfer Series G Preferred Units) and (b) 384,780 Energy Transfer Series G Preferred Units.

(4)

Calculated by multiplying the proposed maximum aggregate offering price by 0.0001091.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this document is not complete and may be changed. Energy Transfer LP may not issue the securities described herein until the registration statement filed with the Securities and Exchange Commission is effective. This document is not an offer to sell these securities and is not soliciting an offer to buy

these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED MARCH 18, 2021

 

LOGO

Dear Common Unitholders of Enable Midstream Partners, LP:

On February 16, 2021, Enable Midstream Partners, LP (“Enable”) entered into an Agreement and Plan of Merger (the “merger agreement”) with Energy Transfer LP (“Energy Transfer”), Elk Merger Sub LLC, a direct wholly owned subsidiary of Energy Transfer (“Merger Sub”), Elk GP Merger Sub LLC, a direct wholly owned subsidiary of Energy Transfer (“GP Merger Sub” and together with Merger Sub, the “Merger Subs”), Enable GP, LLC, the sole general partner of Enable (“Enable General Partner”), solely for the purposes of Section 2.1(a)(i) therein, LE GP, LLC, the sole general partner of Energy Transfer (“ET GP”), and, solely for purposes of Section 1.1(b)(i) therein, CenterPoint Energy, Inc. (“CenterPoint”). Pursuant to the merger agreement, and subject to the terms and conditions therein, (i) Merger Sub will merge with and into Enable (the “LP Merger”), with Enable surviving the LP Merger as a wholly owned subsidiary of Energy Transfer, (ii) GP Merger Sub will merge with and into Enable General Partner (the “GP Merger” and, together with the LP Merger, the “Merger”), with Enable General Partner surviving the GP Merger as a direct wholly owned subsidiary of Energy Transfer and (iii) immediately prior to the effective time of the Merger (the “effective time”), (A) CenterPoint will contribute, assign, transfer, convey and deliver to Energy Transfer, and Energy Transfer will acquire, assume, accept and receive from CenterPoint, all of CenterPoint’s right, title and interest in each 10% Series A Fixed-to-Floating Non-Cumulative Redeemable Perpetual Preferred Unit representing a limited partner interest in Enable (the “Enable Series A Preferred Units”) issued and outstanding at such time in exchange for 0.0265 of a 7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Unit issued by Energy Transfer, and (B) Energy Transfer will subsequently contribute, assign, transfer, convey and deliver to a subsidiary of Energy Transfer that is treated as a corporation for U.S. federal income tax purposes all or a portion of such Enable Series A Preferred Units.

In the LP Merger, each common unit representing a limited partner interest in Enable (“Enable common units”) issued and outstanding immediately prior to the effective time will be converted into and will thereafter represent the right to receive 0.8595 of a common unit representing a limited partner interest in Energy Transfer (the “Energy Transfer common units” and such consideration, the “LP Merger Consideration”).

In the GP Merger, all of the limited liability company interests in Enable General Partner issued and outstanding as of immediately prior to the effective time will be converted into and will thereafter represent the right to receive $10,000,000 in the aggregate. In exchange for the transactions contemplated by the GP Merger, Enable’s incentive distribution rights outstanding immediately prior to the effective time will be automatically cancelled and cease to exist and the non-economic general partner interest in Enable will be unchanged and remain outstanding as a non-economic general partner interest in the surviving entity of the LP Merger.

The implied value of the merger consideration to be received in exchange for each Enable common unit will fluctuate based on the market price of Energy Transfer common units until the completion of the LP Merger because the LP Merger Consideration is payable in a fixed number of Energy Transfer common units. As a result, the value of the per unit LP Merger Consideration that Enable common unitholders will be entitled to receive upon consummation of the LP Merger could be greater than, less than or the same as the value of the LP Merger Consideration on the date of this consent statement/prospectus. Accordingly, we urge you to obtain current market quotations for the Energy Transfer common units and Enable common units. Enable common units are currently traded on the New York Stock Exchange (the “NYSE”) under the symbol “ENBL,” and Energy Transfer common units are currently traded on the NYSE under the symbol “ET.”

CenterPoint and OGE Energy Corp. (together, the “Sponsors”), who collectively own approximately 79% of the outstanding Enable common units, have each entered into support agreements (the “support agreements”) pursuant to which such Sponsors have agreed, subject to the terms and conditions of such support agreements, to execute and return written consents approving the merger agreement and each of the other matters for which Enable is soliciting consents in connection with the merger agreement within 24 hours after the registration statement, of which this consent statement/prospectus forms a part, becomes effective under the Securities Act. The delivery of the written consents by the Sponsors will be sufficient to approve the merger agreement and the


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other transactions contemplated by the merger agreement. Enable is sending this document to all of its common unitholders, including the Sponsors, to request that they approve the merger agreement and, on a non-binding, advisory basis, the compensation that will or may become payable to Enable’s named executive officers in connection with the transactions contemplated by the merger agreement (the “Transaction-Related Compensation Proposal”) by executing and returning the written consent furnished with this consent statement/prospectus. When the Sponsors execute and return their written consents approving the merger agreement and the Transaction-Related Compensation Proposal, no other consents from the other Enable common unitholders will be required to approve the merger agreement and the Transaction-Related Compensation Proposal.

The board of directors of Enable General Partner (the “Enable General Partner Board”) has set                , 2021 as the record date (which we refer to as the “Enable Record Date”) for determining the holders of Enable common units entitled to execute and deliver written consents with respect to the accompanying consent statement/prospectus.

 

 

We urge you to read the enclosed consent statement/prospectus, which includes important information about the merger agreement and the transactions contemplated thereby. In particular, see the section titled “Risk Factors” beginning on page 21 of the accompanying consent statement/prospectus.

In light of the fact that Enable General Partner and its affiliates have interests in the transactions that are different than the interests of the unaffiliated holders of Enable common units, the Enable General Partner Board delegated to the conflicts committee of the Enable General Partner Board (the “Enable Conflicts Committee”) consisting of directors that satisfy the requirements to serve on a conflicts committee in the Fifth Amended and Restated Agreement of Limited Partnership of Enable, dated as of November 14, 2017 (the “Enable Partnership Agreement”), the power and authority to, among other things, (i) consider, explore, review, analyze, solicit, structure and evaluate the proposed transactions, (ii) determine whether or not to approve the proposed transactions by “Special Approval” under the Enable Partnership Agreement and (iii) make a recommendation to the Enable General Partner Board to approve or disapprove of the proposed transactions. The Enable Conflicts Committee has unanimously, in good faith, among other things, (i) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of Enable, its subsidiaries and the unaffiliated holders of Enable common units, (ii) approved the merger agreement and the transactions contemplated thereby, including the LP Merger, with such approval constituting “Special Approval” under the Enable Partnership Agreement and (iii) recommended to the Enable General Partner Board approval of the merger agreement and the consummation of the transactions contemplated thereby, including the LP Merger. Upon the approval and recommendation of the Enable Conflicts Committee, the Enable General Partner Board has unanimously, in good faith, (i) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of Enable and its subsidiaries, and, with respect to the GP Merger, Enable General Partner, (ii) approved the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby and (iii) authorized that the approval of the merger agreement and the transactions contemplated thereby be submitted to Enable’s common unitholders to act by written consent pursuant to Section 13.11 of the Enable Partnership Agreement.

 

  Sincerely,
  Rodney J. Sailor
  President and Chief Executive Officer

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying consent statement/prospectus or determined that the accompanying document is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying consent statement/prospectus is dated                 , 2021 and is first being mailed to the holders of Enable common units on or about                 , 2021.


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ENABLE MIDSTREAM PARTNERS, LP

499 West Sheridan Avenue, Suite 1500

Oklahoma City, Oklahoma 73102

NOTICE OF SOLICITATION OF WRITTEN CONSENT

Enable Midstream Partners, LP (“Enable”) is requesting that you execute and return your written consent to:

 

  1.

Approve the Agreement and Plan of Merger, dated as of February 16, 2021 (the “merger agreement”), by and among Energy Transfer LP (“Energy Transfer”), Elk Merger Sub LLC (“Merger Sub”), Elk GP Merger Sub LLC, a direct wholly owned subsidiary of Energy Transfer (“GP Merger Sub”), Enable, Enable GP, LLC, the sole general partner of Enable (“Enable General Partner”), solely for purposes of Section 2.1(a)(i) therein, LE GP, LLC, the sole general partner of Energy Transfer (“ET GP”), and solely for purposes of Section 1.1(b)(i) therein, CenterPoint Energy Inc. (“CenterPoint”), pursuant to which (i) Merger Sub will merge with and into Enable (the “LP Merger”), with Enable surviving the LP Merger as a wholly owned subsidiary of Energy Transfer, and (ii) GP Merger Sub will merge with and into Enable General Partner (the “GP Merger” and, together with the LP Merger, the “Merger”), with Enable General Partner surviving the GP Merger as a direct wholly owned subsidiary of Energy Transfer and (iii) immediately prior to the effective time of the Merger (the “effective time”), (A) CenterPoint will contribute, assign, transfer, convey and deliver to Energy Transfer, and Energy Transfer will acquire, assume, accept and receive from CenterPoint, all of CenterPoint’s right, title and interest in each 10% Series A Fixed-to-Floating Non-Cumulative Redeemable Perpetual Preferred Unit representing a limited partner interest in Enable (the “Enable Series A Preferred Units”) issued and outstanding at such time in exchange for 0.0265 of a 7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Unit issued by Energy Transfer, and (B) Energy Transfer will subsequently contribute, assign, transfer, convey and deliver to a subsidiary of Energy Transfer that is treated as a corporation for U.S. federal income tax purposes all or a portion of such Enable Series A Preferred Units.

In the LP Merger, each common unit representing a limited partner interest in Enable (“Enable common units”) issued and outstanding immediately prior to the effective time will be converted into and will thereafter represent the right to receive 0.8595 of a common unit representing a limited partner interest in Energy Transfer (the “Energy Transfer common units” and such consideration, the “LP Merger Consideration”).

In the GP Merger, all of the limited liability company interests in Enable General Partner issued and outstanding as of immediately prior to the effective time will be converted into and will thereafter represent the right to receive $10,000,000 in the aggregate. In exchange for the transactions contemplated by the GP Merger, Enable’s incentive distribution rights outstanding immediately prior to the effective time will be automatically cancelled and cease to exist and the non-economic general partner interest in Enable will be unchanged and remain outstanding as a non-economic general partner interest in the surviving entity of the LP Merger.

 

  2.

Approve, on a non-binding, advisory basis, the compensation that will or may become payable to Enable’s named executive officers in connection with the transactions contemplated by the merger agreement (the “Transaction-Related Compensation” and such proposal, the “Transaction-Related Compensation Proposal”).

This consent statement/prospectus describes the Merger, the other transactions contemplated by the merger agreement and the actions to be taken in connection therewith and provides additional information about the parties involved. Please give this information your careful attention. A copy of the merger agreement is attached as Annex A to this consent statement/prospectus.

Enable cannot complete the transactions contemplated by the merger agreement unless the holders of a majority of the outstanding Enable common units approve the merger agreement. CenterPoint and OGE Energy Corp. (“collectively, the “Sponsors”) who collectively own approximately 79% of the outstanding


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Enable common units, have each entered into support agreements pursuant to which the Sponsors have agreed, subject to the terms and conditions of such support agreements, to execute and return written consents approving the merger agreement and each of the other matters for which Enable is soliciting consents in connection with the merger agreement within 24 hours after the registration statement, of which this consent statement/prospectus forms a part, becomes effective under the Securities Act. The delivery of the written consents by the Sponsors will be sufficient to approve the merger agreement and, on a non-binding, advisory basis, the Transaction-Related Compensation Proposal. When the Sponsors execute and return their written consents approving the merger agreement and the Transaction-Related Compensation Proposal, no other consents from the other Enable common unitholders will be required to approve the merger agreement and the Transaction-Related Compensation Proposal.

The board of directors of Enable General Partner (the “Enable General Partner Board”) has set      , 2021 as the record date (the “Enable Record Date”) for the determination of Enable common unitholders entitled to execute and deliver written consents with respect to this accompanying consent statement/prospectus.

In light of the fact that Enable General Partner and its affiliates have interests in the transactions that are different than the interests of the unaffiliated holders of Enable common units, the Enable General Partner Board delegated to the conflicts committee of the Enable General Partner Board (the “Enable Conflicts Committee”), consisting of directors that satisfy the requirements to serve on a conflicts committee in the Fifth Amended and Restated Agreement of Limited Partnership of Enable, dated as of November 14, 2017 (the “Enable Partnership Agreement”), the power and authority to, among other things, (i) consider, explore, review, analyze, solicit, structure and evaluate the proposed transactions, (ii) determine whether or not to approve the proposed transactions by “Special Approval” under the Enable Partnership Agreement and (iii) make a recommendation to the Enable General Partner Board to approve or disapprove of the proposed transactions. The Enable Conflicts Committee has unanimously, in good faith, among other things, (i) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of Enable, its subsidiaries and the unaffiliated holders of Enable common units, (ii) approved the merger agreement and the transactions contemplated thereby, including the LP Merger, with such approval constituting “Special Approval” under the Enable Partnership Agreement, and (iii) recommended to the Enable General Partner Board approval of the merger agreement and the consummation of the transactions contemplated thereby, including the LP Merger. Upon the approval and recommendation of the Enable Conflicts Committee, the Enable General Partner Board has unanimously, in good faith, (i) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of Enable and its subsidiaries, and, with respect to the GP Merger, Enable General Partner, (ii) approved the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby and (iii) authorized that the approval of the merger agreement and the transactions contemplated thereby be submitted to Enable’s common unitholders to act by written consent pursuant to Section 13.11 of the Enable Partnership Agreement.

Please complete, date and sign the written consent furnished with this consent statement/prospectus and return it promptly to Enable by one of the means described in the section entitled “Enable Solicitation of Written Consents.”

On behalf of the Enable General Partner Board,

Mark C. Schroeder

Executive Vice President, General Counsel and

Chief Ethics and Compliance Officer

                , 2021


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ADDITIONAL INFORMATION

This document, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”), constitutes a consent statement of Enable and is also a prospectus of Energy Transfer under Section 5 of the U.S. Securities Act of 1933, as amended (the “Securities Act”), for Energy Transfer common units that will be issued to Enable common unitholders and Energy Transfer Series G Preferred Units that will be issued to holders of Enable Series A Preferred Units pursuant to the merger agreement.

As permitted under the rules of the SEC, this document incorporates by reference important business and financial information about Energy Transfer and Enable from other documents filed with the SEC that are not included in or delivered with this document. Please read the section titled “Where You Can Find More Information.” You can obtain any of the documents incorporated by reference into this document from the SEC’s website at www.sec.gov. This information is also available to you without charge upon your request in writing or by telephone from Energy Transfer or Enable at the following addresses and telephone numbers:

 

Energy Transfer LP

8111 Westchester Drive, Suite 600

Dallas, Texas 75225

Attention: Investor Relations

Telephone: (214) 981-0795

  

Enable Midstream Partners, LP

499 West Sheridan Avenue, Suite 1500

Oklahoma City, Oklahoma 73102

Attention: Investor Relations

Phone: (405) 525-7788

Please note that copies of the documents provided to you will not include exhibits, unless the exhibits are specifically incorporated by reference into the documents or this document.

You may obtain certain of these documents at Energy Transfer’s website, www.energytransfer.com, and at Enable’s website, www.enablemidstream.com. None of the information contained on the website of Energy Transfer or Enable is incorporated by reference into this document.

If you request any documents, Energy Transfer or Enable will mail them to you by first class mail, or another equally prompt means, within one business day after receipt of your request. To ensure timely delivery of these documents, any request should be made no later than                 , 2021.


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CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE MERGER

     1  

SUMMARY

     10  

Information About the Companies

     10  

The Merger

     10  

Merger Consideration

     11  

Treatment of Enable Series A Preferred Units

     11  

Pre-Closing Transactions

     11  

Treatment of Enable Equity Awards

     11  

Support Agreements

     12  

Summary of Risk Factors

     12  

Approvals Required by the Enable Common Unitholders to Complete the LP Merger and the Other Transactions Contemplated by the Merger Agreement

     14  

Approval of the Enable Conflicts Committee and the Enable General Partner Board and Reasons for the Merger

     14  

Opinion of the Enable General Partner Board’s Financial Advisor

     15  

Opinion of the Enable Conflicts Committee’s Financial Advisor

     15  

Interests of Enable General Partner’s Directors and Executive Officers in the Merger

     16  

Regulatory Approvals Required for the Merger

     16  

No Appraisal or Dissenters’ Rights

     16  

NYSE Listing of Energy Transfer Common Units

     16  

Delisting and Deregistration of Enable Common Units

     16  

Conditions to Completion of the Merger

     17  

Non-Solicitation by Enable

     17  

Termination of Merger Agreement

     17  

Breakup Fee

     18  

Accounting Treatment of the Merger

     18  

Material U.S. Federal Income Tax Consequences of the LP Merger

     18  

Expected Timing of the Merger

     20  

Comparison of Rights of Enable and Energy Transfer Unitholders

     20  

RISK FACTORS

     21  

Risks Factors Related to the Merger

     21  

Tax Risks Related to the Merger

     27  

Tax Risks Related to Owning Energy Transfer Units Following the Merger

     28  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     30  

INFORMATION ABOUT THE COMPANIES

     31  

Energy Transfer LP

     31  

Enable Midstream Partners, LP

     31  

Elk Merger Sub LLC

     31  

Elk GP Merger Sub LLC

     32  

ENABLE SOLICITATION OF WRITTEN CONSENTS

     33  

THE MERGER

     35  

Effects of the Merger

     35  

Background of the Merger

     35  

Energy Transfer’s Reasons for the Merger

     49  

Approval of the Enable Conflicts Committee and the Enable General Partner Board and Reasons for the Merger

     50  

Opinion of the Enable General Partner Board’s Financial Advisor

     59  

Opinion of the Enable Conflicts Committee’s Financial Advisor

     65  

Enable and Energy Transfer Unaudited Prospective Financial Information

     78  

 

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     Page  

Interests of Enable’s Directors and Executive Officers in the Merger

     84  

Securities Ownership of Certain Beneficial Owners and Management

     89  

Merger Expenses, Fees and Costs

     91  

Expected Timing of the Merger

     91  

No Energy Transfer Unitholder Approval

     91  

Accounting Treatment of the Merger

     91  

Regulatory Approvals

     91  

Exchange of Units

     93  

Listing of Energy Transfer Common Units Issued in the Transactions; Delisting and Deregistration of Enable Common Units After the Transactions

     94  

TRANSACTION-RELATED COMPENSATION

     95  

THE MERGER AGREEMENT

     96  

The Merger

     96  

Pre-Closing Transactions

     96  

Merger Closing and Effective Time

     97  

Directors and Officers

     97  

LP Merger Consideration

     97  

GP Merger Consideration

     97  

Preferred Contributions

     97  

Conditions to the Merger

     97  

No Dissenters’ or Appraisal Rights

     99  

Representations and Warranties

     99  

Definition of Material Adverse Effect

     102  

Conduct of Business Pending the Merger

     103  

Mutual Access

     107  

Non-Solicitation by Enable

     108  

Enable Employee Equity-Based Awards

     109  

Regulatory Approvals and Efforts to Close the Merger

     110  

Indemnification and Insurance

     112  

Financing Assistance

     112  

Other Covenants and Agreements

     112  

Termination of the Merger Agreement

     113  

Effect of Termination

     114  

Breakup Fee

     114  

Expenses

     115  

Amendment and Waiver

     115  

Governing Law

     115  

THE SUPPORT AGREEMENTS

     116  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE LP MERGER

     117  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF ENERGY TRANSFER UNIT OWNERSHIP

     122  

Partnership Status

     123  

Limited Partner Status

     124  

Tax Consequences of Unit Ownership

     125  

Tax Treatment of Operations

     132  

Disposition of Units

     133  

Uniformity of Common Units

     136  

Tax-Exempt Organizations and Other Investors

     136  

Administrative Matters

     138  

Recent Legislative Developments

     141  

State, Local, Foreign and Other Tax Considerations

     141  

 

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     Page  

DESCRIPTION OF ENERGY TRANSFER COMMON UNITS

     143  

Number of Common Units

     143  

Where Energy Transfer Common Units Are Traded

     143  

Quarterly Distributions

     143  

Issuance of Additional Partnership Securities; Preemptive Rights

     143  

Voting Rights

     144  

Limited Call Right

     145  

Transfer Agent and Registrar

     145  

Transfer of Energy Transfer Common Units

     145  

Non-Citizen Assignee; Redemption

     146  

Capital Contributions

     146  

Limited Liability

     146  

Change of Management Provisions

     147  

Meetings; Voting

     147  

Books and Reports

     149  

Right to Inspect Books and Records

     149  

DESCRIPTION OF ENERGY TRANSFER SERIES G PREFERRED UNITS

     150  

COMPARISON OF RIGHTS OF ENERGY TRANSFER COMMON UNITHOLDERS AND ENABLE COMMON UNITHOLDERS

     159  

Purpose

     159  

Outstanding Units; Authorized Capital

     159  

Distributions; Dividends

     160  

Distributions of Cash upon Liquidation

     161  

Merger, Sale or Other Disposition of Assets

     161  

Cash upon Liquidation

     161  

Energy Transfer General Partner; Enable General Partner

     163  

Election of General Partner and Directors of the General Partner

     163  

Withdrawal or Removal of the General Partner

     163  

Voting; Meetings

     164  

Transfer of General Partner Interests

     165  

Limited Preemptive Right

     166  

Limited Call Right

     166  

Amendment of Governing Documents

     167  

Indemnification

     172  

Conflicts of Interest

     173  

Termination and Dissolution

     175  

HOUSEHOLDING

     177  

LEGAL MATTERS

     178  

EXPERTS

     178  

WHERE YOU CAN FIND MORE INFORMATION

     179  

ANNEX A – AGREEMENT AND PLAN OF MERGER

     A-1  

ANNEX B – SUPPORT AGREEMENT OF CENTERPOINT ENERGY, INC.

     B-1  

ANNEX C – SUPPORT AGREEMENT OF OGE ENERGY CORP.

     C-1  

ANNEX D – OPINION OF GOLDMAN SACHS & CO. LLC

     D-1  

ANNEX E – OPINION OF INTREPID PARTNERS, LLC

     E-1  

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER

Set forth below are questions that you, as a holder of Enable common units, may have regarding the Merger and brief answers to those questions. For more complete descriptions of the legal and other terms of the Merger, please read this entire document, including the merger agreement, which is attached as Annex A to this consent statement/prospectus, and the documents incorporated by reference into this document. You may obtain a list of the documents incorporated by reference into this document in the section entitled “Where You Can Find More Information.”

 

Q:

Why am I receiving this consent statement/prospectus?

 

A:

On February 16, 2021, Enable Midstream Partners, LP (“Enable”) entered into an Agreement and Plan of Merger (the “merger agreement”) with Energy Transfer LP (“Energy Transfer”), Elk Merger Sub LLC, a direct wholly owned subsidiary of Energy Transfer (“Merger Sub”), Elk GP Merger Sub LLC, a direct wholly owned subsidiary of Energy Transfer (“GP Merger Sub” and together with Merger Sub, the “Merger Subs”), Enable GP, LLC, the sole general partner of Enable (the “Enable General Partner”), solely for the purposes of Section 2.1(a)(i) therein, LE GP, LLC, the sole general partner of Energy Transfer (“ET GP”), and, solely for purposes of Section 1.1(b)(i) therein, CenterPoint Energy, Inc. (“CenterPoint”). Pursuant to the merger agreement, and subject to the terms and conditions therein, (i) Merger Sub will merge with and into Enable (the “LP Merger”), with Enable surviving the LP Merger as a wholly owned subsidiary of Energy Transfer, (ii) GP Merger Sub will merge with and into Enable General Partner (the “GP Merger” and, together with the LP Merger, the “Merger”), with Enable General Partner surviving the GP Merger as a direct wholly owned subsidiary of Energy Transfer and (iii) immediately prior to the effective time of the Merger (the “effective time”), (A) CenterPoint will contribute, assign, transfer, convey and deliver to Energy Transfer, and Energy Transfer will acquire, assume, accept and receive from CenterPoint, all of CenterPoint’s right, title and interest in each 10% Series A Fixed-to-Floating Non-Cumulative Redeemable Perpetual Preferred Unit representing a limited partner interest in Enable (the “Enable Series A Preferred Units”) issued and outstanding at such time in exchange for 0.0265 of a 7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Unit issued by Energy Transfer (the “Energy Transfer Series G Preferred Units”), and (B) Energy Transfer will subsequently contribute, assign, transfer, convey and deliver to a subsidiary of Energy Transfer that is treated as a corporation for U.S. federal income tax purposes all or a portion of such Enable Series A Preferred Units (such transaction described in clause (iii), the “Preferred Contributions”).

In the LP Merger, each common unit representing a limited partner interest in Enable (“Enable common units”) issued and outstanding immediately prior to the effective time will be converted into and will thereafter represent the right to receive 0.8595 (the “exchange ratio”) of a common unit representing a limited partner interest in Energy Transfer (the “Energy Transfer common units” and such consideration, the “LP Merger Consideration”).

In the GP Merger, all of the limited liability company interests in Enable General Partner issued and outstanding as of immediately prior to the effective time will be converted into and will thereafter represent the right to receive $10,000,000 in the aggregate (the “GP Merger Consideration”). In exchange for the transactions contemplated by the GP Merger, Enable’s incentive distribution rights outstanding immediately prior to the effective time will be automatically cancelled and cease to exist and the non-economic general partner interest in Enable will be unchanged and remain outstanding as a non-economic general partner interest in the surviving entity of the LP Merger.

CenterPoint and OGE Energy Corp. (“OGE Energy” and, together with CenterPoint, the “Sponsors”), who collectively own approximately 79% of the outstanding Enable common units, have each entered into a support agreement (together, the “support agreements”) pursuant to which each such Sponsor has agreed, subject to the terms and conditions of such support agreement, to execute and return a written consent approving the merger agreement and each of the other matters for which Enable is soliciting consents in

 

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connection with the merger agreement within 24 hours after the registration statement, of which this consent statement/prospectus forms a part, becomes effective under the Securities Act. The delivery of the written consents by the Sponsors will be sufficient to approve the merger agreement and the other transactions contemplated by the merger agreement. For more information, see the section titled “The Support Agreements” beginning on page 116 of this consent statement/prospectus. Enable is sending this consent statement/prospectus to all of its common unitholders, including the Sponsors, to request that they approve the merger agreement and, on a non-binding, advisory basis, the compensation that will or may become payable to Enable’s named executive officers in connection with the transactions contemplated by the merger agreement (the “Transaction-Related Compensation Proposal”) by executing and returning the written consent furnished with this consent statement/prospectus. When the Sponsors execute and return their written consents approving the merger agreement and the Transaction-Related Compensation Proposal, no other consents from the other Enable common unitholders will be required to approve the merger agreement and the Transaction-Related Compensation Proposal. The Enable General Partner board of directors (the “Enable General Partner Board”) has set                , 2021 as the record date (which we refer to as the “Enable Record Date”) for determining the holders of Enable common units entitled to execute and deliver written consents with respect to this consent statement/prospectus.

This consent statement/prospectus serves as both consent statement of Enable and a prospectus of Energy Transfer in connection with the merger agreement and the Merger and other transactions contemplated thereby.

 

Q:

What will happen in the Merger and the Preferred Contributions?

 

A:

As discussed in greater detail in the response above, if the Merger is successfully completed, Merger Sub will be merged with and into Enable, with Enable surviving as wholly owned subsidiary of Energy Transfer, and GP Merger Sub will merge with and into Enable General Partner, with Enable General Partner surviving as a direct wholly owned subsidiary of Energy Transfer. Furthermore, as part of the Preferred Contributions, each Enable Series A Preferred Unit, all of which are held by CenterPoint, will be contributed, assigned, transferred, conveyed and delivered to Energy Transfer in exchange for 0.0265 of a newly issued Energy Transfer Series G Preferred Unit, and Energy Transfer will subsequently contribute, assign, transfer, convey and deliver to a subsidiary of Energy Transfer all or a portion of such Enable Series A Preferred Units. In addition, if the Merger is successfully completed, the Enable common units will no longer be listed and traded on the NYSE.

 

Q:

What will Enable Common unitholders receive in the LP Merger?

 

A:

As of the effective time, each Enable common unit will be converted into and will thereafter represent the right to receive the LP Merger Consideration. The LP Merger Consideration consists of the right to receive 0.8595 of an Energy Transfer common unit for each Enable common unit owned as of the effective time. If at any time during the period between the date of the merger agreement and the effective time any change in the outstanding Enable common units or outstanding Energy Transfer common units shall occur, by reason of the occurrence or record date of any unit dividend, subdivision, reclassification, recapitalization, split, split-up, unit distribution, combination, exchange of units or other similar transaction, the LP Merger Consideration, the exchange ratio and any other similarly dependent items shall be equitably adjusted to provide to Energy Transfer, Merger Sub and the Enable common unitholders the same economic effect as contemplated by the merger agreement prior to such action.

Based on the $6.96 closing price of Energy Transfer common units on Tuesday, February 16, 2021, the last full trading day before the public announcement of the Merger, the per unit value of Enable common units implied by the LP Merger Consideration is $5.98, or a total common equity valuation of Enable of $2.6 billion.

 

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Q:

What will the Sponsors receive in the Merger and the other transactions contemplated by the merger agreement?

 

A:

(i) Each outstanding Enable common unit, including Enable common units held by the Sponsors, will be converted into and will thereafter represent the right to receive the LP Merger Consideration, (ii) all of the limited liability company interests in Enable General Partner issued and outstanding immediately prior to the effective time, all of which are held by the Sponsors, will be converted into and will thereafter represent the right to receive the GP Merger Consideration and (iii) each Enable Series A Preferred Unit, all of which are held by CenterPoint, will be exchanged for 0.0265 of a newly issued Energy Transfer Series G Preferred Unit.

 

Q:

What happens if the Merger is not completed?

 

A:

If the Merger is not completed for any reason, holders of Enable common units will not receive any LP Merger Consideration in exchange for their Enable common units, the Sponsors will not receive the GP Merger Consideration in exchange for the limited liability company interests in Enable General Partner and CenterPoint will not receive Energy Transfer Series G Preferred Units in exchange for the Enable Series A Preferred Units. Additionally, Enable will remain an independent public company with Enable common units continuing to be traded on the NYSE. If the merger agreement is terminated under specified circumstances, including if Enable willfully breaches any of its non-solicitation covenants under the merger agreement, including soliciting an acquisition proposal from a third party, Enable may be required to pay Energy Transfer a breakup fee of $97.5 million. Following payment of the breakup fee, Enable will not have any further liability with respect to the merger agreement except for liability arising from fraud.

 

Q:

Will any consideration be paid to Enable common unitholders (other than the Sponsors) in the GP Merger or as a result of the Preferred Contributions?

 

A:

No. In the GP Merger, all of the limited liability company interests in Enable General Partner issued and outstanding immediately prior to the effective time will be converted into and will thereafter represent the right to receive the GP Merger Consideration, which will be allocated equally between the Sponsors. In exchange for the transactions contemplated by the GP Merger, Enable’s incentive distribution rights outstanding immediately prior to the effective time will be automatically cancelled and cease to exist and the non-economic general partner interest in Enable will be unchanged and remain outstanding as a non-economic general partner interest in the surviving entity of the LP Merger. In connection with the Preferred Contributions, each Enable Series A Preferred Unit, all of which are held by CenterPoint, will be exchanged for 0.0265 of an Energy Transfer Series G Preferred Unit. The Enable Series A Preferred Units will be unchanged and remain outstanding and wholly owned directly or indirectly by Energy Transfer.

 

Q:

If I am an Enable common unitholder, how will I receive the LP Merger Consideration to which I become entitled?

 

A:

Within five business days following the effective time, the exchange agent will mail to you (i) a letter of transmittal and (ii) instructions for use in effecting the surrender of your Enable common units in exchange for the LP Merger Consideration and any distributions payable pursuant to Section 2.2(c) of the merger agreement. Subject to applicable laws, following surrender of any such Enable common units to the exchange agent, together with your duly completed and validly executed letter of transmittal and any other documents required by the exchange agent, you will be entitled to receive, without interest, (i) promptly after such surrender, the number of whole Energy Transfer common units to which you are entitled, payment by check of the amount of distributions with a record date at or after the effective time and a payment date on or prior to the date of such surrender and not theretofore paid with respect to such Energy Transfer common units and (ii) at the appropriate payment date, the amount of distributions with a record date at or after the effective time and a payment date subsequent to the date of such surrender payable with

 

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  respect to such Energy Transfer common units. No fractional Energy Transfer common units will be issued as LP Merger Consideration. In lieu of receiving a fractional Energy Transfer common unit, all fractional Energy Transfer common units will be aggregated and rounded up to the nearest whole Energy Transfer common unit. For more information about the exchange of Enable common units for Energy Transfer common units, see “The Merger—Exchange of Units” beginning on page 93 of this consent statement/prospectus.

 

Q:

What are Enable common unitholders being asked to do?

 

A:

Enable common unitholders are being asked to deliver written consents to approve the merger agreement and, on a non-binding, advisory basis, the Transaction-Related Compensation Proposal.

The approval of the merger agreement by the holders of a majority of Enable’s outstanding common units is a condition to the obligations of Enable and of Energy Transfer to complete the Merger.

 

Q:

Who is entitled to deliver written consents to approve the merger agreement and the Transaction-Related Compensation Proposal?

 

A:

Only written consents received from holders of Enable common units as of the Enable Record Date, the close of business on                , 2021, will be counted for purposes of approving the merger agreement and, on a non-binding, advisory basis, the Transaction-Related Compensation Proposal. As of the Enable Record Date, there were                Enable common units outstanding.

 

Q:

Are there any important risks related to the Merger or Energy Transfer’s or Enable’s businesses of which I should be aware?

 

A:

Yes, there are important risks related to the Merger and Energy Transfer’s and Enable’s businesses. Before making any decision on how to vote, Energy Transfer and Enable urge you to read carefully and in its entirety the section titled “Risk Factors” beginning on page 21 of this consent statement/prospectus. You also should read and carefully consider the risk factors relating to Energy Transfer and Enable contained in the documents that are incorporated by reference into this consent statement/prospectus, including Energy Transfer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and Enable’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as updated from time to time in each company’s subsequent filings with the SEC.

 

Q:

What Enable unitholder approval is required to approve the merger agreement?

 

A:

The approval of the holders of a majority of Enable’s outstanding common units is required to approve the merger agreement and the other transactions contemplated by the merger agreement.

The Sponsors, who collectively own approximately 79% of the outstanding Enable common units, have each entered into a support agreement pursuant to which such Sponsor has agreed, subject to the terms and conditions of such support agreement, to execute and return a written consent approving the merger agreement and each of the matters for which Enable is soliciting consents of the holders of Enable common units in accordance with the merger agreement within 24 hours after the registration statement, of which this consent statement/prospectus forms a part, becomes effective under the Securities Act. The delivery of the written consents by the Sponsors will be sufficient to approve the merger agreement and the Transaction-Related Compensation Proposal. When the Sponsors execute and return their written consents approving the merger agreement and the Transaction-Related Compensation Proposal, no other consents from the other Enable common unitholders will be required to approve the merger agreement and the Transaction-Related Compensation Proposal.

 

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Q:

Do Enable directors and executive officers have interests that may differ from those of other Enable common unitholders?

 

A:

Yes. Enable common unitholders should be aware and take into account the fact that certain Enable directors and executive officers have interests in the Merger that may be different from, or in addition to, the interests of Enable common unitholders generally and that may create potential conflicts of interest. The Enable General Partner Board was aware of and carefully considered these interests, among other matters, in evaluating the terms and structure, and overseeing the negotiation of, the Merger, in approving the merger agreement and the transactions contemplated thereby, including the Merger. See the section titled “The Merger—Interests of Enable Directors and Executive Officers in the Merger Agreement.”

 

Q:

What was the Enable Conflicts Committee’s role in reviewing the proposed transaction with Energy Transfer and what did the Enable Conflicts Committee determine?

 

A:

The Enable Conflicts Committee reviewed the merger agreement and related documents and unanimously, in good faith, among other things (a) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of Enable, its subsidiaries and the unaffiliated holders of Enable common units, (b) approved the merger agreement and the transactions contemplated thereby, including the LP Merger, with such approval constituting “Special Approval” under the Fifth Amended and Restated Agreement of Limited Partnership of Enable, dated as of November 14, 2017 (the “Enable Partnership Agreement”), and (c) recommended to the Enable General Partner Board approval of the merger agreement and the consummation of the transactions contemplated thereby, including the LP Merger. For more information regarding the recommendation of the Enable Conflicts Committee in making such determination, see “The Merger—Approval of the Enable Conflicts Committee and the Enable General Partner Board and Reasons for the Merger.”

 

Q:

What is the deadline for returning my written consent?

 

A:

Enable common unitholders may execute and return their written consent as soon as reasonably practicable after the date this consent statement/prospectus becomes effective and until                , 2021 (the “consent deadline”).

 

Q:

How do I return my Enable written consent?

 

A:

If you are an Enable common unitholder as of the Enable Record Date, and after carefully reading and considering the information contained in this consent statement/prospectus you wish to return your written consent, please complete, date and sign the enclosed written consent and promptly return it as instructed. If you are a direct registered holder of Enable common units, please send the enclosed notice of consent to the address below, or email a pdf copy of your signed and dated written consent to MacKenzie Partners, Inc. to the email address below.

By Mail. MacKenzie Partners, Inc., 1407 Broadway 27th Floor, New York, NY 10018, attention Glen Linde.

By Email. consent@mackenziepartners.com

Enable will not be holding a meeting to approve the merger agreement, and therefore you will be unable to vote in person.

 

Q:

What if I hold both Energy Transfer common units and Enable common units?

 

A:

If you are both an Energy Transfer common unitholder and an Enable common unitholder, you will still receive consent solicitation materials from Enable. Therefore, please complete, date and sign and deliver the written consent that you receive from Enable.

 

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Q:

If I am an Enable common unitholder, can I change or revoke my written consent?

 

A:

Yes. You may change or revoke your written consent, at any time after this consent statement/prospectus is declared effective and until the consent deadline; however, such change or revocation may not have any effect, as the delivery of written consents by the Sponsors pursuant to the support agreements will be sufficient to approve the merger agreement and the Transaction-Related Compensation Proposal. If you wish to change or revoke your consent, Enable common unitholders may do so by sending in a new written consent with a later date or by delivering a notice of revocation to MacKenzie Partners, Inc., 1407 Broadway 27th Floor, New York, NY 10018, attention Glen Linde.

 

Q:

What if I sell my Enable common units after the Enable Record Date but before the effective time?

 

A:

If you sell or otherwise transfer your Enable common units after the Enable Record Date but prior to the effective time, you will not receive the LP Merger Consideration. You must hold your Enable common units through the effective time to receive the LP Merger Consideration.

 

Q:

What do I do if I receive more than one set of consent solicitation materials?

 

A:

You may receive more than one set of consent solicitation materials, including multiple copies of this consent statement/prospectus or the consent solicitation materials. This can occur if you hold your Enable common units in more than one brokerage account, if you hold Enable common units directly as a holder of record and also in street name, or otherwise through another holder of record, and in certain other circumstances. If you receive more than one set of consent solicitation materials, please return each set separately in order to ensure that all of your written consents are delivered, as applicable.

 

Q:

What will happen if I do not execute and return my written consent?

 

A:

If you are an Enable common unitholder as of the close of business on the Enable Record Date and you do not execute and return a written consent, it will have the same effect as a vote against the approval of the merger agreement and, on a non-binding, advisory basis, the Transaction-Related Compensation Proposal.

 

Q:

Are Enable common unitholders entitled to seek appraisal rights if they do not deliver a written consent?

 

A:

No, Enable common unitholders do not have appraisal rights in connection with the Merger under applicable law or the Enable Partnership Agreement or contractual appraisal rights under the merger agreement.

 

Q:

What are the expected U.S. federal income tax consequences to an Enable common unitholder as a result of the transactions contemplated by the merger agreement?

 

A:

Generally, no gain or loss should be recognized by a holder of Enable common units solely as a result of the receipt of the LP Merger Consideration, other than any net decrease in such holder’s share of partnership liabilities pursuant to Section 752 of the Internal Revenue Code of 1986, as amended (the “Code”) (as adjusted for any nonrecourse liabilities taken into account as part of a “disguised sale”) in excess of such holder’s adjusted tax basis.

However, a holder of Enable common units may recognize gain or loss in certain specific situations, including (i) a disguised sale under Section 707 of the Code if the holder contributes cash or other property to Enable after the signing date of the merger agreement and prior to the effective time, (ii) a deemed sale of Energy Transfer common units pursuant to the withholding provisions of the merger agreement, and (iii) if the holder is a non-U.S. person that beneficially owns or has beneficially owned at any time in the five-year period ending on the closing date of the Merger more than five percent of the total Enable common units.

 

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The amount and effect of any gain that may be recognized by a holder of Enable common units will depend on such holder’s particular situation, including the ability of such holder to utilize any suspended passive losses.

For additional information, please read “Material U.S. Federal Income Tax Consequences of the Merger—Tax Consequences of the LP Merger to Holders of Enable Common Units” and “Risk Factors—Risk Factors Related to the Merger.”

 

Q:

What are the expected U.S. federal income tax consequences for an Enable common unitholder of the ownership of Energy Transfer common units after the LP Merger is completed?

 

A:

Each holder of Enable common units who becomes a holder of Energy Transfer common units as a result of the LP Merger will, as is the case for existing Energy Transfer common unitholders, be allocated such holder’s distributive share of Energy Transfer’s income, gains, losses, deductions and credits. In addition to U.S. federal income taxes, such holder may be subject to other taxes, including state and local income taxes, unincorporated business taxes, and estate, inheritance or intangibles taxes that may be imposed by the various jurisdictions in which Energy Transfer conducts business or owns property following the LP Merger, or in which the holder is a resident. Please read “Material U.S. Federal Income Tax Consequences of Energy Transfer Unit Ownership.”

 

Q:

If the Merger is completed in 2021, how many Schedules K-1 will I receive for 2021 if I am an Enable common unitholder?

 

A:

If you are a holder of Enable common units, you will receive two Schedules K-1 in the year in which the Merger closes, one from Enable, which will describe your share of Enable’s income, gain, loss and deduction for the portion of the tax year that you held Enable common units prior to the effective time, and one from Energy Transfer, which will describe your share of Energy Transfer’s income, gain, loss and deduction for the portion of the tax year you held Energy Transfer common units following the effective time.

If the Merger closes in 2021, Enable expects to furnish a Schedule K-1 to each Enable common unitholder within 90 days of the end of the calendar year. Energy Transfer expects to furnish a Schedule K-1 to each Energy Transfer common unitholder within 90 days of the closing of Energy Transfer’s taxable year on December 31, 2021, whether or not the Merger closes in 2021.

 

Q:

What are the conditions to the completion of the Merger and the other transactions contemplated by the merger agreement?

 

A:

Completion of the Merger is subject to certain closing conditions, including, but not limited to, (i) the required unitholder approval shall have been obtained from the Enable common unitholders; (ii) the LP Merger Consideration shall have been approved for listing on the NYSE; (iii) the receipt of required regulatory approvals; (iv) the Form S-4 will have been declared effective by the SEC; and (v) the satisfaction (or to the extent permitted by applicable law, waiver) of other conditions to closing. See the section titled “The Merger Agreement—Conditions to the Merger” beginning on page 97 of this consent statement/prospectus for more information.

 

Q:

When are the Merger and the other transactions contemplated by the merger agreement expected to be completed?

 

A:

As of the date of this consent statement/prospectus, it is not possible to accurately estimate the closing date for the Merger because the Merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions to Energy Transfer’s and Enable’s obligations to complete the Merger; however, Energy Transfer and Enable currently expect the Merger to close mid-2021. Due to the requirement to obtain certain governmental approvals and other conditions necessary to complete the Merger, no assurance can be given as to when, or if, the Merger will be completed.

 

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Q:

What will happen to outstanding Enable equity awards in the Merger?

 

A:

At the time of the LP Merger, Enable phantom units (including any Seconded Employee Phantom Awards), whether vested or unvested, that are outstanding immediately prior to the effective time will be assumed by Energy Transfer and converted into a restricted unit award representing a contractual right upon vesting to receive a number of Energy Transfer common units or, in the case of Seconded Employees, the right to receive cash determined based on the value of Energy Transfer common units equal to the product obtained by multiplying (x) the number of Enable common units subject to such Enable assumed restricted unit award immediately prior to the effective time by (y) the exchange ratio, rounded up or down to the nearest whole Energy Transfer common unit (each, an “Enable assumed restricted unit award”). Each Enable assumed restricted unit award will otherwise be subject to the same terms and conditions as were applicable to the Enable phantom units immediately prior to the effective time.

Additionally, each award of performance units that corresponds to Enable common units, including Seconded Employee Performance Awards, that is outstanding and unvested as of the effective time will be measured as to performance as of the effective time (or a date reasonably proximate thereto) as determined in good faith by the Enable General Partner Board, and each such Enable performance award will, with respect to the number of Enable common units that are considered earned based on the higher of actual performance or target (the “Enable earned performance units”), be assumed by Energy Transfer and converted into an Enable assumed restricted unit award, which will have the same distribution equivalent rights and be eligible to vest solely based on continued service at the end of the performance period that was originally applicable thereto; provided, however, that the Enable earned performance units will vest upon a “qualifying termination” and, to the extent applicable, will incorporate the provisions related to termination due to “retirement,” as provided in the Enable phantom units, equal to the number of Enable earned performance units multiplied by the exchange ratio, rounded up or down to the nearest whole Energy Transfer common unit. Any performance units that are not Enable earned performance units will automatically be cancelled for no consideration. Notwithstanding the foregoing, with respect to Enable performance awards granted in 2021, the number of Enable earned performance units will be equal to the target number of units granted, regardless of performance.

 

Q:

If I am an Enable common unitholder, do I need to do anything at this time with my common units other than delivering my written consent?

 

A:

If you are an Enable common unitholder, you will be entitled to receive the LP Merger Consideration for your units after the effective time. The only action you are requested to take at this time is to affirmatively deliver written consent FOR the approval of the merger agreement and FOR the proposal to approve the Transaction-Related Compensation Proposal in accordance with the method of written consent set forth in the section entitled “Enable Solicitation of Written Consents” beginning on page 33 of this consent statement/prospectus.

 

Q:

Should I surrender my Enable common units for exchange now to receive the LP Merger Consideration?

 

A:

No. Enable common unitholders should not surrender their Enable common units for exchange to any person at this time. After the closing of the Merger, Energy Transfer’s exchange agent will send you a letter of transmittal and instructions for exchanging your Enable common units for the LP Merger Consideration. See the section titled “The Merger—Exchange of Units” beginning on page 93 of this consent statement/prospectus.

 

Q:

How will the Merger and the other transactions contemplated by the merger agreement be financed?

 

A:

Energy Transfer has, and at the closing will have, sufficient cash, available lines of credit or other sources of immediately available funds to pay the GP Merger Consideration and to refinance Enable’s indebtedness or otherwise satisfy requirements of such obligations in connection with the consummation of the transactions

 

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  contemplated by the merger agreement. Because the LP Merger Consideration consists of the right to receive 0.8595 Energy Transfer common units for each Enable common unit owned as of the effective time, no financing is required to complete the LP Merger.

 

Q:

Is the completion of the Merger and the other transactions contemplated by the merger agreement subject to a financing condition?

 

A:

No. The receipt of any financing by Energy Transfer is not a condition to completion of the Merger or any of the other transactions contemplated by the merger agreement.

 

Q.

Will the Energy Transfer common units issued to Enable common unitholders be traded on an exchange?

 

A:

Yes. It is a condition to completion of the LP Merger that the Energy Transfer common units to be issued to Enable common unitholders in the LP Merger be approved for listing on the NYSE, subject to official notice of issuance, under the symbol “ET.”

 

Q:

If I am an Enable common unitholder, whom should I call with questions?

 

A:

If you have any questions about the transactions contemplated by the merger agreement or the Enable consent solicitation materials, or desire additional copies of this consent statement/prospectus, you should contact:

MacKenzie Partners, Inc.

1407 Broadway 27th Floor

New York, NY 10018

Telephone: (212) 929-5500

Toll Free: (800) 322-2885

Email: consent@mackenziepartners.com

or

Enable Midstream Partners, LP

499 West Sheridan Avenue, Suite 1500

Oklahoma City, Oklahoma 73102

Attention: Investor Relations

Telephone: (405) 558-4600

Email: ir@enablemidstream.com

 

Q:

Where can I find more information about Energy Transfer and Enable?

 

A:

You can find more information about Energy Transfer and Enable from the various sources described under “Where You Can Find More Information” beginning on page 179 of this consent statement/prospectus.

 

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SUMMARY

This summary highlights selected information from this document. You are urged to carefully read the entire document and the other documents referred to and incorporated in this document because the information in this section does not provide all the information that might be important to you with respect to the merger agreement, the Merger and the other matters being considered at the special meeting. See “Where You Can Find More Information.” Each item in this summary refers to the page of this document on which that subject is discussed in more detail.

Information About the Companies (See page 31)

Energy Transfer LP is a publicly traded limited partnership owning and operating a diversified portfolio of energy assets. Energy Transfer’s core operations include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (“NGLs”) and refined product transportation and terminalling assets; NGL storage and fractionation; and various acquisition and marketing assets. Energy Transfer, through its ownership of Energy Transfer Operating, L.P., also owns Lake Charles LNG Company, as well as limited partner interests and the general partner interests of publicly traded master limited partnerships Sunoco LP and USA Compression Partners, LP. The address of Energy Transfer’s principal executive office is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and the telephone number at this address is (214) 981-0700.

Enable Midstream Partners, LP is a publicly traded limited partnership owning, operating and developing strategically located natural gas and crude oil infrastructure assets. Enable’s assets include approximately 14,000 miles of natural gas, crude oil, condensate and produced water gathering pipelines, approximately 2.6 billion cubic feet per day (“Bcf/d”) of natural gas processing capacity, approximately 7,800 miles of interstate pipelines (including Southeast Supply Header, LLC (“SESH”) of which Enable owns 50%), approximately 2,200 miles of intrastate pipelines and seven natural gas storage facilities comprising 84.5 billion cubic feet of storage capacity. The address of Enable’s principal executive office is 499 West Sheridan Avenue, Suite 1500, Oklahoma City, Oklahoma, and the telephone number at this address is (405) 525-7788.

Elk Merger Sub LLC is a Delaware limited liability company and wholly owned subsidiary of Energy Transfer. Merger Sub has not carried on any activities to date, other than activities incidental to its formation or undertaken in connection with the transactions contemplated by the merger agreement. The address of Merger Sub’s principal executive office is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and the telephone number at this address is (214) 981-0700.

Elk GP Merger Sub LLC is a Delaware limited liability company and wholly owned subsidiary of Energy Transfer. GP Merger Sub has not carried on any activities to date, other than activities incidental to its formation or undertaken in connection with the transactions contemplated by the merger agreement. The address of GP Merger Sub’s principal executive office is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and the telephone number at this address is (214) 981-0700.

The Merger (See page 35)

Energy Transfer and Enable have entered into a merger agreement, pursuant to which Energy Transfer will acquire Enable, and Enable will cease to be a publicly held limited partnership. Upon the terms and subject to the conditions set forth in the merger agreement, at the effective time (i) Merger Sub will merge with and into Enable, with Enable continuing as the surviving entity and a wholly owned subsidiary of Energy Transfer, and (ii) GP Merger Sub will merge with and into Enable General Partner, with Enable General Partner surviving the GP Merger as a direct wholly owned subsidiary of Energy Transfer.



 

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The merger agreement is attached as Annex A to this document, and both Energy Transfer and Enable encourage you to read it carefully and in its entirety because it is the legal document that governs the Merger.

Merger Consideration (See page 97)

In the LP Merger, Enable common unitholders will receive, for each Enable common unit they own as of immediately prior to the effective time, 0.8595 of an Energy Transfer common unit.

In the GP Merger, holders of Enable General Partner limited liability company interests will receive the right to receive $10 million in the aggregate. As of March 18, 2021, the Sponsors collectively owned 100% of the limited liability company interests in Enable General Partner.

No fractional Energy Transfer common units will be issued. All fractional Energy Transfer common units that a holder of Enable common units would otherwise have been entitled to receive will be aggregated and then, if a fractional Energy Transfer common unit results from the aggregation, be rounded up to the nearest whole Energy Transfer common unit.

Treatment of Enable Series A Preferred Units (See page 97)

Following the Pre-Closing Transactions (as defined below under “—Pre-Closing Transactions”) and immediately prior to the effective time, (A) CenterPoint will contribute, assign, transfer, convey and deliver to Energy Transfer, and Energy Transfer will acquire, assume, accept and receive from CenterPoint, all of CenterPoint’s right, title and interest in each Enable Series A Preferred Unit issued and outstanding at such time in exchange for 0.0265 of an Energy Transfer Series G Preferred Unit, and (B) Energy Transfer will subsequently contribute, assign, transfer, convey and deliver to a subsidiary of Energy Transfer that is treated as a corporation for U.S. federal income tax purposes all or a portion of such Enable Series A Preferred Units. The Enable Series A Preferred Units will be unchanged and remain outstanding and wholly owned directly or indirectly by Energy Transfer.

Pre-Closing Transactions (See page 96)

Prior to the effective time, and as a condition to the closing of the Merger, Energy Transfer will undertake certain internal reorganization transactions and cause its subsidiary, Energy Transfer Operating, L.P. (“ETO”), to merge with and into a newly formed, wholly owned Energy Transfer merger subsidiary. As a result of such merger, each issued and outstanding preferred unit of ETO will convert into the right to receive a newly issued preferred unit in Energy Transfer, having the same preferences, rights, powers and duties as the existing ETO preferred unit (other than any non-substantive differences to reflect the issuance of such securities by Energy Transfer, as opposed to ETO) (such transactions collectively, the “Pre-Closing Transactions”). Promptly following the closing of the Pre-Closing Transactions, Energy Transfer intends to undertake additional reorganizational steps in order to convey substantially all of ETO’s assets and liabilities to Energy Transfer.

Treatment of Enable Equity Awards (See page 109)

Enable Phantom Units. Enable phantom units (including any Seconded Employee Phantom Awards), whether vested or unvested, that are outstanding immediately prior to the effective time will be assumed by Energy Transfer and converted into a restricted unit award representing a contractual right upon vesting to receive a number of Energy Transfer common units or, in the case of Seconded Employees, the right to receive cash determined based on the value of Energy Transfer common units equal to the product obtained by multiplying (x) the number of Enable common units subject to such Enable assumed restricted unit award immediately prior to the effective time by (y) the exchange ratio, rounded up or down to the nearest whole Energy Transfer common unit (each, an “Enable assumed restricted unit award”). Each Enable assumed restricted unit award will otherwise be subject to the same terms and conditions as were applicable to the Enable phantom units immediately prior to the effective time.



 

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Enable Performance Awards. Each award of performance units that corresponds to Enable common units, including Seconded Employee Performance Awards, that is outstanding and unvested as of the effective time will be measured as to performance as of the effective time (or a date reasonably proximate thereto) as determined in good faith by the Enable General Partner Board, and each such Enable performance award will, with respect to the number of Enable common units that are considered earned based on the higher of actual performance or target (the “Enable earned performance units”), be assumed by Energy Transfer and converted into an Enable assumed restricted unit award, which will have the same distribution equivalent rights and be eligible to vest solely based on continued service at the end of the performance period that was originally applicable thereto; provided, however, that the Enable earned performance units will vest upon a “qualifying termination” and, to the extent applicable, will incorporate the provisions related to termination due to “retirement,” as provided in the Enable phantom units, equal to the number of Enable earned performance units multiplied by the exchange ratio, rounded up or down to the nearest whole Energy Transfer common unit. Any performance units that are not Enable earned performance units will automatically be cancelled for no consideration. Notwithstanding the foregoing, with respect to Enable performance awards granted in 2021, the number of Enable earned performance units will be equal to the target number of units granted, regardless of performance.

Support Agreements (See page 116)

Contemporaneously with the execution of the merger agreement, each of the Sponsors, Energy Transfer, Merger Sub, GP Merger Sub, Enable and Enable General Partner, entered into separate support agreements (together, the “support agreements”). CenterPoint owns approximately 53.7% of the issued and outstanding Enable common units and 100% of the Enable Series A Preferred Units, and OGE Energy owns approximately 25.5% of the issued and outstanding Enable common units. In addition, the Sponsors own Enable General Partner. CenterPoint owns a 50% management interest and a 40% economic interest in Enable General Partner, and OGE Energy owns a 50% management interest and a 60% economic interest in Enable General Partner. Pursuant to the respective support agreement, each Sponsor agreed to, among other things, (i) within 24 hours of the time when the registration statement, of which this consent statement/prospectus is a part, has been declared effective by the SEC and such Sponsor has received from Energy Transfer a copy of the consent statement/prospectus, execute and deliver (or cause to be delivered) a written consent, covering all of the Enable common units held by such Sponsor approving each of the matters for which Enable is soliciting consents of the holders of Enable common units and (ii) oppose, vote against and not to consent to any other action, agreement or proposal intended to, or which has the effect of or reasonably would be expected to have the effect of, impeding, delaying, restricting, limiting or interfering with the performance of such Sponsor’s obligations under its support agreement or the consummation of the Merger. Copies of the support agreements are attached as Annex B and Annex C to this consent statement/prospectus.

Summary of Risk Factors (See page 21)

You should carefully consider all of the risk factors together with all of the other information included in, or incorporated by reference into, this consent statement/prospectus before deciding whether to deliver the written consent relating to your Enable common units. Some of these risks include, but are not limited to, those described below and in more detail under the heading “Risk Factors.”

Risks Related to the Merger

 

   

Because the market price of Energy Transfer common units will fluctuate prior to the consummation of the merger, Enable common unitholders cannot be sure of the market value of Energy Transfer common units that they will receive in the Merger.

 

   

The fairness opinions rendered to the Enable Conflicts Committee by Intrepid Partners, LLC (“Intrepid”) and to the Enable General Partner Board by Goldman Sachs & Co. LLC (“Goldman Sachs”) were based on factors such as market and other conditions then in effect, and certain financial



 

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forecasts and other information made available to Intrepid and Goldman Sachs, as of the date of the opinions. As a result, the opinions do not reflect changes in events or circumstances after the date of such opinions. The Enable Conflicts Committee and the Enable General Partner Board have not obtained, and do not expect to obtain, updated fairness opinions from Intrepid and Goldman Sachs reflecting changes in circumstances that may have occurred since the signing of the merger agreement.

 

   

The Merger is subject to various closing conditions, and any delay in completing the Merger may reduce or eliminate the benefits expected and delay the payment of the LP Merger Consideration to Enable’s common unitholders.

 

   

Certain executive officers and directors of Enable have interests in the Merger that are different from, or in addition to, the interests of Enable common unitholders generally, which could have influenced their decision to approve the merger agreement.

 

   

The merger agreement and support agreements limit Enable’s ability to pursue alternatives to the Merger.

 

   

Maintaining credit ratings is under the control of ratings agencies, which are independent third parties. There can be no assurances that the debt of the combined company will qualify for an investment-grade credit rating, and the failure to qualify for an investment-grade credit rating could negatively impact the combined company’s access to capital and costs of doing business.

 

   

Enable’s financial estimates are based on various assumptions that may not prove to be correct.

 

   

A different set of factors and conditions affect Energy Transfer common units and could have a negative impact on the unit price.

 

   

Enable common unitholders will have a reduced ownership and voting interest after the Merger and will exercise less influence over management.

 

   

Energy Transfer common units to be received by Enable common unitholders as a result of the Merger will have different rights from Enable common units.

 

   

If the merger agreement is terminated, under certain circumstances, Enable may be obligated to pay a breakup fee to Energy Transfer. This fee could require Enable to seek loans or use Enable’s available cash that would have otherwise been available for operations, distributions or other general partnership purposes.

 

   

The failure to successfully combine the businesses of Energy Transfer and Enable in the expected time frame may adversely affect Energy Transfer’s future results, which may adversely affect the value of the Energy Transfer common units that Enable unitholders would receive in the LP Merger.

 

   

If the LP Merger is approved by the Enable common unitholders, the date that the Enable common unitholders will receive the LP Merger Consideration is uncertain.

 

   

If a governmental authority asserts objections to the Merger, Energy Transfer and Enable may be unable to complete the Merger or, in order to do so, Energy Transfer and Enable may be required to comply with material restrictions or satisfy material conditions.

 

   

The pendency of the Merger could materially adversely affect the future business and operations of Enable or result in a loss of Enable employees.

 

   

Energy Transfer and Enable may be subject to class action lawsuits relating to the Merger, which could materially adversely affect their business, financial condition and operating results.

 

   

Failure to complete the Merger could negatively affect the unit price of Enable and its future businesses and financial results.



 

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Completion of the Merger may trigger change in control or other provisions in certain agreements to which Enable is a party, which may have an adverse impact on Energy Transfer’s business and results of operations after the Merger.

 

   

Enable common unitholders are not entitled to appraisal rights in connection with the Merger.

Tax Risks Related to the Merger

 

   

No ruling has been obtained with respect to the U.S. federal income tax consequences of the LP Merger.

 

   

The expected U.S. federal income tax consequences of the LP Merger are dependent upon Energy Transfer and Enable being treated as partnerships for U.S. federal income tax purposes.

 

   

Holders of Enable common units could recognize taxable income or gain for U.S. federal income tax purposes as a result of the LP Merger.

Tax Risks Related to Owning Energy Transfer Units Following the Merger

 

   

Certain tax consequences of the ownership of Energy Transfer Series G Preferred Units, including treatment of distributions as guaranteed payments for the use of capital, are uncertain.

 

   

The treatment of distributions on the Energy Transfer Series G Preferred Units as guaranteed payments for the use of capital means that such distributions will not be eligible for the 20% deduction for qualified business income.

 

   

Holders of Energy Transfer common units will continue to be subject to the tax risks that holders of Energy Transfer common units are currently subject to.

Approvals Required by the Enable Common Unitholders to Complete the LP Merger and the Other Transactions Contemplated by the Merger Agreement (See page 33)

The Sponsors, who collectively own approximately 79% of the outstanding Enable common units, have each entered into the support agreements pursuant to which such Sponsors have agreed, subject to the terms and conditions of such support agreements, to execute and return written consents approving the merger agreement and each of the other matters for which Enable is soliciting consents in connection with the merger agreement within 24 hours after the registration statement, of which this consent statement/prospectus forms a part, becomes effective under the Securities Act. The delivery of the written consents by the Sponsors will be sufficient to approve the merger agreement and the other transactions contemplated by the merger agreement. Enable is sending this consent statement/prospectus to all of its common unitholders, including the Sponsors, to request that they approve the merger agreement and, on a non-binding, advisory basis, the Transaction-Related Compensation Proposal by executing and returning the written consent furnished with this consent statement/prospectus. When the Sponsors execute and return their written consents approving the merger agreement and the Transaction-Related Compensation Proposal, no other consents from the other Enable common unitholders will be required to approve the merger agreement and the Transaction-Related Compensation Proposal.

Approval of the Enable Conflicts Committee and the Enable General Partner Board and Reasons for the Merger (See page 50)

On February 16, 2021, the Enable Conflicts Committee unanimously, in good faith, among other things (a) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of Enable, its subsidiaries and the unaffiliated Enable common unitholders, (b) approved the merger agreement and the transactions contemplated thereby, including the LP Merger upon the terms and conditions set forth in the merger agreement, with such approval constituting “Special Approval” for all purposes



 

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under the Enable Partnership Agreement and (c) recommended to the Enable General Partner Board approval of the merger agreement and the consummation of the transactions contemplated thereby, including the LP Merger.

Later on February 16, 2021, upon receiving the approval and recommendation of the Enable Conflicts Committee, the Enable General Partner Board unanimously, in good faith, (a) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of Enable, its subsidiaries, and, with respect to the GP Merger, Enable General Partner, (b) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the Merger, (c) approved the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby, including the Merger, and (d) authorized and directed that the approval of the merger agreement and the transactions contemplated thereby be submitted to Enable’s unitholders to act by written consent pursuant to Section 13.11 of the Enable Partnership Agreement.

In reaching its decision to approve the merger agreement and direct that the approval of the merger agreement and the transactions contemplated thereby be submitted to Enable’s unitholders for approval by written consent, the Enable Conflicts Committee and the Enable General Partner Board consulted with Enable management and their respective financial and legal advisors and considered the factors described in the section titled “The Merger—Approval of the Enable Conflicts Committee and the Enable General Partner Board and Reasons for the Merger” beginning on page 50 of this consent statement/prospectus.

Opinion of the Enable General Partner Board’s Financial Advisor (See page 59)

At a meeting of the Enable General Partner Board, Goldman Sachs rendered to the Enable General Partner Board its oral opinion, subsequently confirmed in writing, to the effect that, as of February 16, 2021 and based upon and subject to the factors and assumptions set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders (other than Energy Transfer and its affiliates) of Enable common units.

The full text of the written opinion of Goldman Sachs, dated February 16, 2021, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex D. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Enable General Partner Board in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to whether any holder of Enable common units should approve the merger agreement or any other matter.

Opinion of Enable Conflicts Committee’s Financial Advisor (See page 65)

The Enable Conflicts Committee engaged Intrepid to act as its financial advisor. On February 16, 2021, Intrepid delivered to the Enable Conflicts Committee its oral opinion, confirmed by its delivery of a written opinion dated as of the same date, that, as of the date thereof, and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the exchange ratio in the LP Merger is fair, from a financial point of view, to the Public Unaffiliated Unitholders (as defined in “The Merger—Opinion of the Enable Conflicts Committee’s Financial Advisor”).

The full text of Intrepid’s written opinion, dated February 16, 2021, which sets forth, among other things, certain of the assumptions made, procedures followed, matters considered, qualifications and limitations with respect to the review undertaken by Intrepid, is attached as Annex E to this consent statement/prospectus and is incorporated by reference herein. The summary of Intrepid’s opinion set forth in this consent statement/prospectus is qualified in its entirety by reference to the full text of the opinion. Enable common unitholders are



 

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encouraged to read the opinion and the description carefully and in their entirety. Intrepid provided its opinion solely for the information and benefit of the Enable Conflicts Committee (in its capacity as such) in connection with its evaluation of the Merger.

Intrepid’s opinion was necessarily based upon business, market, economic, regulatory and other conditions as they exist on, and were evaluated as of, February 16, 2021. Intrepid assumes no responsibility for updating, revising or reaffirming its opinion based on developments, circumstances or events occurring, or information made available to it, after February 16, 2021.

For additional information, see the section entitled “The Merger—Opinion of the Enable Conflicts Committee’s Financial Advisor” beginning on page 65 and Annex E.

Interests of Enable General Partner’s Directors and Executive Officers in the Merger (See page 84)

You should be aware that aside from their interests as Enable common unitholders, Enable’s directors and executive officers have interests in the merger that are different from, or in addition to, those of other Enable common unitholders generally. The members of the Enable General Partner Board were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the Merger. See “The Merger—Background of the Merger,” and “The Merger—Approval of the Enable Conflicts Committee and the Enable General Partner Board and Reasons for the Merger.” Enable’s common unitholders should take these interests into account in deciding whether to vote “FOR” the merger proposal. These interests are described in more detail below, and certain of them are quantified in the narrative and the tables below.

Regulatory Approvals Required for the Merger (See page 91)

Governmental and regulatory approvals are required to complete the transactions contemplated by the merger agreement. These approvals include the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). Energy Transfer and Enable each filed the required notification and report forms under the HSR Act on March 9, 2021. At any time before or after the completion of the merger, the Antitrust Division of the Department of Justice, the FTC, foreign antitrust authorities, or others could take action under the antitrust laws as deemed necessary or desirable in the public interest, including without limitation seeking to enjoin the completion of the merger or to permit completion only subject to divestitures, behavioral commitments or other regulatory concessions or conditions.

No Appraisal or Dissenters’ Rights (See page 99)

No appraisal or dissenters’ rights are available with respect to the Merger.

NYSE Listing of Energy Transfer Common Units (See page 94)

Energy Transfer common units are currently listed on the NYSE under the ticker symbol “ET.” It is a condition to closing that the Energy Transfer common units to be issued in the LP Merger to Enable common unitholders be approved for listing on the NYSE, subject to official notice of issuance.

Delisting and Deregistration of Enable Common Units (See page 94)

Enable common units are currently listed on the NYSE under the ticker symbol “ENBL.” If the Merger is completed, Enable common units will cease to be listed on the NYSE and will be deregistered under the Exchange Act.



 

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Conditions to Completion of the Merger (See page 97)

The obligations of Energy Transfer, on the one hand, and Enable, on the other hand, to complete the Merger are subject to the fulfillment (or waiver) of the following conditions, among others:

 

   

Enable Common Unitholder Approval. Approval of the merger agreement by holders of a majority of the outstanding Enable common units, voting as a single class, entitled to vote at the special meeting.

 

   

No Injunction. No injunction or law prohibiting the Merger.

 

   

Regulatory Approvals. Expiration or termination of any applicable waiting period under the HSR Act.

 

   

Registration Statement. The registration statement (of which this consent statement/prospectus forms a part) must be effective, and no stop order suspending the effectiveness of the registration statement has been issued and no proceeding for such purpose has been initiated or threatened by the SEC.

 

   

Accuracy of Representations; No Material Adverse Effect. Accuracy of the other party’s representations, except with certain exceptions, where the failure to be accurate would not have a material adverse effect on Energy Transfer or Enable, as applicable.

 

   

Compliance with Covenants. Material compliance with each party’s covenants.

 

   

Receipt of Opinions of Counsel. Receipt of an opinion (a) from each party’s counsel that the respective party meets the 90% qualifying income test and that, subject to certain exceptions, the respective party and the respective holders of such party’s common units should not recognize any income for U.S. federal income tax purposes as a result of the Merger and (b) from Energy Transfer’s counsel that the combined entity will meet the 90% qualifying income test.

In addition, the obligations of Enable to complete the Merger are subject to the fulfillment (or waiver) of the following conditions, among others:

 

   

NYSE Listing. Approval for listing on the NYSE, subject to official notice of issuance, of the Energy Transfer common units to be issued in the Merger.

 

   

Preferred Contributions. The parties shall have completed the Preferred Contributions.

 

   

Pre-Closing Transactions. Energy Transfer shall have completed the Pre-Closing Transactions.

Neither Energy Transfer nor Enable can give any assurance that all of the conditions to the Merger will either be satisfied or waived or that the Merger will occur. See “The Merger Agreement—Conditions to the Merger.”

Non-Solicitation by Enable (See page 108)

The merger agreement contains a detailed provision requiring Enable and Enable General Partner to (i) cease and terminate any discussions relating to any acquisition proposal and (ii) not to, among other things, to directly or indirectly solicit, initiate, knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal. See “The Merger Agreement—Non-Solicitation by Enable.”

Termination of Merger Agreement (See page 113)

The merger agreement can be terminated in the following circumstances (see “The Merger Agreement—Termination of the Merger Agreement”):

 

   

Mutual Agreement. Mutual agreement of Energy Transfer and Enable.



 

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End Date. Termination by either party, if the merger has not closed by November 30, 2021, which may be automatically extended to February 28, 2022 in certain circumstances (such date, as it may be extended from November 30, 2021, is referred to as the “End Date”).

 

   

Final Injunction or Other Law. Termination by either party, if a permanent injunction has been issued or other law has been enacted prohibiting the merger.

 

   

Breach of Representations or Covenants. Termination by either party, if the other party has breached its representations or covenants in a way that causes the representations and warranties of such party to be untrue as of the closing date (except where such failure to be true would not result in a Material Adverse Effect) or results in the failure to perform a covenant and such breach cannot be or is not reasonably likely to be cured prior to the End Date.

 

   

Willful Breach of Non-Solicitation Covenant. Termination by Energy Transfer upon a willful and material breach of the non-solicitation obligations by Enable which materially impedes, interferes with or hinders the consummation of the transactions contemplated by the merger agreement on or prior to the End Date.

Breakup Fee (See page 114)

Enable must pay Energy Transfer a breakup fee of $97.5 million (the “breakup fee”) in the following circumstances (see “The Merger Agreement—Breakup Fee”):

 

   

Willful Breach of Non-Solicitation Obligations. Energy Transfer terminates the merger agreement because Enable or Enable General Partner has willfully and materially breached its non-solicitation obligations.

 

   

Breach of Representation or Failure to Perform Covenant. Energy Transfer terminates the merger agreement because (i) Enable or Enable General Partner breached or failed to perform any of its representations, warranties, covenants or other agreements contained in the merger agreement (as described above), (ii) prior to such termination and after the date of the merger agreement, any Person (other than Energy Transfer, Merger Sub or any of their respective affiliates) shall have made an Acquisition Proposal, which shall have been publicly announced or disclosed or otherwise communicated to the Enable General Partner Board or any affiliate of Enable General Partner (including CenterPoint and OGE Energy but excluding their respective affiliates (other than Enable and its subsidiaries)) and not have been withdrawn prior to such termination and (iii) within 12 months after the date of such termination, Enable enters into a definitive agreement with respect to an Acquisition Proposal (or publicly approves or recommends to the unitholders of Enable or otherwise does not oppose, in the case of a tender or exchange offer, an Acquisition Proposal) or consummates an Acquisition Proposal.

Accounting Treatment of the Merger (See page 91)

In accordance with accounting principles generally accepted in the United States and in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Topic 805-Business Combinations, Energy Transfer will account for the Merger as an acquisition of a business.

Material U.S. Federal Income Tax Consequences of the LP Merger (See page 117)

Tax matters associated with the LP Merger are complicated. The U.S. federal income tax consequences of the LP Merger to a holder of Enable common units will depend, in part, on such holder’s own tax situation. In general, no gain or loss should be recognized by a holder of Enable common units upon the exchange of Enable common units for Energy Transfer common units pursuant to the LP Merger.



 

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The tax discussions contained herein focus on the U.S. federal income tax consequences generally applicable to individuals who are residents or citizens of the United States that hold their Enable common units as capital assets, and these discussions have only limited application to other unitholders, including those subject to special tax treatment. Enable common unitholders are urged to consult with and rely solely upon their tax advisors in respect of the U.S. federal, state, local and foreign tax consequences of exchanging common units in Enable for common units in Energy Transfer pursuant to the LP Merger and of owning and disposing of Energy Transfer common units in light of their particular circumstances. For a more detailed discussion of the material U.S. federal income tax consequences of the Merger to holders of Enable common units, please see the section titled “Material U.S. Federal Income Tax Consequences of the LP Merger.”

The expected U.S. federal income tax consequences of the LP Merger are dependent, in part, upon Energy Transfer and Enable being treated as partnerships for U.S. federal income tax purposes at the time of the LP Merger. Whether each of Energy Transfer and Enable will be treated as a partnership for U.S. federal income tax purposes at the time of the LP Merger will depend, in part, on whether at least 90% of the gross income of each for the calendar year that immediately precedes the LP Merger and the calendar year that includes the closing date of the LP Merger is from sources treated as “qualifying income” within the meaning of Section 7704(d) of the Code.

In connection with the Merger, Energy Transfer expects to receive an opinion from Latham & Watkins LLP (“Latham”) to the effect that (i) for U.S. federal income tax purposes (a) Energy Transfer should not recognize any income or gain as a result of the Merger (other than any gain resulting from any decrease in partnership liabilities pursuant to Section 752 of the Code), and (b) no gain or loss should be recognized by holders of Energy Transfer common units immediately prior to the Merger as a result of the Merger (other than any gain resulting from any decrease in partnership liabilities pursuant to Section 752 of the Code); and (ii) (a) at least 90% of the gross income of Energy Transfer for all of the calendar year that immediately precedes the calendar year that includes the closing date of the Merger and each calendar quarter of the calendar year that includes the closing date of the Merger for which the necessary financial information is available is from sources treated as “qualifying income” within the meaning of Section 7704(d) of the Code, and (b) at least 90% of the combined gross income of each of Energy Transfer and Enable for all of the calendar year that immediately precedes the calendar year that includes the closing date of the Merger and each calendar quarter of the calendar year that includes the closing date of the Merger for which the necessary financial information is available is from sources treated as “qualifying income” within the meaning of Section 7704(d) of the Code. The requirement to deliver such opinion may be waived.

In connection with the Merger, Enable and Enable General Partner expect to receive an opinion from Vinson & Elkins L.L.P. (“Vinson & Elkins”) to the effect that (i) for U.S. federal income tax purposes (a) Enable should not recognize any income or gain as a result of the Merger, and (b) no gain or loss should be recognized by holders of Enable common units (in their capacity as holders of Enable common units) as a result of the Merger (other than any gain resulting from (A) any decrease in partnership liabilities pursuant to Section 752 of the Code, (B) the deemed sale of Energy Transfer common units pursuant to the withholding provisions of the merger agreement, (C) a disguised sale attributable to contributions of cash or other property to Enable after the signing date of the merger agreement and prior to the effective time, and (D) the application of Section 897 of the Code and the Treasury Regulations thereunder to any non-U.S. holder of Enable common units that has beneficially owned more than five percent of the total Enable common units at any time in the five-year period ending on the closing date of the Merger); and (ii) at least 90% of the gross income of Enable for all of the calendar year that immediately precedes the calendar year that includes the closing date of the Merger and each calendar quarter of the calendar year that includes the closing date of the Merger for which the necessary financial information is available is from sources treated as “qualifying income” within the meaning of Section 7704(d) of the Code. The requirement to deliver such opinion may be waived.

Opinions of counsel are subject to certain limitations and are not binding on the Internal Revenue Service (“IRS”), and no assurance can be given that the IRS would not successfully assert a contrary position regarding



 

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the Merger. In addition, such opinions will be based upon certain factual assumptions and certain representations, warranties and covenants made by the officers of Energy Transfer, Enable and certain of their respective affiliates. If either Energy Transfer or Enable waives the receipt of the requisite tax opinion as a condition to closing and the changes to the tax consequences would be material, then this consent statement/prospectus will be amended and recirculated and Enable common unitholder approval will be resolicited.

Expected Timing of the Merger (See page 91)

Energy Transfer and Enable currently expect to complete the Merger mid-2021, subject to the receipt of regulatory approvals and the satisfaction or waiver of the other conditions to completion of the Merger. Because many of the conditions to completion of the Merger are beyond the control of Energy Transfer and Enable, the exact timing for completion of the Merger cannot be predicted with any degree of certainty.

Comparison of Rights of Enable and Energy Transfer Unitholders (See page 159)

Enable common unitholders will own Energy Transfer common units following the completion of the Merger, and their rights associated with those Energy Transfer common units will be governed by the Energy Transfer partnership agreement (as amended to date), which differs in a number of respects from the Enable Partnership Agreement and the Delaware Revised Uniform Limited Partnership Act, as amended (the “Delaware LP Act”).



 

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RISK FACTORS

In addition to the other information included and incorporated by reference into this document, including the matters addressed in the section titled “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risks. In addition, you should read and consider the risks associated with each of the businesses of Energy Transfer and Enable. These risks can be found in Energy Transfer’s and Enable’s respective Annual Reports on Form 10-K for the year ended December 31, 2020, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this consent statement/prospectus. For further information regarding the documents incorporated into this document by reference, please see the section titled “Where You Can Find More Information.” Realization of any of the risks described below, any of the events described under “Cautionary Statement Regarding Forward-Looking Statements” or any of the risks or events described in the documents incorporated by reference could have a material adverse effect on Energy Transfer’s, Enable’s or the combined company’s business, financial condition, cash flows and results of operations and could result in a decline in the trading prices of their respective common units.

Risks Factors Related to the Merger

Because the market price of Energy Transfer common units will fluctuate prior to the consummation of the merger, Enable common unitholders cannot be sure of the market value of Energy Transfer common units that they will receive in the Merger.

At the time the Merger is completed, Enable common unitholders will receive, for each Enable common unit they own as of immediately prior to the Merger, 0.8595 of an Energy Transfer common unit. At the time that Enable common unitholders return their written consents regarding the approval of the merger agreement, Enable common unitholders will not know the actual market value of the Energy Transfer common units that they will receive when the Merger is finally completed. The actual market value of the Energy Transfer common units, when received by Enable common unitholders, will depend on the market value of those units on that date. This market value may be less than the value of the Energy Transfer common units on the date of the merger agreement and on the date that Enable common unitholders return their written consents regarding the approval of the merger agreement. These fluctuations in the market value of Energy Transfer common units may be caused by a variety of factors, including general market and economic conditions, changes in Energy Transfer’s businesses, operations and prospects and regulatory considerations. Such factors are difficult to predict and in many cases may be beyond Enable’s and Energy Transfer’s control.

The fairness opinions rendered to the Enable Conflicts Committee by Intrepid and to the Enable General Partner Board by Goldman Sachs were based on market and other conditions then in effect, and certain financial forecasts and other information made available to Intrepid and Goldman Sachs, as of the date of the opinions. As a result, the opinions do not reflect changes in events or circumstances after the date of such opinions. The Enable Conflicts Committee and the Enable General Partner Board have not obtained, and do not expect to obtain, updated fairness opinions from Intrepid and Goldman Sachs reflecting changes in circumstances that may have occurred since the signing of the merger agreement.

The fairness opinions rendered to the Enable Conflicts Committee by Intrepid and to the Enable General Partner Board by Goldman Sachs were provided in connection with, and at the time of, the evaluation of the Merger and the merger agreement by the Enable Conflicts Committee and the Enable General Partner Board. The opinions were based on market and other conditions then in effect, and certain financial forecasts and other information made available to Intrepid and Goldman Sachs, as of the date of the opinions, which may have changed, or may change, after the date of the opinions. The Enable Conflicts Committee and the Enable General Partner Board have not obtained updated opinions as of the date of this consent statement/prospectus from Intrepid and Goldman Sachs and do not expect to obtain updated opinions prior to completion of the Merger. Changes in the operations and prospects of Energy Transfer or Enable, general market and economic conditions

 

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and other factors that may be beyond the control of Energy Transfer and Enable, and on which the fairness opinions were based, may have altered the value of Energy Transfer or Enable or the prices of Energy Transfer common units or Enable common units since the date of such opinions, or may alter such values and prices by the time the Merger is completed. The opinions do not speak as of any date other than the date of the opinions. For descriptions of the opinions that Intrepid and Goldman Sachs rendered to the Enable Conflicts Committee and to the Enable General Partner Board, see “The Merger—Opinion of the Enable Conflicts Committee’s Financial Advisor” and “The Merger—Opinion of the Enable General Partner Board’s Financial Advisor.”

The Merger is subject to various closing conditions, and any delay in completing the Merger may reduce or eliminate the benefits expected and delay the payment of the LP Merger Consideration to Enable’s common unitholders.

The merger is subject to the satisfaction of a number of other conditions beyond the parties’ control that may prevent, delay or otherwise materially adversely affect the completion of the Merger. These conditions include, among other things, Enable common unitholder approval regarding the approval of the merger agreement and the expiration or termination of any applicable waiting period under the HSR Act. Energy Transfer and Enable cannot predict with certainty whether and when any of these conditions will be satisfied. Any delay in completing the Merger could cause the combined company not to realize, or delay the realization, of some or all of the benefits that the companies expect to achieve from the Merger. In such context, the date on which Enable’s common unitholders will receive the LP Merger Consideration is also uncertain.

Certain executive officers and directors of Enable have interests in the Merger that are different from, or in addition to, the interests of Enable common unitholders generally, which could have influenced their decision to support the Merger or approve the merger agreement.

Certain executive officers and directors of Enable are parties to agreements or participants in other arrangements that give them interests in the Merger that may be different from, or be in addition to, your interests as a common unitholder of Enable. You should consider these interests in voting on the Merger. We have described these different interests under “The Merger—Interests of Enable’s Directors and Executive Officers in the Merger.”

The merger agreement and support agreements limit Enable’s ability to pursue alternatives to the Merger.

The merger agreement contains provisions that make it more difficult for Enable to sell its business to a party other than Energy Transfer. These provisions include the general prohibition on Enable soliciting any Acquisition Proposal or offer for a competing transaction from a third party, and the requirement that Enable pay Energy Transfer a breakup fee of $97.5 million if the merger agreement is terminated in specified circumstances, including in the event Enable willfully breaches its non-solicitation obligations. See “The Merger Agreement—Termination of the Merger Agreement” and “The Merger Agreement—Breakup Fee.” In addition, the Sponsors have entered into the support agreements which obligate them to deliver their written consent to each of the matters for which Enable is soliciting consents of the holders of Enable common units 24 hours after the registration statement, of which this consent statement/prospectus forms a part, becomes effective under the Securities Act. The delivery of the written consents by the Sponsors will be sufficient to approve the merger agreement, and the merger agreement does not permit Enable to terminate the merger agreement to pursue a superior acquisition proposal. See “Support Agreements.” The foregoing may discourage a third party that might have an interest in acquiring all or a significant part of Enable from considering or proposing an acquisition, even if that party were prepared to pay consideration with a higher per unit value than the current proposed merger consideration.

 

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Maintaining credit ratings is under the control of ratings agencies, which are independent third parties. There can be no assurances that the combined company will qualify for an investment-grade credit rating, and the failure to qualify for an investment-grade credit rating could negatively impact the combined company’s access to capital and costs of doing business.

In connection with the completion of the Merger, ratings agencies may reevaluate Energy Transfer’s and Enable’s credit ratings. Energy Transfer and Enable expect that the debt of the combined company will qualify for an investment-grade credit rating consistent with Energy Transfer’s current rating; however, credit rating agencies perform independent analysis when assigning credit ratings and there can be no assurances that such ratings will be achieved in connection with the Merger or maintained in the future. The analysis includes a number of criteria including, but not limited to, business composition, market and operational risks, as well as various financial tests. The combined company’s ratings upon completion of the Merger will reflect each rating organization’s opinion of the combined company’s financial strength, operating performance and ability to meet the obligations associated with its securities. Failure to qualify for an investment-grade credit rating or a downgrade may increase Energy Transfer’s and Enable’s cost of borrowing, may negatively impact Energy Transfer’s and Enable’s ability to raise additional debt capital, may negatively impact Energy Transfer’s and Enable’s ability to successfully compete, and may negatively impact the willingness of counterparties to deal with Energy Transfer and Enable, each of which could have a material adverse effect on the business, financial condition, results of operations and cash flows of Energy Transfer and Enable, as well as the market price of their respective securities.

The trading price of Energy Transfer’s and Enable’s securities could decline as a result of research and reports by third-party securities analysts.

The trading market for Energy Transfer’s and Enable’s securities depends, in part, on the research and reports that third-party securities analysts publish about Energy Transfer and Enable and the industry in which they participate. In connection with the completion of the Merger, one or more of these analysts could downgrade Energy Transfer or Enable securities or issue other negative commentary about Energy Transfer or Enable or the industry in which they participate, which could cause the trading price of such securities to decline.

The financial projections included herein are based on various assumptions that may not prove to be correct.

The financial projections set forth in the forecast included under “The Merger—Enable and Energy Transfer Unaudited Prospective Financial Information” are based on assumptions of, and information available to, the parties at the time they were prepared and provided to the Enable General Partner Board, the Enable Conflicts Committee and their financial advisors. The parties cannot know whether such assumptions will prove correct. Any or all of such projections may turn out to be wrong. Such projections can be adversely affected by inaccurate assumptions or by known or unknown risks and uncertainties, many of which are beyond Energy Transfer’s and Enable’s control. Many factors mentioned in this consent statement/prospectus, including the risks outlined in this “Risk Factors” section and the events or circumstances described under “Cautionary Statement Regarding Forward-Looking Statements,” will be important in determining Energy Transfer’s and Enable’s future results. As a result of these contingencies, actual future results may vary materially from Enable’s projections. In view of these uncertainties, the inclusion of financial projections in this consent statement/prospectus is not and should not be viewed as a representation that the forecast results will be achieved.

The financial projections included herein were not prepared with a view toward public disclosure, and such financial projections were not prepared with a view toward compliance with published guidelines of any regulatory or professional body. Further, any forward-looking statement speaks only as of the date on which it is made, and Energy Transfer and Enable undertake no obligation, other than as required by applicable law, to update the financial projections herein to reflect events or circumstances after the date those financial projections were prepared or to reflect the occurrence of anticipated or unanticipated events or circumstances.

 

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The financial projections included in this consent statement/prospectus have been prepared by, and are the responsibility of, the parties alone. Moreover, neither Enable’s independent registered public accounting firm, Deloitte & Touche LLP (“Deloitte”), nor any other independent registered public accounting firm, including Energy Transfer’s independent accountants, Grant Thornton LLP (“Grant Thornton”), have compiled, examined or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and, accordingly, neither Deloitte nor Grant Thornton assumes any responsibility for, and disclaims any association with, the prospective financial information. The reports of Deloitte and Grant Thornton incorporated by reference herein relate exclusively to the historical financial information of the entities named in those reports and do not cover any other information in this consent statement/ prospectus and should not be read to do so. See “The Merger—Enable and Energy Transfer Unaudited Prospective Financial Information.”

A different set of factors and conditions affect Energy Transfer common units and could have a negative impact on the unit price.

Upon completion of the Merger, Enable common unitholders who receive Energy Transfer common units will become unitholders of Energy Transfer. The businesses of Energy Transfer and the other companies it has acquired and may acquire in the future are different in many respects from those of Enable. There is a risk that various factors, conditions and developments that would not affect the price of Enable’s common units could negatively affect the price of Energy Transfer common units. Please see the section titled “Cautionary Statement Regarding Forward-Looking Statements” for a summary of some of the key factors that might affect Energy Transfer and the prices at which Energy Transfer common units may trade from time to time. Enable common unitholders are also urged to carefully read the risk factors included in Energy Transfer’s Annual Report on Form 10-K for the year ended December 31, 2020, as updated by any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this consent statement/prospectus.

Enable common unitholders will have a reduced ownership and voting interest after the Merger and will exercise less influence over management.

When the Merger occurs, each Enable common unitholder will become a unitholder of Energy Transfer with a percentage ownership of the combined company that is much smaller than such unitholder’s percentage ownership of Enable. Based on the number of Energy Transfer common units and Enable common units outstanding as of          , 2021, Enable common unitholders will own approximately    % of the outstanding Energy Transfer common units after the Merger. Energy Transfer unitholders are not entitled to elect the directors of Energy Transfer’s general partner. In addition, Energy Transfer unitholders have only limited voting rights on matters affecting Energy Transfer’s business and, therefore, limited ability to influence management’s decisions regarding its business. Because of this, Enable common unitholders will have less influence on the management and policies of Energy Transfer than they have now on the management and policies of Enable.

Energy Transfer common units to be received by Enable common unitholders as a result of the Merger will have different rights from Enable common units.

Following completion of the Merger, Enable common unitholders will no longer hold Enable common units but will instead become unitholders of Energy Transfer. There are important differences between the rights of Enable common unitholders and the rights of Energy Transfer unitholders. See “Comparison of Rights of Energy Transfer Common Unitholders and Enable Common Unitholders” for a discussion of the different rights associated with Enable common units and Energy Transfer common units.

 

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If the merger agreement is terminated, under certain circumstances, Enable may be obligated to pay a breakup fee to Energy Transfer. This fee could require Enable to seek loans or use Enable’s available cash that would have otherwise been available for operations, distributions or other general partnership purposes.

In certain circumstances, Enable would be obligated to pay a breakup fee to Energy Transfer of $97.5 million. If the merger agreement is terminated, the breakup fee required to be paid, if any, by Enable under the merger agreement may require Enable to seek loans or borrow amounts to enable it to pay these amounts to Energy Transfer. In either case, payment of these amounts would reduce the cash Enable has available for operations, distributions or other general partnership purposes. See “The Merger Agreement—Breakup Fee.”

The failure to successfully combine the businesses of Energy Transfer and Enable in the expected time frame may adversely affect Energy Transfer’s future results, which may adversely affect the value of the Energy Transfer common units that Enable common unitholders would receive in the Merger.

If Energy Transfer’s and Enable’s businesses are not successfully integrated, the anticipated benefits of the Merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual integration may result in additional and unforeseen expenses, which could reduce the anticipated benefits of the Merger.

Energy Transfer and Enable, including their respective subsidiaries, have operated and, until the completion of the Merger, will continue to operate independently. It is possible that the integration process could result in the loss of key employees, as well as the disruption of each company’s ongoing businesses or inconsistencies in their standards, controls, procedures and policies. Any or all of those occurrences could adversely affect the combined company’s ability to maintain relationships with customers and employees after the Merger or to achieve the anticipated benefits of the Merger. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of Energy Transfer and Enable.

If the LP Merger is approved by the Enable common unitholders, the date that the Enable common unitholders will receive the LP Merger Consideration is uncertain.

As described in this consent statement/prospectus, completing the Merger is subject to several conditions, not all of which are controllable or waivable by Energy Transfer or Enable. Accordingly, if the LP Merger is approved by Enable common unitholders, the date that Enable common unitholders will receive the LP Merger Consideration depends on the completion date of the LP Merger, which is uncertain.

If a governmental authority asserts objections to the Merger, Energy Transfer and Enable may be unable to complete the Merger or, in order to do so, Energy Transfer and Enable may be required to comply with material restrictions or satisfy material conditions.

The closing of the Merger is subject to the condition that there is no law, injunction, judgment or ruling by a governmental authority in effect enjoining, restraining, preventing or prohibiting the Merger contemplated by the merger agreement. If a U.S. governmental authority asserts objections to the Merger, Energy Transfer or Enable may be required to divest assets or accept behavioral or other remedies in order to complete the Merger. There can be no assurance as to the cost, scope or impact of the actions that may be required to address any governmental authority objections to the Merger. If Energy Transfer or Enable takes such actions, it could be detrimental to it or to the combined organization following the consummation of the Merger. Furthermore, these actions could have the effect of delaying or preventing completion of the proposed Merger or imposing additional costs on or limiting the revenue or cash available for distribution of the combined organization following the consummation of the Merger. See “The Merger—Regulatory Approvals.”

Additionally, state attorneys general or other state or local regulators could seek to block, rescind or challenge the Merger as they deem necessary or desirable in the public interest at any time, including after

 

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completion of the Merger. In addition, in some circumstances, a third party could initiate a private action under antitrust laws challenging or seeking to enjoin or rescind the Merger, before or after it is completed. Energy Transfer and Enable may not prevail and may incur significant costs in defending or settling any action under the antitrust laws, including being required to divest assets or accept behavioral or other remedies in order to complete the Merger.

The pendency of the Merger could materially adversely affect the future business and operations of Enable or result in a loss of Enable employees.

In connection with the pending Merger, it is possible that some customers, suppliers and other persons with whom Enable has a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationship with Enable as a result of the Merger, which could negatively impact revenues, earnings and cash flows of Enable, as well as the market price of Enable common units, regardless of whether the Merger is completed. Similarly, current and prospective employees of Enable may experience uncertainty about their future roles with Energy Transfer and Enable following completion of the Merger, which may materially adversely affect the ability of Enable to attract and retain key employees.

Energy Transfer and Enable will incur substantial transaction-related costs in connection with the Merger, including fees paid to legal, financial and accounting advisors, filing fees and printing costs.

Energy Transfer and Enable expect to incur a number of non-recurring costs associated with negotiating and completing the Merger, combining the operations of the two partnerships and achieving the desired synergies. These fees and costs have been, and will continue to be substantial. Non-recurring transaction costs include, but are not limited to, fees paid to legal, financial and accounting advisors, filing fees and printing costs. Thus, any net benefit of the Merger may not be achieved in the near term, the long term or at all.

Energy Transfer and Enable may be subject to class action lawsuits relating to the Merger, which could materially adversely affect their business, financial condition and operating results.

Energy Transfer, Enable and their directors and officers may be subject to class action lawsuits relating to the Merger and other additional lawsuits that may be filed. Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on Enable’s and Energy Transfer’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, then that injunction may delay or prevent the Merger from being completed, which may adversely affect Enable’s and Energy Transfer’s business, financial position and results of operation. Currently, Enable and Energy Transfer are unaware of any securities class action lawsuits or derivative lawsuits having been filed in connection with the Merger.

One of the conditions to consummating the Merger is that no injunction, order or decree prohibiting or otherwise preventing or making unlawful the consummation of the Merger will have been issued by any court or governmental entity of competent jurisdiction in the United States. Consequently, if any lawsuit is filed challenging the Merger and is successful in obtaining an injunction preventing the parties to the merger agreement from consummating the Merger, such injunction may prevent the Merger from being completed in the expected timeframe, or at all.

Failure to complete the Merger could negatively affect the per unit price of Enable common units and Enable’s future businesses and financial results.

If the Merger is not completed, the ongoing business of Enable may be adversely affected and Enable will be subject to several risks and consequences, including the following:

 

   

under the merger agreement, Enable may be required, under certain circumstances, to pay Energy Transfer a breakup fee of $97.5 million;

 

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Enable will be required to pay certain costs relating to the Merger, whether or not the Merger is completed, such as legal, accounting, financial advisor and printing fees;

 

   

under the merger agreement, Enable is subject to certain restrictions on the conduct of its business prior to completing the Merger without Energy Transfer’s consent, which may adversely affect its ability to execute certain of its business strategies; and

 

   

matters relating to the Merger may require substantial commitments of time and resources by Enable management, which could otherwise have been devoted to other opportunities that may have been beneficial to Enable as an independent company.

In addition, if the Merger is not completed, Enable may experience negative reactions from the financial markets, including negative impacts on the market price of its common units, and from its customers, employees, vendors, business partners and other third parties. Enable also could be subject to litigation related to any failure to complete the Merger or to enforcement proceedings commenced against Enable to attempt to force it to perform its obligations under the merger agreement.

Enable common unitholders are not entitled to appraisal rights in connection with the Merger.

Appraisal rights are statutory rights that enable unitholders to dissent from certain extraordinary transactions, such as certain mergers, and to demand that the partnership pay the fair value for their units as determined by a court in a judicial proceeding instead of receiving the consideration offered to unitholders in connection with the applicable transaction. Under the Delaware LP Act, Enable common unitholders will not have rights to an appraisal of the fair value of their Enable common units in connection with the Merger. See “Summary—No Appraisal or Dissenters’ Rights.”

Tax Risks Related to the Merger

No ruling has been obtained with respect to the U.S. federal income tax consequences of the LP Merger.

No ruling has been or will be requested from the IRS with respect to the U.S. federal income tax consequences of the LP Merger. Instead, Energy Transfer and Enable are relying on the opinions of their respective counsel as to the U.S. federal income tax consequences of the LP Merger, and such counsel’s conclusions may not be sustained if challenged by the IRS. Please read “Material U.S. Federal Income Tax Consequences of the LP Merger.”

The expected U.S. federal income tax consequences of the LP Merger are dependent upon Energy Transfer and Enable being treated as partnerships for U.S. federal income tax purposes.

The expected U.S. federal income tax consequences of the LP Merger are dependent upon Energy Transfer and Enable being treated as partnerships for U.S. federal income tax purposes. If either Energy Transfer or Enable were to be treated as a corporation for U.S. federal income tax purposes, the consequences of the LP Merger could be materially different. If Energy Transfer were to be treated as a corporation for U.S. federal income tax purposes, the LP Merger would likely be a fully taxable transaction to holders of Enable common units.

Holders of Enable common units could recognize taxable income or gain for U.S. federal income tax purposes as a result of the LP Merger.

For U.S. federal income tax purposes, each holder of Enable common units will be deemed to contribute its Enable common units to Energy Transfer in exchange for Energy Transfer common units and the deemed assumption by Energy Transfer of each such holder’s share of Enable’s liabilities. Holders of Enable common

 

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units will become limited partners of Energy Transfer upon receipt of Energy Transfer common units and will be allocated a share of Energy Transfer’s nonrecourse liabilities. Each holder of Enable common units will be treated as receiving a deemed cash distribution equal to the net reduction in the amount of nonrecourse liabilities allocated to such Enable common unitholder. If the amount of such deemed cash distribution received by a holder of Enable common units exceeds such holder’s tax basis in Energy Transfer common units immediately after the LP Merger, such holder will recognize gain in an amount equal to such excess.

A holder of Enable common units may also recognize gain or loss pursuant to the LP Merger in certain other situations. If the LP Merger were to be recharacterized by the IRS, and a court were to sustain such recharacterization, a holder of Enable common units could recognize gain or loss in a “disguised sale” under Section 707 of the Code if the holder were to have contributed cash or other property to Enable after the signing date of the merger agreement and prior to the effective time. Further, while under current law we generally do not expect holders of Enable common units to be subject to withholding as a result of the transactions contemplated by the merger agreement, a holder of Enable common units whose Energy Transfer common units are deemed to be sold to fulfill withholding obligations should recognize gain equal to the excess of the fair market value of the Energy Transfer common units which are deemed to be sold over the holder’s adjusted tax basis in such Energy Transfer common units or loss equal to the excess of the holder’s adjusted tax basis in such Energy Transfer common units over the fair market value of such common units. In addition, a non-U.S. person that beneficially owns or has beneficially owned at any time in the five-year period ending on the closing date of the Merger more than five percent of the total Enable common units will recognize gain or loss pursuant to the LP Merger. The amount and effect of any gain or loss that may be recognized by a holder of Enable common units will depend on such holder’s particular situation, including the ability of such holder to utilize any suspended passive losses.

For additional information, please read “Material U.S. Federal Income Tax Consequences of the LP Merger—Tax Consequences of the LP Merger to Holders of Enable Common Units.”

Tax Risks Related to Owning Energy Transfer Units Following the Merger

Certain tax consequences of the ownership of Energy Transfer Series G Preferred Units, including treatment of distributions as guaranteed payments for the use of capital, are uncertain.

The tax treatment of distributions on Energy Transfer Series G Preferred Units is uncertain. We will treat each of the holders of the Energy Transfer Series G Preferred Units as partners for tax purposes and will treat distributions on the Energy Transfer Series G Preferred Units as guaranteed payments for the use of capital that will generally be taxable to each of the holders of the Energy Transfer Series G Preferred Units as ordinary income. Although a holder of Energy Transfer Series G Preferred Units will recognize taxable income from the accrual of such a guaranteed payment (even in the absence of a contemporaneous cash distribution), we anticipate accruing and making the guaranteed payment distributions semi-annually. Otherwise, except in the case of our liquidation, the holders of Energy Transfer Series G Preferred Units are generally not anticipated to share in our items of income, gain, loss or deduction, nor will we allocate any share of our nonrecourse liabilities to the holders of Energy Transfer Series G Preferred Units. If the Energy Transfer Series G Preferred Units are treated as indebtedness for tax purposes, rather than as guaranteed payments for the use of capital, distributions on the Energy Transfer Series G Preferred Units likely would be treated as payments of interest by us to holders of Energy Transfer Series G Preferred Units.

A holder of Energy Transfer Series G Preferred Units will be required to recognize gain or loss on a sale of Energy Transfer Series G Preferred Units equal to the difference between the amount realized by such holder and such holder’s tax basis in the Energy Transfer Series G Preferred Units sold. The amount realized generally will equal the sum of the cash and the fair market value of other property such holder receives in exchange for such Energy Transfer Series G Preferred Units. Subject to general rules requiring a blended basis among multiple partnership interests, the tax basis of an Energy Transfer Series G Preferred Unit will generally be equal to the tax basis in the Enable Series A Preferred Units exchanged therefor. Gain or loss recognized by a holder of Energy Transfer Series G Preferred Units on the sale or exchange of an Energy Transfer Series G Preferred Unit

 

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held for more than one year generally will be taxable as long-term capital gain or loss. Because holders of Energy Transfer Series G Preferred Units will generally not be allocated a share of our items of depreciation, depletion or amortization, it is not anticipated that such holders would be required to recharacterize any portion of their gain as ordinary income as a result of the recapture rules.

Investment in the Energy Transfer Series G Preferred Units by tax-exempt investors, such as employee benefit plans and individual retirement accounts (“IRAs”), and non-U.S. persons raises issues unique to them. The treatment of guaranteed payments for the use of capital to tax-exempt investors is not certain and such payments may be treated as unrelated business taxable income for federal income tax purposes.

Distributions to non-U.S. holders of Energy Transfer Series G Preferred Units will be subject to withholding taxes. If the amount of withholding exceeds the amount of U.S. federal income tax actually due, non-U.S. holders of Energy Transfer Series G Preferred Units may be required to file U.S. federal income tax returns in order to seek a refund of such excess. If you are a tax-exempt entity or a non-U.S. person, you should consult your tax advisor with respect to the consequences of owning the Energy Transfer Series G Preferred Units.

Our treatment of distributions on the Energy Transfer Series G Preferred Units as guaranteed payments for the use of capital means that such distributions will not be eligible for the 20% deduction for qualified business income.

For taxable years beginning after December 31, 2017, and ending on or before December 31, 2025, a non-corporate unitholder may be entitled to a deduction equal to 20% of its “qualified business income” attributable to its interest in a partnership, subject to certain limitations. As described above, we will treat distributions on the Energy Transfer Series G Preferred Units as guaranteed payments for the use of capital, and under the applicable Treasury Regulations, a guaranteed payment for the use of capital will not be taken into account for purposes of computing qualified business income. As a result, distributions received by the holders of the Energy Transfer Series G Preferred Units will not be eligible for the 20% deduction for qualified business income. Holders of Energy Transfer Series G Preferred Units should consult their tax advisors regarding the availability of the deduction for qualified business income.

Holders of Energy Transfer common units will continue to be subject to the tax risks that holders of Energy Transfer common units are currently subject to.

Following the Merger, in addition to the risks described above, holders of Energy Transfer common units, for U.S. federal income tax purposes, will continue to be subject to the risks that holders of Energy Transfer common units are currently subject to, which are described in Energy Transfer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as updated by any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this consent statement/prospectus. See “Where You Can Find More Information” for the location of information incorporated by reference in this consent statement/prospectus.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document includes “forward-looking statements” about Energy Transfer and Enable that are subject to risks and uncertainties. All statements other than statements of historical fact included in this document are forward-looking statements. Statements using words such as “anticipate,” “believe,” “intend,” “project,” “plan,” “expect,” “continue,” “estimate,” “goal,” “forecast,” “may,” “will,” or similar expressions help identify forward-looking statements.

Except for their respective obligations to disclose material information under U.S. federal securities laws, neither Energy Transfer nor Enable undertakes any obligation to release publicly any revisions to any forward-looking statements, to report events or circumstances after the date of this document, or to report the occurrence of unanticipated events.

Forward-looking statements involve a number of risks and uncertainties, and actual results or events may differ materially from those projected or implied in those statements. Important factors that could cause such differences include, but are not limited to:

 

   

the expected timing of closing the merger and benefits of the merger;

 

   

the matters described in the section titled “Risk Factors”;

 

   

cyclical or other downturns in demand;

 

   

adverse changes in economic or industry conditions;

 

   

changes in the securities and capital markets;

 

   

changes affecting customers or suppliers;

 

   

changes in laws or regulations, third-party relations and approvals, and decisions of courts, regulators and/or governmental bodies;

 

   

effects of competition;

 

   

developments in and losses resulting from claims and litigation;

 

   

changes in operating conditions and costs;

 

   

the extent of Energy Transfer’s or Enable’s ability to achieve its operational and financial goals and initiatives; and

 

   

Energy Transfer’s continued taxation as a partnership and not as a corporation.

In addition, the acquisition of Enable by Energy Transfer is subject to the satisfaction of certain conditions and the absence of events that could give rise to the termination of the merger agreement, the possibility that the merger does not close, risks that the proposed acquisition disrupts current plans and operations and business relationships or poses difficulties in attracting or retaining employees, the possibility that the costs or difficulties related to the integration of the two companies will be greater than expected and the possibility that the anticipated benefits from the merger cannot or will not be fully realized.

All written and oral forward-looking statements attributable to Energy Transfer or Enable or persons acting on behalf of Energy Transfer or Enable are expressly qualified in their entirety by such factors. For additional information with respect to these factors, please see the section entitled “Where You Can Find More Information.”

 

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INFORMATION ABOUT THE COMPANIES

Energy Transfer LP

Energy Transfer is a Delaware limited partnership with common units traded on the NYSE under the symbol “ET.” Energy Transfer LP is a publicly traded limited partnership owning and operating a diversified portfolio of energy assets. Energy Transfer’s core operations include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, NGLs and refined product transportation and terminalling assets; NGL storage and fractionation; and various acquisition and marketing assets. Energy Transfer, through its ownership of Energy Transfer Operating, L.P., also owns Lake Charles LNG Company, as well as limited partner interests and the general partner interests of publicly traded master limited partnerships Sunoco LP and USA Compression Partners, LP. Energy Transfer’s executive offices are located at 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and its telephone number is (214) 981-0700.

Enable Midstream Partners, LP

Enable is a Delaware limited partnership with common units traded on the NYSE under the symbol “ENBL.” Enable owns, operates and develops midstream energy infrastructure assets strategically located to serve its customers. Enable’s general partner is owned by CenterPoint and OGE Energy.

Enable’s assets and operations are organized into two reportable segments: (i) gathering and processing and (ii) transportation and storage. Enable’s gathering and processing segment primarily provides natural gas gathering and processing services to its producer customers and crude oil, condensate and produced water gathering services to its producer and refiner customers. Enable’s transportation and storage segment provides interstate and intrastate natural gas pipeline transportation and storage services primarily to its producer, power plant, local distribution companies and industrial end-user customers.

Enable’s natural gas gathering and processing assets are primarily located in Oklahoma, Texas, Arkansas and Louisiana and serve natural gas production in the Anadarko, Arkoma and Ark-La-Tex Basins. Enable’s crude oil gathering assets are located in Oklahoma and North Dakota and serve crude oil production in the Anadarko and Williston Basins. Enable’s natural gas transportation and storage assets consist primarily of an interstate pipeline system extending from western Oklahoma and the Texas Panhandle to Louisiana, an interstate pipeline system extending from Louisiana to Illinois, an intrastate pipeline system in Oklahoma and its investment in SESH, a pipeline extending from Louisiana to Alabama.

Enable’s executive offices are located at 499 West Sheridan Avenue, Suite 1500, Oklahoma City, Oklahoma 73102, and its telephone number is (405) 525-7788.

Elk Merger Sub LLC

Merger Sub is a Delaware limited liability company and a wholly owned subsidiary of Energy Transfer. Merger Sub was formed on February 11, 2021 solely for the purpose of consummating the Merger and has no operating assets. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement.

Merger Sub’s principal executive offices are located at 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and its telephone number is (214) 981-0700.

 

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Elk GP Merger Sub LLC

GP Merger Sub is a Delaware limited liability company and a wholly owned subsidiary of Energy Transfer. GP Merger Sub was formed on February 11, 2021 solely for the purpose of consummating the Merger and has no operating assets. GP Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement.

GP Merger Sub’s principal executive offices are located at 8111 Westchester Drive, Suite 600, Dallas, Texas 75225, and its telephone number is (214) 981-0700.

 

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ENABLE SOLICITATION OF WRITTEN CONSENTS

Consents

The Enable board of directors is providing these consent solicitation materials to all holders of Enable common units as of the Enable Record Date. Enable common unitholders are being asked to (i) approve the merger agreement and (ii) approve, on a nonbinding, advisory basis, the Transaction-Related Compensation Proposal, by executing and delivering the written consent furnished with this consent statement/prospectus.

Units Entitled to Consent and Consent Required

Only holders of record of Enable common units at the close of business on                 , 2021 (the “Enable Record Date”) will be notified of and be entitled to execute and deliver a written consent. Each holder of Enable common units is entitled to one vote for each Enable common unit held as of the Enable Record Date.

To approve the merger agreement, the holders of a majority of the outstanding Enable common units must consent to the approval of the merger agreement. To approve the Transaction-Related Compensation Proposal on a non-binding, advisory basis, the holders of a majority of the outstanding Enable common units must consent to the approval of the Transaction-Related Compensation Proposal.

As of the Enable Record Date, there were                 Enable common units outstanding and entitled to consent with respect to the approval of the merger agreement and, on a non-binding, advisory basis, of the Transaction-Related Compensation Proposal, and directors and officers of Enable General Partner and their affiliates (other than the Sponsors) owned and were entitled to consent with respect to                  Enable common units, representing less than     % of the Enable common units outstanding on that date. Enable currently expects that its directors and officers will deliver written consents in favor of the approval of the merger agreement and the Transaction-Related Compensation Proposal with respect to the Enable common units owned by them, although none of them has entered into any agreements obligating him or her to do so.

The Sponsors, who collectively own approximately 79% of the outstanding Enable common units, have each entered into the support agreements pursuant to which such Sponsors have agreed, subject to the terms and conditions of such support agreements, to execute and return written consents approving the merger agreement and each of the other matters for which Enable is soliciting consents in connection with the merger agreement within 24 hours after the registration statement, of which this consent statement/prospectus forms a part, becomes effective under the Securities Act. The delivery of the written consents by the Sponsors will be sufficient to approve the merger agreement and the other transactions contemplated by the merger agreement. For additional information, see “Support Agreements.”

Submission of Consents

You may consent to the approval of the merger agreement and, on a non-binding, advisory basis, the Transaction-Related Compensation Proposal, with respect to your Enable common units by completing and signing the written consent furnished with this consent statement/prospectus and returning it to Enable by the consent deadline.

If you hold Enable common units as of the Enable Record Date and you wish to give your written consent, you must fill out the enclosed written consent, date and sign it, and promptly return it as instructed. If you hold your Enable common units directly with American Stock Transfer & Trust Company (“AST”), you must complete and deliver your written consent to MacKenzie Partners, Inc., 1407 Broadway 27th Floor, New York, NY 10018, attention Glen Linde.

The delivery of the written consents from the Sponsors pursuant to the support agreements will constitute receipt by Enable of the requisite approval of the merger agreement and, on a non-binding, advisory basis, the

 

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Transaction-Related Compensation Proposal, and a failure of any other Enable common unitholder to deliver a written consent is not expected to have any effect on the approval of the merger agreement or the Transaction-Related Compensation Proposal.

Executing Consents; Revocation of Consents

You may execute a written consent to approve the merger agreement and/or the Transaction-Related Compensation Proposal on a non-binding, advisory basis (which is equivalent to a vote FOR the approval of the merger agreement and/or the approval of the Transaction-Related Compensation Proposal) or disapprove, or abstain from consenting with respect to, the approval of the merger agreement and/or, on a non-binding, advisory basis, the Transaction-Related Compensation Proposal (which is equivalent to a vote AGAINST the approval of the merger agreement and/or the Transaction-Related Compensation Proposal). If you do not return your written consent, it will have the same effect as a vote AGAINST both the approval of the merger agreement and the Transaction-Related Compensation Proposal. If you are an Enable common unitholder as of the close of business on the Enable Record Date and you return a signed written consent without indicating your decision on the approval of the merger agreement or the Transaction-Related Compensation Proposal, you will have given your consent to approve the merger agreement and the Transaction-Related Compensation Proposal.

Your consent to the approval of the merger agreement or the Transaction-Related Compensation Proposal may be changed or revoked at any time before the consent deadline; however, such change or revocation is not expected to have any effect, as the delivery of the written consents from the Sponsors pursuant to the support agreements will constitute receipt by Enable of the requisite approval of the merger agreement and the Transaction-Related Compensation Proposal. If you wish to change or revoke a previously given consent before the consent deadline, you may do so by delivering a new written notice of consent with a later date, or by delivering a revocation notice of consent to MacKenzie Partners, Inc., 1407 Broadway 27th Floor, New York, NY 10018, attention Glen Linde.

Solicitation of Consents; Expenses

The expense of preparing, printing and mailing this consent statement/prospectus is being borne 50% by Enable and 50% by Energy Transfer. Enable has retained MacKenzie Partners, Inc. to aid in solicitation of consents for the Enable consent solicitation and to verify certain records related to the solicitation. Enable will pay MacKenzie Partners, Inc. a fee of approximately $17,500 as compensation for its services and will reimburse it for its reasonable out-of-pocket expenses. Officers and employees of Enable General Partner may solicit consents by telephone and personally, in addition to solicitation by mail. These persons will receive their regular compensation but no special compensation for soliciting consents.

Determination of the Enable General Partner Board and the Enable Conflicts Committee

The Enable Conflicts Committee has unanimously, in good faith, among other things, (i) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of Enable, its subsidiaries and the unaffiliated holders of Enable common units, (ii) approved the merger agreement and the transactions contemplated thereby, including the LP Merger, with such approval constituting “Special Approval” under the Enable Partnership Agreement, and (iii) recommended to the Enable General Partner Board approval of the merger agreement and the consummation of the transactions contemplated thereby, including the LP Merger. Upon the approval and recommendation of the Enable Conflicts Committee, the Enable General Partner Board has unanimously, in good faith, (i) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of Enable and its subsidiaries, and, with respect to the GP Merger, Enable General Partner, (ii) approved the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby and (iii) authorized that the approval of the merger agreement be submitted to Enable’s common unitholders to act by written consent pursuant to Section 13.11 of the Enable Partnership Agreement.

 

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THE MERGER

Effects of the Merger

Upon satisfaction or waiver of the conditions to closing in the merger agreement, on the closing date, (i) Merger Sub, a wholly owned subsidiary of Energy Transfer formed for the purpose of effecting the LP Merger, will merge with and into Enable, and Enable will be the surviving entity in the LP Merger and become a direct wholly owned subsidiary of Energy Transfer and (ii) GP Merger Sub, a wholly owned subsidiary of Energy Transfer formed for the purpose of effecting the GP Merger, will merge with and into Enable General Partner, and Enable General Partner will be the surviving entity in the GP Merger. At the effective time, each Enable common unit issued and outstanding immediately prior to the effective time (other than units held directly by Energy Transfer, Merger Sub or GP Merger Sub) will be cancelled and converted into the right to receive the LP Merger Consideration. Additionally, all limited liability company interests of Enable General Partner issued and outstanding immediately prior to the effective time will be converted into the right to receive the GP Merger Consideration. Lastly, following the Pre-Closing Transactions and immediately prior to the effective time, CenterPoint and Energy Transfer will complete the Preferred Contributions. Enable will take all actions as may be necessary so that at the effective time, each outstanding award of phantom units and performance units of Enable will be treated as described in “The Merger Agreement—Enable Employee Equity-Based Awards.”

Background of the Merger

The terms of the Merger are the result of arm’s length negotiations between Energy Transfer and Enable. The following is a summary of the events leading up to the signing of the merger agreement and the key meetings, negotiations, discussions and actions by and between Energy Transfer and Enable and their respective advisors that preceded the public announcement of the acquisition.

The Enable General Partner Board has routinely engaged in strategy discussions which included the consideration of acquisition opportunities, including potential strategic transactions with third parties. As investors have become increasingly focused on the ability of energy companies to operate within their cash flows and to return capital to unitholders, the Enable General Partner Board also considered that, under current market conditions, Enable, like many of its peers, may have limited access to equity capital and intermittent access to debt capital markets, which could result in an increasing weighted average cost of capital. The Enable General Partner Board also considered that increasing scale through a business combination with a third party could mitigate the impacts of these conditions.

CenterPoint owns 53.7% of the issued and outstanding Enable common units and 100% of the Enable Series A Preferred Units, and OGE Energy owns 25.5% of the issued and outstanding Enable common units. In addition, affiliates of CenterPoint and OGE Energy, which we refer to as the “Sponsors,” own Enable General Partner. CenterPoint owns a 50% management interest and a 40% economic interest in Enable General Partner, and OGE Energy owns a 50% management interest and a 60% economic interest in Enable General Partner. Enable General Partner owns the non-economic general partner interest in Enable and all of Enable’s incentive distribution rights. The Enable General Partner Board is chosen by the Sponsors. Under the Enable Partnership Agreement, any sale of Enable requires the unanimous consent of the Sponsors. The Sponsors’ interests in Enable are burdened with a significant built-in gain (even exceeding the fair market value of their interests) as a result of, among other things, their long-term ownership of their interests in Enable and their respective assets that were contributed to Enable at the time of its formation, and the Sponsors expressed to Enable management and the Enable General Partner Board a preference for tax-deferred transactions.

In July 2020, Party A’s financial advisor reached out to a representative of CenterPoint’s strategic planning team. During this conversation, Party A’s financial advisor and representatives of CenterPoint coordinated a call between CenterPoint’s Chief Executive Officer and Party A’s Chief Executive Officer that took place in early August. During the call in early August, Party A’s Chief Executive Officer expressed an interest in a potential

 

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transaction involving Enable, and CenterPoint’s Chief Executive Officer indicated that Party A should contact Enable and referred him to Mr. R.A. Walker, one of CenterPoint’s newly designated members of the Enable General Partner Board. Previously, on August 4, 2020, CenterPoint had announced that it was designating two new individuals to serve as the CenterPoint designees on the Enable General Partner Board with substantial experience in Enable’s industry who were not officers or directors of CenterPoint.

On August 20, 2020, Enable entered into a mutual confidentiality agreement with Party A, a publicly traded midstream company, which did not include a standstill agreement. The purpose of the confidentiality agreement was to facilitate discussions between Enable and Party A regarding a potential strategic transaction. Following entry into the confidentiality agreement, on August 21, 2020, executives of Party A met with Rodney J. Sailor, Enable’s President and Chief Executive Officer, and John P. Laws, Enable’s Executive Vice President, Chief Financial Officer and Treasurer, together with certain other representatives of both companies who joined telephonically, to explore a potential strategic transaction in which certain of Party A’s gathering and processing assets would be contributed to Enable in exchange for Enable’s transportation and storage assets and other cash consideration. Under the potential strategic transaction, Enable would continue as a simplified publicly traded master limited partnership with Party A owning and controlling its general partner, and the Sponsors would receive partnership interests in a Party A subsidiary that would be exchangeable into common stock in Party A (an “Up-C Structure” and such discussions, the “Party A Proposal”).

On August 25, 2020, Enable delivered materials to CenterPoint and OGE Energy summarizing the Party A Proposal. On August 31, 2020, Robert Gwin and Mr. Walker, each designated to serve on the Enable General Partner Board by CenterPoint, had a call with representatives of Party A, including Party A’s Chief Executive Officer, regarding the Party A Proposal.    

Towards the end of August 2020, Peter H. Kind, Chairman of the Enable Conflicts Committee contacted representatives of the Delaware law firm Richards Layton and Finger, PA (“Richards Layton”) to arrange a discussion regarding the responsibilities of independent directors during a potential sales process. Richards Layton previously represented the Enable Conflicts Committee in connection with a prior transaction.

On September 1, 2020, the Enable Conflicts Committee and representatives of Richards Layton met telephonically to discuss the responsibilities of independent directors during a potential sales process. Between September 1, 2020 and February 3, 2021, the Enable Conflicts Committee and/or Mr. Kind had conversations with representatives of Richards Layton regarding the role of a conflicts committee, the responsibilities of conflicts committee members, considerations in choosing a conflicts committee financial advisor and issues that arise in connection with acquisition transactions, generally. On November 17, 2020, the Enable Conflicts Committee entered into an engagement letter with Richards Layton. The Enable Conflicts Committee determined to engage Richards Layton based on Richards Layton’s prior experience with the Enable Conflicts Committee and Richards Layton’s experience with public mergers and acquisitions, complex transactions involving publicly traded partnerships and representing conflicts committees.

On September 15 and September 16, 2020, the Enable General Partner Board held its regularly scheduled annual strategy meeting. On September 16, the Enable General Partner Board discussed the prospects for a strategic transaction with various counterparties, including Party A.    

On September 17, 2020, Mr. Sailor called the Chief Executive Officer of Party A to discuss the Party A Proposal and to notify Party A that Enable would likely engage a financial advisor to help Enable consider such matters.

On September 21, 2020, Enable contacted Goldman Sachs to discuss the engagement of Goldman Sachs to serve as its financial advisor for the purposes of evaluating a potential strategic transaction with Party A.

On September 22, 2020, Enable provided Goldman Sachs with information relating to the Party A Proposal for Goldman Sachs’ review.

 

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On September 29, 2020, Mr. Walker met with members of Energy Transfer’s management team. Among other things, Energy Transfer’s interest in a potential transaction with Enable was discussed. Mr. Walker informed Energy Transfer that there was no formal sales process announced or in place but that it should submit a formal written indication of interest to Mr. Sailor that could be evaluated and shared with the Enable General Partner Board.

On September 30, 2020, Party A’s financial advisor discussed the Party A Proposal with representatives of Goldman Sachs.

In discussions during early October 2020, Party A indicated that it would not entertain further Enable due diligence on Party A’s assets and forecasted performance without an understanding of the Sponsors’ interest in pursuing the Party A Proposal.

On October 1, 2020, OGE announced it had designated a new individual with substantial experience in Enable’s industry to serve as one of OGE’s designees on the Enable General Partner Board.

On October 14, 2020, Mr. Sailor sent the Party A Proposal to representatives of the Sponsors, explaining the complexities inherent in the Party A Proposal (both the asset exchange and Up-C Structure) and requesting a discussion with the Sponsors.

On October 16, 2020, the Sponsors and Mr. Sailor had a discussion in which Mr. Sailor summarized the Party A Proposal, and the Sponsors directed Enable management to continue discussions with Party A but also requested that Enable management and its advisors consider other potential strategic alternatives.

In mid-October 2020, Mr. Sailor had a conversation with the Chief Executive Officer of Party B, following a call Party B had with OGE Energy. Party B asked if there was a process related to a potential sale of Enable. Mr. Sailor indicated that although there was no formal sales process announced or in place, Mr. Sailor stressed that if Party B had an interest in Enable, they should submit a proposal that could be evaluated and shared with the Enable General Partner Board.

On October 19, 2020, Mr. Sailor informed the Chief Executive Officer of Party A that Enable was prepared to engage in further discussions with Party A, but needed additional information and detail regarding Party A’s proposed transaction structure in order to better evaluate the Party A Proposal.

On October 27, 2020, Mr. Sailor received a call from the then current Chief Financial Officer (and now current Co-Chief Executive Officer) of Energy Transfer, Mr. Thomas Long, regarding Energy Transfer’s intent to deliver a letter proposing a potential transaction. Following the call, Energy Transfer delivered a proposal letter (the “October 27 ET Proposal”) to Enable proposing to acquire 100% of Enable’s limited partner interests in an all-equity transaction, at an implied low to no premium to Enable’s trading price, as well as 100% of the limited liability company interests of Enable General Partner. Under the October 27 ET Proposal, no consideration would be provided for Enable’s incentive distribution rights, which were owned indirectly by the Sponsors (through their ownership of Enable General Partner) and none of which were owned by any of the unaffiliated Enable common unitholders.

On October 28, 2020, Mr. Sailor convened a call to discuss the October 27 ET Proposal with the following members of the Enable General Partner Board: Messrs. Sean Trauschke and Luke Corbett, each designated to serve on the Enable General Partner Board by OGE Energy, and Mr. Gwin and Mr. Walker, each designated to serve on the Enable General Partner Board by CenterPoint. Messrs. Trauschke, Corbett, Gwin and Walker requested that Mr. Sailor notify the full Enable General Partner Board of the October 27 ET Proposal. Mr. Sailor also informed Messrs. Trauschke, Corbett, Gwin and Walker of the inbound inquiry from Party B.

On October 30, 2020, Mr. Sailor sent the October 27 ET Proposal to the full Enable General Partner Board with a brief overview of the potential transaction with Energy Transfer. Mr. Sailor also informed the Enable General Partner Board of the mid-October inbound inquiry from Party B.

 

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In late October 2020, Mr. Sailor was contacted by the Chief Executive Officer of Party C who requested a meeting with Mr. Sailor, following a call that a representative of Party C had with a representative of OGE Energy. On November 3, 2020 Mr. Sailor had a video conference with the Chief Executive Officer of Party C, during which the parties discussed, among other things (i) CenterPoint’s prior public comments regarding the strategic review of Enable, (ii) Party C’s interest in pursuing opportunities involving Enable and (iii) that the management teams should get together to discuss a range of opportunities. Through a series of emails after the video conference, Party C suggested a meeting, and both parties committed to set a meeting time, acknowledging that the current pandemic might make that difficult, and ultimately targeting a date after Thanksgiving. Also, on or around this date, a representative of Party C reached out to a representative of Goldman Sachs to express Party C’s interest in a potential transaction with Enable.

Also on November 3, 2020, the Enable General Partner Board convened a regularly scheduled meeting at which members of Enable management and representatives of Vinson & Elkins, counsel to Enable, participated. At the end of this meeting, in executive session, representatives of Enable management summarized the status of the Party A Proposal and the October 27 ET Proposal to the Enable General Partner Board as well as the Party C inquiry. On that same day, Goldman Sachs informed Enable that they had received an inquiry from an executive at Party B regarding a sale process involving Enable.

On November 4, 2020, CenterPoint expressed on its earnings call that CenterPoint continued to evaluate Enable options and was aligned with OGE with respect to maximizing the value of Enable.

In mid-November, Mr. Sailor called the Chief Executive Officer of Party B to state that although there was no formal process announced or in place, management, on behalf of the Enable General Partner Board, had been requested to evaluate potential third party interest in Enable and encouraged Party B to put forward a formal written indication of interest if it wished to do so. At no time thereafter did Party B submit a formal written indication of interest or a formal proposal to be considered by the Enable General Partner Board.

On November 6, 2020, Mr. Sailor had a discussion with Mr. Long of Energy Transfer regarding the October 27 ET Proposal. In particular, Messrs. Long and Sailor discussed Energy Transfer’s valuation for the potential acquisition transaction and potential synergies. Mr. Sailor advised Mr. Long that the Enable General Partner Board had a number of questions regarding value and structure of the potential acquisition transaction with Energy Transfer and requested that Energy Transfer provide a revised proposal with additional details.

On November 10, 2020, Energy Transfer delivered an updated proposal to Enable (the “November 10 ET Proposal”), which reiterated Energy Transfer’s interest in acquiring 100% of Enable’s limited partner interests in an all-equity transaction and offered an at market exchange ratio of 0.845, which implied a 5% premium to the then-30 day volume weighted average Enable common unit price and Enable unitholder pro forma ownership of 12% in Energy Transfer. Energy Transfer also proposed acquiring Enable General Partner for $10 million in cash, with no additional consideration provided for Enable’s incentive distribution rights.

On November 11, 2020, the Chief Financial Officer of CenterPoint received a call from a representative of Party D, a private equity firm, who expressed interest in a potential transaction with Enable. CenterPoint’s Chief Financial Officer indicated that Party D should communicate such interest directly to Enable management. On that same day, Mr. Sailor received a call from a representative of Party D, who expressed Party D’s interest in midstream investments and that Party D was interested in exploring investment opportunities involving Enable. Mr. Sailor suggested that if Party D had an interest in an investment in Enable, it should put forward a formal written indication of interest that could be evaluated and discussed with the Enable General Partner Board.

On November 22, 2020, Mr. Sailor had a call with Mr. Long of Energy Transfer to update him on the Enable General Partner Board’s review process of the November 10 ET Proposal and to inform him that such proposal would be discussed at an upcoming meeting of the Enable General Partner Board.

 

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On November 23, 2020, the Enable General Partner Board convened a special meeting at which members of Enable management and representatives of Vinson & Elkins participated. Management (i) provided an update on third parties expressing an interest in a strategic transaction with Enable, including with Party A, Party B, Party C and Energy Transfer, and (ii) summarized the November 10 ET Proposal as well as the status of the ongoing dialogue with Party A, Party B and Party C. Mr. Sailor provided an analysis of salient points of potential transactions with each of such parties, including that (i) Party C had a smaller market capitalization and provided significantly less liquidity to Enable’s common unitholders than could be achieved in a potential transaction with certain other parties, including with Energy Transfer, and (ii) Party A’s proposal involved the complexities of both an Up-C structure and an asset exchange resulting in Enable continuing as a publicly traded master limited partnership with only gathering and processing assets. The Enable General Partner Board also discussed and reviewed various business, financing and distribution scenarios for Enable, including steps that Enable could take to avoid further reductions in its distributions.

On November 30, 2020, Enable entered into a mutual confidentiality agreement with Energy Transfer. This confidentiality agreement did not include a standstill agreement.

On December 2, 2020, Messrs. Sailor and Laws had a video conference meeting with the Chief Executive Officer and another executive officer of Party C to discuss general industry conditions and the relationship between Enable and Party C. Representatives of Party C indicated that Party C wanted to engage in discussions with members of Enable management about areas of potential opportunities as precursors to a potential transaction between the parties. Mr. Sailor informed Party C that if they had interest in a potential transaction that they should put forward a formal written indication of interest that could be evaluated and shared with the Enable General Partner Board. At no time thereafter did Party C submit a formal written indication of interest or a formal proposal to be considered by the Enable General Partner Board.

On December 3, 2020, Messrs. Sailor and Laws had a video conference with a representative of Party D. Such representative provided an overview of Party D’s approach to a potential transaction with Enable, including a potential transaction structure which would involve a take-private transaction to be accomplished in one or more steps involving (i) a purchase of the issued and outstanding publicly traded Enable common units and the limited liability company interests in Enable General Partner and (ii) a separate financing transaction to consummate the take-private of Enable.

On December 4, 2020, Party D delivered a letter to Mr. Sailor proposing to acquire all of the Sponsors’ equity in Enable in an all-cash transaction for such ownership interests held by the Sponsors at $6 per Enable common unit and $0.01 per unit for the limited liability company interests of Enable General Partner, which valued Enable General Partner at $10 in the aggregate (the “Party D Proposal”). The Party D Proposal indicated that ultimately Party D intended to acquire all of Enable’s issued and outstanding publicly traded common units, but the terms of the Party D Proposal assumed that, at a minimum, it would acquire the entirety of CenterPoint’s and OGE Energy’s interests in Enable. The Party D Proposal did not provide for any consideration to be provided to the Enable common unitholders who were unaffiliated with the Sponsors. Mr. Sailor delivered the Party D Proposal to the Enable General Partner Board and to the Sponsors.

Also on December 4, 2020, in a Schedule 13D amendment filed with the SEC, CenterPoint publicly disclosed it was in the process of evaluating its investment in Enable. CenterPoint’s filing stated that during this process it intended to consider various plans, proposals and other strategic alternatives with respect to its investment in Enable and Enable General Partner, which might result in the disposition of a portion or all of its interests in Enable and Enable General Partner or in a different transaction involving Enable.

In early December 2020, Mr. Sailor received a call from a representative of one of the banks that was a party to Enable’s credit facility, during which the representative indicated that Party E, a private midstream company with which the bank also worked, had discussed an interest in a potential acquisition transaction with Enable and was requesting Mr. Sailor’s contact information. The bank followed up with a proposed transaction structure, pursuant to

 

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which Enable would be taken private by Party E and recapitalized with increased leverage, that could be discussed between Party E and Enable. Mr. Sailor agreed to provide his contact information and requested a call on December 10, 2020 with Party E. Also in early December, representatives of Party E met with the Chief Financial Officer of CenterPoint and expressed an interest in a potential acquisition transaction with Enable. Party E was directed by CenterPoint’s Chief Financial Officer to communicate their interest directly to Enable management.

On December 9, 2020, following receipt of the Party D Proposal, Mr. Sailor advised a representative of Party D that Enable was not prepared to engage in further discussions at that time. In part, Enable’s decision was based upon the fact that (i) Party D had indicated it would require additional time to raise capital for the transaction (and could not effect the transaction without having raised sufficient capital), (ii) an all-cash transaction would have resulted in negative tax consequences for the Sponsors that would have restricted the flexibility of the timing of such a taxable event and (iii) the Party D Proposal only contemplated a purchase of the Sponsors’ ownership interests in Enable and did not provide for any consideration for the Enable common unitholders who were unaffiliated with the Sponsors.

On December 10, 2020, Messrs. Sailor and Laws met telephonically with executives from Party E concerning its potential structured acquisition of Enable. Mr. Sailor informed Party E that the illustrative structure might not meet certain of Enable’s or the Sponsors’ objectives, including tax related objectives, and suggested that the parties should explore additional options. At no time thereafter did Party E submit a formal written indication of interest or a formal proposal for consideration by the Enable General Partner Board.

On December 15, 2020, Party A sent Enable additional materials regarding the proposed Up-C Structure that would have the practical effect of allowing the Sponsors to defer recognition of taxable gain until they were prepared to sell (or otherwise exchange limited liability company units for) shares of Party A common stock. Party A’s materials noted a number of ongoing challenges, restrictions and uncertainties for Party A that might affect the overall attractiveness of the potential transaction to Party A, including a requirement that Party A not be able to dispose of Enable assets for a period of time and a risk of stock index ineligibility.

On the evening of December 15, 2020 and again over the course of the morning on December 16, 2020, members of Enable management met with members of Energy Transfer management at an offsite location to discuss a potential acquisition transaction. During those meetings, Enable management provided Energy Transfer with an overview presentation of Enable and its operations, and Energy Transfer management provided Enable with an overview presentation of Energy Transfer and its operations.

On December 18, 2020, Enable management and Goldman Sachs had a phone call with executives of Party A on which Party A described the complexities with establishing an Up-C structure, and expressed additional reservations about the associated challenges, restrictions and uncertainties that such a structure would present for Party A. Party A indicated that these factors might have a negative effect on the overall attractiveness of the potential strategic transaction to Party A, and that it would need more time to consider a potential strategic transaction with Enable and would continue to discuss internally. Enable management offered to send to Party A additional information about Enable to assist Party A in its considerations.

On December 21, 2020, Mr. Sailor delivered a strategic transaction update memorandum to the Enable General Partner Board which included an update on (i) the November 10 ET Proposal and the Party A Proposal and (ii) the Energy Transfer management presentation that was provided to Enable on December 16. In the same memorandum, Mr. Sailor described the proposed Party A Up-C Structure for the Enable General Partner Board’s review and comment, including in particular, their views on tax efficiency of the potential transaction with Party A. Also on December 21, 2020, Enable management delivered to Party A a presentation providing an overview of Enable and its operations.

No formal discussions were scheduled or took place between the executive officers of Party A and Enable on or after December 21, 2020.

 

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On January 4, 2021, Goldman Sachs delivered to the Enable General Partner Board an executed disclosure letter regarding certain of Goldman Sachs’ relationships with Energy Transfer and the Sponsors.

On January 6, 2021, Mr. Sailor had a call with Mr. Long of Energy Transfer to discuss the November 10 ET Proposal and the expected rating agency reaction to a potential transaction between Enable and Energy Transfer, as well as the exchange ratio and upcoming board meeting schedules.    

On January 11, 2021, Mr. Sailor had a conversation with Mr. Long to discuss aspects of the November 10 ET proposal, including the exchange ratio for the Enable common units, the treatment of the Enable Series A Preferred Units and operational synergies. Mr. Sailor and Mr. Long also discussed the need for additional information regarding the businesses of Enable and Energy Transfer, including a request for financial forecasts for Energy Transfer and to inquire if an update to the November 10 ET Proposal would be forthcoming.

On January 13, 2021, Party F, an infrastructure investment firm, reached out to representatives of Enable management regarding a potential acquisition transaction. Management notified Mr. Sailor of the inquiry.

On January 14, 2021, Energy Transfer delivered a letter (the “January 14 ET Proposal”) to Enable reiterating Energy Transfer’s interest in acquiring Enable in an at-market, all-equity transaction, and offering an exchange ratio for the Enable common units determined by the 10-day volume-weighted average trading prices, which implied an exchange ratio of 0.826 as of the date of such letter. The January 14 ET Proposal included an offer to (i) exchange the Enable Series A Preferred Units held by CenterPoint for Energy Transfer Series G Preferred Units and (ii) acquire all of the limited liability company interests of Enable General Partner for $10 million in cash, with no additional consideration provided for Enable’s incentive distribution rights which were wholly-owned indirectly by the Sponsors.

On January 15, 2021, Mr. Sailor sent the January 14 ET Proposal to the Enable General Partner Board with a brief overview of the proposed acquisition transaction between Energy Transfer and Enable. On that same day, Messrs. Sailor and Laws had a telephone conference with Mr. Long of Energy Transfer and Christopher Hefty, Energy Transfer’s Senior Vice President – Mergers & Acquisitions, to discuss the January 14 ET Proposal, the proposed exchange ratio, the level of synergies in such proposal, remaining due diligence required by both parties, forecasts and the potential transaction timeline.

Also on January 15, 2021, a representative of Party F called a representative of Goldman Sachs and noted Party F’s general interest in a transaction with Enable. Separately on that same day, Mr. Laws had a conversation with that same representative of Party F and noted that while the Enable General Partner Board did not have a formal process in place, Party F should submit a formal written indication of interest to be considered by the Enable General Partner Board if it so desired. Party F indicated to Mr. Laws that Party F did not have a formal proposal prepared but would discuss internally. Mr. Sailor was informed of the conversations with Mr. Laws and a representative of Goldman Sachs. At no time thereafter did Party F submit a formal written indication of interest or a formal proposal to either Enable or Goldman Sachs.

On January 22, 2021, the Enable General Partner Board convened a special meeting at which members of Enable management, representatives of Goldman Sachs and representatives of Vinson & Elkins participated. A representative of Vinson & Elkins provided the Enable General Partner Board with an overview of process considerations in connection with a third-party acquisition transaction, strategic alternatives, as well as a summary of applicable board duties and the framework established in the Enable Partnership Agreement regarding such matters. Representatives of Goldman Sachs discussed with the Enable General Partner Board (i) its current perspectives on the midstream market, (ii) an overview of discussions with the third parties regarding their potential interest in a strategic transaction with Enable and the strategic landscape, and (iii) a review of Energy Transfer and a preliminary financial analysis of the January 14 ET Proposal.

Between January 22, 2021 and February 1, 2021 each of the Sponsors and their advisors had multiple conversations with members of Enable management and the Enable General Partner Board and their advisors

 

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regarding the views of the Sponsors, Enable management and Enable General Partner regarding the proposed acquisition terms from Energy Transfer. Such discussions included (i) the consideration that would be received by Enable common unitholders in exchange for Enable common units (and the strength and quality and other considerations regarding the equity currency offered by Energy Transfer), (ii) the consideration that would be received by the Sponsors for their limited liability company interests of Enable General Partner, (iii) the treatment of the Enable Series A Preferred Units and the consideration to be received by CenterPoint for such Series A Preferred Units (including the form of such consideration), (iv) the fact that no consideration would be received for Enable’s incentive distribution rights which were wholly-owned indirectly by the Sponsors, (v) the fact that Enable management had already engaged, prior to such date, in discussions with multiple potential counterparties and (vi) whether additional third-party outreach prior to attempting to reach agreement on a transaction with Energy Transfer would be likely to result in more favorable terms for a potential transaction. The Sponsors ultimately supported Enable’s view that further third-party outreach could significantly damage the prospects of a potential transaction with Energy Transfer, taking into account various factors, including (i) that Enable management had already engaged in discussions with multiple potential counterparties, (ii) the lack of interest and follow-up from various counterparties and (iii) the public disclosures by the Sponsors in the market regarding openness to considering strategic alternatives for Enable, and the Sponsors and the Enable General Partner Board agreed to move forward with Energy Transfer in an attempt to improve and finalize the terms of a potential transaction, with a focus on improving the exchange ratio for the Enable common units. The Sponsors also would not seek to increase the amount that Energy Transfer would pay to them to acquire Enable General Partner from them or seek to receive consideration from Energy Transfer for the incentive distribution rights, which were not owned by any of the unaffiliated Enable common unitholders. The Sponsors and the Enable General Partner Board also acknowledged that further outreach would be made as required by the Enable Conflicts Committee.

Additionally, between January 22, 2021 and February 2, 2021, the Sponsors had several discussions amongst themselves regarding the potential acquisition transaction with Energy Transfer, alternatives to such a transaction, the willingness of both Sponsors to enter into such a transaction and concerns regarding the strategic and business outlook for Enable.

On January 28, 2021, representatives of Party G called Goldman Sachs and inquired regarding a potential transaction with Enable. Representatives of Goldman Sachs indicated that while there was no formal process in place, Party G should submit a formal written indication of interest if it so desired. At no time thereafter did Party G submit a formal written indication of interest or a formal proposal to either Enable or Goldman Sachs.

On February 2, 2021, Mr. Sailor had a call with the Chief Executive Officers of each Sponsor in which they indicated that Mr. Sailor should inform Energy Transfer of a desire to move forward with developing a potential transaction between Energy Transfer and Enable for review. Later that day, Messrs. Sailor and Laws had a teleconference with Messrs. Long and Hefty of Energy Transfer to advise them that the Enable General Partner Board and the Sponsors supported moving forward with negotiating an acquisition transaction between Energy Transfer and Enable. In particular, Messrs. Sailor and Laws noted that the Sponsors and the Enable General Partner Board were focused on improving the exchange ratio for the Enable common units and had expressed a strong desire that the process move forward expeditiously.

On February 3, 2021, the Enable Conflicts Committee conducted interviews of two potential financial advisors. Following the interviews, based on Intrepid’s experience with public mergers and acquisitions, complex transactions involving publicly traded partnerships and representations of conflicts committees and knowledge of Enable and after consideration of Intrepid’s independence from the Sponsors, Enable and Energy Transfer, the Enable Conflicts Committee determined that Intrepid had the requisite expertise to provide high quality advice to the Enable Conflicts Committee in connection with the proposed transaction with Energy Transfer. The Enable Conflicts Committee determined to engage Intrepid, subject to negotiation of a mutually acceptable fee and engagement letter. The Enable Conflicts Committee and Intrepid executed an engagement letter agreement dated February 12, 2021, which contained the terms of Intrepid’s engagement. Following Intrepid’s selection as

 

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financial advisor to the Enable Conflicts Committee, the Enable Conflicts Committee instructed Intrepid and Richards Layton to begin their diligence of the proposed acquisition transaction with Energy Transfer.

On February 3, 2021, Latham, counsel to Energy Transfer, delivered initial drafts of the merger agreement and support agreements to Vinson & Elkins.

On February 4, 2021, the Enable General Partner Board convened a special meeting to authorize the Enable Conflicts Committee, comprised of directors determined to be independent under both the NYSE rules and the Enable Partnership Agreement requirements for service on the Enable Conflicts Committee, to (i) consider, explore, review, analyze, solicit, structure and evaluate the proposed acquisition transaction with Energy Transfer, (ii) investigate any potential alternatives to the proposed acquisition transaction with Energy Transfer as the Enable Conflicts Committee deems necessary or appropriate, (iii) authorize, empower or direct the officers and employees of Enable General Partner and its subsidiaries to provide the Enable Conflicts Committee with such information (including, without limitation, books, records, financial statements and projections with respect to the Partnership or any of its subsidiaries) and assistance as may be requested by the Enable Conflicts Committee, (iv) negotiate, or delegate the ability to negotiate to any persons, the terms and provisions, and determine the advisability, of the proposed acquisition transaction with Energy Transfer (including, without limitation, the terms and provisions of any arrangements related to the proposed acquisition transaction with Energy Transfer involving officers or directors of Enable General Partner), (v) determine whether or not to approve the proposed acquisition transaction with Energy Transfer by “Special Approval” (as such term is defined in the Enable Partnership Agreement), (vi) make a recommendation to the Enable General Partner Board to approve or disapprove the proposed acquisition transaction with Energy Transfer, (vii) if so approved by the Enable Conflicts Committee and the Enable General Partner Board, to take such other actions as are necessary or advisable to consummate the proposed acquisition transaction with Energy Transfer, (viii) review and advise on any public disclosure to be made by Enable with respect to the proposed acquisition transaction with Energy Transfer and any related transaction documentation, and (ix) do such other things (including the approval of any actions or agreements or other documents as the Enable Conflicts Committee deems necessary, appropriate or advisable in connection with the exercise of its authority) and make such other recommendations to the Enable General Partner Board as it may determine, in its sole discretion, to be advisable in connection with the foregoing. At such meeting, the Enable General Partner Board also resolved that it would not approve the potential transaction with Energy Transfer unless such transaction is recommended by the Enable Conflicts Committee.

On February 5, 2021, the Enable Conflicts Committee held a meeting with representatives of Richards Layton and Intrepid, during which the Enable Conflicts Committee discussed with its advisors the proposed acquisition transaction with Energy Transfer. The Enable Conflicts Committee and its advisors discussed the broad scope of the Enable General Partner Board resolutions empowering the Enable Conflicts Committee to consider the proposed acquisition transaction with Energy Transfer and any potential alternatives. The Enable Conflicts Committee received presentations relating to their duties from Richards Layton and information regarding the process for conducting financial diligence from Intrepid.

On February 5, 2021, representatives of Enable, Energy Transfer and their advisors participated on a diligence call in which management of Enable and Energy Transfer answered business and financial related due diligence questions.

On February 8, 2021, the Enable Conflicts Committee held a meeting with representatives of Intrepid, Richards Layton and representatives of Enable management, during which the Enable Conflicts Committee received a presentation from representatives of Enable management relating to the proposed terms of the proposed acquisition transaction with Energy Transfer, the benefits of, and rationale for, the proposed acquisition transaction with Energy Transfer, management’s diligence that had been completed with respect to Energy Transfer, a summary of the benefits and considerations of acquisition transactions that Enable management had previously discussed with other parties and the outlook for Enable if there was no transaction. Enable

 

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management also discussed with the Enable Conflicts Committee its proposed process with respect to negotiation of the exchange ratio with Energy Transfer. In addition, representatives of Intrepid presented preliminary financial information relating to Energy Transfer and representatives of Richards Layton presented the terms of the initial drafts of the merger agreement and support agreements. The Enable Conflicts Committee and its advisors discussed the negotiation process, ongoing diligence with respect to the proposed acquisition transaction and the Enable Conflicts Committee provided preliminary feedback to Richards Layton on the terms of the merger agreement, which feedback Richards Layton provided to Vinson & Elkins.

Also on February 8, 2021, representatives of Enable, Energy Transfer, the Sponsors and all advisors participated on a diligence call in which management of Enable and Energy Transfer answered legal and regulatory related due diligence questions.

On February 9, 2021, Mr. Sailor had a discussion with Mr. Long to inform him that a revised draft of the merger agreement and the other transaction documents were going to be delivered by Vinson & Elkins to Latham shortly and to preview a few of the key issues reflected in such revised draft. Counsel to the Enable Conflicts Committee had provided comments and direction regarding key issues and terms of the merger agreement, as did the Sponsors’ advisors.

On February 9, 2021, Vinson & Elkins delivered to Latham a revised draft of the merger agreement which proposed, among other things, that (i) the Sponsors’ written consents would be delivered after the Energy Transfer registration statement was declared effective by the SEC, (ii) Energy Transfer acquire the Enable Series A Preferred Units for $25.50 in cash, rather than exchanging such units for Energy Transfer Series G Preferred Units, (iii) a covenant prohibiting Enable from soliciting other transactions be removed and related termination rights of Energy Transfer as well as the proposed breakup fee be eliminated, (iv) the covenant related to obtaining regulatory approvals to be revised to require Energy Transfer to divest of any assets if necessary for purposes of obtaining antitrust regulatory approval and (v) Energy Transfer would (A) not undertake certain actions (including asset sales) for a period of 48 months if such actions resulted in either Sponsor recognizing gain greater than $10 million in the aggregate per year and (B) indemnify the Sponsors for any breach of the foregoing clause (A) (this clause (v) is referred to as the “Tax Indemnity Provisions”).

On February 10, 2021, Vinson & Elkins delivered to Latham a revised draft of the form of the support agreements, which reflected that the consents of the Sponsors would be delivered after the Energy Transfer registration statement was declared effective by the SEC. Also on February 10, 2021, Latham and Vinson & Elkins held a preliminary call on open issues in the merger agreement.    

On February 10, 2021, Enable management and Intrepid had a due diligence meeting to review Enable’s financial forecasts provided to Intrepid by Enable management, including a discussion regarding the assumptions underlying such projections.

On February 10, 2021, Mr. Sailor had a discussion with Mr. Long regarding open issues including the proposed Tax Indemnity Provisions, employment and benefits related covenants and representations and warranties, antitrust considerations, consideration for the Enable Series A Preferred Units and to discuss a general path forward around improving Energy Transfer’s proposed exchange ratio.

On February 11, 2021, Mr. Sailor had a call with a principal of Party D, in which Party D reiterated that it had an interest in Enable and indicated that it wanted to better understand what terms (economic or otherwise) the Sponsors might require in order to approve a potential transaction. Mr. Sailor pointed them to previous public statements of CenterPoint and noted that if Party D wanted to engage with Enable, it should provide an updated proposal addressing Enable’s concerns regarding the original Party D Proposal. In addition, on that same date, representatives of Party D called CenterPoint’s strategic planning and tax team to discuss potential transaction structures which would defer tax gain. At no time thereafter did Party D submit an updated formal written indication of interest or formal written proposal to be considered by the Enable General Partner Board.

 

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On February 11, 2021, the Enable Conflicts Committee held a meeting with representatives of Intrepid and Richards Layton, during which the Enable Conflicts Committee discussed the proposed terms of the Merger. The Enable Conflicts Committee received presentations from Intrepid relating to the proposed terms of the transaction and Intrepid’s preliminary financial analysis of the consideration to be paid to the unaffiliated Enable common unitholders in the transaction, including a sensitivity analysis evaluating the financial impact of an illustrative shutdown of the Dakota Access Pipeline resulting from the ongoing litigation related to this pipeline, and from Richards Layton relating to the terms of the merger agreement. The Enable Conflicts Committee and its advisors also discussed the consideration that the Sponsors would receive in the proposal acquisition transaction with Energy Transfer.

On February 11, 2021, the Chief Financial Officer of CenterPoint had two calls with Dylan Bramhall, Executive Vice President, Finance and Group Treasurer, of Energy Transfer, in part to better understand the offer by Energy Transfer to exchange the Enable Series A Preferred Units held by CenterPoint for Series G Preferred Units to be issued by Energy Transfer, and to discuss options to address priorities. This discussion resulted in a tentative agreement between Energy Transfer and CenterPoint whereby CenterPoint would accept Series G Preferred Units from Energy Transfer rather than cash, in exchange for the Enable Series A Preferred Units held by CenterPoint at an exchange ratio of 0.0265 Energy Transfer Series G Preferred Units for each Enable Series A Preferred Unit.

On February 12, 2021, the Enable General Partner Board convened a regularly scheduled meeting to approve quarterly distributions, at which members of Enable management, as well as representatives of Goldman Sachs and Vinson & Elkins, participated. Enable management provided the Enable General Partner Board with a summary of the Enable financial forecasts, including a discussion regarding the assumptions underlying such projections. Enable management also provided the Enable General Partner Board with a summary of the Energy Transfer standalone financial forecasts prepared by Energy Transfer management, as well as a summary of Energy Transfer’s financial forecasts as adjusted by Enable management to reflect more conservative assumptions related to future commodities prices, drilling activity, and revenue following the expiration of existing customer contracts from various operations and assets and other matters (See “—Enable and Energy Transfer Unaudited Prospective Financial Information—Unaudited Prospective Financial Information Regarding Energy Transfer”). In addition, Enable management provided to the Enable General Partner Board a pro forma financial forecast prepared by Enable management based on the proposed exchange ratio for the Merger, the Energy Transfer adjusted financial forecast and the Enable financial forecast. Representatives of Goldman Sachs discussed with the Enable General Partner Board its preliminary financial analyses regarding Enable on a stand-alone basis, as well as on a pro forma basis for the transaction with Energy Transfer.

On February 12, 2021, Latham delivered to Vinson & Elkins a revised draft of the merger agreement and the support agreements. The revised merger agreement proposed, among other things, (i) a modified version of a no solicitation covenant with payment of a 5.5% breakup fee if Enable were to commit a willful breach of the non-solicitation covenant or if Enable otherwise were to commit a breach of the merger agreement giving rise to a termination right for Energy Transfer and there was a pending alternative proposal, (ii) that the Enable Series A Preferred Units be exchanged for Energy Transfer Series G Preferred Units (instead of cash) at the exchange ratio previously discussed between Energy Transfer and CenterPoint representatives, (iii) limiting Energy Transfer’s obligation to divest assets or other remedial efforts to those that would not materially impact the benefits or advantages Energy Transfer expected to receive from the Merger and (iv) eliminating the Tax Indemnity Provisions.

On February 12, 2021, the Enable Conflicts Committee and representatives of Intrepid and Richards Layton held a meeting, during which Richards Layton provided updates on the draft merger agreement and support agreements and the Enable Conflicts Committee provided Richards Layton with feedback on the agreements, which feedback Richards Layton provided to Vinson & Elkins. Representatives of Intrepid presented materials to the Enable Conflicts Committee summarizing the benefits and considerations of a business combination between Enable and Energy Transfer relative to Enable on a status quo basis.

 

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On February 13, 2021, Mr. Sailor had a conversation with Mr. Long to discuss the path forward on the Tax Indemnity Provisions, consent requirements, open issues pertaining to employment and benefit covenants, the consideration to be received in exchange for CenterPoint’s Enable Series A Preferred Units and the exchange ratio to be received by Enable common unitholders as part of the LP Merger. As a result of this conversation, and in particular, as a result of back and forth discussions regarding the exchange ratio, Mr. Long reiterated Energy Transfer’s proposal that the exchange ratio to be received by Enable common unitholders as part of the LP Merger would be determined by the 10-day volume-weighted average trading prices, which resulted in an exchange ratio of 0.8595x based on the closing prices as of February 12, 2021, and Mr. Sailor stated his intention to present this proposal to the Enable General Partner as Energy Transfer’s firm position on the exchange ratio. Mr. Sailor and Mr. Long also discussed updates with respect to (i) rating agency discussions and (ii) timing of a potential announcement, appropriate time required for the boards of directors of both companies to review and consider the merger agreement, including, with respect to Enable, time required for the Enable Conflicts Committee and the Sponsors to review and determine whether or not to consider the merger agreement or take other actions.

On February 13, 2021, the Sponsors notified the Enable Conflicts Committee and its counsel that the Sponsors had reached an agreement pursuant to which CenterPoint agreed to pay to OGE Energy a total of $30 million in cash in connection with the closing of the contemplated transaction between Enable and Energy Transfer. This payment from CenterPoint to OGE Energy was subject to the conditions that it would only occur if both Sponsors were satisfied with the terms of an agreed-upon transaction and the overall transaction received the favorable recommendation of the Enable Conflicts Committee, the approval of the Enable General Partner Board, the receipt of the approval of a majority of the outstanding Enable common units and all other requisite approvals, and was in fact consummated. A written agreement to this effect was provided to the Enable Conflicts Committee and its counsel for the committee’s information and was executed by the Sponsors on February 16, 2021. This Sponsor-to-Sponsor payment would not involve, impact or result in any reduction in the consideration to be paid by Energy Transfer to the unaffiliated Enable common unitholders.

On February 13, 2021, the Enable Conflicts Committee held a meeting with representatives of Intrepid and Richards Layton. The Enable Conflicts Committee and its advisors discussed the Sponsors’ disclosure of CenterPoint’s agreement to pay OGE Energy $30 million if the proposed transaction was approved and was in fact consummated, and determined to make a request of the Sponsors for an additional $30 million payment to the unaffiliated Enable common unitholders. Representatives of Intrepid presented materials to the Enable Conflicts Committee relating to the proposed exchange of Enable’s Series A Preferred Units for Energy Transfer’s Series G Preferred Units. Following the meeting, Mr. Kind informed representatives of CenterPoint and OGE Energy of the Enable Conflicts Committee’s request for additional consideration and representatives of Richards Layton informed legal counsel to CenterPoint and OGE Energy of the request.

On February 14, 2021, Vinson & Elkins delivered to Latham a revised draft of the merger agreement and the support agreements. The revised merger agreement (i) accepted the inclusion of a no solicitation covenant but with a break-up fee of 3.5% (the “proposed breakup fee”) if Enable were to commit a willful breach of the covenant or if the merger agreement is terminated due to a failure of Enable to distribute a combined consent solicitation statement to its common unitholders and the holder of the Enable Series A Preferred Units and Enable were to enter into an alternative transaction within 12 months of such termination, (ii) replaced the proposed exchange ratio with respect to the exchange of the Enable Series A Preferred Units with a blank to be filled in later, (iii) accepted, in part, Energy Transfer’s revisions to the divestiture clause but requiring Energy Transfer to divest assets and take remedial efforts up to a proposed agreed upon limit, and (iv) re-inserting the Tax Indemnity Provisions.

On February 13 and 14, 2021, Mr. Sailor had discussions with the representatives of the Sponsors and Mr. Kind regarding Energy Transfer’s proposed exchange ratio and understanding of acceptable pricing. As part of these conversations, Mr. Sailor relayed the position of Energy Transfer, expressed by Mr. Long, regarding the exchange ratio of 0.8595x to be received by Enable common unitholders as part of the LP Merger.

 

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Also on February 14, 2021, Mr. Sailor had a conversation with Mr. Long on open matters including open negotiation points from the Sponsors’ perspective.

On February 14, 2021, the Enable Conflicts Committee met with representatives of Intrepid and Richards Layton. The Enable Conflicts Committee discussed open issues in the merger agreement and provided feedback to Richards Layton regarding its views, which feedback Richards Layton provided to Vinson & Elkins. Following the meeting, Richards Layton discussed with representatives of CenterPoint and OGE Energy the request of the Enable Conflicts Committee for a payment of $30 million to the unaffiliated Enable common unitholders (an amount equal to the amount CenterPoint agreed to pay to OGE Energy if the proposed transaction was approved and consummated). In that discussion, representatives of CenterPoint and OGE Energy informed Richards Layton that the agreed payment from CenterPoint to OGE Energy did not involve or impact the consideration to be paid by Energy Transfer to any party in the proposed transaction, and that no reduction in the consideration to be paid by Energy Transfer to the unaffiliated Enable common unitholders would result from the payment agreed to be made by CenterPoint to OGE Energy if the proposed transaction was approved and consummated. The Sponsors therefore rejected the Enable Conflicts Committee’s request for a payment to the unaffiliated Enable common unitholders outside of the terms being offered by Energy Transfer.

Later on February 14, 2021, the Enable Conflicts Committee met again to discuss the rejection by the Sponsors of the Enable Conflicts Committee’s request. After discussions, the Enable Conflicts Committee determined that it remained attractive to continue pursuing the proposed acquisition transaction despite the rejection by the Sponsors of its request. The Enable Conflicts Committee and its advisors also discussed the proposed exchange ratio and changes to the merger agreement.

Between February 13 and 16 representatives of Enable, Energy Transfer, Latham, Vinson & Elkins, Jones Day (counsel to OGE Energy), Wachtell, Lipton, Rosen & Katz and Baker Botts (each counsel to CenterPoint), and Richards Layton (counsel to the Enable Conflicts Committee), had multiple conversations regarding the terms of the support agreements, the merger agreement and related agreements, including, with respect to the merger agreement, provisions of the merger agreement pertaining to Energy Transfer’s termination rights, the exchange ratio, consideration for the Enable Series A Preferred Units and the Tax Indemnity Provisions.

On February 15, Latham delivered a draft of the merger agreement to Vinson & Elkins which, among other things, (i) accepted Vinson & Elkin’s proposed draft of the non-solicitation covenant with certain revisions and (ii) rejected certain of Vinson & Elkins’ changes to the termination provisions and added a termination right for Energy Transfer if either Sponsor were to willfully breach their obligations under the support agreements.

On February 15, 2021, Mr. Sailor and Mr. Laws had a discussion with Mr. Long, Mr. Hefty and Mr. Bramhall, to discuss both companies’ performance during the current weather conditions in Texas and Oklahoma, including ongoing Winter Storm Uri and its impact on operations and financial results. Separately on the same day, Mr. Sailor and Mr. Long had a discussion regarding the proposed exchange ratio, the Tax Indemnity Provisions, and covenants in the draft merger agreement delivered by Latham on February 15. In this conversation, Mr. Long reiterated Energy Transfer’s position that it would not increase the exchange ratio.

On February 15, 2021, the Enable Conflicts Committee and representatives of Intrepid and Richards Layton held a meeting, during which they discussed the proposed terms of the Merger. Intrepid presented the Enable Conflicts Committee with a preliminary financial analysis relating to the $10 million proposed to be paid by Energy Transfer for the limited liability company interests of Enable General Partner. The Enable Conflicts Committee reviewed the rationale for the Merger. Richards Layton made a presentation regarding open issues in the merger agreement and the Enable Conflicts Committee provided Richards Layton with feedback on the open issues, which feedback Richards Layton provided to Vinson & Elkins.

On February 16, Vinson & Elkins delivered a draft of the merger agreement to Latham which included (i) certain structural changes to the exchange of the Enable Series A Preferred Units as discussed between the

 

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parties, (ii) certain updates to the Tax Indemnity Provisions that had been discussed between the parties and (iii) revisions to the breakup fee provisions such that the proposed breakup fee would only be payable in a circumstance in which Enable had entered into an alternative transaction within 12 months following a termination of the merger agreement due to a willful breach by Enable of the non-solicitation covenant or a terminable breach by Enable of the merger agreement. On that same day, CenterPoint’s Chief Financial Officer had a call with Mr. Bramhall to confirm the consideration to be received by CenterPoint in exchange for its Enable Series A Preferred Units, and noted CenterPoint’s preference to receive the same class and CUSIP numbers as the Series G Preferred Units to be issued by Energy Transfer in the Pre-Closing Transactions rather than Series G Preferred Units issued by a subsidiary or affiliate entity of Energy Transfer.

Early in the day on February 16, Latham returned proposed final versions of the merger agreement and the support agreements to Vinson & Elkins, which reflected agreed upon terms between the parties and which, with respect to the merger agreement, (i) modified the non-solicitation covenant, (ii) eliminated the Tax Indemnity Provisions and (iii) specified that the proposed breakup fee would be $97.5 million (or approximately 3.75% of the equity value of the Enable common units outstanding) payable to Energy Transfer if Energy Transfer terminated the merger agreement and (A) such termination was due to Enable’s willful breach of the non-solicitation covenant or (B) such termination was due to Enable’s terminable breach of the merger agreement, if at the time of the termination, a third party has proposed and not withdrawn an alternative transaction to Enable and Enable enters into an alternative transaction within 12 months of such termination.

Midday on February 16, 2021, the Enable Conflicts Committee held a meeting with representatives of Intrepid and Richards Layton. Prior to the meeting, substantially final versions of the merger agreement and other ancillary documents were distributed to the Enable Conflicts Committee. The Enable Conflicts Committee reviewed the rationale for the Merger. Mr. Sailor joined the beginning of the meeting and provided an update on the final negotiations related to the terms of the transaction, including the proposed exchange ratio of 0.8595, after which he left the meeting. The Richards Layton representatives provided the Enable Conflicts Committee with an overview of various matters relating to the proposed acquisition transaction with Energy Transfer, including updates to the definitive documents. Representatives of Intrepid reviewed Intrepid’s financial analysis of the proposed acquisition transaction with the Enable Conflicts Committee. Upon the request of the Enable Conflicts Committee, Intrepid delivered an oral opinion as of February 16, 2021, which was subsequently confirmed by delivery of a written opinion dated as of such date, to the effect that, as of such date, and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the exchange ratio in the LP Merger was fair, from a financial point of view, to the unaffiliated Enable common unitholders. Following such discussion and receipt of the Intrepid opinion, the Enable Conflicts Committee unanimously, in good faith, among other things (i) determined that the merger agreement and the transactions contemplated by the merger agreement, including the LP Merger, are in the best interests of Enable, its subsidiaries and the unaffiliated Enable common unitholders, (ii) approved the merger agreement and the transactions contemplated by the merger agreement, including the LP Merger, upon the terms and conditions set forth in the merger agreement, with such approval constituting “Special Approval” for all purposes under the Enable Partnership Agreement, and (iii) recommended that the Enable General Partner Board approve the proposed acquisition transaction upon the terms set forth in the merger agreement, including the LP Merger.

Following the Enable Conflicts Committee meeting on February 16, 2021, the Enable General Partner Board convened a special meeting to discuss the proposed acquisition transaction with Energy Transfer, including the proposed final terms of the merger agreement. Representatives of Vinson & Elkins made a presentation to the Enable General Partner Board with respect to various matters, including, without limitation, (i) the Enable General Partner Board’s duties in connection with its consideration of a proposed acquisition transaction, (ii) an overview of the key terms of the merger agreement, including the proposed support agreements, and (iii) a summary of the resolutions to come before the board in connection with the proposed acquisition transaction with Energy Transfer. Goldman Sachs then discussed its financial analysis of the

 

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proposed acquisition transaction with the Enable General Partner Board. Thereafter, Goldman Sachs orally rendered its fairness opinion to the Enable General Partner Board that, as of February 16, 2021, and based upon and subject to the assumptions made and limitations to be set forth in the opinion, the exchange ratio pursuant to the merger agreement is fair from a financial point of view to the holders (other than Energy Transfer and its affiliates) of Enable common units. Goldman Sachs subsequently confirmed its fairness opinion in writing. After discussion, the Enable General Partner Board unanimously (a) determined that the merger agreement and the transactions contemplated by the merger agreement, including the LP Merger, are in the best interests of Enable, its subsidiaries and, with respect to the GP Merger, Enable General Partner, (b) approved and declared advisable the merger agreement and the transactions contemplated by the merger agreement, including the Merger, (c) approved the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated by the merger agreement, including the Merger, and (d) authorized and directed that the approval of the merger agreement and the transactions contemplated by the merger agreement be submitted to Enable’s unitholders to act by written consent pursuant to Section 13.11 of the Enable Partnership Agreement.

Also on February 16, 2021, the ET board of directors held a special meeting to approve the merger agreement and the transactions contemplated thereby, including the Merger. After discussion, the Merger, the merger agreement and the other transactions contemplated thereby were unanimously approved and adopted by the ET board of directors.

That evening, representatives of each of Vinson & Elkins, Latham, Richards Layton, Baker Botts, Wachtell, Lipton, Rosen & Katz and Jones Day finalized the merger agreement, disclosure schedules and ancillary documents, following which Enable and Energy Transfer executed and delivered the merger agreement. Contemporaneously with the execution of the merger agreement, each of the Sponsors executed their respective support agreement and consent to the merger agreement as managing members of Enable General Partner.

Prior to the opening of U.S. stock markets on February 17, 2021, Energy Transfer and Enable issued a joint news release announcing the proposed acquisition transaction.

Energy Transfer’s Reasons for the Merger

The merger between Energy Transfer and Enable will increase Energy Transfer’s scale across multiple regions and provide increased connectivity for Energy Transfer’s natural gas and NGL transportation businesses. In evaluating the Merger, the Energy Transfer board of directors consulted with Energy Transfer’s management and legal and financial advisors. The Energy Transfer board of directors determined the Merger to be in the best interests of Energy Transfer based on, among other factors, its belief that the Merger will:

Enhance Energy Transfer’s Natural Gas Gathering and Transportation Infrastructure in the Mid-Continent and Ark-La-Tex Regions. The Merger will increase Energy Transfer’s footprint of natural gas gathering assets and transmission pipelines, particularly in Oklahoma, Louisiana, Texas and Arkansas. As a result of the transaction, Energy Transfer will have basin-leading processing capacity and pipeline miles in the Mid-Continent and processing and treating capacity in the Ark-La-Tex basin. Enable’s 10,100-mile network of interstate and intrastate pipelines will also provide additional access to core markets with consistent sources of demand for Energy Transfer’s customers.

Provide Opportunities to Increase NGL Volumes through Energy Transfer’s Assets. Enable produces significant NGL volumes across its footprint of processing facilities in Oklahoma. These volumes are currently dedicated to a third-party. As those contractual arrangements expire, Energy Transfer will pursue the opportunity to redirect those volumes through its substantial downstream fractionation and export platform on the Gulf Coast.

Add a Diverse Set of Large, Creditworthy Counterparties to the Energy Transfer Customer Base. Enable’s customers include a number of investment grade utilities, LDCs and producers that rely on Enable’s assets for transporting natural gas. In many cases, the relationship between Enable and these customers has lasted more than 10 years. Energy Transfer intends to maintain these relationships following the Merger.

 

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Add Incremental Free Cash Flow. The Merger is expected to further Energy Transfer’s deleveraging efforts by increasing Energy Transfer’s free cash flow post-distributions, both immediately and over the long-term, which can be used to pay down debt or returned to unitholders through distributions or unit buybacks.

Create Synergies and Cost Savings. Energy Transfer expects the combination of its significant infrastructure with Enable’s complementary assets will allow the combined company to pursue additional commercial opportunities and enhance Energy Transfer’s ability to serve customers, while achieving significant cost savings through the elimination of overlapping support functions.

Maintain Investment Grade Status. While enhancing Energy Transfer’s growth profile, the Merger is expected to have a positive impact on Energy Transfer’s investment-grade credit status.

Approval of the Enable Conflicts Committee and the Enable General Partner Board and Reasons for the Merger

The Enable Conflicts Committee consists of three directors who satisfy the requirements to serve on a conflicts committee in the Enable Partnership Agreement: Peter H. Kind (Chairman), Alan N. Harris and Ronnie K. Irani. On February 4, 2021, the Enable General Partner Board authorized the Enable Conflicts Committee to (a) consider, explore, review, analyze, solicit, structure and evaluate the transactions contemplated by the merger agreement, (b) make such investigation of potential alternatives to the transactions contemplated by the merger agreement, including maintaining the status quo, as the Enable Conflicts Committee deems necessary or appropriate, (c) authorize, empower or direct the officers and employees of Enable General Partner, and its subsidiaries, and any of them, for and on behalf of Enable, to provide the Enable Conflicts Committee with such information (including, without limitation, books, records, financial statements and projections with respect to Enable or any of its subsidiaries) and assistance as may be requested by the Enable Conflicts Committee, (d) negotiate, or delegate the ability to negotiate to any person, the terms and provisions, and determine the advisability, of the transactions contemplated by the merger agreement (including, without limitation, the terms and provisions of any arrangements related to the transactions contemplated by the merger agreement involving officers or directors of Enable General Partner), (e) determine whether or not to approve the transactions contemplated by the merger agreement by “Special Approval” (pursuant to Section 7.9(a) of the Enable Partnership Agreement), (f) make a recommendation to the full Enable General Partner Board to approve or disapprove the transactions contemplated by the merger agreement, (g) if so approved by the Enable Conflicts Committee, together with the approval by the full Enable General Partner Board, to take such other actions as are necessary or advisable to consummate the transactions contemplated by the merger agreement, (h) review and advise on any public disclosure to be made by Enable with respect to the transactions contemplated by the merger agreement and any related transaction documentation, and (i) do such other things (including the approval of any actions or agreements or other documents as the Enable Conflicts Committee deems necessary, appropriate or advisable in connection with the exercise of its authority pursuant to these resolutions) and make such other recommendations to the Enable General Partner Board as it may determine, in its sole discretion, to be advisable in connection with the foregoing.

On February 16, 2021, the Enable Conflicts Committee unanimously, and in good faith, among other things (a) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of Enable, its subsidiaries and the unaffiliated Enable common unitholders, (b) approved the merger agreement and the transactions contemplated thereby, including the LP Merger, upon the terms and conditions set forth in the merger agreement, with such approval constituting “Special Approval” for all purposes under the Enable Partnership Agreement, and (c) recommended to the Enable General Partner Board approval of the merger agreement and the consummation of the transactions contemplated thereby, including the LP Merger.

Later on February 16, 2021, upon receiving the approval and recommendation of the Enable Conflicts Committee, the Enable General Partner Board unanimously, and in good faith, (a) determined that the merger agreement and the transactions contemplated thereby, including the LP Merger, are in the best interests of

 

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Enable, its subsidiaries, and, with respect to the GP Merger, Enable General Partner, (b) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the Merger, (c) approved the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby, including the Merger and (d) authorized and directed that the approval of the merger agreement and the transactions contemplated thereby be submitted to Enable’s unitholders to act by written consent pursuant to Section 13.11 of the Enable Partnership Agreement.

The Enable Conflicts Committee retained Richards Layton as its legal counsel and Intrepid Partners, LLC as its financial advisor. The Enable General Partner Board retained Vinson & Elkins as its legal counsel and Goldman Sachs as its financial advisor. Each of the Enable Conflicts Committee and the Enable General Partner Board oversaw the performance of financial and legal due diligence conducted by their advisors, conducted an extensive review and evaluation of the transactions contemplated by the merger agreement, including, with respect to the Enable Conflicts Committee, considering withholding “Special Approval” and maintaining the status quo.

In determining to approve the transactions contemplated by the merger agreement, the Enable Conflicts Committee and the Enable General Partner Board consulted with Enable’s senior management and their respective outside legal and financial advisors and considered several factors that weighed in favor of the Merger, including the following (not necessarily presented in order of relative importance):

 

   

Aggregate Value and Composition of the Consideration.

 

   

The fact that the LP Merger Consideration has an implied value per unit of Enable common units of $5.86, based on the closing price of Energy Transfer common units as of February 12, 2021 (the last trading day prior to the approval of the merger agreement), and represented a premium of approximately 4.8% to Enable’s 60-calendar day volume weighted average price of $5.60;

 

   

the belief that the exchange ratio provides greater value to Enable common unitholders than the long-term value of Enable as a standalone publicly traded partnership and that the exchange ratio was Energy Transfer’s final offer and was the highest price per Enable common unit that Energy Transfer would be willing to pay;

 

   

the fact that the unit-for-unit LP Merger allows Enable common unitholders to participate in the value and opportunities of Energy Transfer after the LP Merger, including distributions and expected future growth;

 

   

the fact that, based on the exchange ratio, Enable common unitholders will own approximately 12% of the outstanding Energy Transfer common units on a pro forma basis;

 

   

the fact that the exchange ratio provides for a fixed number of Energy Transfer common units and therefore the implied value of the consideration payable to Enable common unitholders, including its unaffiliated common unitholders, will increase in the event that the market price of Energy Transfer common units increases prior to the closing of the transactions contemplated by the merger agreement;

 

   

the fact that Energy Transfer has a larger public float relative to Enable and that the trading market for Energy Transfer common units should provide Enable common unitholders who receive the LP Merger Consideration in the LP Merger with greater trading liquidity than is currently available for Enable common unitholders coupled with the fact that Energy Transfer has demonstrated durable, long-term access to the capital markets to fund its operations;

 

   

the fact that CenterPoint and OGE Energy will receive an aggregate of $10 million in cash in exchange for their membership interests in the General Partner and CenterPoint will receive 0.0265 Energy Transfer Series G Preferred Units for each Enable Series A Preferred Unit; and

 

   

the expectation that holders of Enable common units generally should not recognize any gain or loss for U.S. federal income tax purposes as a result of the Merger.

 

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Strategic Considerations

 

   

The belief that the combination of Energy Transfer’s significant infrastructure with Enable’s complementary assets will allow the combined company to pursue additional commercial opportunities and achieve cost savings while enhancing the combined company’s ability to serve customers;

 

   

the fact that Energy Transfer’s acquisition of Enable will increase Energy Transfer’s footprint across multiple regions and provide increased connectivity for the combined company’s natural gas transportation businesses to the global LNG market and growing global demand for natural gas as the world transitions to cleaner power and fuel sources;

 

   

the belief that the Merger will improve the cost of capital in part because Energy Transfer is not burdened by potential distributions associated with an incentive distribution rights equity structure;

 

   

the belief that from an operational perspective, the Merger will expand the scale, geographic diversity, asset diversity, commodity diversity and geographic footprint of the combined company as compared to Enable as a standalone company;

 

   

the belief that the combined company’s geographic and customer diversification, enhanced assets and stronger financial position will provide for greater access to the capital markets and improve the combined company’s competitiveness going forward;

 

   

the understanding that the transaction is expected to be immediately accretive to Enable common unitholders, including Enable’s unaffiliated common unitholders, with regard to distributable cash flow per Enable common unit, have a positive impact on Energy Transfer’s credit metrics and add significant fee-based cash flows from Enable’s fixed-fee contracts;

 

   

the fact that the transaction will also position the combined company in all major U.S. Basins, including the Permian Basin, Eagle Ford, Bakken and Appalachia regions and will result in significant gas gathering and processing assets in the Anadarko and Arkoma basins across Oklahoma and Arkansas, as well as the Haynesville Shale in East Texas and North Louisiana;

 

   

the expectation that the combined company will continue to have an investment grade balance sheet;

 

   

the current and prospective business climate in the industry in which Enable and Energy Transfer operate, including the position of current and likely competitors of Enable and Energy Transfer; and

 

   

the caliber of Energy Transfer’s executive management team and the Energy Transfer board of directors, which are expected to continue on in their roles following the consummation of the transactions.

 

   

Due Diligence and Alternative Transactions

 

   

The fact that, since November 2020, representatives of Enable’s management communicated with numerous counterparties regarding a strategic transaction with Enable as part of the Enable General Partner Board’s exploration of strategic alternatives, including additional acquisitions in gathering and processing or equity financings and the Enable General Partner Board’s belief, after considering the advice and discussions with its financial and legal advisors, that the proposed transaction with Energy Transfer was the most attractive option available to Enable and the Enable General Partner;

 

   

the fact that CenterPoint had publicly announced its intention to explore alternatives related to its equity interests in Enable, which communicated to potential bidders the opportunity to make a solicitation of interest to Enable;

 

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the fact that the Enable General Partner Board and Enable Conflicts Committee considered the results of the due diligence reviews of Energy Transfer and its businesses conducted by each of the Enable General Partner Board, the Enable Conflicts Committee, CenterPoint and OGE Energy and their respective financial advisors and outside legal counsel;

 

   

the absence of other strategic alternatives available to Enable that would provide comparable or superior value and terms, based in part on Enable’s discussions with multiple potential counterparties as described in the section entitled “Background of the Merger,” beginning on page 35 of this consent statement/prospectus, coupled with the Enable General Partner Board’s recognition of the risks and uncertainties related to overall uncertainty in midstream corporate and asset transactions;

 

   

the historical and current market prices of Enable common units;

 

   

the risks and uncertainties related to the ongoing disruption to oil demand, due to the COVID-19 pandemic, unpredictable geopolitical dynamics, including actions of foreign oil producers, and potential consumption of hydrocarbons trending lower long-term, which risks are relatively greater were Enable to continue to operate as a standalone company with relatively smaller market capitalization than the combined company;

 

   

the fact that from a financial perspective, Energy Transfer’s EBITDA growth outlook, coverage ratio, long-term credit profile, access to capital and cost of capital are more attractive than Enable’s growth outlook, coverage ratio, long-term credit profile, access to capital and cost of capital;

 

   

the fact that Energy Transfer is a highly diversified midstream company with significant scale, including the fact that Energy Transfer:

 

   

is the third largest infrastructure company in North America and has annual adjusted EBITDA over $10 billion;

 

   

has a highly diversified business model comprised of five core segments, of which no one segment contributes more than 30% to adjusted EBITDA;

 

   

has more than 90,000 miles of pipeline (compared to the approximately 14,000 miles of pipeline of Enable) with assets in every major U.S. supply basin linked to major demand markets in the United States, including export markets;

 

   

is a fully integrated franchise with gathering, processing, fractionation, transportation, storage, terminalling and export assets; and

 

   

transports approximately 25% of U.S. natural gas, more than 25% of U.S. natural gas liquids and more than 35% of U.S. crude oil;

 

   

the belief that investors tend to favor midstream investments exhibiting scale, asset footprint diversity and integration, which will be achieved through a combination with Energy Transfer; and

 

   

the fact that Enable, as a standalone entity faces near-term commodity price risk because commodity demand has been severely impacted by the global COVID-19 pandemic and other worldwide and domestic events, countered by the fact that Energy Transfer’s scale and size will offer improved ability to withstand commodity supply and demand and price volatility.

 

   

Likelihood of Completion of the Transaction

 

   

The Enable General Partner Board’s evaluation of the likely time period necessary to consummate the transactions contemplated by the merger agreement, and the limited number and customary nature of the closing conditions as well as Energy Transfer’s affirmative obligation, subject to certain exceptions and limitations, to take, or cause to be taken, any and all steps and undertakings

 

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in respect of requirements under applicable regulations so as to enable closing to occur as promptly as practicable;

 

   

the lack of a financing condition to closing and the overall scope of the conditions to closing;

 

   

the circumstances under which the merger agreement can be terminated and the impact of such termination (see “The Merger Agreement—Termination of the Merger Agreement” beginning on page 113 of this consent statement/prospectus);

 

   

the fact that the Merger and the issuance of Energy Transfer common units in connection with the LP Merger are not subject to a vote of Energy Transfer’s equity owners;

 

   

the fact that CenterPoint and OGE Energy, which collectively own approximately 79% of the Enable common units and 100% of the Enable Series A Preferred Units, are in support of the Merger and have entered into support agreements pursuant to which they agreed to, among other things, deliver written consents in respect of the Enable common units owned by them in favor of the transactions contemplated by the merger agreement, including the Merger; and

 

   

that Enable is entitled to specific performance of Energy Transfer’s obligations under the merger agreement.

 

   

Other Favorable Terms of the Merger Agreement

 

   

The belief that, in coordination with the Enable Conflicts Committee’s and Enable General Partner Board’s legal advisors, the terms of the merger agreement, taken as a whole, including the parties’ representations, warranties, covenants and conditions to closing, and the circumstances under which the merger agreement may be terminated, are reasonable;

 

   

the fact that, in order to obtain any required regulatory approvals, subject to certain exceptions and limitations, Energy Transfer is required to take all steps necessary to eliminate each impediment under antitrust or anticompetition laws that are asserted by any governmental entity or other parties, including divestiture of certain assets, subject to certain pre-agreed limits;

 

   

the fact that the Enable General Partner Board has the ability to terminate the merger agreement under certain circumstances, including if Energy Transfer shall have breached or failed to perform its representations, warranties or covenants in certain circumstances; and

 

   

the fact that the Enable Conflicts Committee and the Enable General Partner Board, after discussing the termination fees with its advisors, believed that such fees were consistent with market practice.

In addition, each of the Enable Conflicts Committee and the Enable General Partner Board separately considered a number of additional positive factors. These included:

(a) with respect to the Enable General Partner Board:

 

   

the fact that the Enable Conflicts Committee (consisting solely of independent directors), Enable, and CenterPoint and OGE Energy and their advisors were extensively involved throughout the process, as well as receiving regular direct updates from Enable’s financial and legal advisors and Enable management;

 

   

the financial analyses of Enable and Energy Transfer prepared by Goldman Sachs and reviewed and discussed with the Enable General Partner Board as described in “—Opinion of the Enable General Partner Board’s Financial Advisor”; and

 

   

the delivery of an opinion by Goldman Sachs to the Enable General Partner Board on February 16, 2021, to the effect that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders (other than Energy Transfer and its affiliates) of Enable common units, as more fully described below under “—Opinion of the Enable General Partner Board’s Financial Advisor.”

 

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(b) with respect to the Enable Conflicts Committee:

 

   

the fact that CenterPoint and OGE Energy are receiving the same LP Merger Consideration per common unit as the other Enable common unitholders;

 

   

the fact that the Enable Conflicts Committee’s legal and financial advisors were involved in the process and negotiations, and updated the Enable Conflicts Committee regularly, which provided the Enable Conflicts Committee with additional perspectives on the negotiations in addition to those of the Enable General Partner Board and Enable’s management;

 

   

the valuation analyses of Enable and Energy Transfer prepared by Intrepid and reviewed and discussed with the Enable Conflicts Committee, including, among other things, comparable company trading analysis, discounted cash flow analysis, precedent midstream transactions analysis and precedent premiums paid analysis with respect to Enable and a comparable company trading analysis and discounted cash flow analysis with respect to Energy Transfer; and

 

   

the delivery of an opinion by Intrepid to the Enable Conflicts Committee on February 16, 2021, to the effect that, as of that date and based upon and subject to the assumptions, limitations, qualifications and other matters set forth in its written February 16 opinion, the exchange ratio in the LP Merger, was fair, from a financial point of view, to the unaffiliated Enable common unitholders.

In addition to the factors above, the Enable Conflicts Committee also considered a number of factors relating to the procedural safeguards involved in the negotiation of the merger agreement, including those discussed below, each of which supported its February 16 determination with respect to the fairness of the transactions contemplated by the merger agreement to the unaffiliated Enable common unitholders:

 

   

each of the members of the Enable Conflicts Committee satisfies the requirements for serving on the Enable Conflicts Committee, including the requirement that all members of the Enable Conflicts Committee be independent;

 

   

the Enable General Partner Board delegated to the Enable Conflicts Committee the authority to provide “Special Approval” and adopted resolutions providing that the Merger would not be approved unless the Enable General Partner Board received a prior favorable recommendation from the Enable Conflicts Committee, and that the Enable Conflicts Committee understood that it had no obligation to recommend any transaction and had the authority to investigate alternatives;

 

   

in connection with the consideration of the transactions contemplated by the merger agreement, the Enable Conflicts Committee retained its own independent financial and legal advisors with knowledge and experience with respect to public merger and acquisition transactions, and Enable’s and Energy Transfer’s industry specifically, as well as substantial experience advising publicly traded master limited partnerships and other companies with respect to transactions similar to the transactions contemplated by the merger agreement;

 

   

the terms and conditions of the merger agreement and the transactions contemplated thereby were determined through arm’s-length negotiations between Enable, Energy Transfer, the Enable Conflicts Committee, CenterPoint and OGE Energy and their respective representatives and advisors;

 

   

the fact that under the terms of the merger agreement, the parties may not amend any provision of the merger agreement without the prior written consent of the Enable Conflicts Committee; and

 

   

under the terms of the merger agreement, prior to the effective time of the Merger, the Enable General Partner will not, without the consent of the Enable Conflicts Committee, eliminate the Enable Conflicts Committee, revoke or diminish the authority of the Enable Conflicts Committee or remove or cause the removal of any member of the Enable General Partner Board who is a member of the Enable Conflicts Committee either as a director or as a member of such committee.

The Enable General Partner Board and Enable Conflicts Committee also considered and balanced against the positive factors set forth above a number of uncertainties, risks and other countervailing factors in its

 

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deliberations concerning the merger and the merger agreement, including the following (not necessarily presented in order of relative importance):

 

   

the fact that the Enable Conflicts Committee did not conduct a public auction process or other formal solicitation of interest from third parties for the acquisition of Enable common units; however, because CenterPoint had publicly announced its intention to explore alternatives related to its equity interests in Enable in early November 2020 and the financial community highlighted this intention in research reports, there was publicly available information that would typically lead a potential buyer to make unsolicited inquiries of management; and that while multiple inquiries were received by or directed to management of Enable, and management of Enable, CenterPoint and OGE Energy had discussions with other parties, none of the inquiries or discussions led to sufficiently attractive offers or proposals believed to have a reasonable likelihood of yielding any offers commensurate with the terms of the transaction with Energy Transfer;

 

   

the belief that Energy Transfer would not be willing to accept a post-signing market check of the proposed transaction based on the fact that Energy Transfer required support agreements from each of the Sponsors contractually obligating them to deliver written consents approving the Merger;

 

   

the fact that the exchange ratio in the merger agreement provides for a fixed number of Energy Transfer common units, and, as such, Enable common unitholders cannot be certain at the time of submitting their consent to the transactions of the market value of the LP Merger Consideration they will receive, and the possibility that Enable common unitholders could be adversely affected by a decrease in the trading price of Energy Transfer common units before the closing of the Merger and the fact that the merger agreement does not provide Enable with a value-based termination right;

 

   

the fact that Enable has significantly reduced distributions to Enable unitholders in prior periods coupled with the fact that the Merger is expected to be immediately dilutive to the Enable common unitholders, including the unaffiliated Enable common unitholders, with regard to expected distributions per common unit;

 

   

the risks and contingencies relating to the announcement and pendency of the Merger, including the potential for diversion of management and employee attention and the potential effect of the combination on the businesses of both Energy Transfer and Enable and the restrictions on the conduct of Enable’s business during the period between the execution of the merger agreement and the completion of the transactions contemplated thereby;

 

   

the potential challenges and difficulties in integrating the operations and business culture of Enable into Energy Transfer and the risk that the anticipated cost savings and operational and other synergies between the two companies, or other anticipated benefits of the Merger, might not be realized, may only be achieved over time or might take longer to realize than expected;

 

   

the fact that Enable common unitholders, including the unaffiliated Enable common unitholders, are not entitled to dissenters’ or appraisal rights under the merger agreement, the Enable Partnership Agreement or Delaware law;

 

   

the fact that the terms of the merger agreement do not require approval of a majority of the unaffiliated Enable common unitholders to be obtained in order to consummate the transactions contemplated thereby;

 

   

the fact that Enable will be required to (i) pay Energy Transfer a breakup fee of $97.5 million if Energy Transfer were to terminate the merger agreement due to (A) a willful breach by Enable of its non-solicitation covenant or (B) if Enable entered into a definitive agreement with respect to an alternative acquisition proposal within 12 months of a termination due to a breach of Enable’s representations, warranties or covenants; however, the Enable Conflicts Committee and the Enable General Partner Board believed that the breakup fee and expense reimbursement amount are consistent with comparable transactions; and, in addition, if the merger agreement is terminated, Enable will generally be required to pay its own expenses associated with the transaction;

 

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the Enable General Partner Board and Enable Conflicts Committee considered the possibility that a third party may be willing to enter into a strategic combination with Enable on terms more favorable than the Merger with Energy Transfer. In connection therewith, the Enable General Partner Board and Enable Conflicts Committee considered the terms of the merger agreement relating to no-shop covenants as well as the provisions of the support agreements obligating OGE Energy and CenterPoint, respectively, to provide the requisite vote to approve the Merger, which eliminate the ability of Enable to consider an alternative transaction following execution of the merger agreement, particularly in light of the fact that Enable had received indications of interest from other potential counterparties;

 

   

the fact that the Merger may not be completed in a timely manner, or at all, and a failure to complete the Merger could result in significant costs and disruption to Enable’s normal business and negatively affect the trading price of Enable’s common units;

 

   

the possibility that litigation may be commenced in connection with the Merger and such litigation may increase costs and result in a diversion of management focus;

 

   

the potential impact on Energy Transfer’s business and financial results from the uncertain future of the Dakota Access Pipeline, taking into account that public markets are generally informed about the Dakota Access Pipeline and its prospects;

 

   

the fact that Energy Transfer and its subsidiaries currently have more leverage on a relative basis than the status quo operations of Enable and its subsidiaries;

 

   

the fact that the restrictions on Enable’s conduct of business prior to completion of the transaction could delay or prevent Enable from undertaking business opportunities that may arise or taking other actions with respect to its operations during the pendency of the transaction;

 

   

risks of the type and nature described under the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” beginning on pages 30 and 21, respectively, of this consent statement/prospectus;

 

   

the fact that crude and natural gas prices are expected to remain volatile, impacting U.S. shale producer activity and corresponding midstream volume trends in key basins, including the Anadarko, Ark-La-Tex and Williston basins;

 

   

capital markets access and investor appetite for midstream equities remain challenging;

 

   

the fact that the midstream mergers and acquisition market remains depressed with across the board low-to-no premium transactions expected to be the norm for the foreseeable future; and

 

   

the fact that the Sponsors and certain members of Enable’s management and the Enable General Partner Board may have interests in the transactions that are different from, or in addition to, the interests of the unaffiliated Enable common unitholders (for example, the fact that, as a result of an agreement between CenterPoint and OGE Energy, if the transactions contemplated by the merger agreement were entered into on acceptable terms and the Merger is ultimately consummated, CenterPoint will pay $30 million in cash or other mutually agreed consideration to OGE Energy immediately following the closing of the Merger, which payment would come entirely from CenterPoint and did not reduce or affect the consideration to be received from Energy Transfer by the unaffiliated public unitholders of Enable in the proposed transaction).

After taking into account the factors set forth above, as well as others, the Enable Conflicts Committee concluded that the risks, uncertainties, restrictions and potentially negative factors associated with the transactions contemplated by the merger agreement were outweighed by the potential benefits thereof to the unaffiliated Enable common unitholders. Similarly, after taking into account the factors set forth above as well as upon the recommendation and approval of the Enable Conflicts Committee, the Enable General Partner Board concluded that the risks, uncertainties and restrictions and potentially negative factors associated with the transaction were outweighed by the potential benefits thereof to Enable and Enable General Partner.

 

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The foregoing discussion of factors considered by Enable is not intended to be exhaustive but summarizes the material factors considered by the Enable Conflicts Committee and the Enable General Partner Board, as applicable. In making its determinations and approvals, the Enable Conflicts Committee considered the financial analyses regarding Enable prepared by Intrepid and reviewed and discussed by Intrepid with the Enable Conflicts Committee. The Enable Conflicts Committee considered each of these analyses in the context of the fairness opinion provided by Intrepid on February 16, 2021 in reaching its conclusions regarding the transactions contemplated by the merger agreement and whether such transactions were in the best interests of the unaffiliated Enable common unitholders.

In making its determination and approvals, the Enable General Partner Board considered a number of factors, including (i) the February 16, 2021 unanimous determination and recommendation of the Enable Conflicts Committee and (ii) the financial analyses regarding Enable reviewed and discussed by Goldman Sachs with the Enable General Partner Board. The Enable General Partner Board considered the financial analyses, the fairness opinion provided by Goldman Sachs on February 16, 2021, as well as other factors it considered (as described above), in reaching its conclusions regarding the transactions contemplated by the merger agreement and whether such transactions were in the best interests of Enable and its subsidiaries and, with respect to the GP Merger, Enable General Partner.

In view of the variety of factors considered in connection with their evaluation of the transactions and the complexity of these matters, neither the Enable Conflicts Committee nor the Enable General Partner Board found it useful or attempted to quantify or assign any relative or specific weights to the various factors considered in making their determinations. In addition, each of the members of the Enable Conflicts Committee and the Enable General Partner Board may have given differing weights to different factors. Overall, the Enable Conflicts Committee and the Enable General Partner Board believed that the positive factors supporting the transactions contemplated by the merger agreement outweighed the negative factors they considered.

Enable General Partner, the Enable Conflicts Committee and the Enable General Partner Board have not, including, without limitation, in making the determinations set forth above, assumed any obligations to the Enable common unitholders (whether fiduciary, contractual, implied, or otherwise) other than those obligations that exist in the Enable Partnership Agreement. Under the Enable Partnership Agreement, whenever Enable General Partner makes a determination or takes or omits to take any other action (including action taken by the Enable General Partner Board or any committee thereof (including the Enable Conflicts Committee)), in its capacity as the general partner of Enable, Enable General Partner, the Enable General Partner Board or the applicable committee thereof (including the Enable Conflicts Committee) must make such determination or take or omit to take such other action in good faith, and such determination, action or omission is not subject to any other or different standard under applicable law. Under the Enable Partnership Agreement, an action or determination will be deemed to be made in “good faith” if it meets certain standards set forth in the Enable Partnership Agreement. Nothing in this consent statement/prospectus or the actions or determinations of Enable General Partner, the Enable Conflicts Committee, or the Enable General Partner Board described in this consent statement/prospectus should be read to mean that Enable General Partner, the Enable Conflicts Committee or the Enable General Partner Board assumed any obligations to Enable or its limited partners (whether fiduciary, contractual, implied, or otherwise) other than those obligations that exist in the Enable Partnership Agreement. You are urged to read the full text of the Enable Partnership Agreement, which is incorporated by reference into this consent statement/prospectus. See the section titled “Where You Can Find More Information” beginning on page 179 of this consent statement/prospectus.

In considering whether to consent to the adoption of the merger agreement, holders of Enable common units should be aware that the executive officers and directors of Enable General Partner have certain interests in the transaction that may be different from, or in addition to, the interests of Enable common unitholders generally. See the section titled “—Interests of the Enable’s Directors and Executive Officers in the Merger” beginning on page 84 of this consent statement/prospectus.

 

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It should be noted that this explanation of the reasoning of the Enable General Partner Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 30 of this consent statement/prospectus.

Opinion of the Enable General Partner Board’s Financial Advisor

At a meeting of the Enable General Partner Board, Goldman Sachs rendered to the Enable General Partner Board its oral opinion, subsequently confirmed in writing, to the effect that, as of February 16, 2021 and based upon and subject to the factors and assumptions set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders (other than Energy Transfer and its affiliates) of Enable common units.

The full text of the written opinion of Goldman Sachs, dated February 16, 2021, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex D. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Enable General Partner Board in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to whether any holder of Enable common units should approve the merger agreement, or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

   

the merger agreement;

 

   

annual reports to unitholders and Annual Reports on Form 10-K of Enable and Energy Transfer for the five years ended December 31, 2019;

 

   

certain interim reports to unitholders and Quarterly Reports on Form 10-Q of Enable and Energy Transfer;

 

   

certain other communications from Enable and Energy Transfer to their respective unitholders;

 

   

certain publicly available research analyst reports for Enable and Energy Transfer; and

 

   

certain internal financial analyses and forecasts for Enable prepared by its management (the “Enable unaudited prospective financial information”) (as described under “—Enable and Energy Transfer Unaudited Prospective Financial Information”) and for Energy Transfer on a standalone basis prepared by its management as adjusted by the management of Enable (the “ET adjusted unaudited projections”) (as described under “—Enable and Energy Transfer Unaudited Prospective Financial Information”), and certain financial analyses and forecasts for Energy Transfer pro forma for the Merger prepared by the management of Enable (the “ET adjusted unaudited pro forma projections” and, together with the Enable unaudited prospective financial information and the ET adjusted unaudited projections, the “Forecasts”) (as described under “—Enable and Energy Transfer Unaudited Prospective Financial Information”), in each case, as approved for Goldman Sachs’ use by Enable.

Goldman Sachs also held discussions with members of the senior managements of Enable and Energy Transfer regarding their assessment of the strategic rationale for, and the potential benefits of, the Merger and the past and current business operations, financial condition, and future prospects of Enable and Energy Transfer; reviewed the reported price and trading activity for the Enable common units and the Energy Transfer common units; compared certain financial and stock market information for Enable and Energy Transfer with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the energy industry; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

 

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For purposes of rendering this opinion, Goldman Sachs, with Enable’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with Enable’s consent that the Forecasts were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Enable. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Enable or Energy Transfer or any of their respective subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on Enable or Energy Transfer or on the expected benefits of the Merger in any way meaningful to its analysis. Goldman Sachs has also assumed that the Merger will be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of Enable to engage in the Merger or the relative merits of the Merger as compared to any strategic alternatives that may be available to Enable; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the holders (other than Energy Transfer and its affiliates) of Enable common units, as of the date of the opinion, of the exchange ratio to be paid to such holders pursuant to the merger agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the merger agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the Merger, including the fairness of the GP Merger Consideration or the Preferred Contributions, or the fairness of the Merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of Enable or Energy Transfer; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Enable, or class of such persons, in connection with the Merger, whether relative to the exchange ratio pursuant to the merger agreement or otherwise. Goldman Sachs’ opinion was necessarily based on economic, monetary market and other conditions, as in effect on, and the information made available to it as of the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. In addition, Goldman Sachs does not express any opinion as to the prices at which Enable common units or Energy Transfer common units will trade at any time, or as to the potential effects of volatility in the credit, financial and stock markets on Enable, Energy Transfer or the Merger, or as to the impact of the Merger on the solvency or viability of Enable or Energy Transfer or the ability of Enable or Energy Transfer to pay their respective obligations when they come due. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Enable General Partner Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before February 12, 2021, the last completed trading day before Goldman Sachs rendered the opinion described above (which we refer to for purposes of this section as the “last trading date”), and is not necessarily indicative of current market conditions.

Historical Common Units Trading Analysis. Goldman Sachs calculated the implied consideration per Enable common unit of $5.86 by multiplying the exchange ratio of 0.8595 by the closing price per Energy Transfer common unit on the last trading date of $6.82. Goldman Sachs analyzed the $5.86 implied consideration

 

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per Enable common unit represented by the exchange ratio in relation to (i) the closing price per Enable common unit on the last trading date and (ii) the volume weighted average price (“VWAP”) per Enable common unit for the 10-trading-day, 30-calendar-day and 60-calendar day periods ended on the last trading date.

The following table presents the results of this analysis:

 

Historical Date or Period

   Price Per Unit      Implied Premium /(Discount)  

Last Trading Date Closing Price

   $ 6.02        (2.6 )% 

10-Trading-Day VWAP

   $ 5.78        1.4

30-Calendar-Day VWAP

   $ 5.72        2.5

60-Calendar-Day VWAP

   $ 5.60        4.8

Implied Exchange Ratio Analysis. Goldman Sachs reviewed the historical trading prices per Enable common unit and per Energy Transfer common unit for the three-year period ended on the last trading date and calculated historical exchange ratios by dividing the closing price per Enable common unit by the closing price per Energy Transfer common unit over such period. Goldman Sachs then calculated the premia implied by the exchange ratio in relation to (i) historical average exchange ratio over the 3-year, 1-year, 6-month, 60-calendar-day and 30-calendar day periods ended on the last trading date, (ii) historical average exchange ratio based on VWAP of the units over the 10-trading-day period ended on the last trading date and (iii) exchange ratio of closing per unit prices on the last trading date.

The following table presents the results of this analysis:

 

     Average  
   3-Year     1-Year     6-Month     60-Calendar
Day
    30-Calendar
Day
    10-Trading-Day
VWAP
    Last Trading
Date
 

Exchange Ratio

     0.8537x       0.7170x       0.8313x       0.8414x       0.8533x       0.8593x       0.8827x  

Transaction Exchange Ratio as a Premium / (Discount)

     0.7     19.9     3.4     2.2     0.7     0.0     (2.6 )% 

Illustrative Unlevered Discounted Cash Flow Analysis—Enable. Using the Enable unaudited prospective financial information, Goldman Sachs performed an illustrative unlevered discounted cash flow analysis of Enable common units on a standalone basis. Using discount rates ranging from 8.0% to 9.5%, reflecting estimates of Enable’s weighted average cost of capital, Goldman Sachs discounted to present value as of December 31, 2020 (i) estimates of unlevered free cash flow for Enable for January 1, 2021 through December 31, 2025 as reflected in the Enable unaudited prospective financial information and (ii) a range of illustrative terminal values for Enable, which were calculated by applying an illustrative terminal value to EBITDA multiple range of 7.0x to 8.0x to estimated terminal year Adjusted EBITDA for Enable as reflected in the Enable unaudited prospective financial information (which analysis implied perpetuity growth rates ranging from (2.1)% to 0.5%). Goldman Sachs derived such range of discount rates by application of capital asset pricing model, which requires certain company-specific inputs, including Enable’s target capital structure weightings, the cost of preferred equity, the cost of debt and a beta for Enable, as well as certain financial metrics for the United States financial markets generally. The illustrative terminal value to EBITDA multiple range for Enable was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things, EBITDA multiples implied by Enable’s trading prices (and estimates of last-twelve-months and next-twelve-months EBITDA as reported by IBES) over certain prior periods.

Goldman Sachs derived a range of illustrative enterprise values for Enable by adding the range of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for Enable (i) the estimated amount of Enable’s net debt as of December 31, 2020 and (ii) the estimated amount of Enable’s preferred equity as of December 31, 2020, in each case, as provided by the management of Enable

 

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and approved for Goldman Sachs’ use by Enable, to derive a range of illustrative equity values for Enable. Goldman Sachs then divided the range of illustrative equity values by the total number of fully diluted outstanding Enable common units as of February 12, 2021, as provided by the management of Enable and approved for Goldman Sachs’ use by Enable, to derive a range of illustrative present values per Enable common unit of $4.02 to $6.29.

Illustrative Present Value of Future Unit Price Analysis—Enable. Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per Enable common unit. Goldman Sachs calculated the implied enterprise values of Enable as of December 31 for each of 2021 and 2022, by applying a range of illustrative NTM EBITDA multiples of 7.0x to 8.0x to estimated EBITDA for Enable for each of 2022 and 2023, as reflected in the Enable unaudited prospective financial information. The illustrative EBITDA multiple range for Enable was derived by Goldman Sachs using its professional judgment and experience, taking into account, among other things, EBITDA multiples implied by current and historical trading prices for Enable common units (and estimates of next-twelve-months EBITDA as reported by IBES) over certain prior periods. To derive a range of illustrative implied equity values per Enable common unit, Goldman Sachs then subtracted from the range of implied enterprise values (i) the estimated amount of Enable’s projected net debt as of December 31, 2021 and December 31, 2022, respectively and (ii) the estimated amount of Enable’s preferred equity as of December 31, 2021 and December 31, 2022, respectively, in each case as reflected in the Enable unaudited prospective financial information. Goldman Sachs then divided the range of implied equity value by the total number of fully diluted outstanding Enable common units, as reflected in the Enable unaudited prospective financial information, to derive a range of illustrative implied equity values per Enable common unit as of December 31, 2021 and December 31, 2022. Goldman Sachs then discounted to December 31, 2020 the range of illustrative implied unit prices using a discount rate of 10.5%, reflecting an estimate of Enable’s cost of equity. Goldman Sachs derived such discount rate by application of the capital asset pricing model, which requires certain company-specific inputs, including a beta for Enable as well as certain financial metrics for the United States financial markets generally. Goldman Sachs then added to such implied present values the aggregate distributions per Enable common unit estimated to be paid by Enable for each of 2021 and 2022 fiscal years, as reflected in the Enable unaudited prospective financial information, and discounted the amount of such distributions to December 31, 2020 using a discount rate of 10.5%, reflecting an estimate of Enable’s cost of equity. This analysis resulted in a range of illustrative implied present values of $3.98 to $6.70 per Enable common unit.

Illustrative Present Value of Future Unit Price Analysis—Pro Forma Energy Transfer. Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per Energy Transfer common unit on a pro forma basis (“Pro Forma Energy Transfer”) and calculated the implied valuation uplift per Enable common unit upon consummation of the Merger. Goldman Sachs calculated the implied values per Pro Forma Energy Transfer common unit as of December 31 for each of 2021 and 2022, by applying a range of illustrative NTM EBITDA multiples of 7.5x to 8.5x to estimated EBITDA for Pro Forma Energy Transfer using the ET adjusted unaudited pro forma projections as described in “—Other Information” for each of the years 2022 and 2023, less Adjusted EBITDA attributable to non-wholly owned assets included in Adjusted EBITDA (consolidated) plus (i) distributable cash flow attributable to Energy Transfer’s interest in non-wholly owned assets excluding Sunoco LP and USA Compression Partners, LP and (ii) distributions paid to Energy Transfer from Sunoco LP and USA Compression Partners, LP.

The illustrative EBITDA multiple range for Pro Forma Energy Transfer was derived by Goldman Sachs using its professional judgment and experience, taking in account, among other things, EBITDA multiples implied by trading prices of Enable common units and Energy Transfer common units (and estimates of next-twelve-months EBITDA for Enable and Energy Transfer as reported by IBES) over certain prior periods. To derive a range of illustrative implied equity values per Pro Forma Energy Transfer common unit, Goldman Sachs then subtracted from the range of implied enterprise values (i) the estimated amount of Pro Forma Energy Transfer’s net debt as of December 31, 2021 and December 31, 2022 respectively and (ii) the estimated amount of Pro Forma Energy Transfer’s preferred equity as of December 31, 2021 and December 31, 2022 respectively,

 

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in each case using the ET adjusted unaudited pro forma projections as described in “—Other Information.” Goldman Sachs then divided the range of implied equity value by the total number of fully diluted outstanding units for Pro Forma Energy Transfer, using the ET adjusted unaudited pro forma projections as described in “—Other Information,” to derive a range of illustrative implied equity values per Pro Forma Energy Transfer common unit as of December 31, 2021 and December 31, 2022. Goldman Sachs then discounted to December 31, 2021 the range of illustrative implied Pro Forma Energy Transfer common unit prices using a discount rate of 8.0%, reflecting an estimate of the Pro Forma Energy Transfer’s cost of equity. Goldman Sachs derived such discount rate by application of the capital asset pricing model, which requires certain company-specific inputs, including a beta for Pro Forma Energy Transfer as well as certain financial metrics for the United States financial markets generally. Goldman Sachs then added to such implied present values the aggregate distributions per pro forma unit estimated to be paid by Pro Forma Energy Transfer for each of 2021 and 2022 fiscal years, using the ET adjusted unaudited pro forma projections as described in “—Other Information,” and then discounted the amount of such distributions to December 31, 2020 using a discount rate of 8.0%, reflecting an estimate of Pro Forma Energy Transfer’s cost of equity. Goldman Sachs then calculated a range of illustrative implied values for the pro forma value to be received per Enable common unit pursuant to the merger agreement by multiplying such range of implied values per Energy Transfer common unit by the exchange ratio. This analysis resulted in a range of illustrative implied present values of $4.82 to $7.90 per Enable common unit.

General. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company used in the above analyses as a comparison is directly comparable to Enable or Energy Transfer or the Merger.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the Enable General Partner Board as to the fairness from a financial point of view to the holders (other than Energy Transfer and its affiliates) of Enable common units, as of the date of the opinion, of the exchange ratio pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Enable, Energy Transfer, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The exchange ratio was determined through arm’s-length negotiations between Enable and Energy Transfer and was approved by the Enable General Partner Board. Goldman Sachs provided advice to Enable during these negotiations. Goldman Sachs did not, however, recommend any specific exchange ratio to Enable or the Enable General Partner Board or that any specific exchange ratio constituted the only appropriate consideration for the Merger.

As described above, Goldman Sachs’ opinion to the Enable General Partner Board was one of many factors taken into consideration by the Enable General Partner Board in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex D.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services

 

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for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Enable, Energy Transfer, any of their respective affiliates and third parties, including OGE Energy and CenterPoint, each of whom is an affiliate of a significant unitholder of Enable, and their respective affiliates, or any currency or commodity that may be involved in the Merger for the accounts of Goldman Sachs and its affiliates and employees and their customers. Goldman Sachs acted as financial advisor to Enable in connection with, and participated in certain of the negotiations leading to, the Merger. Goldman Sachs has provided certain financial advisory and/or underwriting services to Enable and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as joint book runner with respect to a public offering of Enable’s 4.15% Senior Notes due 2029 (aggregate principal amount $550,000,000) in September 2019. During the two-year period ended February 16, 2021, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Enable and/or its affiliates (other than OGE Energy, CenterPoint and their respective subsidiaries) of approximately $0.2 million. Goldman Sachs also has provided certain financial advisory and/or underwriting services to Energy Transfer and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted, as a co-manager with respect to a public offering of 500,000 6.75% Series F Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units and 1,100,000 7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units by ETO, in January 2020, and as a joint book runner with respect to a public offering of 2.90% Senior Notes due 2025 (aggregate principal amount of $1,000,000,000) by ETO in January 2020, a public offering of 3.75% Senior Notes due 2030 (aggregate principal amount of $1,500,000,000) by ETO in January 2020, a public offering of 5.00% Senior Notes due 2050 (aggregate principal amount of $2,000,000,000) by ETO in January 2020. During the two-year period ended February 16, 2021, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Energy Transfer and/or its affiliates of approximately $1.4 million. Goldman Sachs has also provided certain financial advisory and/or underwriting services to CenterPoint and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as financial advisor to CenterPoint in connection with the sale of its energy services business in June 2020 and as joint book runner with respect to a public offering of CenterPoint’s 2.50% Senior Notes due 2024 (aggregate principal amount of $500,000,000), 2.95% Senior Notes due 2030 (aggregate principal amount of $400,000,000) and 3.70% Senior Notes due 2049 (aggregate principal amount of $300,000,000) in August 2019. During the two-year period ended February 16, 2021, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to CenterPoint and/or its affiliates (other than Enable and its subsidiaries) of approximately $4.0 million. During the two-year period ended February 16, 2021, the Investment Banking Division of Goldman Sachs has not been engaged by OGE Energy to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to Enable, Energy Transfer and their respective affiliates, including OGE Energy and CenterPoint, and their respective affiliates, for which the Investment Banking Division of Goldman Sachs may receive compensation.

The Enable General Partner Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to a letter agreement dated February 2, 2021, Enable engaged Goldman Sachs to act as its financial advisor in connection with the Merger. The engagement letter between Enable and Goldman Sachs provides for a customary transaction fee, a portion of which became payable upon the presentation by Goldman Sachs to the Enable General Partner Board of the final results of the study Goldman Sachs undertook to determine whether it was able to render a fairness opinion in connection with the exchange ratio, and the remainder of which is contingent upon consummation of the Merger. In addition, Enable has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

 

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Opinion of the Enable Conflicts Committee’s Financial Advisor

The Enable Conflicts Committee engaged Intrepid to act as its financial advisor. As part of that engagement, the Enable Conflicts Committee requested that Intrepid evaluate the fairness, from a financial point of view, of the exchange ratio in the LP Merger to the holders of Enable common units other than Enable General Partner and its affiliates (which affiliates include but are not limited to the Sponsors) (such holders are referred to in this section as the “Public Unaffiliated Unitholders”). On February 16, 2021, Intrepid delivered to the Enable Conflicts Committee its oral opinion, confirmed by its delivery of a written opinion dated as of the same date, that, as of the date thereof, and based upon and subject to the assumptions, procedures, factors, qualifications, limitations and other matters set forth in Intrepid’s written opinion, the exchange ratio in the LP Merger is fair, from a financial point of view, to the Public Unaffiliated Unitholders.

The full text of Intrepid’s written opinion, dated February 16, 2021, which sets forth, among other things, certain of the assumptions made, procedures followed, matters considered, qualifications and limitations with respect to the review undertaken by Intrepid, is attached as Annex E to this consent statement/prospectus and is incorporated by reference into this section.

Intrepid provided its opinion solely for the information and benefit of the Enable Conflicts Committee (in its capacity as such) in connection with its evaluation of the Merger. The opinion does not address Enable’s underlying business decision to enter into the Merger or the relative merits of the Merger as compared with any other strategic alternative that may be available to Enable. The opinion is not intended to be and does not constitute a recommendation to any Enable common unit holder as to whether such Enable common unitholder should approve the merger agreement or any other matter. In addition, the opinion is not rendered to or for the benefit of, and does not confer rights or remedies upon, any person other than the Enable Conflicts Committee (including any equity holders, creditors, bondholders or other constituencies of Enable, Enable General Partner or Energy Transfer). This summary is qualified in its entirety by reference to the full text of the opinion.

Intrepid’s opinion was necessarily based upon business, market, economic, regulatory and other conditions as they existed on, and were evaluated as of, February 16, 2021. Intrepid assumes no responsibility for updating, revising or reaffirming its opinion based on developments, circumstances or events occurring, or information made available to it, after February 16, 2021. Intrepid’s opinion did not express any opinion as to equity securities or debt securities of Enable or Energy Transfer and the price, trading range or volume at which any securities will trade at any time.

In connection with rendering its opinion, Intrepid, among other things:

 

   

reviewed a draft of the merger agreement (draft dated February 16, 2021);

 

   

reviewed a draft of the Form of Support Agreement (draft dated February 16, 2021) to be entered into among Energy Transfer, Merger Sub, GP Merger Sub, Enable, Enable General Partner and CenterPoint;

 

   

reviewed a draft of the Form of Support Agreement (draft dated February 16, 2021) to be entered into among Energy Transfer, Merger Sub, GP Merger Sub, Enable, Enable General Partner and OGE Energy;

 

   

reviewed a draft of the Registration Rights Agreement (draft dated February 16, 2021);

 

   

reviewed certain presentations to the Enable Conflicts Committee from the management of Enable General Partner and ET GP;

 

   

reviewed certain publicly available information relating to Enable and Energy Transfer that Intrepid deemed relevant, including each of Enable’s and Energy Transfer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, Quarterly Report on Form 10-Q for the three months ended March 31, 2020, Quarterly Report on Form 10-Q for the three months ended June 30, 2020, Quarterly Report on Form 10-Q for the three months ended September 30, 2020 and certain Current Reports on Form 8-K, in each case as filed with or furnished to the U.S. Securities and Exchange Commission;

 

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reviewed certain non-public projected financial data and related assumptions of each of Enable and Energy Transfer, as prepared and furnished to Intrepid by management of Enable General Partner and ET GP, respectively;

 

   

reviewed Enable’s and Energy Transfer’s business plan with management of Enable General Partner and ET GP, respectively, including a detailed review of business segments, certain material growth projects and commercial contracts and legal, environmental, regulatory and other matters;

 

   

reviewed certain recent corporate announcements made by Enable General Partner and ET GP;

 

   

discussed past and current operations and operational projections of each of Enable and Energy Transfer with management of Enable General Partner and ET GP, respectively (including their views on the risks and uncertainties in achieving the projections set forth in the forecasts provided);

 

   

reviewed the terms of the Energy Transfer Series G Preferred Units and the terms and historical trading value of the Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units of Energy Transfer Operating, L.P., as applicable;

 

   

discussed potential tax implications resulting from the Merger, including expected tax impacts to the Public Unaffiliated Unitholders;

 

   

discussed the strategic rationale for, and potential benefits of, the Merger with management of Enable General Partner and ET GP;

 

   

reviewed and analyzed pro forma impacts of the Merger;

 

   

performed discounted cash flow analyses based on forecasts and other data provided by management of Enable General Partner and ET GP;

 

   

reviewed and analyzed publicly available historical and current financial information, unit price data and broker research estimates with respect to certain public companies with operations and assets that Intrepid considered comparable to each of Enable and Energy Transfer;

 

   

reviewed the financial metrics of certain historical transactions that Intrepid deemed relevant and compared such financial metrics to those implied by the Merger; and

 

   

conducted such other studies and investigations, performed such other analyses and examinations, reviewed such other information and considered such other factors that Intrepid deemed appropriate for purposes of providing its opinion.

For purposes of its analysis and opinion, Intrepid assumed and relied upon the accuracy and completeness of all of the foregoing information and any other financial, accounting, legal, operational, tax and other information and data provided to, discussed with or reviewed by it, and Intrepid has not assumed any responsibility for independent verification of the accuracy or completeness of any such information. Intrepid further relied upon the assurances of management of Enable General Partner and ET GP that they are not aware of any facts or circumstances that would make such information inaccurate, incomplete or misleading. With respect to financial forecasts, projections and business plans of Enable and Energy Transfer provided to it, Intrepid relied, with the consent of the Enable Conflicts Committee, upon the assurances of management of Enable General Partner and ET GP that such data had been reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of Enable General Partner and ET GP as to the future performance of Enable and Energy Transfer, under the assumptions reflected therein. Intrepid expresses no view as to such forecasts or any judgments, estimates or assumptions on which they were based.

Intrepid relied, with the consent of the Enable Conflicts Committee, upon the assessments of management of Enable General Partner and ET GP as to (i) the potential impact on Enable and Energy Transfer of market and other trends and prospects for, and governmental, regulatory and legislative matters relating to or otherwise affecting, the oil and gas industry or U.S. markets, (ii) the potential impact on the operations, results and prospects of Enable and Energy Transfer of the Merger, and (iii) existing and future contracts and relationships,

 

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agreements and arrangements with related and third parties that are necessary or desirable for the operation of Enable and Energy Transfer. Intrepid did not undertake an independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which Enable or Energy Transfer is or may be a party or is or may be subject. Intrepid also assumed that there were no material changes in the liabilities, financial condition, results of operations, business or prospects of or relating to Enable or Energy Transfer since the date of the latest information relating to Enable or Energy Transfer, as applicable, made available to it. In arriving at its opinion, Intrepid did not conduct a physical inspection of the properties and facilities of Enable or Energy Transfer and did not make or obtain any evaluations or appraisals of their respective assets or liabilities, nor has Intrepid been furnished with any such evaluations or appraisals.

In rendering its opinion, Intrepid assumed (in all respects material to its analysis and with the consent of the Enable Conflicts Committee) that the representations and warranties of each party contained in the merger agreement are true and correct, and that each party will perform all of the covenants, undertakings and agreements required to be performed by it under the merger agreement, and the Merger will be consummated on the terms described in the merger agreement, without any waiver or modification of any terms or conditions contained therein that are material to Intrepid’s analysis. Intrepid assumed that the final executed and delivered versions of all documents reviewed by it in draft form will conform in all material respects to the most recent drafts reviewed by it. Intrepid assumed that all governmental, regulatory or other consents, approvals or releases, including under the Enable Partnership Agreement, and any financing will be obtained without any material delay, limitation, restriction or condition that would have an adverse effect on the parties to the Merger or materially reduce the benefits of the Merger to Enable. Intrepid assumed that the Merger and the business of each of Enable, Enable General Partner and the other parties to the Merger will be and has been conducted in a manner that complies with all applicable federal, state and local statutes, rules and regulations. Intrepid assumed that Enable, Enable General Partner and the Enable Conflicts Committee have relied on the advice of their counsel, independent accountants and other advisors (other than Intrepid) as to all legal, financial reporting, tax, accounting, securities and regulatory matters with respect to the Merger.

 

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Intrepid was not asked to pass upon, and expressed no opinion with respect to, any matter other than whether the exchange ratio in the LP Merger, is fair, from a financial point of view, to the Public Unaffiliated Unitholders. Intrepid was not asked to, nor does it express any view on, and its opinion does not address, any other terms, conditions, aspects or implications of the Merger or any agreements, arrangements or understandings entered into in connection therewith or otherwise, including the structure, form or timing of the Merger and the covenants and undertakings of Enable and Energy Transfer. Intrepid’s opinion does not address any financing transactions associated with the Merger. In addition, Intrepid does not express any view regarding the relative merits of the Merger as compared to any other transaction or business strategy in which Enable might engage or the merits of the underlying decision by the Enable General Partner Board to engage in the Merger and enter into and perform the merger agreement. Intrepid expresses no view or opinion as to the fairness of the GP Merger Consideration or the Preferred Contributions or the fairness of the Merger to the holders of the Enable General Partner Interests, the holders of Enable Series A Preferred Units, creditors, bondholders or other constituencies of Enable (other than the Public Unaffiliated Unitholders, as described in Intrepid’s opinion) or its subsidiaries, or the fairness of the amount or nature of, or any other aspects relating to, the compensation to any officers, directors or employees of any parties to the Merger or class of such persons, relative to the exchange ratio or otherwise (including any allocation of value as between the Sponsors). Further, the Enable Conflicts Committee did not authorize Intrepid to solicit, and Intrepid did not solicit, any indications of interest from any third party with respect to alternative transactions.

Intrepid’s opinion does not address accounting, legal, actuarial, regulatory or tax matters. Intrepid is not a legal, tax, commercial or bankruptcy advisor. Intrepid’s opinion does not constitute a solvency opinion and does not address the solvency or financial condition of Enable or any of the potential parties to the Merger. Intrepid’s opinion does not address whether Enable has sufficient cash available or other sources of funds to enable it to consummate any distributions. Intrepid’s opinion does not constitute a tax opinion. Intrepid’s opinion cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on such taxpayer. Each person should seek legal, regulatory, accounting and tax advice based on his, her or its particular circumstances from independent advisors regarding the evaluation and impact of any transactions or matters described herein.

Intrepid does not express any opinion as to equity securities or debt securities of Enable or Energy Transfer and the price, trading range or volume at which any securities will trade at any time, including following announcement of the Merger.

In arriving at its opinion, Intrepid did not attribute any particular weight to any particular analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Several analytical methodologies were employed by Intrepid in its analyses, and no one single method of analysis should be regarded as critical to the overall conclusion reached by Intrepid. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. Accordingly, Intrepid believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it, without considering all analyses and all factors in their entirety, could create a misleading or incomplete view of the evaluation process underlying its opinion. The conclusion reached by Intrepid, therefore, is based on the application of Intrepid’s own experience and judgment to all analyses and factors considered by it, taken as a whole. Intrepid’s opinion was approved by the fairness opinion committee of Intrepid.

Summary of Material Financial Analyses

Set forth below is a summary of the material financial analyses performed by Intrepid and reviewed with the Enable Conflicts Committee on February 16, 2021, in connection with rendering Intrepid’s opinion to the Enable Conflicts Committee. Intrepid performed a comparable company trading analysis, discounted cash flow analysis, precedent midstream transactions analysis, and precedent premiums paid analysis with respect to Enable and a comparable company trading analysis and discounted cash flow analysis with respect to Energy Transfer.

 

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Intrepid calculated the implied exchange ratio ranges reflected in the financial analyses described below by comparing (i) the low end of the valuation range for Enable common units to the high end of the valuation range for Energy Transfer common units and (ii) the high end of the valuation range for Enable common units to the low end of the valuation range for Energy Transfer common units. The resulting implied exchange ratio ranges were then compared with the exchange ratio.

In addition, Intrepid performed certain other analyses which were reviewed with the Enable Conflicts Committee. As reference analyses, Intrepid reviewed research analyst price targets included in equity research from certain investment banks and performed a 52-week market trading analysis for Enable common units, Energy Transfer common units and the implied exchange ratio of Enable common units to Energy Transfer common units, as further described below.

Financial data for Enable and Energy Transfer utilized by Intrepid in the financial analyses described below were based on, among other things, the prospective financial information that was furnished to it: the Enable unaudited prospective financial information, on a standalone basis, as prepared by the management of Enable General Partner, and the Energy Transfer unaudited, unadjusted prospective financial information, on a standalone basis, prepared by the management of ET GP (as described under “—Enable and Energy Transfer Unaudited Prospective Financial Information”).

The following summary does not purport to be a complete description of the financial and comparative analyses performed by Intrepid, nor does the order of analyses described represent relative importance or weight given to those analyses by Intrepid. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. A fairness opinion is thus not susceptible to partial analysis or summary descriptions.

The financial and comparative analyses summarized below include information presented in tabular format. In order to fully understand the analyses performed by Intrepid, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial and comparative analyses performed by Intrepid. Considering the data set forth in the tables below without considering the full narrative description of the analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial and comparative analyses performed by Intrepid. Except as otherwise noted, the following quantitative information is based on market data or conditions as they existed at the time of the delivery of the opinion, and is not necessarily indicative of current market conditions.

Analysis of Enable

Comparable Company Trading Analysis

Intrepid performed a comparable company trading analysis of Enable by reviewing and comparing the market values and trading multiples of the following publicly-traded midstream companies that Intrepid deemed to have certain characteristics similar to those of Enable:

 

   

Targa Resources Corp.;

 

   

Western Midstream Partners, LP;

 

   

Equitrans Midstream Corporation;

 

   

DCP Midstream, LP;

 

   

Hess Midstream LP;

 

   

EnLink Midstream, LLC;

 

   

Antero Midstream Corporation;

 

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Crestwood Equity Partners LP; and

 

   

Rattler Midstream LP.

These companies are referred to in this section as the “Enable selected comparable companies.” Intrepid performed the comparable company trading analysis based on data derived from public company filings and disclosures, publicly available disclosures and broker research estimates. Although none of the Enable selected comparable companies are directly comparable to Enable, the companies included were selected because they are midstream companies with operations, asset profiles, financial profiles, service profiles, geographic exposure and/or entity structure that, in Intrepid’s experience and professional judgment, for purposes of this analysis, may be considered similar to certain aspects of those of Enable. Accordingly, Intrepid believes that purely quantitative analyses are not, in isolation, determinative in the context of the Merger and that qualitative judgments concerning differences between the financial and operating characteristics and prospects of Enable and the Enable selected comparable companies also are relevant.

For each of the Enable selected comparable companies, Intrepid calculated the following trading multiples based on information from public company filings and disclosures, publicly available disclosure statements and broker research estimates, using applicable market data as of February 12, 2021, including:

 

   

Enterprise Value / EBITDA, which is calculated as enterprise value divided by EBITDA (as projected by broker research analysts) (each company’s definition of EBITDA may vary); and

 

   

LP Distributable Cash Flow Yield, which is calculated as limited partner distributable cash flow per unit divided by limited partner equity value per unit. Distributable cash flow (“DCF”) is calculated as EBITDA less maintenance capital expenditures, less interest expense, less state and local taxes and other cash flow adjustments (each company’s definition of EBITDA and DCF may vary). LP distributable cash flow is calculated as DCF less the DCF allocation to the economic general partner interest and the incentive distribution rights, as applicable.

The resulting mean and median trading multiples and ratios of the ENBL selected comparable companies are set forth below.

 

     Mean     Median  

EV/EBITDA (2021E)

     9.1x       9.2x  

EV/EBITDA (2022E)

     8.6x       8.5x  

LP DCF Yield (2021E)

     18.9     17.9

LP DCF Yield (2022E)

     20.0     18.6

The table below includes relevant multiple reference ranges selected by Intrepid based on the trading multiples of the Enable selected comparable companies set forth above and Intrepid’s professional judgment.

 

     Reference Range

EV/EBITDA (2021E)

   7.75x -9.25x

EV/EBITDA (2022E)

   7.25x - 8.75x

LP DCF Yield (2021E)

   25.0% - 17.5%

LP DCF Yield (2022E)

   25.0% - 17.5%

 

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Based upon the enterprise value to EBITDA multiples and LP Distributable Cash Flow Yield ratios observed in this analysis, Intrepid calculated an implied total enterprise value range and implied price per unit range for Enable common units as set forth below.

 

     Implied Total
Enterprise Value

($mm)
     Implied Unit Price
($)
 

EV/EBITDA (2021E)

   $ 7,095 - $8,468      $ 5.68 - $8.81  

EV/EBITDA (2022E)

   $ 6,358 - $7,674      $ 4.00 - $7.00  

LP DCF Yield (2021E)

   $ 6,995 - $8,020      $ 5.45 - $7.79  

LP DCF Yield (2022E)

   $ 6,796 - $7,736      $ 5.00 - $7.14

Based upon this analysis, Intrepid determined an implied Enable common unit price range of $5.03 to $7.68 based on the averages of the respective minimum and maximum values as derived by each of the methodologies.

Discounted Cash Flow Analysis

For purposes of this analysis, “unlevered free cash flow” is calculated as EBITDA attributable to Enable less maintenance capital expenditures, growth capital expenditures and changes in net working capital and other. Intrepid performed discounted cash flow analyses to calculate the estimated present value of: (i) the unlevered free cash flow that Enable is projected to generate for the five year period beginning with the twelve months ending December 31, 2021, based on the Enable unaudited prospective financial information prepared by Enable General Partner’s management, and (ii) an implied terminal enterprise value.

Using an estimated weighted average cost of capital ranging from 7.3% to 9.0%, Intrepid discounted: (i) Enable’s estimated unlevered free cash flow, and (ii) a range of illustrative terminal enterprise values, calculated by applying a range of terminal EBITDA multiples of 7.0x to 9.0x to terminal year EBITDA. Intrepid derived such weighted average cost of capital range by application of the Capital Asset Pricing Model and such terminal multiple range using its professional judgment and experience, taking into account, among other things, an analysis of Enable and Enable selected comparable companies. Intrepid then subtracted Enable estimated net debt as of December 31, 2020, Enable’s Series A Preferred Units valued at 106% of face value multiplied by the market price of the 7.125% Series G Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units of ETO (the “ETO Series G Preferred Units”), each of which, upon the completion of the Pre-Closing Transactions, will convert into the right to receive a newly issued Energy Transfer Series G Preferred Unit having the same preferences, rights, powers and duties as the ETO Series G Preferred Units, and $10 million attributable to Enable’s general partner interest to arrive at an implied equity value for Enable. Intrepid divided the implied equity value for Enable by the Enable fully diluted common units outstanding as of December 31, 2020 to compute the implied equity value per Enable common unit. The analysis resulted in an implied equity value per Enable common unit range of $4.27 to $8.21.

Precedent Transactions Analysis

Intrepid evaluated certain financial information with respect to the following midstream precedent transactions, each of which was announced during the period between January 2018 and August 2020:

 

Date

  

Buyer(s)

  

Seller(s)

8/24/20    Citizen Energy    Riviera Resources
7/5/20    Berkshire Hathaway Energy    Dominion Energy
10/18/19    DTE Midstream    Momentum and Indigo
10/3/19    Rattler Midstream & Oryx Midstream    Reliance Gathering
9/30/19    NextEra Energy Partners    AltaGas, Cabot Oil & Gas, EIF Vega Midstream
7/2/19    UGI Energy Services    TC Energy

 

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Date

  

Buyer(s)

  

Seller(s)

5/2/19    DTE Midstream    WGL Midstream
4/10/19    Crestwood    Williams
3/18/19    CPPIB    Williams
3/18/19    Williams    Momentum Midstream
3/14/19    EQM Midstream Partners    Morgan Stanley Infrastructure
2/19/19    Blackstone    Targa Resources
11/1/18    First Reserve    Dominion Energy
10/23/18    Enable Midstream    Energy Spectrum
7/30/18    Harvest Midstream    Williams
7/4/18    Brookfield Infrastructure    Enbridge
5/9/18    ArcLight Capital Partners    Midcoast Operating (Enbridge)
3/29/18    SP Investor Holdings    Unit Corporation
1/8/18    Riverstone; Goldman Sachs    Lucid Energy Group

The transactions listed in the table above are referred to in this section as the “selected comparable transactions.” No selected comparable transaction utilized in the precedent transactions analysis was identical or entirely comparable to the Merger. Accordingly, Intrepid believes that purely quantitative analyses are not, in isolation, determinative in the context of the Merger and that qualitative judgments concerning differences between the financial and operating characteristics and prospects of Enable and Energy Transfer and the selected comparable transactions that could affect the values are also relevant.

The resulting low, median, mean and high data, determined by dividing the total enterprise value by EBITDA of the selected comparable transactions were:

 

     TEV / EBITDA  

High

     16.3x  

Mean

     11.8x  

Median

     12.0x  

Low

     7.1x  

Based on a review of the full range of total enterprise value to EBITDA multiples paid in the selected comparable transactions and its professional judgment, rather than the application of a mathematical mean or median, Intrepid applied relevant EBITDA multiples ranging from 8.0x to 10.0x to projected EBITDA for the twelve months ending December 31, 2021. Based on this analysis, Intrepid determined an implied equity value per Enable common unit range of $6.20 to $10.37.

 

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Precedent Premiums Paid Analysis

Intrepid compared the premiums implied by the exchange ratio with premiums received in selected precedent mergers in the oil and gas industry with equity consideration greater than 80% of total consideration. Intrepid calculated the implied premiums received considering the offer exchange ratio relative to the historical target/acquirer exchange ratio calculated based on prior 1-day closing prices, 10-day volume-weighted average prices (“VWAP”), 20-day VWAPs and 30-day VWAPs using publicly available information. Intrepid considered that premiums paid in the selected precedent transactions have varied widely based on specific considerations with respect to each transaction and that there are inherent differences between each of the targets and transactions analyzed by Intrepid relative to Enable and the Merger, respectively. Intrepid analyzed the following transactions:

 

Date Announced

  

Acquirer

  

Target

12/21/20    Diamondback Energy    QEP Resources
10/26/20    Contango Oil & Gas Company    Mid-Con Energy Partners
10/20/20    Pioneer Natural Resources Company    Parsley Energy
10/19/20    ConocoPhillips    Concho Resources
9/28/20    Devon Energy Corporation    WPX Energy
8/12/20    Southwestern Energy Company    Montage Resources
7/20/20    Chevron Corporation    Noble Energy
10/14/19    Parsley Energy    Jagged Peak Energy
8/26/19    PDC Energy    SRC Energy
7/15/19    Callon Petroleum Company    Carrizo Oil & Gas
6/17/19    Keane Group    C&J Energy Services
5/6/19    Midstates Petroleum    Amplify Energy
11/1/18    Encana    Newfield Exploration Company
8/27/18    Eclipse Resources    Blue Ridge Mountain Resources
8/14/18    Diamondback Energy    Energen Corporation
3/28/18    Concho Resources    RSP Permian

The median and mean premiums are set forth below:

 

     Mean     Median  

T-1

     7.0     6.0

10-Day VWAP

     7.4     8.6

20-Day VWAP

     7.6     11.9

30-Day VWAP

     7.9     8.9

Intrepid reviewed the relevant merger premiums and derived a range of premiums to Enable’s 10-day volume-weighted average common unit price as of February 12, 2021, of 0.0% to 15.0%. Intrepid determined an implied equity value per Enable common unit range of $5.78 to $6.65.

 

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Intrepid made numerous judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters. Mathematical analysis, such as determining the median and mean, is not in itself a meaningful method of using comparable transaction data. Also, the transaction multiples for the precedent transactions reflect the cyclicality of the oil and gas industry and any potential business, economic, market, regulatory and other conditions impacting such transactions.

Analysis of Energy Transfer

Comparable Company Trading Analysis

Intrepid performed a comparable company trading analysis of Energy Transfer by reviewing and comparing the market values and trading multiples of the following publicly-traded midstream companies that Intrepid deemed to have certain characteristics similar to those of Energy Transfer:

 

   

Enbridge Inc.;

 

   

TC Energy Corporation;

 

   

Enterprise Products Partners L.P.;

 

   

Kinder Morgan, Inc.;

 

   

The Williams Companies, Inc.;

 

   

ONEOK, Inc.;

 

   

Targa Resources Corp.; and

 

   

DCP Midstream, LP.

These companies are referred to in this section as the “Energy Transfer selected comparable companies.” Intrepid performed the comparable company trading analysis based on data derived from public company filings and disclosures, publicly available disclosures and broker research estimates. Although none of the Energy Transfer selected comparable companies is directly comparable to Energy Transfer, the companies included were selected because they are public companies with operations, asset profiles, financial profiles, service profiles, geographic exposure and/or entity structure that, in Intrepid’s experience and professional judgment, for purposes of this analysis, may be considered similar to certain aspects of those of Energy Transfer. Accordingly, Intrepid believes that purely quantitative analyses are not, in isolation, determinative in the context of the Merger and that qualitative judgments concerning differences between the financial and operating characteristics and prospects of Energy Transfer and the Energy Transfer selected comparable companies also are relevant.

For each of the Energy Transfer selected comparable companies, Intrepid calculated the following trading multiples based on information from public company filings and disclosures, publicly available disclosure statements and broker research estimates, using applicable market data as of February 12, 2021, including:

 

   

Enterprise Value / EBITDA, which is calculated as enterprise value divided by EBITDA (as projected by broker research analysts) (each company’s definition of EBITDA may vary); and

 

   

LP DCF Yield, which is calculated as limited partner distributable cash flow per unit divided by limited partner equity value per unit. DCF is calculated as EBITDA less maintenance capital expenditures, less interest expense, less state and local taxes and other cash flow adjustments (each company’s definition of EBITDA and DCF may vary). LP distributable cash flow is calculated as DCF less the DCF allocation to the economic general partner interest and the incentive distribution rights, as applicable.

 

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The resulting mean and median trading multiples and ratios of the Energy Transfer selected comparable companies are set forth below.

 

     Mean     Median  

EV/EBITDA (2021E)

     10.3x       10.3x  

EV/EBITDA (2022E)

     9.9x       10.0x  

LP DCF Yield (2021E)

     12.9     13.0

LP DCF Yield (2022E)

     13.6     13.3

The table below includes relevant multiple reference ranges selected by Intrepid based on the mean and median trading multiples and ratios of the Energy Transfer selected comparable companies set forth above and Intrepid’s professional judgment.

 

     Reference Range  

EV/EBITDA (2021E)

     8.0x - 9.5x  

EV/EBITDA (2022E)

     8.0x - 9.5x  

LP DCF Yield (2021E)

     20.0% - 14.0%

LP DCF Yield (2022E)

     20.0% - 14.0%  

Based upon the financial multiples observed in this analysis, Intrepid calculated an implied total enterprise value range and an implied price per unit range for Energy Transfer common units as set forth below.

 

     Implied Total
Enterprise Value

($mm)
     Implied Unit
Price ($)
 

EV/EBITDA (2021E)

   $ 85,287 - $101,278      $ 7.65 - $13.50  

EV/EBITDA (2022E)

   $ 90,770 - $107,789      $ 9.65 - $15.88  

LP DCF Yield (2021E)

   $ 91,238 - $102,742      $ 9.83 - $14.04  

LP DCF Yield (2022E)

   $ 93,646 - $106,182      $ 10.71 - $15.30  

Based upon this analysis, Intrepid determined an implied common unit price range of $9.46 to $14.68 based on the average minimum and maximum values of equity value per Energy Transfer common unit as derived by each of the methodologies.

Discounted Cash Flow Analysis

For purposes of this analysis, “unlevered free cash flow” is calculated as consolidated Energy Transfer EBITDA less maintenance capital expenditures, growth capital expenditures, cash taxes and subsidiary noncontrolling interest and other adjustments. Intrepid performed discounted cash flow analyses to calculate the estimated present value of: (i) the unlevered free cash flow that Energy Transfer is projected to generate for the three year period beginning with the twelve months ending December 31, 2021, based on the Energy Transfer unaudited, unadjusted prospective financial information prepared by ET GP’s management, and (ii) an implied terminal enterprise value.

Using an estimated weighted average cost of capital ranging from 6.5% to 8.1%, Intrepid discounted: (i) Energy Transfer’s estimated unlevered free cash flow, and (ii) a range of illustrative terminal enterprise values, calculated by applying a range of terminal EBITDA multiples of 7.5x to 9.5x to terminal year EBITDA attributable to Energy Transfer. Intrepid derived such weighted average cost of capital range by application of the Capital Asset Pricing Model and such terminal multiple range using its professional judgment and experience, taking into account, among other things, an analysis of Energy Transfer and Energy Transfer selected comparable companies. Intrepid then subtracted Energy Transfer estimated net debt as of December 31, 2020, and Energy Transfer’s preferred equity to arrive at an implied equity value for Energy Transfer. Intrepid divided the implied equity value for Energy Transfer by the Energy Transfer fully diluted common units outstanding as of

 

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December 31, 2020 to compute the implied equity value per Energy Transfer common unit. The analysis resulted in an implied equity value per unit of Energy Transfer common units of $8.40 to $14.65.

Exchange Ratio Summary

Intrepid analyzed the implied exchange ratios resulting from the comparable company trading analyses, discounted cash flow analyses, precedent transactions analysis and precedent premiums paid analysis utilized to value the Enable common units and Energy Transfer common units. Intrepid calculated the implied exchange ratio ranges by comparing (i) the low end of the valuation range for Enable common units to the high end of the valuation range for Energy Transfer common units and (ii) the high end of the valuation range for Enable common units to the low end of the valuation range for Energy Transfer common units. The resulting implied exchange ratio reference ranges utilizing each applicable valuation methodology are summarized below.

 

Benchmark

   Exchange Ratio  

Comparable company trading analysis

     0.3427x - 0.8121x  

Discounted cash flow analysis

     0.2917x - 0.9775x  

Precedent transactions analysis(1)

     0.4222x - 1.0965x  

Precedent premiums paid analysis

     0.8594x - 0.9883x  

 

(1)

Implied price per unit range of Energy Transfer common units based on implied price per unit range of Energy Transfer common units under comparable company trading analysis.

Intrepid compared the exchange ratio to each of the implied exchange ratio ranges derived by Intrepid from the aforementioned analyses.

Other Information Reviewed for Informational Purposes Only

Solely for informational purposes, Intrepid analyzed the implied exchange ratios resulting from the range of trading prices for Enable common units and Energy Transfer common units for the 52-week period ended February 12, 2021. Intrepid observed that, during this period, the closing prices of Enable common units ranged from $1.81 to $9.06 per unit and the closing prices of Energy Transfer common units ranged from $4.53 to $12.83 per unit. The exchange ratios, as calculated by the closing prices of Enable common units and Energy Transfer common units, ranged from 0.2524x to 0.9627x for the 52-week period ended February 12, 2021. This information did not provide the basis for, and was not otherwise material to, the rendering of Intrepid’s fairness opinion.

General

As described above in this section, the preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Intrepid’s opinion. In arriving at its fairness determination, Intrepid considered the results of all of its analyses and, except as otherwise described herein, did not attribute any particular weight to any factor or analysis considered by it. Intrepid made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses taken as a whole. No company or transaction used in the above analyses as a comparison is directly comparable to Enable, Energy Transfer or the transactions contemplated by the merger agreement. Accordingly, these analyses must take into account differences in the financial and operating characteristics of the selected publicly traded companies and differences in the structure and timing of the selected transactions and other factors that would affect the public trading value and acquisition value of the companies considered.

Intrepid prepared these analyses for purposes of Intrepid providing its opinion only to the Enable Conflicts Committee as to the fairness, from a financial point of view, of the exchange ratio in the LP Merger to the Public

 

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Unaffiliated Unitholders. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Enable, Enable General Partner, Intrepid or any other person assumes responsibility if future results are materially different from those forecasts.

As described above, Intrepid’s opinion to the Enable Conflicts Committee was only one of many factors taken into consideration by the Enable Conflicts Committee and should not be viewed as determinative of the views of the Enable Conflicts Committee in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Intrepid in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Intrepid attached as Annex E to this consent statement/prospectus.

Miscellaneous

Intrepid and its affiliates, as part of their investment banking business, are regularly engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, private placements and other transactions as well as for real estate, corporate and other purposes. Intrepid and its affiliates also engage in advisory work, private equity activities, underwriting and financing, principal investing, investment management and other financial and non-financial activities and services for various persons and entities.

Intrepid and its affiliates and employees, and funds or other entities in which they invest or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in (i) equity, debt and other securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments (including bank loans and other obligations) of Enable, Energy Transfer, any of their respective affiliates and third parties or any of the other parties to the transactions contemplated by the merger agreement, or (ii) any currency or commodity that may be involved in the transactions and other matters otherwise contemplated by the merger agreement for the accounts of Intrepid and its affiliates and employees and their customers.

Intrepid acted as financial advisor to the Enable Conflicts Committee in connection with, and participated in certain of the negotiations leading to, the transactions contemplated by the merger agreement. Intrepid may in the future provide certain investment banking services to Enable, Enable General Partner, the Sponsors, Energy Transfer and/or their affiliates, for which Intrepid may receive compensation.

Intrepid was engaged by the Enable Conflicts Committee to act as its financial advisor in connection with an evaluation of the Merger by entering into an engagement letter. The engagement letter between the Enable Conflicts Committee and Intrepid provides for a customary opinion fee, which was paid to and earned by Intrepid upon delivery of the opinion, regardless of the conclusion reached by Intrepid. The Intrepid engagement letter also provides for a financial advisory fee, which was paid to and earned by Intrepid upon execution of the engagement letter, and a transaction fee, which becomes payable upon the consummation of the Merger. In addition, Enable has agreed to reimburse Intrepid for certain of its expenses, including certain attorneys’ fees and disbursements, and to indemnify Intrepid and related persons against various liabilities, including certain liabilities under the federal securities laws. During the past two years, no material relationship has existed between Intrepid and its affiliates and Enable, Energy Transfer, the Sponsors or any of their respective affiliates pursuant to which compensation was received by Intrepid or its affiliates as a result of such a relationship.

The Enable Conflicts Committee selected Intrepid as its financial advisor because it is a nationally recognized investment banking firm and is regularly engaged in the valuation of businesses and securities in

 

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connection with mergers and acquisitions, negotiated underwritings, private placements and valuations for corporate and other purposes. The Enable Conflicts Committee selected Intrepid to act as its financial advisor on the basis of Intrepid’s qualifications and expertise, knowledge of the oil and gas industry, reputation in the investment community, independence and experience in transactions similar to the transactions described in the merger agreement, as well as familiarity with Enable and its business.

Enable and Energy Transfer Unaudited Prospective Financial Information

Enable and Energy Transfer do not as a matter of course make public long-term projections as to future sales, earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. As a result, Enable and Energy Transfer do not endorse the unaudited prospective financial information as a reliable indication of future results. However, the management of Enable and Energy Transfer have included the unaudited prospective financial information set forth below to present the financial information made available and utilized in connection with the Enable General Partner Board’s or the Enable Conflicts Committee’s respective evaluations of the Merger and the other transactions contemplated by the merger agreement. Goldman Sachs and Intrepid each used certain of the unaudited prospective financial information in connection with their respective financial analyses and opinions described in the sections titled —Opinion of the Enable General Partner Board’s Financial Advisor” and “—Opinion of the Enable Conflicts Committee’s Financial Advisor,” with the approval of the Enable General Partner Board and the Enable Conflicts Committee, respectively. The inclusion of this information should not be regarded as an indication that any of Enable, Energy Transfer, their respective advisors or other representatives or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future performance or events, or that it should be construed as financial guidance, and such summary projections set forth below should not be relied on as such. The unaudited prospective financial information is not being included in this consent statement/prospectus in order to influence any holder of Enable common units to make an investment decision with respect to the Merger or to influence any holder of Enable common units as to whether such unitholder should deliver a written consent or act with respect to the approval of the merger agreement, the Merger or the other transactions contemplated by the merger agreement or any other matter.

This information was prepared solely for internal use and is subjective in many respects. The Enable unaudited prospective financial information, the ET unaudited projections, the ET adjusted unaudited projections and the ET adjusted unaudited pro forma projections (collectively referred to herein as the “unaudited prospective financial information”) were based solely upon information available to Enable’s management and, with respect to the ET unaudited projections, to Energy Transfer, at the time of their preparation.

While presented with numeric specificity, the unaudited prospective financial information reflects numerous estimates and assumptions that were deemed to be reasonable as of the respective dates the estimates and assumptions were made, but are inherently uncertain and may be beyond the control of Enable’s and Energy Transfer’s management. These assumptions include, but are not limited to, Enable’s and Energy Transfer’s future results, oil and gas industry activity, commodity prices, demand for natural gas and crude oil, capital availability, general economic and regulatory conditions and other matters described in the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors.” The unaudited prospective financial information reflects both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Enable and Energy Transfer can give no assurance that the unaudited prospective financial information and the underlying estimates and assumptions will be realized.

In addition, since the unaudited prospective financial information is inherently forward looking and covers multiple years, such information by its nature becomes less predictive with each successive year. Actual results may differ materially from those set forth below, and important factors that may affect actual results and cause the unaudited prospective financial information to be inaccurate include, but are not limited to, risks and uncertainties relating to Enable and Energy Transfer’s businesses, industry performance, the regulatory

 

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environment, general business and economic conditions and other matters described under the section of this consent statement/prospectus entitled “Risk Factors.” See also “Cautionary Statement Regarding Forward-Looking Statements” and “Where You Can Find More Information.”

The accompanying unaudited prospective financial information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with GAAP, published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of Enable’s and Energy Transfer’s management, was prepared on a reasonable basis, reflects the best estimates and judgments then-available, and presents, to the best of management’s knowledge and belief, the then-expected course of action and financial performance of Enable and Energy Transfer. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this consent statement/prospectus are cautioned not to place undue reliance on the unaudited prospective financial information. Neither Enable’s independent registered public accounting firm nor Energy Transfer’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the unaudited prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the unaudited prospective financial information. The reports of the independent registered public accounting firms of Enable and/or Energy Transfer contained in their respective Annual Reports on Form 10-K for the year ended December 31, 2020, which are incorporated by reference into this consent statement/prospectus, relate to historical financial information of Enable and Energy Transfer, respectively, and such reports do not extend to the unaudited prospective financial information included below and should not be read to do so. The unaudited prospective financial information set forth in this consent statement/prospectus has been prepared by, and is the responsibility of, Enable’s and Energy Transfer’s management.

Furthermore, the unaudited prospective financial information does not take into account any circumstances or events occurring after the date it was prepared. Enable and Energy Transfer can give no assurance that, had the unaudited prospective financial information been prepared either as of the date of the merger agreement or as of the date of this consent statement/prospectus, similar estimates and assumptions would be used. Except as required by applicable securities laws, Enable and Energy Transfer do not intend to, and disclaim any obligation to, make publicly available any update or other revision to the unaudited prospective financial information to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, including with respect to the accounting treatment of the Merger under GAAP, or to reflect changes in general economic or industry conditions.

The unaudited prospective financial information does not take into account all the possible financial and other effects on Enable or Energy Transfer of the Merger, the effect on Enable or Energy Transfer of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect of any business or strategic decisions or actions that would likely have been taken if the merger agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the Merger. Further, the unaudited prospective financial information does not take into account the effect on Enable or Energy Transfer of any possible failure of the Merger to occur. None of Enable, Energy Transfer, or their respective affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any Enable or Energy Transfer unitholder or other person regarding Enable’s or Energy Transfer’s ultimate performance compared to the information contained in the unaudited prospective financial information or that the forecasted results will be achieved. The inclusion of the unaudited prospective financial information should not be deemed an admission or representation by Enable, Energy Transfer, their respective advisors or any other person that it is viewed as material information of Enable or Energy Transfer, particularly in light of the inherent risks and uncertainties associated with such forecasts. The summary of the unaudited prospective financial information included below is not being included to influence your decision whether to consent to the approval of the merger agreement or any other matter for which Enable is

 

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soliciting consents of the holders of Enable common units, but is being provided solely because certain of such information was among the financial information made available to and utilized in connection with the Enable General Partner Board’s or the Enable Conflicts Committee’s respective evaluations of the Merger and the other transactions contemplated by the merger agreement.

In light of the foregoing, and considering the uncertainties inherent in any forecasted information, holders of Enable common units are cautioned not to place undue reliance on such information, and Enable urges all holders of Enable common units to review Enable’s most recent SEC filings for a description of Enable’s reported financial results and Energy Transfer’s most recent SEC filings for a description of Energy Transfer’s reported financial results. See the section entitled “Where You Can Find More Information.”

Unaudited Prospective Financial Information Regarding Enable

In preparing the Enable unaudited prospective financial information described below, the management team of Enable assumed the following oil and natural gas prices (with oil prices based on NYMEX WTI pricing and natural gas prices based on Henry Hub pricing), in each case based on Enable management’s generated outlook for future commodity price levels as of January 5, 2021:

 

     Oil and Gas Price Assumptions  
     2021E      2022E      2023E      2024E      2025E  

Commodity Prices

              

Oil ($/Bbl)

   $ 47.82      $ 49.64      $ 49.05      $ 50.21      $ 49.89  

Gas ($/MMBtu)

   $ 2.90      $ 2.85      $ 2.71      $ 2.74      $ 2.77  

In addition to the assumptions above regarding commodity price environment, in developing the Enable unaudited prospective financial information, Enable’s management made numerous assumptions regarding Enable’s business, including, but not limited to:

 

   

Rig activity and well connects in the gathering and processing segment reflecting moderate recovery and stabilization in Enable’s operating areas consistent with the commodity price assumptions indicated above;

 

   

Expansion capital in the gathering and processing segment largely consists of well connects, line looping and additional compression, with no expansions in processing capacity required to meet forecasted volumes;

 

   

Gross margin in the transportation and storage segment reflecting existing contracts and Enable’s commercial discussions and perspectives regarding recontracting, new contracts and non-firm revenue outlook on a contract-by-contract basis; and

 

   

Expansion capital in the transportation and storage segment includes the MASS project and the construction of the Gulf Run Pipeline project.

The following table presents selected unaudited prospective financial data of Enable (referred to herein as the “Enable unaudited prospective financial information”):

 

     Year ended December 31,  
     2021E      2022E      2023E      2024E      2025E  

Adjusted EBITDA (in millions)(1)

   $ 915      $ 877      $ 956      $ 950      $ 921  

Capital Expenditures (in millions)

   $ 374      $ 541      $ 253      $ 264      $ 261  

Distributable Cash Flow (in millions)(2)

   $ 598      $ 548      $ 610      $ 595      $ 563  

Unlevered Free Cash Flow (in millions)(3)

   $ 551      $ 340      $ 698      $ 603      $ 662  

Distribution Coverage Ratio(4)

     2.07x        1.90x        2.11x        2.06x        1.94x  

Distributions per Enable common unit

   $ 0.66      $ 0.66      $ 0.66      $ 0.66      $ 0.66  

 

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(1)

Adjusted EBITDA is defined as net income attributable to limited partners excluding net income from noncontrolling interests plus depreciation and amortization expense, interest expense net of any interest income, income tax expense, distributions received from equity method affiliate in excess of equity earnings, non-cash equity-based compensation, and changes in the fair value of derivatives.

(2)

Distributable Cash Flow is defined as Adjusted EBITDA, as further adjusted for Enable Series A Preferred Unit distributions, adjusted interest expense (which is interest expense plus amortization of premium on long-term debt and capitalized interest, less interests income, amortization of debt costs and discount on long term-debt), maintenance capital expenditures, compensation expense for distribution equivalent rights of phantom and performance units and current income tax.

(3)

Unlevered Free Cash Flow is defined as Adjusted EBITDA less capital expenditures less working capital and other cash items, inclusive of investment in equity method affiliate.

(4)

Distribution Coverage Ratio is defined as Distributable Cash Flow divided by distributions declared related to Enable common unitholders as of each respective period.

Unaudited Prospective Financial Information Regarding Energy Transfer

Energy Transfer provided unaudited prospective financial information of Energy Transfer on a standalone basis for years 2021 to 2023 to Enable (the “ET unaudited projections”). As part of Enable’s due diligence review of the ET unaudited projections, Enable’s management made certain adjustments to the ET unaudited projections based on Enable’s judgment and experience in the midstream industry (the “ET adjusted unaudited projections”), and also prepared unaudited prospective financial information for Energy Transfer on a pro forma basis for the years 2021 through 2023 by combining the Enable unaudited prospective financial information and the ET adjusted unaudited projections (the “ET adjusted unaudited pro forma projections” and, together with the ET unaudited projections and the ET adjusted unaudited projections, the “unaudited prospective financial information regarding Energy Transfer”).

ET Unaudited Projections

The ET unaudited projections provided by Energy Transfer management assumed the following oil and natural gas price prices (with oil prices based on NYMEX WTI pricing and natural gas prices based on Henry Hub pricing), in each case based on Energy Transfer management’s generated outlook for future commodity price levels as of January 5, 2021:

 

     Oil and Gas Price Assumptions  
     2021E      2022E      2023E  

Commodity Prices

        

Oil ($/Bbl)

   $ 49.42      $ 47.25      $ 45.87  

Gas ($/MMBtu)

   $ 2.80      $ 2.65      $ 2.48  

In addition to the assumptions above regarding the commodity price environment, Energy Transfer management made numerous assumptions regarding Energy Transfer’s business, including, but not limited to:

 

   

Upstream activity in basins served by Energy Transfer’s assets generally reflecting a moderate degree of recovery consistent with the commodity price assumptions indicated above;

 

   

Revenue derived under existing contracts and Energy Transfer management’s commercial discussions and perspectives regarding recontracting, new contracts and non-firm revenue outlook;

 

   

Capital expenditures include the completion of existing capital projects underway, system optimization projects and capital required for maintenance of assets as well as a significant moderation in capital expenditures for expansion capital projects over the projection period;

 

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Capital expenditures for expansion projects underway include expenditures for the NGL and Refined Products segment, including Mariner East system, Marcus Hook facilities, and Nederland LPG facilities; expansion projects for the Midstream segment include expenditures for processing and compression projects primarily in West Texas and the Northeast operating areas; and expansion projects in the Crude Oil segment include the Bakken Pipeline optimization project, Ted Collins Link project, and Cushing-to-Nederland project; and

 

   

Legal or regulatory actions related to the Dakota Access Pipeline will not cause any material interruptions to its current or future operations.

The following table presents the ET unaudited projections provided by Energy Transfer’s management:

 

     Year ended December 31,  
     2021E      2022E      2023E  

Adjusted EBITDA (consolidated) (in millions)(1)

   $ 10,661      $ 11,346      $ 11,506  

Capital Expenditures (in millions)

   $ 2,084      $ 1,130      $ 1,110  

Distributable Cash Flow attributable to partners (in millions)(2)

   $ 5,369      $ 5,850      $ 5,927  

Distribution Coverage Ratio(3)

     3.26x        3.55x        3.60x  

Distributions per Energy Transfer common unit

   $ 0.61      $ 0.61      $ 0.61  

 

(1)

Adjusted EBITDA (consolidated) is defined as total partnership earnings before interest, taxes, depreciation, depletion, amortization and other non-cash items, such as non-cash compensation expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and other non-operating income or expense items. Adjusted EBITDA reflects amounts for unconsolidated affiliates based on the same recognition and measurement methods used to record equity in earnings of unconsolidated affiliates.

(2)

Distributable Cash Flow attributable to partners is defined as net income, adjusted for certain non-cash items, less distributions to preferred unitholders and maintenance capital expenditures. Non-cash items include depreciation, depletion and amortization, non-cash compensation expense, amortization included in interest expense, gains and losses on disposals of assets, the allowance for equity funds used during construction, unrealized gains and losses on commodity risk management activities, inventory valuation adjustments, non-cash impairment charges, losses on extinguishments of debt and deferred income taxes. For unconsolidated affiliates, Distributable Cash Flow attributable to partners reflects Energy Transfer’s proportionate share of the investee’s distributable cash flow. To the extent that noncontrolling interests exist among Energy Transfer’s subsidiaries, Distributable Cash Flow attributable to partners reflects the following:

 

   

For subsidiaries with publicly traded equity interests, other than Energy Transfer Operating, L.P., Distributable Cash Flow attributable to partners includes distributions to be received by the parent company with respect to the periods presented.

 

   

For consolidated joint ventures or similar entities, where the noncontrolling interest is not publicly traded, Distributable Cash Flow attributable to partners reflects only the amount of distributable cash flow of such subsidiaries that is attributable to Energy Transfer’s ownership interest.

 

(3)

Distribution Coverage Ratio for a period is calculated as Distributable Cash Flow attributable to partners, as adjusted, divided by distributions expected to be paid to the partners of Energy Transfer in respect of such period.

ET Adjusted Unaudited Projections

As part of Enable’s due diligence review of the ET unaudited projections, Enable’s management made certain adjustments to the ET unaudited projections based on Enable’s judgment and experience in the midstream

 

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industry. Enable management’s adjustments reflected lower levels of Adjusted EBITDA and Distributable Cash Flow attributable to partners over the years 2021 through 2023 to account for a range of potential risks to the ET unaudited projections provided by Energy Transfer management for Energy Transfer, including but not limited to:

 

   

Lower upstream activity across the basins in which Energy Transfer operates, resulting in lower volumes across Energy Transfer’s system;

 

   

Lower growth in gross margin reflecting lower upstream activity and associated volumes, in particular in the NGL and Refined Product and the Crude Oil segments;

 

   

More competitive recontracting environment resulting in a reduction of contracted tariffs on certain assets; and

 

   

Potential unfavorable regulatory rulings resulting in temporary disruption in service on existing assets.

The following table presents the Energy Transfer unaudited prospective financial information, as adjusted by Enable’s management (referred to as the “ET adjusted unaudited projections”):

 

     Year ended December 31,  
     2021E      2022E      2023E  

Adjusted EBITDA (consolidated) (in millions)

   $ 10,402      $ 10,754      $ 10,808  

Capital Expenditures (in millions)

   $ 2,084      $ 1,130      $ 1,110  

Distributable Cash Flow attributable to partners (in millions)

   $ 5,167      $ 5,385      $ 5,369  

Distribution Coverage Ratio

     3.14x        3.27x        3.26x  

Distributions per Energy Transfer common unit

   $ 0.61      $ 0.61      $ 0.61  

Other Information

Enable management also prepared unaudited prospective financial information for Energy Transfer on a pro forma basis for the years 2021 through 2023 by combining the Enable unaudited prospective financial information and the ET adjusted unaudited projections (referred to as the “ET adjusted unaudited pro forma projections”). The ET adjusted unaudited pro forma projections give effect to the terms of the Merger including the LP Merger Consideration and the exchange of Enable Series A Preferred Units for Energy Transfer Series G Preferred Units and are prepared on a basis as if the Merger had occurred on January 1, 2021. Enable management did not include the impact of potential reductions in general and administrative costs on a pro forma prospective basis following the closing of the Merger nor the impact of potential commercial synergies resulting from the combination of the commercial operations of Enable and Energy Transfer following the closing of the Merger.

Certain of the measures included in the Enable unaudited prospective financial information and the unaudited prospective financial information regarding Energy Transfer are non-GAAP financial measures, including, but not limited to, Adjusted EBITDA, Distributable Cash Flow, Distributable Cash Flow attributable to partners, Unlevered Free Cash Flow and Distribution Coverage Ratio. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Enable and Energy Transfer are not reported by all of their competitors and may not be comparable to similarly titled amounts used by other companies.

ENABLE AND ENERGY TRANSFER DO NOT INTEND TO, AND DISCLAIM ANY OBLIGATION TO, UPDATE, CORRECT OR OTHERWISE REVISE THE ENABLE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION OR THE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION REGARDING ENERGY TRANSFER TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE OF THE MERGER AGREEMENT OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN

 

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THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE ENABLE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION OR THE UNAUDITED PROSPECTIVE FINANCIAL INFORMATION REGARDING ENERGY TRANSFER ARE NO LONGER APPROPRIATE (EVEN IN THE SHORT TERM).

Interests of Enable’s Directors and Executive Officers in the Merger

You should be aware that aside from their interests as Enable common unitholders, Enable’s directors and executive officers have interests in the Merger that are different from, or in addition to, those of other Enable common unitholders generally. The members of the Enable General Partner Board were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the Merger. See the section above titled “—Background of the Merger,” and the section entitled “—Approval of the Enable Conflicts Committee and the Enable General Partner Board and Reasons for the Merger.” Enable’s common unitholders should take these interests into account in deciding whether to vote “FOR” the merger proposal. These interests are described in more detail below, and certain of them are quantified in the narrative and the table below.

Treatment of Equity-Based Awards

Under the merger agreement equity-based awards held by Enable directors and executive officers as of the effective time of the Merger will be treated at the effective time of the Merger as follows:

 

   

Enable Phantom Units. Enable phantom units, whether vested or unvested, that are outstanding immediately prior to the effective time will be assumed by Energy Transfer and converted into a restricted unit award representing a contractual right upon vesting to receive a number of Energy Transfer common units equal to the product obtained by multiplying (x) the number of Enable common units subject to such Enable assumed restricted unit award immediately prior to the effective time by (y) the exchange ratio, rounded up or down to the nearest whole Energy Transfer common unit (each, an “Enable assumed restricted unit award”). Each Enable assumed restricted unit award will otherwise be subject to the same terms and conditions as were applicable to the Enable phantom units immediately prior to the effective time.

 

   

Enable Performance Awards. Each award of performance units that corresponds to Enable common units that is outstanding and unvested as of the effective time will be measured as to performance as of the effective time (or a date reasonably proximate thereto) as determined in good faith by the Enable General Partner Board, and each such Enable performance award will, with respect to the number of Enable common units that are considered earned based on the higher of actual performance as of the closing of the Merger or target (the “Enable earned performance units”), be assumed by Energy Transfer and converted into an Enable assumed restricted unit award, which will have the same distribution equivalent rights and be eligible to vest solely based on continued service at the end of the performance period that was originally applicable thereto; provided, however, that the Enable earned performance units will vest upon a “qualifying termination” and, to the extent applicable, will incorporate the provisions related to termination due to “retirement,” as provided in the Enable phantom units, equal to the number of Enable earned performance units multiplied by the exchange ratio, rounded up or down to the nearest whole Energy Transfer common unit. Any performance units that are not Enable earned performance units will automatically be cancelled for no consideration. Notwithstanding the foregoing, with respect to Enable performance awards granted in 2021, the number of Enable earned performance units will be equal to the target number of units granted, regardless of performance.

The number of unvested equity-based awards held by each independent director and executive officer of Enable as of March 2, 2021 is set forth below. For an estimate of the amounts that would be payable to each of Enable’s named executive officers upon the vesting and settlement of their unvested equity-based awards, see “—Quantification of Payments and Benefits to Enable’s Named Executive Officers” below. All awards to Enable

 

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independent directors are immediately vested, so there are no outstanding awards to independent directors. Non-independent directors (other than Rodney J. Sailor) are not eligible for these awards.

 

Executive Officer and

Independent Director Name

   Number of Units Subject to
Outstanding Time-Based
Phantom Unit Awards

(#)(1)
     Number of Units Subject to
Outstanding Performance
Unit Awards (Based on
Target Performance)

(#)(2)
 

Rodney J. Sailor

     381,069        707,698  

John P. Laws

     137,708        255,740  

Frank J. Antoine Jr

     40,136        47,406  

Deanna J. Farmer

     72,561        134,753  

Mark C. Schroeder

     55,125        132,673  

Alan N. Harris

     —          —    

Ronnie K. Irani

     —          —    

Peter H. Kind

     —          —    

 

(1)

The outstanding time-based phantom unit awards granted in 2021 and held by each of the executive officers are as follows: (i) Mr. Sailor: 199,730 units, (ii) Mr. Laws: 69,695 units, (iii) Mr. Antoine: 12,896 units, (iv) Ms. Farmer: 36,966 units and (v) Mr. Schroeder: 36,123 units.

(2)

If maximum performance is achieved, the 2019 and 2020 Enable performance awards payout at 200%. Performance between threshold and maximum will be interpolated. Pursuant to the merger agreement, performance awards granted in 2021 will pay out only at target (i.e., 100%). The 2021 performance awards held by each of the executive officers are as follows: (i) Mr. Sailor: 370,927 units, (ii) Mr. Laws: 129,432 units, (iii) Mr. Antoine: 23,948 units, (iv) Ms. Farmer: 68,650 units, and (v) Mr. Schroeder: 67,085 units.

Change of Control Payments and Benefits

For purposes of the plan and agreements described below, the completion of the Merger will constitute a “change of control” as defined within the applicable documents.

Enable does not maintain employment agreements with its executive officers. However, Enable maintains the Enable Midstream Partners, LP Change of Control Plan (which we refer to as the “Enable change of control plan”) in which its executive officers are eligible to participate. The Enable change of control plan provides for certain “double trigger” payments and benefits, meaning that the payments or other benefits become due only if the executive officer’s employment is terminated not due to death or disability and without cause or by the executive for good reason (which we refer to as a “covered termination”) within two years after the occurrence of a change of control, which includes the merger.

The payments and benefits due to an executive officer under the Enable change of control plan upon a covered termination following a change of control are: (i) accrued but unpaid salary, earned but untaken vacation through the date of the covered termination and reimbursement of eligible expenses incurred through the date of the covered termination; (ii) a prorated bonus for the calendar year of the covered termination, payable in a lump sum no later than 60 days following the date of the covered termination; (iii) a lump sum cash payment in the amount of $25,000 for outplacement services payable no later than 60 days following the date of the covered termination; (iv) a lump sum cash payment in an amount equal to the greater of the executive officer’s base

salary plus target bonus determined immediately prior to the date on which the change of control occurs or base salary plus the target bonus determined immediately prior to the date of the covered termination (or as determined immediately prior to a reduction in base salary or target bonus if the covered termination is due to the executive officer’s termination due to good reason) times the executive’s change of control multiple payable no later than 60 days following the date of the covered termination; and (v) a lump sum cash payment in an amount equal to the sum of the employer’s portion of the annual premium for medical, dental and vision benefit coverage as in effect immediately prior to the date of the covered termination multiplied by the executive’s change of

 

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control multiple. The payments and benefits set forth in (ii)-(v) will be contingent on the executive officer’s execution of a release of claims in favor of Enable.

For purposes of the Enable change of control plan, the change of control multiple means 2.99 for Mr. Sailor, 2.0 for Messrs. Laws and Schroeder and Ms. Farmer, and 1.5 for Mr. Antoine.

For purposes of the Enable change of control plan, the term “cause” generally means the termination of an executive officer’s employment due to (i) willful and continued failure to perform his or her duties, (ii) willful failure to comply with any valid and legal directive of either the person to whom the executive officer reports or the Enable General Partner Board, (iii) conviction of or plea of guilty or nolo contendere to a misdemeanor involving moral turpitude or any felony, or (iv) willful engagement in misconduct that results in injury to Enable or its affiliates. For purposes of determining whether an action or omission is willful, an action or omission will not be considered willful unless done or omitted to be done in bad faith or without reasonable belief that the act or omission was in the vest interests of Enable or its affiliates.

Additionally, under the Enable change of control plan, the term “good reason” generally means, without the consent of the executive officer, the occurrence of one of the following: (i) a decrease in the executive officer’s base salary, target bonus or target incentive by more than ten percent (10%) (other than as a result of general across-the-board reductions applicable to all officers of the same level), (ii) a material reduction in the executive officer’s authority, duties or responsibilities, (iii) a permanent relocation of the executive officer’s principal residence as a requirement to maintain his or her officer position by more than 50 miles from the location at which the executive officer normally performed services immediately before the relocation, or (iv) any other action or inaction that constitutes a material breach by Enable of any employment agreement with the executive officer.

Pursuant to the terms of Enable’s performance unit awards, if a change of control occurs prior to the end of the performance period and if the executive is terminated (i) due to death, (ii) due to disability, (iii) by Enable during the two-year period following a change of control (which includes the Merger) for any reason other than for cause, or (iv) by the executive for good reason during the two-year period following a change of control (which includes the Merger) (which we refer to as a “qualifying termination”), then the executive will earn performance units equal to the greater of: (1) target or (2) actual performance.

Pursuant to the terms of Enable’s phantom units, if an executive is terminated due to (i) death, (ii) disability, (iii) by Enable during the two-year period following a change of control (which includes the Merger) for any reason other than for cause; or (iv) by the executive for good reason (which we refer to as a “qualifying termination”), the phantom units will immediately vest as of the date of the qualifying termination.

For purposes of the performance unit awards and phantom units (collectively the “Enable equity awards”), “cause” generally means the termination of an executive officer’s employment due to (i) a material act or willful misconduct that is materially detrimental to Enable or any affiliate; (ii) an act of dishonesty relating to the performance of the executive’s duties, habitual unexcused absence(s) from work, willful failure to perform duties in any material respect (other than any such failure resulting from incapacity due to physical or mental illness or disability), or gross negligence in the performance of duties resulting in material damage or injury to Enable or any affiliate, its reputation or goodwill; or (iii) any felony conviction or any conviction involving dishonesty, fraud or breach of trust (other than for a minor traffic violation or similar offenses).

For purposes of the Enable equity awards, “good reason” generally means, without consent of the executive officer, termination of the executive’s employment during the two-year period following a change of control due to one or more of the following conditions: (i) a material reduction in the executive’s authority, duties or responsibilities; (ii) a decrease in base salary by more than ten percent (10%); (iii) a decrease in target bonus opportunity by more than ten percent (10%); (iv) a decrease in target long term incentive compensation opportunity by more than ten percent (10%); (v) a relocation of principal office by more than fifty (50) miles

 

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away from the location of principal office on the date of the change of control; or (vi) any other action or inaction that constitutes a material breach by Enable of any written agreement under which the executive provides services.

Annual Bonuses

The merger agreement provides that where the effective time occurs after July 1, 2021, then Energy Transfer will, as soon as practicable following the effective time, pay annual incentive bonuses for the 2021 calendar year under the Enable Short Term Incentive Plan in an amount equal to the higher of actual performance or target and prorated for the portion of the 2021 calendar year that occurs prior to the effective time. However, where the effective time occurs prior to July 1, 2021, then no prorated annual incentive bonuses will be paid in connection with the merger and employees will be eligible for annual bonuses for 2021 under the terms of Energy Transfer’s applicable short-term incentive plans as if they had been employed with Energy Transfer and its subsidiaries from January 1, 2021. Any prorated bonus under this provision of the merger agreement will offset any prorated bonus under the Enable change of control plan as described below under “Quantification of Payments and Benefits to Enable’s Named Executive Officers.”

Indemnification and Insurance

Pursuant to the terms of the merger agreement, Enable’s directors and executive officers will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies from the surviving corporation. Such indemnification is further described in the section entitled “The Merger Agreement—Indemnification and Insurance.”

Quantification of Payments and Benefits to Enable’s Named Executive Officers

Item 402(t) of Regulation S-K requires disclosure of compensation arrangements or understandings with Enable’s named executive officers that are based on or otherwise related to the merger, whether present, deferred or contingent. The individuals disclosed within this section and referred to as the “named executive officers” are Enable’s principal executive officer, principal financial officer and three most highly compensated executive officers other than the principal executive officer and principal financial officer for Enable’s most recently completed fiscal year.

The table set forth below includes the amount of payments and benefits that each of Enable’s named executive officers could potentially receive that is based on or otherwise relates to the Merger under the merger agreement and any other plan, agreement or arrangement. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules, and in this section such term is used to describe the merger-related compensation payable to Enable named executive officers. These payments include the payments described above and are not in addition to those described in previous sections. The amounts presented in the table below do not necessarily represent what each named executive officer will actually receive, and are calculated based on particular assumptions, as outlined below. These payments are specifically identified in this fashion to allow for a non-binding, advisory vote of Enable’s common unitholders regarding these payments and benefits.

The amounts in the table below were calculated using the following assumptions: (i) the consummation of the Merger occurs on March 2, 2021 (which is the assumed date solely for purposes of this golden parachute compensation disclosure), (ii) the value of accelerated equity awards is determined by multiplying the number of Enable common units subject to each Enable equity award outstanding as of March 2, 2021 by $5.86, (the exchange ratio multiplied by Energy Transfer’s common unit closing price on Friday, February 12, 2021), (iii) the employment of each of the named executive officers will be terminated by Enable on March 2, 2021 in a manner that constitutes a covered termination under Enable’s change of control plan or a qualifying termination under the Enable equity awards (iv) each named executive officer has properly executed any documents and

 

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complied with all requirements necessary in order to receive the benefits noted below (including, for example, execution and non-revocation of a release of claims), and (v) the named executive officer’s base salary and annual target bonus remain unchanged from those in place as of March 2, 2021. Some of the assumptions used in the table below are subject to change and, as a result, the actual amounts to be received by any of the individuals below may differ from the amounts set forth below.

Change of Control Compensation

 

Name

   Cash
($)(1)
     Equity
($)(2)
     Perquisites/
Benefits
($)(3)
     Total
($)
 

Rodney J. Sailor

     4,641,798        6,752,146        53,840        11,447,784  

John P. Laws

     1,739,104        2,452,731        63,405        4,255,240  

Frank J. Antoine Jr.

     666,468        540,391        40,384        1,247,243  

Deanna J. Farmer

     1,398,204        1,291,808        44,291        2,734,303  

Mark C. Schroeder

     1,368,645        1,176,993        63,405        2,609,043  

 

 

(1)

These amounts reflect the cash severance amounts payable under the Enable change of control plan as described under “—Change of Control Payments and Benefits”. Details of the cash payments are shown in the following supplemental table:

 

Name

   Salary
($)(a)
     Accrued
Salary
and Vacation
($)(b)
     Target
Bonus

($)(c)
     Prorated
Bonus
($)(d)
     Total
($)
 

Rodney J. Sailor

     2,221,934        63,596        2,221,934        134,334        4,641,798  

John P. Laws

     933,504        42,191        700,128        63,281        1,739,104  

Frank J. Antoine Jr.

     431,808        16,884        194,314        23,462        666,468  

Deanna J. Farmer

     773,635        34,592        541,545        48,432        1,398,204  

Mark C. Schroeder

     755,997        35,619        529,198        47,831        1,368,645  

 

 

(a)

2.99 times Mr. Sailor’s annualized base salary, two times Messrs. Laws and Schroeder’s and Ms. Farmer’s annualized base salary and 1.5 times Mr. Antoine’s annualized salary in each case, for the year in which their respective terminations occurred, presumed for purposes of these disclosures to be 2021.

(b)

Assumes a qualifying termination of March 2, 2021.

(c)

2.99 times Mr. Sailor’s target bonus, 2 times Messrs. Laws, Schroeder’s and Ms. Farmer’s target bonus, and 1.5 times Mr. Antoine’s target bonus, in each case, for the year in which their respective terminations occurred, presumed for purposes of these disclosures to be 2021.

(d)

Prorated bonus at target for each executive, assuming a qualifying termination of March 2, 2021.

 

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(2)

These amounts reflect the value of time-based phantom units and performance awards, as described under “—Treatment of Equity-Based Awards” and “—Change of Control Payments and Benefits”. The Enable time-based phantom units only vest upon a qualifying termination (and therefore vesting is subject to a “double trigger”). The Enable performance awards only vest upon a qualifying termination (and therefore vesting is subject to a “double trigger”) based on the higher of target or actual performance. Based on performance as of March 2, 2021, these awards would vest at target such that the amounts reflected for performance awards are at target. The awards reflected in this table assume a qualifying termination. The amount is based on a per unit value of $5.86, which value represents the exchange ratio multiplied by the per unit value of Energy Transfer common units on February 12, 2021. Details of the equity award payments are shown in the following supplemental table:

 

Name

   Time-Based Phantom
Units ($)(a)
     Performance-Based
Awards ($)(b)
     Distribution
Equivalent
Rights ($)
     Total
($)
 

Rodney J. Sailor

     2,233,064        4,147,110        371,972        6,752,146  

John P. Laws

     806,969        1,498,636        147,126        2,452,731  

Frank J. Antoine Jr.

     235,197        277,799        27,395        540,391  

Deanna J. Farmer

     425,207        789,653        76,948        1,291,808  

Mark C. Schroeder

     323,033        777,464        76,496        1,176,993  

 

(a)

These amounts reflect the number of time-based phantom units subject to acceleration in connection with a qualifying termination (381,069 for Mr. Sailor, 137,708 for Mr. Laws, 40,136 for Mr. Antoine, 72,561 for Ms. Farmer, and 55,125 for Mr. Schroeder) multiplied by $5.86.

(b)

These amounts reflect the target number of performance-based awards subject to acceleration in connection with a qualifying termination (707,698 for Mr. Sailor, 255,740 for Mr. Laws, 47,406 for Mr. Antoine, 134,753 for Ms. Farmer, and 132,673 for Mr. Schroeder) multiplied by $5.86.

 

(3)

These amounts reflect benefits that are part of severance under the Enable change of control plan described under “Change of Control Payments and Benefits,” which include a lump sum cash payment in the amount of $25,000 for outplacement services and reimbursement of Enable’s portion of annual premiums for medical, dental and vision benefit coverage for the NEO and his or her eligible dependents in effect immediately prior to the NEO’s covered termination multiplied by the change of control multiplier (2.99 for Mr. Sailor, 2.0 for Messrs. Laws and Schroeder and Ms. Farmer and 1.5 for Mr. Antoine).

Securities Ownership of Certain Beneficial Owners and Management

To Enable’s knowledge, the following tables set forth certain information regarding the beneficial ownership of Enable common units and Enable Series A Preferred Units as of the close of business on March 2, 2021 (except as noted in the footnotes below) and with respect to: (1) each person known by Enable to beneficially own 5% or more of the outstanding Enable common units and Enable Series A Preferred Units; (2) each member of the board of directors of Enable General Partner; (3) each named executive officer of Enable; and (4) the members of the board of directors of Enable General Partner and Enable’s current executive officers as a group.

 

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Principal Unitholders

The following table contains information regarding the only persons Enable knows of that beneficially own more than 5% of outstanding Enable common units or Enable Series A Preferred Units as of January 29, 2021. Percentage of class amounts are based on 435,565,067 of Enable common units and 14,520,000 of Enable Series A Preferred Units outstanding as of January 29, 2021.

 

     Common units
beneficially owned
    Series A Preferred Units
beneficially owned
 

Name of beneficial owner

   Number      Percentage     Number      Percentage  

CenterPoint Energy, Inc. (1)

     233,856,623        53.7     14,520,000        100

OGE Energy Corp. (2)

     110,982,805        25.5     —          —    

 

(1)

1111 Louisiana Street, Houston, Texas 77002

(2)

321 North Harvey, P.O. Box 321, Oklahoma City, OK 73101

Unit Ownership of Directors and Executive Officers

The following table sets forth, as of March 2, 2021, the beneficial ownership of Enable common units by:

 

   

each of Enable General Partner’s directors;

 

   

each of Enable General Partner’s named executive officers; and

 

   

all of Enable General Partner’s directors and executive officers as a group.

None of Enable’s directors or executive officers beneficially own any Enable Series A Preferred Units.

 

     Common units
beneficially owned
     Series A Preferred
Units beneficially
owned
 

Name of beneficial owner

   Number      Percentage      Number      Percentage  

Kristie L. Colvin (1)

     —          *        —          —    

Luke R. Corbett (2)

     —          *        —          —    

Robert G. Gwin (1)

     —          *        —          —    

Alan N. Harris (3)

     115,617        *        —          —    

Ronnie K. Irani (3)

     46,110        *        —          —    

Monica Karuturi (1)

     —          *        —          —    

Peter H. Kind (3)

     61,941        *        —          —    

Sarah Stafford (2)

     —          *        —          —    

Sean Trauschke (2)

     21,000        *        —          —    

R.A. Walker (1)

     —          *        —          —    

Charles B. Walworth (2)

     —          *        —          —    

Rodney J. Sailor (3)

     925,824        *        —          —    

John P. Laws (3)

     270,895        *        —          —    

Frank J. Antoine Jr. (5)

     78,807        *        —          —    

Deanna J. Farmer (3)

     204,756        *        —          —    

Mark C. Schroeder (4)

     201,154        *        —          —    

All directors and executive officers as a group
(16 people)

     1,926,104        *        —          —    

 

 

*

Less than 1%

(1)

1111 Louisiana Street, Houston, Texas 77002

(2)

321 North Harvey, P.O. Box 321, Oklahoma City, OK 73101

(3)

499 West Sheridan Ave, Suite 1500, Oklahoma City, Oklahoma 73102

 

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(4)

910 Louisiana Street, Houston, Texas 77002

(5)

5300 Northshore Cove, N. Little Rock, Arkansas, 72118

Merger Expenses, Fees and Costs

All fees, costs and expenses incurred by Energy Transfer and Enable in connection with the Merger will be paid by the party incurring those fees, costs or expenses, whether or not the Merger is completed, except that the fees and expenses incurred in connection with the printing, filing and mailing of this document (including applicable SEC filing fees) and filing fees payable under the HSR Act will be borne equally by Energy Transfer and Enable.

In the event of a termination of the merger agreement under certain circumstances, Enable may be required to pay Energy Transfer a breakup fee of $97.5 million. See “The Merger Agreement—Breakup Fee.”

Expected Timing of the Merger

Energy Transfer and Enable currently expect to complete the Merger in mid-2021, subject to the receipt of required regulatory approvals and the satisfaction or waiver of the other conditions to completion of the Merger. Because many of the conditions to completion of the Merger is beyond the control of Energy Transfer and Enable, the exact timing for completion of the Merger cannot be predicted with any degree of certainty.

No Energy Transfer Unitholder Approval

Energy Transfer unitholders are not required to approve the merger agreement or the issuance of Energy Transfer common units or Energy Transfer Series G Preferred Units in connection with the Merger.

Registration Rights Agreement

In connection with the closing of the Merger, Energy Transfer will enter into a registration rights agreement with the Sponsors, pursuant to which, among other things, the Sponsors will have customary rights to require Energy Transfer to file and maintain the effectiveness of a registration statement with respect to the re-sale of the Energy Transfer common units received by the Sponsors in the Merger, and under certain circumstances, to require Energy Transfer to undertake underwritten offerings of such Energy Transfer common units.

Accounting Treatment of the Merger

In accordance with accounting principles generally accepted in the United States and in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Topic 805-Business Combinations, Energy Transfer will account for the Merger as an acquisition of a business.

Regulatory Approvals

The following is a summary of the material regulatory requirements for completion of the transactions.

Antitrust. Under the HSR Act, and related rules and regulations, certain transactions, including the Merger, may not be completed until notification and report forms have been filed with the Antitrust Division and the FTC, and the applicable waiting period (and any extensions of such waiting period) has expired or been terminated. Energy Transfer and Enable each filed the required notification and report forms under the HSR Act on March 9, 2021.

At any time before or after the effective time, the Antitrust Division, the FTC or foreign antitrust authorities could take action under the U.S. or foreign antitrust laws, including seeking to prevent the Merger, to rescind the

 

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Merger or to conditionally approve the Merger upon the divestiture of assets of Energy Transfer or Enable or behavioral commitments, or subject to other remedies. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin the Merger or permitting completion subject to divestitures, behavioral commitments, or other regulatory concessions or conditions. There can be no assurance that regulatory authorities will not impose conditions on the completion of the Merger or require changes to the terms of the Merger. Private parties may also seek to take legal action under the antitrust laws under some circumstances. There can be no assurance that a challenge to the Merger on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.

General. Pursuant to the terms of the merger agreement, Energy Transfer and Enable have agreed to use their respective reasonable best efforts to take, or cause their subsidiaries to take, all actions necessary to obtain all regulatory approvals required to consummate the Merger. Energy Transfer and Enable have agreed to use their reasonable best efforts to make available to the other party such information as the other party may reasonably request in order to respond to information or document requests by any relevant Governmental Entity; take, or cause to be taken, other actions and do, or cause to be done, other things advisable to consummate and make effective the Merger; and keep each other apprised of the status of matters relating to the completion of the Merger. In connection with the foregoing, each of Energy Transfer and Enable have agreed to:

 

   

promptly furnish the other with copies of substantive notices or other substantive communications or correspondence between the parties, or any of their respective subsidiaries or affiliates, and any third party or governmental entity with respect to the Merger;

 

   

permit counsel for the other party a reasonable opportunity to review and provide comments on any substantive communications, advocacy, white papers, information responses or other submissions to any governmental entity in connection with the Merger, and consider in good faith the view of the other party in connection therewith;

 

   

refrain from participating in any substantive meeting or discussion with any governmental entity in connection with the Merger unless the party consults with the other party in advance and, to the extent not prohibited by such governmental entity, gives the other party the opportunity to attend and participate where appropriate and advisable under the circumstances; and

 

   

use their reasonable best efforts to respond to and comply with, as promptly as reasonably practicable, any request for information or documentary material from any relevant governmental entity, and use reasonable best efforts to assist and cooperate with the other party in doing all things necessary, proper or advisable to consummate and make effective the Merger.

Pursuant to the merger agreement, Energy Transfer has agreed to take any and all steps necessary to eliminate each and every impediment under any antitrust law asserted by any governmental entity or any other party so as to enable the parties to close the Merger no later than the End Date (as defined in “The Merger Agreement—Termination of the Merger Agreement”), including negotiating, committing to and effecting by consent decree, hold separate orders, or otherwise, the sale, divestiture or disposition of Energy Transfer’s and its subsidiaries’ assets, properties or businesses or Enable’s properties or businesses to be acquired, and entering into such other arrangements as are necessary in order to effect the dissolution of any injunction, temporary restraining order or other order in any suit or proceeding, that would otherwise have the effect of preventing the consummation of the Merger no later than the End Date. Energy Transfer has also agreed to defend through litigation on the merits any claim asserted in court by any party in order to avoid entry of, or to have vacated or terminated, any decree, order or judgment (whether temporary, preliminary or permanent) that would prevent the closing from occurring no later than the End Date.

Energy Transfer and its subsidiaries and affiliates are not required, however, to offer, negotiate, commit to, effect, enter into or take any action, agreement, condition, commitment or remedy of any kind, including but not limited to any sale, divestiture or disposition of any assets, properties or businesses of Energy Transfer, Enable or

 

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their respective subsidiaries or affiliates that would require Energy Transfer or its subsidiaries or affiliates to sell, divest, lease, license, transfer, dispose of, or otherwise encumber, impair, limit or restrict Energy Transfer’s or its subsidiaries’ or affiliates’ ownership, control, management or operation of assets or businesses (including any equity or other interests) of Energy Transfer, Enable or any of their respective subsidiaries or affiliates (other than the Sponsors and their respective affiliates) meeting or exceeding a remedy threshold.

Enable and its subsidiaries and affiliates (other than the Sponsors and their respective affiliates) (a) shall not, without the prior written consent of Energy Transfer, and (b) shall, if required in writing by Energy Transfer, offer, negotiate, commit to, effect, enter into or take any action, agreement, condition, commitment or remedy as described above.

Exchange of Units

American Stock Transfer & Trust Company, LLC will serve as the exchange agent for purposes of issuing the LP Merger Consideration.

As soon as reasonably practicable after the effective time (and not later than the fifth business day following the effective time), the exchange agent will mail to each holder of Enable common units, which at the effective time were converted into the right to receive the LP Merger Consideration, (i) a letter of transmittal and (ii) instructions for use in effecting the surrender of the Enable common units in exchange for the LP Merger Consideration and any distributions payable pursuant to Section 2.2(c) of the merger agreement. Such holders will be paid the LP Merger Consideration and any distributions payable pursuant to Section 2.2(c) of the merger agreement to which they are entitled upon the surrender to the exchange agent of such Enable common units and a duly completed and validly executed letter of transmittal and any other documents required by the exchange agent. No interest will be paid or will accrue on any distributions payable pursuant to Section 2.2(c) of the merger agreement.

No distributions with respect to Energy Transfer common units with a record date after the effective time will be paid to the holder of any unsurrendered Enable common units with respect to the Energy Transfer common units represented by such Enable common units until such Enable common units have been surrendered in accordance with the terms of the merger agreement. Subject to applicable laws, following surrender of any such Enable common units, the record holders of such Enable common units will be paid, without interest, (i) promptly after such surrender, the number of whole Energy Transfer common units to which such holder is entitled, payment by check of the amount of distributions with a record date at or after the effective time and a payment date on or prior to the date of such surrender and not theretofore paid with respect to such Energy Transfer common units and (ii) at the appropriate payment date, the amount of distributions with a record date at or after the effective time and a payment date subsequent to the date of such surrender payable with respect to such Energy Transfer common units.

All LP Merger Consideration issued upon the surrender for exchange of Enable common units in accordance with the terms of the merger agreement and any cash paid as distributions pursuant to the Section 2.2(c) of the merger agreement will be deemed to have been issued (or paid) in full satisfaction of all rights pertaining to such Enable common units. After the effective time, the transfer books of Enable will be closed, and there will be no further registration of transfers on the transfer books of Enable common units. If, after the effective time, Enable common units are presented to Enable or the exchange agent for any reason, they will be cancelled and exchanged as provided in the merger agreement. If any Enable common units have been lost, stolen or destroyed, the exchange agent will issue the LP Merger Consideration and any distributions payable pursuant to Section 2.2(c) of the merger agreement to be paid with respect to such Enable common units, upon the making of an affidavit of the fact by the person claiming their Enable common units to be lost, stolen or destroyed and, if required by Energy Transfer, the posting by such person of a bond, in such reasonable amount as Energy Transfer may direct, as indemnity against any claim that many be made against it with respect to such claimed lost stolen or destroyed Enable common units.

 

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Each of Energy Transfer, the Merger Subs and the exchange agent will be entitled to deduct and withhold from the LP Merger Consideration otherwise payable to any holder of Enable common units, such amounts as Energy Transfer, the Merger Subs and the exchange agent are required to deduct and withhold under the Internal Revenue Code of 1986, as amended (the “Code”), or any tax law, with respect to the making of such payment (and to the extent deduction and withholding is required, such deduction and withholding may be taken in Energy Transfer common units). To the extent that amounts are withheld and paid over to the applicable governmental entity, such withheld or deducted amounts will be treated as having been paid to the holder of the Enable common units, in respect of which such deduction and withholding were made. If deduction or withholding is taken in Energy Transfer common units, Energy Transfer, the Merger Subs or the exchange agent, as applicable, shall be treated as having sold such Energy Transfer common units for an amount of cash equal to the fair market value of such Energy Transfer common units at the time of such deemed sale.

One year after the effective time, any portion of the exchange fund that remains undistributed to former Enable common unitholders will be delivered to Energy Transfer and any holders of Enable common units who have not surrendered such units to the exchange agent in compliance with the merger agreement may thereafter look only to Energy Transfer for payment of their claim for the LP Merger Consideration and any distributions payable pursuant to the merger agreement.

Listing of Energy Transfer Common Units Issued in the Transactions; Delisting and Deregistration of Enable Common Units After the Transactions

It is a condition to the completion of the transactions that the Energy Transfer common units deliverable to the unitholders of Enable as contemplated by the merger agreement will have been approved for listing (subject, if applicable, to official notice of issuance) for trading on the NYSE. Upon completion of the Merger, the Enable common units will cease to be listed on the NYSE and will subsequently be deregistered under the Exchange Act.

 

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TRANSACTION-RELATED COMPENSATION

As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, Enable is required to submit a proposal to the Enable common unitholders for a non-binding, advisory vote to approve the payment of certain compensation to Enable’s named executive officers that is based on or otherwise relates to the transaction. This proposal gives the Enable common unitholders the opportunity to consent, on a non-binding, advisory basis, to the compensation that the named executive officers will or may be entitled to receive from Enable that is based on or otherwise relates to the transaction. This compensation is summarized in the table (including the footnotes to the table) under “The Merger—Change of Control Compensation” above.

The Enable General Partner Board encourages you to review carefully the named executive officer transaction-related compensation information disclosed in this consent statement/prospectus.

Enable common unitholders are being asked to approve the following resolution:

“RESOLVED, that the unitholders of Enable hereby approve, on a non-binding, advisory basis, the compensation that will or may become payable to Enable’s named executive officers that is based on or otherwise relates to the transaction, as disclosed pursuant to Item 402(t) of Regulation S-K in the Change of Control Compensation table and the related footnotes and narrative disclosures.”

The written consent for the approval of the Transaction-Related Compensation Proposal is a consent separate and apart from the consent on the approval of the merger agreement. Accordingly, you may consent to the approval of the merger agreement but not consent to the approval of the Transaction-Related Compensation Proposal and vice versa. Because the consent for the Transaction-Related Compensation Proposal is advisory only, it will not be binding on Enable. Therefore, if the merger agreement is approved and the transactions contemplated thereby are completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the non-binding, advisory consent of the Enable common unitholders.

The consent of a majority of the outstanding Enable common units will be required to approve, on a non-binding, advisory basis the Transaction-Related Compensation Proposal. The Sponsors, who collectively own approximately 79% of the outstanding Enable common units, have each entered into support agreements pursuant to which such Sponsors have agreed, subject to the terms and conditions of such support agreements, to execute and return written consents approving each of the matters for which Enable is soliciting consents of the holders of Enable common units in accordance with the merger agreement within 24 hours after the registration statement, of which this consent statement/prospectus forms a part, becomes effective under the Securities Act. The delivery of the written consents by the Sponsors will be sufficient to approve the Transaction-Related Compensation Proposal.

 

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THE MERGER AGREEMENT

The following section summarizes material provisions of the merger agreement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. This summary is subject to, and qualified in its entirety by reference to, the merger agreement, which is attached as Annex A to this consent statement/prospectus and is incorporated by reference herein. The rights and obligations of the parties are governed by the express terms and conditions of the merger agreement and not by this summary or any other information contained in this consent statement/prospectus. You are urged to read the merger agreement carefully and in its entirety before making any decisions regarding the Merger.

The merger agreement summary is included in this consent statement/prospectus only to provide you with information regarding the terms and conditions of the merger agreement, and not to provide any other factual information about Energy Transfer or Enable or their respective subsidiaries, affiliates or businesses. Accordingly, the representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read together with the information provided elsewhere in this consent statement/prospectus and in the documents incorporated by reference herein. See “Where You Can Find More Information.”

The representations, warranties and covenants contained in the merger agreement and described in this document were made only for purposes of the merger agreement and as of specific dates and may be subject to more recent developments, were made solely for the benefit of the other parties to the merger agreement and may be subject to limitations agreed upon by the contracting parties, including being qualified by reference to confidential disclosures which may modify, qualify or create exceptions to the representations and warranties, for the purposes of allocating risk between the parties to the merger agreement instead of establishing these matters as facts, and may apply standards of materiality in a way that is different from what may be viewed as material by you or other investors. The representations and warranties contained in the merger agreement do not survive the effective time of the Merger. Moreover, information concerning the subject matter of the representations, warranties, covenants and agreements may change after the date of the merger agreement.

Energy Transfer and Enable will provide additional disclosure in their filings with the SEC, to the extent that they are aware of the existence of any material facts that are required to be disclosed under federal securities laws and that might otherwise contradict the terms and information contained in the merger agreement and will update such disclosure as required by federal securities laws.

The Merger

The merger agreement by and among Energy Transfer, Merger Sub, GP Merger Sub, Enable, Enable General Partner and, solely for the purposes of certain sections therein, ET GP and CenterPoint, provides for the merger of Merger Sub with and into Enable, with Enable as the surviving entity and becoming a wholly owned subsidiary of Energy Transfer, and the merger of GP Merger Sub with and into Enable General Partner, with Enable General Partner as the surviving entity and becoming a wholly owned subsidiary of Energy Transfer. The Enable and Enable General Partner organizational documents immediately prior to the effective time of the Merger will be the governing documents of Enable and Enable General Partner after the Merger unless and until such are amended following the Merger.

Pre-Closing Transactions

Prior to the effective time, and as a condition to the closing of the Merger, Energy Transfer will undertake certain internal reorganization transactions and cause ETO to merge with and into a newly formed, wholly owned Energy Transfer merger subsidiary. As a result of such merger, each issued and outstanding preferred unit of ETO will convert into the right to receive a newly issued preferred unit in Energy Transfer, having the same preferences, rights, powers and duties as the existing ETO preferred unit (other than any non-substantive

 

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differences to reflect the issuance of such securities by Energy Transfer, as opposed to ETO) (such transactions collectively, the “Pre-Closing Transactions”). Promptly following the closing of the Pre-Closing Transactions, Energy Transfer intends to undertake additional reorganizational steps in order to convey substantially all of ETO’s assets and liabilities to Energy Transfer.

Merger Closing and Effective Time

The closing of the Merger will be on the second business day after the satisfaction or waiver of the conditions to closing (other than conditions that by their nature are to be satisfied at closing), which are described in the section titled “—Conditions to the Merger” unless Energy Transfer and Enable agree in writing to a different date. The Merger will be effective at the time the certificates of merger are filed with the Secretary of State of the State of Delaware by each of Enable General Partner and Enable, or at such later time as the parties agree upon and is specified in the certificates of merger in accordance with the Delaware Limited Liability Company Act (the “Delaware LLC Act”) and the Delaware LP Act.

Directors and Officers

Certain directors and officers of Energy Transfer will be the initial directors and officers of Enable General Partner following the effective time and will hold their respective positions until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

LP Merger Consideration

At the effective time, each Enable common unit outstanding immediately prior to the effective time (other than units held directly by Energy Transfer, Merger Sub or GP Merger Sub) will be cancelled and converted into the right to receive 0.8595 of an Energy Transfer common unit. No fractional Energy Transfer common units will be issued in the LP Merger. All fractional Energy Transfer common units that a holder of Enable common units would otherwise be entitled to receive as LP Merger Consideration will be aggregated and then, if a fractional Energy Transfer common unit results from that aggregation, be rounded up to the nearest whole Energy Transfer common unit.

GP Merger Consideration

At the effective time, all Enable General Partner Interests outstanding immediately prior to the effective time will be converted into the right to receive $10,000,000 in the aggregate.

Preferred Contributions

Following the Pre-Closing Transactions and immediately prior to the effective time, (i) CenterPoint will contribute, assign, transfer, convey and deliver to Energy Transfer, and Energy Transfer will acquire, assume, accept and receive from CenterPoint, all of CenterPoint’s right, title and interest in each Enable Series A Preferred Unit issued and outstanding at such time in exchange for 0.0265 of an Energy Transfer Series G Preferred Unit, and (ii) Energy Transfer will subsequently contribute, assign, transfer, convey and deliver to a subsidiary of Energy Transfer that is treated as a corporation for U.S. federal income tax purposes all or a portion of such Enable Series A Preferred Units.

Conditions to the Merger

Conditions to Each Party’s Obligations

Each party’s obligation to complete the Merger is subject to the fulfillment or waiver of the following conditions at or prior to the effective time:

 

   

the merger agreement must have been approved by the holders of a majority of the outstanding Enable common units voting as a single class entitled to vote thereon;

 

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the absence of any, injunction, law, order or decree by any court or other governmental entity of competent jurisdiction which prohibits or prevents the consummation of the Merger;

 

   

the expiration or termination of any waiting period under the HSR Act must have occurred;

 

   

the registration statement on Form S-4 (of which this consent statement/prospectus forms a part) must be effective and no stop order suspending the effectiveness of the registration statement shall have been issued and no proceeding for such purpose shall have been initiated or threatened by the SEC;

 

   

the receipt by Energy Transfer of an opinion of Latham that Energy Transfer meets the 90% qualifying income test and that the combined entity will meet the 90% qualifying income test; and

 

   

the receipt by Enable of an opinion of Vinson & Elkins that Enable meets the 90% qualifying income test.

Conditions to Enable’s Obligations

The obligations of Enable and Enable General Partner to effect the Merger is further subject to the fulfillment, or waiver by both Enable and Enable General Partner, at or prior to the effective time of the following conditions:

 

   

the representations and warranties of Energy Transfer, Merger Sub and GP Merger Sub in the merger agreement must be true and correct as of the date of the merger agreement and as of the closing date as though made at the closing date (without giving effect to any materiality, material adverse effect and similar qualifiers) except where the failure to be true and correct would not, in the aggregate, have a material adverse effect on Energy Transfer, Merger Sub or GP Merger Sub, provided that the representations and warranties that speak only as of a particular date or period need only be true and correct as of such date or period, except:

 

   

the representations and warranties of Energy Transfer, Merger Sub and GP Merger Sub regarding the capitalization of Energy Transfer and its subsidiaries must be true and correct both as of the date of the merger agreement and as of the closing date as though made at the closing date, except for immaterial inaccuracies; and

 

   

the representations and warranties of Energy Transfer, Merger Sub and GP Merger Sub regarding the absence of a material adverse effect at Energy Transfer since September 30, 2020 must be true and correct as of the date of the merger agreement and as of the closing date;

 

   

Energy Transfer must have performed, in all material respects, all of its obligations and complied with all covenants required by the merger agreement to be performed or complied with prior to the effective time;

 

   

Energy Transfer must have delivered to Enable a certificate, certifying to the effect that the two foregoing conditions to closing have been satisfied;

 

   

the Energy Transfer common units to be issued in the Merger must have been approved for listing on the NYSE, subject to official notice of issuance;

 

   

Enable and Enable General Partner must have received an opinion of Vinson & Elkins that for U.S. federal income tax purposes (a) Enable should not recognize any income or gain as a result of the Merger, and (b) no gain or loss should be recognized by holders of Enable common units (in their capacity as holders of Enable common units) prior to the Merger as a result of the Merger (other than any gain resulting from (A) any decrease in partnership liabilities pursuant to Section 752 of the Code, (B) the deemed sale of Energy Transfer common units pursuant to the withholding provisions of the merger agreement, (C) a disguised sale attributable to contributions of cash or other property to Enable after the signing date of the merger agreement and prior to the effective time, and (D) the application of Section 897 of the Code and the Treasury Regulations thereunder to any non-U.S. holder of Enable

 

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common units that has beneficially owned more than five percent of the total Enable common units at any time in the five-year period ending on the closing date of the Merger) (see “Material U.S. Federal Income Tax Consequences of the Merger”);

 

   

the Pre-Closing Transactions must have been completed;

 

   

the Preferred Contributions must have been completed; and

 

   

Energy Transfer must have delivered a duly executed counterpart to the registration rights agreement, which is attached as Exhibit A to the merger agreement.

Conditions to Energy Transfer’s Obligations

The obligation of Energy Transfer to effect the Merger is further subject to the fulfillment, or waiver by Energy Transfer, at or prior to the effective time, of the following conditions:

 

   

the representations and warranties of Enable and Enable General Partner in the merger agreement must be true and correct as of the date of the merger agreement and as of the closing date as though made at the closing date (without giving effect to any materiality, material adverse effect and similar qualifiers) except where the failure to be true and correct would not, in the aggregate, have a material adverse effect on Enable, provided that the representations and warranties that speak only as of a particular date or period need only be true and correct as of such date or period, except:

 

   

the representations and warranties of Enable and Enable General Partner regarding the capitalization of Enable and Enable General Partner must be true and correct except for immaterial inaccuracies both as of the date of the merger agreement and as of the closing date as though made at the closing date; and

 

   

the representations and warranties of Enable and Enable General Partner regarding the absence of a material adverse effect at Enable since September 30, 2020 must be true and correct as of the date of the merger agreement and as of the closing date;

 

   

Enable must have performed, in all material respects, all of its obligations and complied with all covenants required by the merger agreement to be performed or complied with prior to the effective time;

 

   

Enable must have delivered to Energy Transfer a certificate, certifying to the effect that the two foregoing conditions to closing have been satisfied; and

 

   

Energy Transfer must have received an opinion from Latham to the effect that for U.S. federal income tax purposes (a) Energy Transfer should not recognize any income or gain as a result of the Merger (other than any gain resulting from any decrease in partnership liabilities pursuant to Section 752 of the Code) and (b) no gain or loss should be recognized by holders of Energy Transfer common units immediately prior to the Merger as a result of the Merger (other than any gain resulting from any decrease in partnership liabilities pursuant to Section 752 of the Code).

No Dissenters’ or Appraisal Rights

No dissenters’ or appraisal rights are available with respect to the Merger or the other transactions contemplated by the merger agreement.

Representations and Warranties

The merger agreement contains general representations and warranties made by each of Energy Transfer, Merger Sub and GP Merger Sub, on the one hand, and Enable and Enable General Partner on the other, to the other parties, regarding aspects of their respective businesses, financial condition and structure, as well as other

 

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facts pertinent to the Merger. These representations and warranties are in many respects subject to materiality, knowledge and other similar qualifications contained in the merger agreement and expire at the effective time. The representations and warranties of each of Energy Transfer, Merger Sub and GP Merger Sub, on the one hand, and Enable and Enable General Partner on the other, were made solely for the benefit of the other parties. In addition, those representations and warranties were intended not as statements of actual fact, but rather as a way of allocating risk between the parties, were modified by the disclosure schedules attached to the merger agreement, were subject to the materiality standard described in the merger agreement (which may differ from what may be viewed as material by you) and were made only as of the date of the merger agreement and the closing date or another date as is specified in the merger agreement. Information concerning the subject matter of these representations or warranties may have changed since the date of the merger agreement. Energy Transfer and Enable will provide additional disclosure in their SEC reports to the extent that they are aware of the existence of any material facts that are required to be disclosed under federal securities laws and that might otherwise contradict the terms and information contained in the merger agreement and will update such disclosure as required by federal securities laws.

Enable and Enable General Partner

Enable and Enable General Partner made a number of representations and warranties to Energy Transfer, Merger Sub and GP Merger Sub, including representations and warranties related to the following matters:

 

   

the organization, qualification to do business and good standing of Enable, Enable General Partner and their respective subsidiaries;

 

   

the capital structure of Enable, Enable General Partner and their respective subsidiaries;

 

   

the authority of Enable and Enable General Partner to enter into the merger agreement and to consummate the transactions contemplated thereby, and the governmental and regulatory approvals necessary, to enter into the merger agreement and consummate the transactions contemplated thereby, and the absence of any loss, or creation of any lien, or violation of the organizational documents of Enable or Enable General Partner and their respective subsidiaries or any applicable laws resulting from the consummation of the transactions contemplated by the merger agreement;

 

   

Enable’s SEC filings and the financial statements contained therein;

 

   

Enable’s internal controls over financial reporting and disclosure controls and procedures;

 

   

the absence of undisclosed liabilities for Enable and its subsidiaries;

 

   

compliance with laws and permits;

 

   

environmental laws and regulations;

 

   

employee benefit plans and other employee benefits matters;

 

   

the conduct of Enable and its subsidiaries’ business and the absence of certain adverse changes or events since September 30, 2020;

 

   

litigation, investigations, claims or judgments against Enable or its subsidiaries;

 

   

the accuracy of the information supplied by Enable and its subsidiaries for this consent statement/prospectus and the registration statement of which it is a part;

 

   

certain regulatory matters related to Enable and its subsidiaries;

 

   

Enable, its subsidiaries and Enable General Partner’s taxes, tax returns and other tax matters;

 

   

certain employment and labor matters related to Enable, Enable General Partner and their subsidiaries;

 

   

intellectual property matters;

 

   

owned and leased real property and rights-of-way;

 

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insurance policies;

 

   

the receipt by the Enable Conflicts Committee of an opinion from Intrepid related to the fairness of the merger consideration to be received by the unaffiliated holders of Enable common units;

 

   

Enable, Enable General Partner and their respective subsidiaries’ material contracts;

 

   

investment bankers, brokers or finder fees in connection with the consummation of the Merger;

 

   

the inapplicability of any state takeover laws to the Merger or other transactions contemplated by the merger agreement;

 

   

the absence of any violations of applicable export control and economic sanctions laws by Enable, Enable General Partner or any of their respective subsidiaries; and

 

   

the absence of any additional Energy Transfer, Merger Sub or GP Merger Sub representations or warranties beyond those in the merger agreement.

Energy Transfer, Merger Sub and GP Merger Sub

Energy Transfer, Merger Sub and GP Merger Sub each also made a number of representations and warranties to Enable and Enable General Partner, including representations and warranties related to the following matters:

 

   

organization, qualification to do business and good standing of Energy Transfer, Merger Sub, GP Merger Sub and their subsidiaries;

 

   

the equity interests of Energy Transfer and capital structure of Merger Sub and GP Merger Sub;

 

   

the authority of Energy Transfer, Merger Sub and GP Merger Sub, and governmental and regulatory approvals necessary, to enter into the merger agreement and consummate the transactions contemplated thereby, and the absence of any loss, or creation of any lien, or violation of the organizational documents of Energy Transfer and its subsidiaries, or any applicable laws resulting from the consummation of the transactions contemplated by the merger agreement;

 

   

Energy Transfer and its subsidiaries’ SEC filings and the financial statements contained therein;

 

   

Energy Transfer’s internal controls over financial reporting and disclosure controls and procedures;

 

   

the absence of undisclosed liabilities for Energy Transfer and its subsidiaries;

 

   

compliance with laws and permits;

 

   

environmental laws and regulations;

 

   

employee benefit plans and other employee benefits matters;

 

   

the conduct of Energy Transfer and its subsidiaries’ business and the absence of certain adverse changes or events since September 30, 2020;

 

   

litigation, investigations, claims or judgments against Energy Transfer or its subsidiaries;

 

   

the accuracy of the information supplied by Energy Transfer or its subsidiaries for this consent statement/prospectus and the registration statement of which it is a part;

 

   

certain regulatory matters related to Energy Transfer and its subsidiaries;

 

   

Energy Transfer and its subsidiaries’ taxes and tax returns and other tax matters;

 

   

certain employment and labor matters related to Energy Transfer and its subsidiaries;

 

   

owned and leased real property and rights-of-way;

 

   

Energy Transfer and its subsidiaries’ insurance policies;

 

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Energy Transfer, Merger Sub, GP Merger Sub and their subsidiaries’ material contracts;

 

   

investment bankers, brokers or finder fees in connection with the consummation of the LP Merger;

 

   

the inapplicability of any state takeover laws to the Merger or other transactions contemplated by the merger agreement;

 

   

the lack of beneficial ownership of Enable common units by Energy Transfer or any affiliate;

 

   

the absence of any violations of applicable export control and economic sanctions laws by Energy Transfer and its subsidiaries;

 

   

Energy Transfer’s available funds to consummate the GP Merger and the other transactions contemplated by the merger agreement; and

 

   

the absence of any additional representations or warranties by Enable and Enable General Partner beyond those in the merger agreement.

Definition of Material Adverse Effect

Many of the representations and warranties of Energy Transfer, Merger Sub, GP Merger Sub, Enable and Enable General Partner are qualified by a material adverse effect standard. For purposes of the merger agreement, “material adverse effect,” with respect to either Energy Transfer or Enable, is defined to mean an event, change, effect, development or occurrence that has had, or is reasonably likely to have, a material adverse effect on the business, financial condition or continuing results of operations of either (i) Energy Transfer and its subsidiaries, taken as a whole or (ii) Enable and its subsidiaries, taken as a whole, as the case may be, in either case, other than any event, change, effect, development or occurrence:

 

   

disclosed in any of the applicable party’s SEC filings prior to the date of the merger agreement (excluding any disclosure set forth in any risk factor section, any section relating to forward looking statements or any disclosure related to litigation or regulatory matters that caveats the uncertainty or likelihood of any particular outcome or the general unpredictability of an outcome to such litigation or regulatory matter) or as disclosed on the applicable party’s disclosure schedule to the merger agreement;

 

   

generally affecting the economy, the financial or securities markets, or political, legislative or regulatory conditions, in each case, in the United States or elsewhere in the world, including any changes in supply, demand, currency exchange rates, interest rates, tariff policy, monetary policy or inflation (so long as it does not disproportionately affect the applicable party relative to similarly situated companies); or

 

   

resulting from or arising out of:

 

  (A)

changes or developments in the industries in which the applicable party or its subsidiaries conduct their business;

 

  (B)

changes or developments in prices for oil, natural gas or other commodities or for the applicable party’s raw material inputs and end products, including general market prices and regulatory changes generally affecting the industries in which the applicable party or any of its subsidiaries operate;

 

  (C)

the negotiation, execution, announcement, pendency or the existence of, or compliance with the merger agreement or the transactions contemplated thereby (including its impact on the relationships, contractual or otherwise, of the applicable party and its subsidiaries with employees, labor unions, customers, suppliers or partners, and including any lawsuit, action or other proceeding with respect to the Merger or the other transactions contemplated by the merger agreement);

 

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  (D)

taking of any action required by the merger agreement or the support agreements or at the request of (i) Energy Transfer, Merger Sub or GP Merger Sub, in the case of Enable, or (ii) Enable, in the case of Energy Transfer;

 

  (E)

adoption, implementation, promulgation, repeal, modification, reinterpretation or proposal of any rule, regulation, ordinance, order, protocol or any other law of or by governmental entity, or market administrator;

 

  (F)

changes in GAAP or accounting standards or interpretations thereof;

 

  (G)

earthquakes, any weather-related or other force majeure event, hurricanes, tsunamis, tornadoes, floods, mudslides, wildfires, pandemics (including the existence, response to and impact of the COVID-19 pandemic) or outbreak or other natural disasters, or hostilities or acts of war or terrorism, sabotage, civil disobedience, cyber-attack or any escalation or general worsening of the foregoing;

 

  (H)

failure by the applicable party to meet any internal or external projections, forecasts, estimates, milestones or budgets or financial or operating predictions of revenues, earnings or other financial or operating metrics for any period (although this exclusion does not affect a determination that the underlying event, change, effect, development or occurrence resulted in, or contributed to, a material adverse effect); or

 

  (I)

any changes in the unit price or trading volume of the equity interests of Energy Transfer or Enable, as the case may be, or in their respective credit ratings (although this exclusion does not affect a determination that the underlying event, change, effect, development or occurrence resulted in, or contributed to, a material adverse effect);

except, in each case with respect to subclauses (A), (B) and (E) through (G) above, to the extent disproportionately affecting Energy Transfer or Enable, as the case may be, and its subsidiaries, taken as a whole, relative to other similarly situated companies in the industries in which such party and its subsidiaries operate.

Conduct of Business Pending the Merger

Enable

Enable has agreed that, until the earlier of the termination of the merger agreement in accordance with its terms or the effective time, except (i) as required by law or any applicable stock exchange or regulatory authority, (ii) as may be consented to in writing by Energy Transfer (which consent will not be unreasonably withheld, delayed or conditioned), (iii) as may be contemplated or required by the merger agreement (including the Pre-Closing Transactions and the Preferred Contributions) or (iv) as set forth on Enable’s disclosure schedule to the merger agreement, Enable will and will cause its subsidiaries to use commercially reasonable efforts to:

 

   

conduct their businesses in the ordinary course; and

 

   

preserve substantially intact their present lines of business and preserve its relationships with significant customers and suppliers.

Enable and Enable General Partner have further agreed that, on behalf of themselves and their subsidiaries, until the earlier of the termination of the merger agreement or the effective time, except (i) as required by law or any applicable stock exchange or regulatory authority, (ii) as may be consented to by Energy Transfer (which consent will not be unreasonably withheld, delayed or conditioned), (iii) as may be contemplated or required by the merger agreement or (iv) as set forth on Enable’s disclosure schedule, each of Enable and Enable General Partner:

 

   

will not adopt any amendment to its organizational documents, and will not permit its subsidiaries to do so;

 

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will not permit its subsidiaries to issue, sell, pledge, dispose of, encumber, split, combine or reclassify or authorize the issuance, sale, pledge, disposition, encumbrance, split, combination or reclassification of any securities of Enable, Enable General Partner or any of their subsidiaries or any securities convertible into equity interests of thereof, except (1) issuances of Enable common units in respect of vesting, exercise or settlement of any Enable equity awards outstanding as of the date of the merger agreement or as may be granted in accordance with the merger agreement or (2) for transactions among Enable and its subsidiaries or among Enable’s subsidiaries which remain subsidiaries after the consummation of such transaction;

 

   

except in the ordinary course of business, will not, and not permit its subsidiaries to, authorize or pay any dividend or make any distribution with respect to outstanding equity interests, except (1) by a subsidiary to Enable or its subsidiaries in the ordinary course, (2) regular quarterly cash distributions with customary record and payment dates on the Enable Series A Preferred Units not in excess of the quarterly cash distribution amount set forth in the Enable Partnership Agreement, (3) those required under the organizational documents of Enable’s non-wholly owned subsidiaries in effect on the date of the merger agreement and (4) regular quarterly cash distributions with customary record and payment dates on Enable common units, not in excess of $0.16525 per Enable common unit per quarter;

 

   

will not, and will not permit its material subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, or any reorganization, or enter into a letter of intent or agreement in principle with respect thereto, other than the LP Merger, or reorganizations solely among Enable and its subsidiaries or among its subsidiaries or in connection with an acquisition not prohibited by the merger agreement;

 

   

will not, and will not permit its subsidiaries to, make any acquisition or make any loans, advances or capital contributions to, or investments in excess of $25 million in the aggregate, except (1) as set forth in the Enable’s disclosure schedules, (2) among Enable and its wholly owned subsidiaries or among its wholly owned subsidiaries or (3) capital contributions made in response to any emergency, whether caused by war, terrorism, weather events, public health events (including pandemics and COVID-19), outages or otherwise; that in each case, would not be expected to prevent, materially impede or materially delay the LP Merger;

 

   

will not, and will not permit its subsidiaries to, sell, lease, license, transfer, exchange or swap or dispose of any properties or non-cash assets with a value of more than $25 million in the aggregate, except (1) of obsolete or worthless equipment, (2) of inventory, commodities and produced hydrocarbons, crude oil and refined products in the ordinary course of business or (3) among Enable and its wholly owned subsidiaries or among its wholly owned subsidiaries;

 

   

will not, and will not permit its subsidiaries to, authorize any capital expenditures in excess of $25 million, except (1) as set forth in Enable’s disclosure schedule or (2) those made in response to any emergency, whether caused by war, terrorism, weather events, public health events (including pandemics and COVID-19), outages or otherwise;

 

   

except as required by law or any Enable benefit plan as in effect on the date of the merger agreement, will not, and will not permit its subsidiaries to, (1) increase the compensation or benefits payable or provided to Enable’s or Enable General Partner’s directors, officers or employees, other than (A) increases set forth in Enable’s disclosure schedule, and (B) if (y) the closing occurs before July 1, 2021, customary increases in the ordinary course of business consistent with past practice for non- officer level employees, not to exceed $450,000 in the aggregate, and (z) the closing occurs after July 1, 2021, customary increases consistent with past practice for non-officer level employees, not to exceed 2% in the aggregate of base compensation paid to non-officer level employees in 2020, (2) enter into or amend any employment, change of control, severance or retention agreement with any director, officer or employee, (3) establish, adopt, enter into, terminate or amend any Enable benefit plan, (4) enter into, terminate or amend any collective bargaining agreement, (5) make any change in Enable or its material subsidiaries’ key management structure, including the hiring of additional officers or the termination of existing officers (other than for cause), (6) grant any Enable equity

 

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awards other than set forth in Enable’s disclosure schedule, or (7) enter into or make any loans or advances to any of its officers, directors, employees, agents, or consultants (other than those for travel or reasonable business expenses or such loans or advances otherwise made in the ordinary course of business);

 

   

will not, and will not permit its subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or law;

 

   

will not, and will not permit its subsidiaries to acquire any shares of the capital stock of any of them or any rights, warrants or options to acquire any such shares, except for transactions among Enable and its subsidiaries or among its subsidiaries;

 

   

will not, and will not permit its subsidiaries to become liable for any indebtedness for borrowed money or any guarantee of such indebtedness, except (1) among Enable and its wholly owned subsidiaries or among its wholly owned subsidiaries, (2) incurred to replace, renew, extend, refinance or refund any existing indebtedness on substantially the same or more favorable terms, (3) for any guarantees by Enable of indebtedness of its subsidiaries or guarantees by its subsidiaries of indebtedness of Enable or any Enable subsidiary, (4) incurred or made in response to any emergency, whether caused by war, terrorism, weather events, public health events (including pandemics and COVID-19), outages or otherwise and (5) incurred pursuant to Enable’s revolving credit agreement and/or Enable’s commercial paper program, not to exceed $125 million in the aggregate; in each case, provided that such indebtedness does not impose or result in any additional restrictions or limitations that would be material to Enable and its subsidiaries, or, following the closing of the Merger, Energy Transfer and its subsidiaries, other than any obligation to make payments on such indebtedness and other than any restrictions or limitations to which Enable or any subsidiary is subject as of the date of the merger agreement;

 

   

other than in the ordinary course of business, will not, and will not permit its subsidiaries to, modify, amend or terminate, or waive any rights under any Enable material contract or under any Enable permit, in a manner or with an effect that is materially adverse to Enable and its subsidiaries as a whole;

 

   

other than agreements, arrangements or contracts made in the ordinary course of business, on terms no less favorable to Enable and its subsidiaries than those generally being proved to or available from unrelated third parties, and in each case, involving aggregate payments of less than $50 million, will not and will not permit its subsidiaries to, enter into any agreement, arrangement, contract or other transaction with any affiliate, including CenterPoint, OGE Energy or any of their respective affiliates or subsidiaries;

 

   

will not, and will not permit its subsidiaries to, waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or compromises (1) equal to or lesser than the amounts reserved for it on the balance sheet as of September 30, 2020 or (2) that do not exceed $25 million in the aggregate;

 

   

will not, and will not permit its subsidiaries to (except in the ordinary course of business) (1) change its fiscal year or any material method of tax accounting, (2) make, change or revoke any material tax election, (3) enter into any closing agreement, with respect to, or otherwise settle or compromise, any material tax liability, (4) file any material amended tax return, or (5) surrender a claim for a material refund of taxes;

 

   

except as otherwise permitted by the merger agreement or for transactions between Enable and its subsidiaries or among its subsidiaries, will not, and will not permit its subsidiaries, to prepay, redeem, repurchase, defease, cancel or otherwise acquire any indebtedness or guarantees thereof of Enable or any subsidiary, other than at (1) stated maturity, (2) prepayment and repayment of existing indebtedness in connection with any replacement, renewal, extension, refinancing or refund thereof in

 

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accordance with the terms of the merger agreement, (3) prepayment and repayment of revolving loans (including Enable’s commercial paper program) in the ordinary course of business, and (4) any required amortization payments and mandatory prepayments, in each case in accordance with the terms of the instrument governing such indebtedness as in effect on the date of the merger agreement;

 

   

will not, and will not permit any of its subsidiaries to, engage in any activity or conduct its business in a manner that would cause less than 90% of the gross income of Enable for any calendar quarter since its formation and prior to the effective time to be treated as “qualifying income” within the meaning of Section 7704(d) of the Code; and

 

   

will not, and will not permit any of its subsidiaries to, agree to take any of the foregoing actions.

Notwithstanding the foregoing, from the date of the merger agreement until the earlier of the effective time or the termination date, Enable and its subsidiaries may take or refrain from taking any COVID-19 action so long as (i) prior thereto, Enable consults with, and considers in good faith, Energy Transfer’s suggestions and/or feedback, or (ii) such COVID-19 action would not reasonably be expected to materially impact Enable’s ability to operate in the ordinary course of business or materially delay or impede the consummation of the LP Merger.

Energy Transfer

Energy Transfer has agreed that, until the earlier of the termination of the merger agreement or the effective time, except (i) as required by law or any applicable stock exchange or regulatory authority, (ii) as may be consented to in writing by Enable (which consent will not be unreasonably withheld, delayed or conditioned), (iii) as may be contemplated or required by the merger agreement (including the Pre-Closing Transactions and the Preferred Contributions), or (iv) as set forth on Energy Transfer’s disclosure schedule to the merger agreement, Energy Transfer will and will cause its subsidiaries to use commercial reasonable efforts to:

 

   

conduct its businesses in the ordinary course; and

 

   

preserve substantially intact their present lines of business and preserve relationships with significant customers and suppliers.

Energy Transfer has further agreed that, until the earlier of the termination of the merger agreement or the effective time, except (i) as required by law or any applicable stock exchange or regulatory authority, (ii) as may be consented to by Enable (which consent will not be unreasonably withheld, delayed or conditioned), (iii) as may be contemplated or required by the merger agreement (including the Pre-Closing Transactions and the Preferred Contributions), or (iv) as set forth on Energy Transfer’s disclosure schedule to the merger agreement, Energy Transfer:

 

   

will not adopt any material amendment to Energy Transfer’s organizational documents or the organizational documents and governance arrangement of ET GP;

 

   

will not, and will not permit any of its subsidiaries to, issue, sell, pledge, dispose of or encumber, split, combine or reclassify or authorize the issuance, sale, pledge, disposition or encumbrance, split, combination or reclassification of any equity interest or other ownership interest in Energy Transfer or any securities convertible into or exchangeable for any such equity interest or other ownership interest, or any rights, warrants or options to acquire any such equity interest, ownership interest or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing Energy Transfer benefit plans, other than (1) as set forth in Energy Transfer’s disclosure schedule to the merger agreement, (2) issuances of common units in respect of any vesting or exercise of Energy Transfer equity awards and settlement of any Energy Transfer equity awards outstanding on the date of the merger agreement or as may be granted after the date of the merger agreement as permitted in the merger agreement, (3) the sale of Energy Transfer common units pursuant to the exercise of options if necessary to effectuate an option direction upon exercise or for withholding of taxes, (4) the grant of equity compensation awards under the Energy Transfer equity

 

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plans, or (5) for transactions among Energy Transfer and its subsidiaries or among Energy Transfer’s subsidiaries;

 

   

except in the ordinary course of business, will not, and will not permit its subsidiaries that are not wholly owned by Energy Transfer or wholly owned subsidiaries of such subsidiaries to, authorize or pay any dividends on or make any distribution with respect to its outstanding equity securities, except (1) dividends or distributions by any subsidiaries only to Energy Transfer or any subsidiary of Energy Transfer in the ordinary course of business, (2) dividends or distributions required under the applicable organizational documents of such entity in effect on the date of the merger agreement and (3) regular quarterly cash distributions with respect to the Energy Transfer common units and the Energy Transfer Operating, L.P. preferred units as set forth in Energy Transfer’s disclosure schedule to the merger agreement;

 

   

will not, and will not permit any of its material subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, other than the LP Merger and other than any merger, consolidation, restructuring or reorganization solely among Energy Transfer and its subsidiaries or among Energy Transfer’s subsidiaries or in connection with an acquisition that would not materially delay or impede the consummation of the LP Merger;

 

   

will not permit any of Energy Transfer’s subsidiaries to, make any acquisition or any other person or business or make loans, advances or capital contributions to, or investments in, any other person that would reasonably be expected to prevent, materially impede or materially delay the consummation of the LP Merger;

 

   

will not acquire any equity securities of Energy Transfer or any rights, warrants or options to acquire any such equity securities, except for transactions set forth in Energy Transfer’s disclosure schedule to the merger agreement or among Energy Transfer and its subsidiaries or among Energy Transfer’s subsidiaries;

 

   

will not, and will not permit any of its subsidiaries to (except in the ordinary course of business), (1) change its fiscal year or any material method of tax accounting, (2) make, change or revoke any material tax election, (3) enter into any closing agreement with respect to, or otherwise settle or compromise, any material liability for taxes, (4) file any material amended tax return or (5) surrender a claim for a material refund of taxes;

 

   

will not, and will not permit any of its subsidiaries to, engage in any activity or conduct its business in a manner that would cause less than 90% of the gross income of Energy Transfer for any calendar quarter since its formation and prior to the effective time to be treated as “qualifying income” within the meaning of Section 7704(d) of the Code; and

 

   

will not, and will not permit any of its subsidiaries to, agree to take any of the foregoing actions.

Notwithstanding the foregoing, from the date of the merger agreement until the earlier of the effective time or the termination date, Energy Transfer and its subsidiaries may take or refrain from taking any COVID-19 action so long as (i) prior thereto, Energy Transfer consults with, and considers in good faith, Enable’s suggestions and/or feedback, or (ii) such COVID-19 action would not reasonably be expected to materially impact Energy Transfer’s ability to operate in the ordinary course of business or materially delay or impede the consummation of the LP Merger.

Mutual Access

Until the effective time or the earlier termination of the merger agreement, Energy Transfer and Enable agreed to afford the other party and its representatives, reasonable access during normal business hours to its and its subsidiaries’ personnel and properties, contracts, commitments, books and records and any reports, schedules

 

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or documents filed or received by it pursuant to law, together with such other accounting, financing, operating, environmental and other information as a party may reasonably request. Notwithstanding the obligations described above, neither Enable nor Energy Transfer is required to afford such access to the extent it would unreasonably disrupt the operations of such party or its subsidiaries, would cause a violation of any agreement to which it or its subsidiaries is party, would cause a risk of a loss of privilege to such party or its subsidiaries or would violate the law or would interfere with the ability of such party or any of its subsidiaries’ ability to comply with any COVID-19 measures. Neither Enable or Energy Transfer or any of their respective representatives are permitted to perform onsite procedures (including an onsite study or any Phase II environmental site assessment or other invasive or subsurface testing, sampling, monitoring or analysis) on the property of the other party or its subsidiaries without prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Enable and Energy Transfer are required to comply, and cause their respective subsidiaries and representatives to comply, with their respective obligations under the confidentiality agreement between Enable and Energy Transfer.

Non-Solicitation by Enable

Termination of Discussions

Enable and Enable General Partner agreed to, and agreed to cause their respective subsidiaries to, and to use their reasonable best efforts to cause their representatives to, immediately following the execution of the merger agreement, cease and terminate any discussions related to any acquisition proposal (as defined below), and to cause their subsidiaries and their respective directors, officers and employees, and to use reasonable best efforts to cause its representatives, to cease and terminate such discussions.

Non-Solicitation Obligations

Subject to certain exceptions summarized below, from the date of the merger agreement until the earlier of the effective time or the termination of the merger agreement, Enable and Enable General Partner have agreed that they will not, and they will cause their subsidiaries, and their respective officers, directors, employees and representatives not to, directly or indirectly:

 

   

solicit, initiate, knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal;

 

   

furnish any non-public information regarding Enable or any of its subsidiaries, or afford access to the business, properties, books or records of Enable or any of its subsidiaries, in connection with or in response to an acquisition proposal or any inquiries regarding an acquisition proposal;

 

   

engage or participate in any discussions or negotiations with any person (other than Energy Transfer, Merger Sub, GP Merger Sub or their respective directors, officers, employees, affiliates or representatives) with respect to an acquisition proposal;

 

   

enter into any letter of intent, term sheet, memorandum of understanding, merger agreement, acquisition agreement, exchange agreement or any other agreement (whether binding or not) with respect to any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal or requiring Enable to abandon, terminate or fail to consummate the Merger or any other transaction contemplated by the merger agreement; or

 

   

agree to do any of the foregoing.

Enable’s non-solicitation obligations described above do not prohibit Enable from informing any person that Enable is a party to the merger agreement and of the non-solicitation restrictions therein

 

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Definition of Acquisition Proposal and Acquisition Transaction

As used above, an “acquisition proposal” means any bona fide offer or proposal, whether or not in writing, received from or made public by a third party (other than an offer or proposal by Energy Transfer, Merger Sub, GP Merger Sub or their respective affiliates) relating to any acquisition transaction.

An “acquisition transaction” means any transaction or series of related transactions in which a third person (other than Energy Transfer, Merger Sub, GP Merger Sub or any of their affiliates) directly or indirectly: