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Mail Stop 3561
November 1, 2005
John W. McReynolds
General Partner
Energy Transfer Equity, L.P.
2828 Woodside Street
Dallas, Texas 75204
Re: Energy Transfer Equity, L.P.
Amendment No. 1 to Registration Statement on Form S-1
Filed October 13, 2005
File No. 333-128097
Dear Mr. McReynolds:
We have reviewed your amended filing and have the following
comments. Where indicated, we think you should revise your
document
in response to these comments. If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary. Please be as detailed as necessary in your
explanation. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Our Management, page 5
1. Please refer to comment 11 in our letter dated September 30,
2005.
State here that ETP may be your potential competitor if you
develop
independent operations in the future.
Our Cash Distribution Policy and Restrictions on Distributions,
page
48
Unaudited Pro-Forma Consolidated Available Cash, page 50
2. Please refer to comment 22 in our letter dated September 30,
2005.
We reissue part of the comment. Please add a footnote that shows
your calculation of your proceeds from the issuances of ETP common
units or add a cross reference to show specifically where this
information can be found.
Estimated Cash Available to Pay Distributions Based Upon Estimated
Consolidated Adjusted EBITDA, page 55
3. Please refer to comment 25 in our letter dated September 30,
2005.
Please disclose the reasons for the significant increase in EBITDA
for the transportation segment from $63.7 million for the year
ended
August 31, 2004 to the $275 million estimate for the 12 months
ended
August 31, 2006 in a similar fashion to what you provided in your
response letter. Estimated organic growth represents greater than
a
50% increase when compared to the $63.7 million EBITDA for the
transportation segment for the year ended August 31, 2004. Please
revise to explain the principal factors contributing to the
significant organic growth assumption and whether your estimate of
organic growth for the forecasted period differs from your long-
term
expectations of organic growth for the transportation segment. To
the extent that your long-term organic growth assumption is
materially lower than your organic growth assumption for the
forecasted period, please ensure a reader understands the
implications of the variance between near-term and long-term
growth
assumptions on your ability to increase cash distributions in
periods
beyond the forecasted period.
4. Please refer to comment 26 in our letter dated September 30,
2005.
Please tell us how you determined that no adjustment is necessary
to
your estimated cash available to pay distributions. You note that
a
$100 million working capital facility available at the closing of
the
offering would obviate further equity issuances to support your
cash
distributions to unitholders. Given that the equity issuance
resulted in proceeds of $131.0 million we do not understand your
statement that your ability to make your cash distribution does
not
depend on equity issuances since the working capital facility
would
be insufficient to supply the cash necessary to make your intended
distribution assuming it was available prior to the closing of the
offering. Also, to the extent your assumption is that you would
rely
on increased borrowings in future periods to fund intended cash
distributions, your disclosure should reflect an appropriate
amount
for the incremental cash interest expense that would be incurred
to
fund your cash distributions through borrowings on your working
capital facility.
Management`s Discussion and Analysis of Financial Condition ...,
page
69
Overview, page 69
5. In your discussion of anticipated minimum volumes of natural
gas
and NGLs sold on a pro forma basis for the fiscal year ending
August
31, 2004, please reconcile those amounts to the amounts disclosed
in
your assumptions on page 56.
Security Ownership of Certain Beneficial Owners and Management,
page
165
6. Please refer to comment 36 in our letter dated September 30,
2005.
Please identify the persons that control Oasis Gas Partners LLC.
Also, provide the beneficial ownership information for the
entities
identified on page 218.
Description of Our Common Units, page 177
Transfer of Common Units, page 177
7. Please refer to comment 36 in our letter dated September 30,
2005.
Represent, if accurate, that although by state law or partnership
agreement, your general partner is not prevented from withholding
its
consent to an assignee requesting admission as a substituted
limited
partner, you do not foresee your general partner exercising that
right.
Underwriting, page 220
8. Please refer to comment 38 in our letter dated September 30,
2005.
It appears from your response letter that the electronic offering
procedures and materials utilized by UBS Securities LLC through
its
"New Issues" system for this offering do not differ from those
reviewed by the staff in the spring of 2001. Please confirm to us
that this is indeed the case. Alternatively, if the procedures
and
materials have changed, please describe them in your response
letter.
Directed Unit Program, page 223
9. Please refer to comment 41 in our letter dated September 30,
2005.
In your response letter, please tell us how you have determined
the
prospective participants in the directed share offering, and
particularly identify the category of the "certain other persons."
In addition, describe to us the procedural differences between the
directed share offering and the general offering to the
unaffiliated
public investors. Finally, please provide us a brief analysis on
how
the directed share offering meets the requirements of Section 5
and
Rule 134. We reissue the comment in part.
Energy Transfer Equity, L.P. and Subsidiaries
Audited Consolidated Financial Statements, page F-19
General
10. Please update the filing to include audited financial
statements
for the year ended August 31, 2005. See Rule 3-12(d) of
Regulation
S-X.
Notes to Consolidated Financial Statements, page F-27
General
11. Please refer to comment 43 in our letter dated September 30,
2005. Please tell us if there have been any equity issuances
subsequent to September 2, 2005. It was our understanding that
Class
B units convertible into common units on a one-for-one basis had
been
issued recently. This issuance does not appear in your response
or
in Item 15 of your amended filing. Please provide us with the
following information regarding each issuance of common units,
warrants, options, or debt that is convertible into common units.
Providing the requested information in a tabular format for the
period would help expedite our review. Tell us in detail the date
of
each issuance, what was issued, all of the terms associated with
each
issuance (number of shares, stock price paid, exercise price and
terms, and conversion price and terms), the fair value of a share
of
your common units on each issuance date, how you determined the
fair
value on each date, and the amount of any compensation expense,
interest expense, or other charges recorded in your financial
statements associated with each issuance, including how you
calculated any amount recorded. If any amounts are being
amortized
rather than expensed immediately, also tell us how you determined
the
amortization period. If the fair value you indicate for your
stock
on any of these issuance dates is less than the anticipated
initial
public offering price, also describe the intervening events that
occurred between the issuance date and the date you filed your
registration statement that significantly increased the fair value
of
your stock. Also, reconcile the amounts of compensation expense
and
other expenses recorded in your financial statements to the
analysis
you provide us.
Note 1. Operations and Organization, page F-27
12. Please refer to comment 44 in our letter dated September 30,
2005. It does not appear you used the fair value of ETP common
units
received to record the transaction. The closing price as quoted
on
the New York Stock Exchange was $34.07 on June 20, 2005 and $33.80
on
June 15, 2005. In Note 18 on page F-73 you disclose that the
units
were sold at a 6% discount to the closing common unit price on
June
17, 2005. Please explain the justification for the discount
assumed
and the significance of the June 17, 2005 date used to determine
the
amount of the discount. Please advise or revise.
Gain on Issuances of Subsidiary Units, page F-38
13. Please refer to comment 45 in our letter dated September 30,
2005. It appears that your general partner interest in ETP would
not
change as a result of the required pro rata capital contributions.
However, we assume that your limited partner interest you hold
would
change as a result of future issuances. Tell us if you have
recognized any SAB 51 transactions related to the limited partner
interest you hold. Also, please tell us where you discuss the
required capital contributions of ETP`s general partner on pages
118
and F-38 as indicated in your response letter.
Employee Incentive Interest, page F-40
14. Please refer to comment 46 in our letter dated September 30,
2005. Please help us understand the specific literature you
relied
upon in determining the propriety of the nature and size of the
discounts you assumed in valuing the employee incentive units.
While
we understand that a discount is necessary to account for certain
contingencies it is not clear how you determined that a 99%
discount
was necessary. In this regard, please tell us whether ETE`s debt
obligations and/or distributions to limited partner units were
supported or guaranteed by any affiliated entities of ETE, such
that
risk of nonpayment was reduced. Further, please explain in
greater
detail how you determined that a 40% discount for lack of
marketability is appropriate.
* * * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments. Detailed cover letters greatly facilitate our review.
Please understand that we may have additional comments after
reviewing your amendment and responses to our comments.
You may contact Anthony Watson, Staff Accountant, at (202)
551-
3318, or George Ohsiek, Accounting Branch Chief, at (202) 551-3843
if
you have questions regarding comments on the financial statements
and
related matters. Please contact Pradip Bhaumik, Attorney-Advisor,
at
(202) 551-3333, Ellie Quarles, Special Counsel, at (202) 551-3238,
or
me at (202) 551-3720 with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: Thomas P. Mason, Esq.
Vinson & Elkins L.L.P.
Fax: (713) 615-5320
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John W. McReynolds
Energy Transfer Equity, L.P.
November 1, 2005
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