Energy Transfer sells interest in ETP Holdco to simplify structure

Energy Transfer Equity LP

Energy Transfer Equity LP (NYSE:ETE) will sell its interest in ETP Holdco Corp. to Energy Transfer Partners LP (NYSE:ETP) for $3.75 billion in cash and ETP common units. ETP Holdco is the entity formed by ETP and ETE in 2012 to own the equity interests in Southern Union Company and Sunoco Inc. With this acquisition, ETP will own 100% of ETP Holdco. The deal is expected to close in the second quarter of 2013, subject to customary closing conditions.

In exchange for the interest in ETP Holdco, ETE will receive $2.35 billion of newly issued ETP common units and $1.40 billion in cash. ETE, which owns the general partner and incentive distribution rights (IDR) of ETP, has agreed to forego all of the IDR payments on the newly issued ETP units for each of the first eight consecutive quarters beginning with the quarter in which the closing of the transaction occurs, and fifty percent of the IDR payments on the newly issued ETP units for the following eight consecutive quarters.

The agreement between the partnerships is yet another important step in executing on their commitment to simplify their structures and optimize their asset portfolios. The announcement of the ETP Holdco acquisition by ETP follows the February 2013 announcement that ETP’s Southern Union Gas Services (SUGS) assets would be contributed to Regency Energy Partners, and the December 2012 announcement that Southern Union’s local distribution companies, Missouri Gas Energy and New England Gas Company, would be sold.

Latham & Watkins advised Energy Transfer Equity in the transaction.

 

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