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The information in this preliminary prospectus supplement is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and they are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
Per | ||||||||
Note | Total | |||||||
Price to Public(1) | % | $ | ||||||
Underwriting Discount | % | $ | ||||||
Proceeds to Energy Transfer Equity, L.P. (Before Expenses) | % | $ |
(1) | Plus accrued interest from , 2010, if settlement occurs after that date. |
Credit Suisse |
Morgan Stanley |
Wells Fargo Securities |
BofA Merrill Lynch |
CITI |
UBS Investment Bank |
BNP PARIBAS |
Deutsche Bank Securities |
SunTrust Robinson Humphrey |
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Prospectus | ||||
About This Prospectus | 1 | |||
Energy Transfer Equity, L.P. | 1 | |||
Energy Transfer Partners, L.P. | 1 | |||
Cautionary Statement Concerning Forward-Looking Statements | 2 | |||
Risk Factors | 4 | |||
Use of Proceeds | 4 | |||
Ratio of Earnings to Fixed Charges | 4 | |||
Description of Debt Securities | 5 | |||
Plan of Distribution | 8 | |||
Legal Matters | 9 | |||
Experts | 9 | |||
Where You Can Find More Information | 10 | |||
Incorporation of Certain Documents by Reference | 10 |
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• | the accompanying prospectus, which provides general information, some of which may not apply to the notes; and | |
• | this prospectus supplement, which provides a summary of the specific terms of the notes. |
• | our Annual Report onForm 10-K for the year ended December 31, 2009; | |
• | our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010; | |
• | our Current Reports onForms 8-K and 8-K/A filed January 20, 2010, January 28, 2010, March 30, 2010, April 29, 2010, May 11, 2010, May 13, 2010, June 2, 2010, July 29, 2010, August 10, 2010 and September 15, 2010; and |
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• | all documents filed by us under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 between the date of this prospectus supplement and before the termination of this offering. |
• | the ability of our subsidiaries, Energy Transfer Partners, L.P., or ETP, and Regency Energy Partners LP, or Regency, to make cash distributions to us, which is dependent on the results of operations, cash flows and financial condition of ETP and Regency; | |
• | the actual amount of cash distributions by ETP and Regency to us, which is affected by the amount of cash reserves, if any, established by the respective Board of Directors of the general partners of ETP and Regency and is outside of our control; | |
• | the amount of natural gas transported on ETP’s and Regency’s pipelines and gathering systems; | |
• | the level of throughput in ETP’s and Regency’s natural gas processing and treating facilities; | |
• | the fees charged and the margins realized by ETP and Regency for gathering, treating, processing, storage and transportation services; | |
• | the prices and market demand for, and the relationship between, natural gas and natural gas liquids, or NGLs; | |
• | energy prices generally; | |
• | the prices of natural gas and propane compared to the price of alternative and competing fuels; | |
• | the general level of petroleum product demand and the availability and price of propane supplies; | |
• | the level of domestic oil, propane and natural gas production; | |
• | the availability of imported oil and natural gas; |
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• | ETP’s ability to obtain adequate supplies of propane for retail sale in the event of an interruption in supply or transportation and the availability of capacity to transport propane to market areas; | |
• | actions taken by foreign oil and gas producing nations; | |
• | the political and economic stability of petroleum producing nations; | |
• | the effect of weather conditions on demand for oil, natural gas and propane; | |
• | availability of local, intrastate and interstate transportation systems; | |
• | ETP’s and Regency’s continued ability to find and contract for new sources of natural gas supply; | |
• | availability and marketing of competitive fuels; | |
• | the impact of energy conservation efforts; | |
• | energy efficiencies and technological trends; | |
• | governmental regulation and taxation; | |
• | changes to, and the application of, regulation of tariff rates and operational requirements related to ETP’s and Regency’s pipelines; | |
• | hazards or operating risks incidental to the gathering, treating, processing and transporting of natural gas and NGLs or to the transporting, storing and distributing of propane that may not be fully covered by insurance; | |
• | the maturity of the propane industry and competition from other propane distributors; | |
• | competition from other midstream companies, interstate pipeline companies and propane distribution companies; | |
• | loss of key personnel; | |
• | loss of key natural gas producers or the providers of fractionation services; | |
• | reductions in the capacity or allocations of third-party pipelines that connect with ETP’s and Regency’s pipelines and facilities; | |
• | the effectiveness of risk-management policies and procedures and the ability of ETP’s and Regency’s liquids marketing counterparties to satisfy their financial commitments; | |
• | the nonpayment or nonperformance by ETP’s and Regency’s customers; | |
• | regulatory, environmental, political and legal uncertainties that may affect the timing and cost of ETP’s or Regency’s internal growth projects; | |
• | risks associated with the construction of new pipelines and treating and processing facilities or additions to ETP’s or Regency’s existing pipelines and facilities, including difficulties in obtaining permits andrights-of-way or other regulatory approvals and the performance by third-party contractors; | |
• | the availability and cost of capital and ETP’s and Regency’s ability to access certain capital sources; | |
• | the deterioration of the credit and capital markets; | |
• | the ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to ETP’s or Regency’s financial results and to successfully integrate acquired businesses; | |
• | changes in laws and regulations to which we, ETP or Regency are subject, including tax, environmental, transportation and employment regulations or new interpretations by regulatory agencies concerning such laws and regulations; and | |
• | the costs and effects of legal and administrative proceedings. |
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General Partner | Incentive | |||||||||||
Interest | Distribution Rights | Common Units | ||||||||||
ETP | 1.8 | % | 100 | % | 50,226,967 | |||||||
Regency | 2.0 | % | 100 | % | 26,266,791 |
• | an approximate 1.8% general partner interest, which we hold through our ownership interests in ETP GP; | |
• | 100% of the incentive distribution rights in ETP, which we hold through our ownership interests in ETP GP; and |
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• | approximately 50.2 million ETP common units, representing an approximate 26% limited partner interest in ETP. |
• | 13.0% of all incremental cash distributed in a fiscal quarter after $0.275 has been distributed in respect of each common unit of ETP for that quarter; | |
• | 23.0% of all incremental cash distributed in a fiscal quarter after $0.3175 has been distributed in respect of each common unit of ETP for that quarter; and | |
• | the maximum sharing level of 48.0% of all incremental cash distributed in a fiscal quarter after $0.4125 has been distributed in respect of each common unit of ETP for that quarter. |
Six Months | ||||||||||||||||
Ended | Years Ended | |||||||||||||||
June 30, | December 31, | |||||||||||||||
2010 | 2009 | 2009 | 2008 | |||||||||||||
Limited Partner Interests | $ | 100,750 | $ | 111,720 | $ | 223,440 | $ | 221,878 | ||||||||
General Partner Interest | 9,754 | 9,721 | 19,505 | 17,322 | ||||||||||||
Incentive Distribution Rights | 184,751 | 168,310 | 350,486 | 298,575 | ||||||||||||
Total distributions received from ETP(1)(2) | $ | 295,255 | $ | 289,751 | $ | 593,431 | $ | 537,775 | ||||||||
(1) | Represents cash distributions received in respect of each of the quarters included within the period, including distributions paid in respect of the last quarter of such period after the end of such quarter and excluding distributions paid during the first quarter of such period in respect of the prior quarter. | |
(2) | The distributions paid by ETP for the periods prior to May 26, 2010, the date of the closing of the Regency Transactions, do not reflect the reduction in the number of ETP common units held by us as a result of the Regency Transactions and the associated reduction in distributions payable in respect of the incentive distribution rights. |
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• | In April 2007, ETP completed its243-mile pipeline from Cleburne in north Texas to Carthage in east Texas, which we refer to as the Cleburne to Carthage pipeline, to expand its capacity to transport natural gas produced from the Barnett Shale and the Bossier Sands to its Texoma pipeline and other pipeline interconnections. The Cleburne to Carthage pipeline is primarily a42-inch diameter natural gas pipeline. In December 2007, ETP completed two natural gas compression projects that added approximately 90,000 horsepower on the Cleburne to Carthage pipeline, increasing its natural gas deliverability at the Carthage Hub to more than 2.0 Bcf/d. | |
• | In April 2008, ETP completed its approximately150-mile Southeast Bossier42-inch natural gas pipeline, which we refer to as the Southeast Bossier pipeline. This pipeline connects ETP’s Cleburne to Carthage pipeline and its East Texas pipeline to its Texoma pipeline. The Southeast Bossier pipeline has an initial throughput capacity of 900 million cubic feet per day, orMMcf/d, that can be increased to 1.3 Bcf/d with the addition of compression. The Southeast Bossier pipeline increases ETP’s takeaway capacity from the Barnett Shale and Bossier Sands and provides increased market access for natural gas produced in these areas. | |
• | In July 2008, ETP completed its36-inch Paris Loop natural gas pipeline expansion project in north Texas. This135-mile pipeline initially provided ETP with an additional400 MMcf/d of capacity out of the Barnett Shale, which increased to900 MMcf/d in May 2009. The Paris Loop originates near Eagle Mountain Lake in northwest Tarrant County, Texas and connects to ETP’s Houston Pipe Line system near Paris, Texas. | |
• | In August 2008, ETP completed an expansion of its Cleburne to Carthage pipeline from the Texoma pipeline interconnect to the Carthage Hub through the installation of 32 miles of42-inch pipeline. This expansion, which we refer to as the Carthage Loop, added500 MMcf/d of pipeline capacity from Cleburne to the Carthage Hub. In September 2009, ETP increased the capacity of the Carthage Loop to 1.1 Bcf/d by adding compression to this pipeline. | |
• | In August 2008, ETP completed the first segment of its36-inch Maypearl to Malone natural gas pipeline expansion project. This25-mile pipeline extends from Maypearl, Texas to Malone, Texas, and provides an additional600 MMcf/d of capacity out of the Fort Worth Basin. | |
• | In January 2009, ETP completed its Southern Shale natural gas pipeline project, which consists of 31 miles of36-inch pipeline that originates in southern Tarrant County, Texas and delivers natural gas to its Maypearl to Malone pipeline expansion project. The Southern Shale pipeline provides an additional700 MMcf/d of takeaway capacity from the Barnett Shale. |
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• | In January 2009, ETP completed its36-inch Cleburne to Tolar natural gas pipeline expansion project. This20-mile pipeline extends from Cleburne, Texas to Tolar, Texas and provides an additional400 MMcf/d of takeaway capacity from the Barnett Shale. | |
• | In February 2009, ETP completed its56-mile Katy Expansion pipeline project. This36-inch expansion project increased the capacity of its existing ETC Katy natural gas pipeline in southeast Texas by more than400 MMcf/d. | |
• | In August 2009, ETP completed its Texas Independence Pipeline, which consists of 143 miles of42-inch pipeline originating near Maypearl, Texas and ending near Henderson, Texas. This pipeline connects ETP’s ET Fuel System and North Texas System with its East Texas pipeline. The Texas Independence Pipeline expands ETP’s ET Fuel System’s throughput capacity by an incremental 1.1 Bcf/d and, with the addition of compression, the capacity may be expanded to 1.75 Bcf/d. | |
• | In June 2010, ETP announced plans to construct a63-mile natural gas pipeline that will originate in Shelby County, Texas, and terminate in Nacogdoches County, Texas. This project will consist of 20- and24-inch pipe and will have an initial capacity of645 MMcf/d. The pipeline will interconnect with two interstate pipelines in addition to ETP’s Houston Pipe Line system. Partial service is expected to begin in the third quarter of 2010, with full in-service capabilities by the fourth quarter of 2010. |
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• | ETP believes that the size and scope of its operations, its stable asset base and cash flow profile, and its investment grade status will be significant positive factors in its efforts to obtain new debt or equity financing in light of current market conditions. | |
• | ETP’s experienced management team has an established reputation as highly-effective, strategic operators within its operating segments. In addition, ETP’s management team is motivated to effectively and efficiently manage its business operations through performance-based incentive compensation programs and through ownership of a substantial equity position in us and therefore benefits from incentive distribution payments ETP makes to ETP GP. |
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• | a 2.0% general partner interest, which we hold through our ownership interests in Regency GP and Regency LLC; | |
• | 100% of the incentive distribution rights in Regency, which we hold through our ownership interests in Regency GP; and | |
• | approximately 26.3 million Regency common units, representing an approximate 19% limited partner interest in Regency. |
• | 13% of all incremental cash distributed in a fiscal quarter after $0.4025 has been distributed in respect of each common unit of Regency for that quarter; | |
• | 23% of all incremental cash distributed in a fiscal quarter after $0.4375 has been distributed in respect of each common unit of Regency for that quarter; and | |
• | the maximum sharing level of 48% of all incremental cash distributed in a fiscal quarter after $0.525 has been distributed in respect of each common unit of Regency for that quarter. |
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• | we acquired a 100% equity interest in Regency GP and Regency LLC, the general partner entities of Regency, from an affiliate of GE EFS in exchange for 3,000,000 Series A Convertible Preferred Units having an aggregate liquidation preference of $300.0 million; | |
• | we acquired the equity interests in an entity that owns a 49.9% membership interest in MEP and an option to acquire the equity interests in an entity that owns a 0.1% membership interest in MEP, which is exercisable on May 27, 2011, which we refer to as the Option, from ETP in exchange for the redemption by ETP of approximately 12.3 million ETP common units owned by us; and | |
• | we contributed the equity interests in the entity that owns a 49.9% membership interest in MEP along with our rights under the Option to a subsidiary of Regency in exchange for approximately 26.3 million newly issued Regency common units. |
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(1) | Includes approximately 560,000 common units owned by management of ETP. | |
(2) | Includes unamortized discounts and fair value adjustments. | |
(3) | Does not include the outstanding debt of joint ventures of ETP and Regency. See “Capitalization” and “Description of Other Indebtedness.” |
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Issuer | Energy Transfer Equity, L.P. | |
Notes Offered | We are offering $1,000,000,000 aggregate principal amount of % Senior Notes due 2020. | |
Maturity | , 2020. | |
Interest Rate | Interest on the notes will accrue at the per annum rate of %. | |
Interest Payment Dates | Interest on the notes will accrue from the issue date of the notes and be payable semi-annually on and of each year, beginning on , 2011. | |
Ranking | Unless the collateral release event described below has occurred, our obligations under the notes will be secured on a first priority, equal and ratable basis with our obligations under our senior secured revolving credit facility, which we refer to as the revolving credit facility, and our senior secured term loan facility, which we refer to as the term loan facility, by a lien on substantially all assets that from time to time secure our obligations under those facilities, subject to certain exceptions and permitted liens. Initially, the collateral for the notes and our credit facilities will consist primarily of all of the common units of ETP and Regency that are owned by us and the equity interests we own in our restricted subsidiaries. Our restricted subsidiaries own all of the incentive distribution rights related to ETP and Regency and the general partner interests in ETP and Regency. The liens securing the notes will be subject to the terms of an intercreditor agreement, under which the collateral agent for the lenders under our revolving credit facility, referred to as the revolving bank collateral agent, will generally be entitled to sole control of all decisions and actions, including foreclosure, with respect to the collateral, even if an event of default under the notes has occurred, and neither the holders of notes nor the trustee will generally be entitled to independently exercise remedies with respect to the collateral. In addition, the revolving bank collateral agent will be entitled, without the consent of holders of notes or the trustee, to amend the terms of the security documents securing the notes (subject to certain limitations) and to release the liens of the secured parties on any part of the collateral at any time. | |
All of the liens securing the notes may be released, at our election, if all outstanding indebtedness under our term loan facility is discharged or if all liens on the collateral securing our obligations under the term loan facility are released. We refer to such a release as the “collateral release event.” After the collateral release event, the notes will be unsecured and will effectively rank junior to our secured indebtedness to the extent of the value of collateral securing such indebtedness. If the indebtedness under our term |
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loan facility is discharged concurrently with the closing of this offering, the notes will be unsecured when issued. We expect our revolving credit facility to continue to be secured by a substantial portion of our assets following the occurrence of the collateral release event. | ||
The notes will be our senior obligations. The notes will rank equally in right of payment with all of our other existing and future senior indebtedness and senior to any of our subordinated indebtedness. Assuming we had completed this offering on June 30, 2010, after giving effect to the application of the use of proceeds of this offering, we would have had approximately $700.5 million of indebtedness outstanding that would rank equally in right of payment to the notes as of that date. See “Description of Notes — Ranking” and “— Security for the Notes.” | ||
The notes initially will not be guaranteed by any of our subsidiaries. However, if at any time following the issue date of the notes, any of our subsidiaries guarantees or becomes a co-obligor with respect to any indebtedness, or if at any time following the issue date of the notes any Restricted Subsidiary of ETE otherwise incurs any indebtedness, then such subsidiary or Restricted Subsidiary, as the case may be, will also guarantee the notes on terms provided for in the indenture; provided, however, that prior to November 2, 2012, ETE GP Acquirer LLC and ETE Services Company, LLC may guarantee our obligations in respect of the credit facility without guaranteeing our obligations with respect to the notes. With respect to the assets of our subsidiaries that do not guarantee the notes, including ETP and Regency, the notes will effectively rank junior to all existing and future obligations of those subsidiaries. As of September 8, 2010, our subsidiaries, including ETP, Regency and their respective subsidiaries, had outstanding approximately $7.14 billion of indebtedness that would effectively rank senior to the notes with respect to the assets of those subsidiaries. | ||
Optional Redemption | We may redeem the notes in whole, at any time, or in part, from time to time, prior to maturity, at a redemption price that includes accrued and unpaid interest and a make-whole premium. See “Description of Notes — Optional Redemption.” | |
Covenants | We will issue the notes under an indenture with U.S. Bank National Association, as trustee. The covenants in the indenture include a limitation on liens, a limitation on transactions with affiliates and a restriction on sale-leaseback transactions. The covenants will generally not apply to ETP, Regency and their respective subsidiaries. Each covenant is subject to a number of important exceptions, limitations and qualifications that are described in “Description of Notes — Covenants.” | |
Mandatory Offer to Repurchase | If we experience a change of control together with a rating decline, each as defined in the indenture, we must offer to repurchase the notes at an offer price in cash equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of repurchase. See “Description of Notes — Covenants.” |
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Use of Proceeds | We anticipate using approximately $142.1 million of the net proceeds of this offering to repay all of the outstanding indebtedness under our revolving credit facility and approximately $741.9 million of the net proceeds of this offering to repay a portion of the indebtedness outstanding under our term loan facility. In addition, we anticipate using the remaining approximately $99.0 million of the net proceeds of this offering to fund the estimated cost to terminate interest rate swap agreements relating to these outstanding borrowings. See “Use of Proceeds” and “Description of Other Indebtedness.” | |
Governing Law | The indenture and the notes provide that they will be governed by, and construed in accordance with, the laws of the state of New York. | |
Risk Factors | Investing in the notes involves risks. See “Risk Factors” beginning on pageS-20 of this prospectus supplement and the other risks identified in the documents incorporated by reference herein for information regarding risks you should consider before investing in the notes. | |
Original Issue Discount | The notes may be issued with original issue discount, or OID, for U.S. federal income tax purposes. If the notes are issued with OID, then such OID will accrue from the date of issuance of the notes and will be included as interest income in a U.S. holder’s gross income for U.S. federal income tax purposes in advance of receipt of the cash payments to which such income is attributable, regardless of such holder’s method of tax accounting. See “Certain United States Federal Income Tax Considerations — Tax Consequences to U.S. Holders — Stated Interest and OID on the Notes.” |
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Four Months | ||||||||||||||||||||||||
Six Months Ended | Years Ended | Ended | Year Ended | |||||||||||||||||||||
June 30, | December 31, | December 31, | August 31, | |||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2007 | |||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Investment in ETP | $ | 3,139,687 | $ | 2,781,917 | $ | 5,417,295 | $ | 9,293,868 | $ | 2,349,510 | $ | 6,792,037 | ||||||||||||
Investment in Regency | 102,980 | — | — | — | — | — | ||||||||||||||||||
Other | (2,157 | ) | (253 | ) | — | (501 | ) | (168 | ) | — | ||||||||||||||
Total revenues | 3,240,510 | 2,781,664 | 5,417,295 | 9,293,367 | 2,349,342 | 6,792,037 | ||||||||||||||||||
Gross margin | 1,171,285 | 1,196,532 | 2,295,239 | 2,355,287 | 675,688 | 1,713,831 | ||||||||||||||||||
Depreciation and amortization | 184,816 | 154,888 | 325,024 | 274,372 | 75,406 | 191,383 | ||||||||||||||||||
Operating income | 518,289 | 571,129 | 1,110,398 | 1,098,903 | 316,651 | 809,336 | ||||||||||||||||||
Interest expense, net of interest capitalized | (250,734 | ) | (220,950 | ) | (468,420 | ) | (357,541 | ) | (103,375 | ) | (279,986 | ) | ||||||||||||
Income before income tax expense | 192,867 | 430,978 | 707,100 | 683,562 | 192,758 | 563,359 | ||||||||||||||||||
Income tax expense | 9,264 | 9,470 | 9,229 | 3,808 | 9,949 | 11,391 | ||||||||||||||||||
Net income attributable to noncontrolling interest | 51,558 | 165,597 | 255,398 | 304,710 | 90,132 | 232,608 | ||||||||||||||||||
Net income attributable to partners | 132,045 | 255,911 | 442,473 | 375,044 | 92,677 | 319,360 | ||||||||||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||||||
Current assets | $ | 1,084,534 | $ | 872,030 | $ | 1,267,959 | $ | 1,180,995 | $ | 1,403,796 | $ | 1,050,578 | ||||||||||||
Total assets | 16,361,954 | 11,435,309 | 12,160,509 | 11,069,902 | 9,462,094 | 8,183,089 | ||||||||||||||||||
Current liabilities | 1,183,068 | 925,714 | 889,745 | 1,208,921 | 1,241,433 | 932,815 | ||||||||||||||||||
Long-term debt, less current maturities | 8,776,173 | 7,265,314 | 7,750,998 | 7,190,357 | 5,870,106 | 5,198,676 | ||||||||||||||||||
Total equity | 5,630,258 | 2,945,635 | 3,220,251 | 2,339,316 | 2,091,156 | 1,835,300 | ||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||
Cash flow provided by operating activities | $ | 801,936 | $ | 653,488 | $ | 723,461 | $ | 1,143,720 | $ | 208,635 | $ | 1,006,320 | ||||||||||||
Cash flow used in investing activities | (786,185 | ) | (875,514 | ) | (1,345,756 | ) | (2,015,585 | ) | (995,943 | ) | (2,158,090 | ) | ||||||||||||
Cash flow provided by financing activities | 183 | 244,364 | 598,587 | 907,331 | 766,515 | 1,202,916 | ||||||||||||||||||
Capital expenditures: | �� | |||||||||||||||||||||||
Maintenance (accrual basis) | 43,855 | 44,283 | 102,652 | 140,968 | 48,998 | 89,226 | ||||||||||||||||||
Growth (accrual basis) | 600,944 | 402,240 | 530,333 | 1,921,679 | 604,371 | 998,075 | ||||||||||||||||||
Cash (received in) paid for acquisitions | 129,390 | 6,362 | (30,367 | ) | 84,783 | 337,092 | 90,695 | |||||||||||||||||
Ratio of earnings to fixed charges | 1.67 | 2.81 | 2.39 | 2.74 | 2.58 | 2.75 |
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Four Months | ||||||||||||||||||||||||
Six Months Ended | Years Ended | Ended | Year Ended | |||||||||||||||||||||
June 30, | December 31, | December 31, | August 31, | |||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2007 | |||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||
Equity in earnings of affiliates | $ | 221,740 | $ | 287,534 | $ | 526,383 | $ | 551,835 | $ | 168,547 | $ | 435,247 | ||||||||||||
Selling, general and administration expense | (17,415 | ) | (2,822 | ) | (4,970 | ) | (6,453 | ) | (2,875 | ) | (8,496 | ) | ||||||||||||
Interest expense | (36,916 | ) | (38,139 | ) | (74,049 | ) | (91,822 | ) | (37,071 | ) | (104,405 | ) | ||||||||||||
(Losses) Gains on non-hedged interest rate derivatives | (35,177 | ) | 9,394 | (5,620 | ) | (77,435 | ) | (27,670 | ) | (1,952 | ) | |||||||||||||
Other, net | (212 | ) | (628 | ) | 79 | (1,056 | ) | (8,128 | ) | (405 | ) | |||||||||||||
Net income | 132,045 | 255,911 | 442,473 | 375,044 | 92,677 | 319,360 | ||||||||||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||||||
Current assets | $ | 2,895 | $ | 2,136 | $ | 1,446 | $ | 684 | $ | 11,694 | $ | 25,783 | ||||||||||||
Total assets | 2,228,837 | 1,721,281 | 1,718,948 | 1,671,339 | 1,630,940 | 1,537,875 | ||||||||||||||||||
Current liabilities | 198,939 | 70,777 | 71,513 | 61,419 | 27,978 | 10,507 | ||||||||||||||||||
Long-term debt, less current maturities | 1,450,000 | 1,572,498 | 1,573,951 | 1,571,642 | 1,572,643 | 1,571,500 | ||||||||||||||||||
Cash Flow Data: | ||||||||||||||||||||||||
Cash flow provided by operating activities | $ | 233,100 | $ | 230,641 | $ | 468,969 | $ | 436,819 | $ | 77,360 | $ | 239,777 | ||||||||||||
Cash flow from investing activities | 3,016 | — | — | — | — | — | ||||||||||||||||||
Cash flow provided by (used in) financing activities | (236,116 | ) | (230,641 | ) | (468,969 | ) | (436,799 | ) | (85,919 | ) | 968,689 | |||||||||||||
Distributable Cash Flow: | ||||||||||||||||||||||||
Cash distributions related to period expected from ETP associated with: | ||||||||||||||||||||||||
Limited partner interests | $ | 100,750 | $ | 111,720 | $ | 223,440 | $ | 221,878 | $ | 70,313 | $ | 199,221 | ||||||||||||
General partner interest | 9,754 | 9,721 | 19,505 | 17,322 | 5,110 | 13,676 | ||||||||||||||||||
Incentive distribution rights | 184,751 | 168,310 | 350,486 | 298,575 | 85,775 | 222,353 | ||||||||||||||||||
Total distributions related to period expected from ETP | 295,255 | 289,751 | 593,431 | 537,775 | 161,198 | 435,250 | ||||||||||||||||||
Cash distributions related to period expected from Regency associated with: | ||||||||||||||||||||||||
Limited partner interests | $ | 11,689 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
General partner interest | 1,105 | — | — | — | — | — | ||||||||||||||||||
Incentive distribution rights | 915 | — | — | — | — | — | ||||||||||||||||||
Total cash distribution expected from Regency | 13,709 | — | — | — | — | — | ||||||||||||||||||
Pro rata cash settlement related to Regency Transactions: | ||||||||||||||||||||||||
Received from ETP related to 12,273,830 ETP common units redeemed | $ | 10,451 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Paid to Regency related to 26,266,791 Regency common units | (7,436 | ) | — | — | — | — | — | |||||||||||||||||
Net pro rata cash settlement for period from April 1, 2010 through May 25, 2010 | $ | 3,015 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Total cash distributions expected from ETP and Regency including pro rata cash settlement | 311,979 | 289,751 | 593,431 | 537,775 | 161,198 | 435,250 | ||||||||||||||||||
ETE related expenses | (17,161 | ) | (2,603 | ) | (3,678 | ) | (7,007 | ) | (11,288 | ) | (10,343 | ) | ||||||||||||
Interest expense, net of amortization of financing costs, interest income, and realized gains and losses on interest rate derivatives | (53,160 | ) | (44,888 | ) | (95,337 | ) | (97,654 | ) | (34,748 | ) | (100,933 | ) | ||||||||||||
Distributable Cash Flow | $ | 241,658 | $ | 242,260 | $ | 494,416 | $ | 433,114 | $ | 115,162 | $ | 323,974 | ||||||||||||
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Four Months | ||||||||||||||||||||||||
Six Months Ended | Years Ended | Ended | Year Ended | |||||||||||||||||||||
June 30, | December 31, | December 31, | August 31, | |||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2007 | |||||||||||||||||||
Reconciliation of Net income to Distributable Cash Flow: | ||||||||||||||||||||||||
Net income | $ | 132,045 | $ | 255,911 | $ | 442,473 | $ | 375,044 | $ | 92,677 | $ | 319,360 | ||||||||||||
Adjustments to derive Distributable Cash Flow: | ||||||||||||||||||||||||
Equity in income of unconsolidated affiliates | (221,740 | ) | (287,534 | ) | (526,383 | ) | (551,835 | ) | (168,547 | ) | (435,247 | ) | ||||||||||||
Distributions related to period expected from ETP | 295,255 | 289,751 | 593,431 | 537,775 | 161,198 | 435,251 | ||||||||||||||||||
Distributions related to period expected from Regency | 13,709 | — | — | — | — | — | ||||||||||||||||||
Net pro rata cash settlement related to Regency Transactions | 3,015 | — | — | — | — | — | ||||||||||||||||||
Amortization included in interest | 2,153 | 4,162 | 6,309 | 5,076 | 1,006 | 2,630 | ||||||||||||||||||
Unrealized (gains) losses on non-hedged interest rate swaps | 16,764 | (20,307 | ) | (21,965 | ) | 66,231 | 28,805 | 1,952 | ||||||||||||||||
Other non-cash | 457 | 277 | 551 | 823 | 23 | 28 | ||||||||||||||||||
Distributable Cash Flow | $ | 241,658 | $ | 242,260 | $ | 494,416 | $ | 433,114 | $ | 115,162 | $ | 323,974 | ||||||||||||
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Four Months | ||||||||||||||||||||||||
Six Months Ended | Years Ended | Ended | Year Ended | |||||||||||||||||||||
June 30, | December 31, | December 31, | August 31, | |||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2007 | |||||||||||||||||||
Reconciliation of Cash flow provided by operating activities to Distributable Cash Flow: | ||||||||||||||||||||||||
Cash flow provided by operating activities | $ | 233,100 | $ | 230,641 | $ | 468,969 | $ | 436,819 | $ | 77,360 | $ | 239,777 | ||||||||||||
Adjustments to derive Distributable Cash Flow: | ||||||||||||||||||||||||
Distributions related to period expected from ETP | 295,255 | 289,751 | 593,431 | 537,775 | 161,198 | 435,251 | ||||||||||||||||||
Distributions related to period expected from Regency | 13,709 | — | — | — | — | — | ||||||||||||||||||
Cash distributions received from ETP | (301,206 | ) | (281,205 | ) | (574,775 | ) | (535,342 | ) | (110,878 | ) | (360,602 | ) | ||||||||||||
Net pro rata cash settlement related to Regency Transactions | 3,015 | — | — | — | — | — | ||||||||||||||||||
Deferred income taxes | (858 | ) | 573 | 645 | — | — | — | |||||||||||||||||
Net changes in operating assets and liabilities | (1,357 | ) | 2,500 | 6,146 | (6,138 | ) | (12,518 | ) | 9,548 | |||||||||||||||
Distributable Cash Flow | $ | 241,658 | $ | 242,260 | $ | 494,416 | $ | 433,114 | $ | 115,162 | $ | 323,974 | ||||||||||||
Successor | Predecessor | ||||||||||||||||||||||||
Period from | |||||||||||||||||||||||||
Acquisition | |||||||||||||||||||||||||
(May 26, | Period from | Six Months | |||||||||||||||||||||||
2010) to | January 1, | Ended | Years Ended | ||||||||||||||||||||||
June 30, | 2010 to | June 30, | December 31, | ||||||||||||||||||||||
2010 | May 25, 2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||
Gas sales | $ | 48,103 | $ | 232,063 | $ | 254,793 | $ | 481,400 | $ | 1,126,760 | $ | 744,681 | |||||||||||||
NGL sales | 28,766 | 166,362 | 107,261 | 262,652 | 409,476 | 347,737 | |||||||||||||||||||
Gathering, transportation and other fees | 22,884 | 116,061 | 142,079 | 273,770 | 286,507 | 100,644 | |||||||||||||||||||
Net realized and unrealized gain from derivatives | (130 | ) | (716 | ) | 26,970 | 41,577 | (21,233 | ) | (34,266 | ) | |||||||||||||||
Other | 3,357 | 15,477 | 12,417 | 30,098 | 62,294 | 31,442 | |||||||||||||||||||
Total revenues | 102,980 | 529,247 | 543,520 | 1,089,497 | 1,863,804 | 1,190,238 | |||||||||||||||||||
Depreciation and amortization | 10,995 | 46,084 | 54,125 | 109,893 | 102,566 | 55,074 | |||||||||||||||||||
Operating (loss) income | (1,152 | ) | 19,936 | 185,579 | 224,636 | 163,973 | 59,364 | ||||||||||||||||||
Interest expense, net | (8,109 | ) | (36,459 | ) | (33,795 | ) | (77,996 | ) | (63,243 | ) | (52,016 | ) | |||||||||||||
Income (loss) before income tax expense | (4,650 | ) | (4,542 | ) | 153,963 | 139,394 | 101,062 | (12,600 | ) | ||||||||||||||||
Income tax (benefit) expense | 245 | 404 | (416 | ) | (1,095 | ) | (266 | ) | 931 | ||||||||||||||||
Net income attributable to noncontrolling interest | (29 | ) | (406 | ) | (100 | ) | (91 | ) | (312 | ) | (305 | ) | |||||||||||||
Net income attributable to Regency | (4,924 | ) | (5,352 | ) | 154,279 | 140,398 | 101,016 | (13,836 | ) |
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Successor | Predecessor | ||||||||||||||||||||||||
Period from | |||||||||||||||||||||||||
Acquisition | |||||||||||||||||||||||||
(May 26, | Period from | Six Months | |||||||||||||||||||||||
2010) to | January 1, | Ended | Years Ended | ||||||||||||||||||||||
June 30, | 2010 to | June 30, | December 31, | ||||||||||||||||||||||
2010 | May 25, 2010 | 2009 | 2009 | 2008 | 2007 | ||||||||||||||||||||
Balance Sheet Data (at period end): | |||||||||||||||||||||||||
Current assets | $ | 166,077 | $ | 158,827 | $ | 178,776 | $ | 236,403 | $ | 179,893 | |||||||||||||||
Total assets | 4,595,292 | 2,477,284 | 2,533,414 | 2,458,639 | 1,278,410 | ||||||||||||||||||||
Current liabilities | 154,365 | 128,506 | 161,308 | 216,950 | 198,258 | ||||||||||||||||||||
Long-term debt, net | 1,276,640 | 1,185,385 | 1,014,299 | 1,126,229 | 481,500 | ||||||||||||||||||||
Total partners’ capital and non-controlling interest | 3,026,579 | 1,148,520 | 1,243,010 | 1,099,413 | 563,293 | ||||||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||
Net cash flows (used in) provided by operating activities | $ | (16,207 | ) | $ | 89,421 | $ | 69,271 | $ | 143,960 | $ | 181,298 | $ | 79,529 | ||||||||||||
Net cash flows (used in) provided by investing activities | (46,935 | ) | (148,450 | ) | (36,003 | ) | (156,165 | ) | (948,629 | ) | (157,933 | ) | |||||||||||||
Net cash flows provided by (used in) financing activities | 44,454 | 72,186 | (24,592 | ) | 21,433 | 734,959 | 99,443 | ||||||||||||||||||
Capital expenditures: | |||||||||||||||||||||||||
Growth | 77,271 | (a) | 81,349 | 136,260 | 354,727 | 78,305 | |||||||||||||||||||
Maintenance | 7,858 | (a) | 7,933 | 20,170 | 18,247 | 7,734 | |||||||||||||||||||
(a) | Includes capital expenditures incurred during the period from January 1, 2010 through May 25, 2010. |
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• | if all outstanding indebtedness under our term loan facility is discharged or if all liens on collateral securing our obligations under the term loan facility are released, all of the liens securing the notes |
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may be released in accordance with the covenant described under “Description of Notes — Security for the Notes — Release of Collateral;” or |
• | upon the consent of holders of at least two-thirds in principal amount of the notes then outstanding, in accordance with the covenant described under “Description of Notes — Amendments and Waivers.” |
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• | how long payments under the notes could be delayed following commencement of a bankruptcy case; | |
• | whether or when the collateral agent could repossess or dispose of the collateral; | |
• | the value of the collateral at the time of the bankruptcy petition; or | |
• | whether or to what extent holders of the notes would be compensated for any delay in payment or loss of value of the collateral through the requirement of “adequate protection.” |
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• | the amount of natural gas transported through ETP’s and Regency’s transportation pipelines and gathering systems; | |
• | the level of throughput in processing and treating operations; | |
• | the fees charged and the margins realized by ETP and Regency for gathering, treating, processing, storage and transportation services; | |
• | the price of natural gas; | |
• | the relationship between natural gas and NGL prices; | |
• | the weather in their respective operating areas; |
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• | the cost of the propane ETP buys for resale and the prices it receives for its propane; | |
• | the level of competition from other midstream companies, interstate pipeline companies, propane companies and other energy providers; | |
• | the level of their respective operating costs; | |
• | prevailing economic conditions; and | |
• | the level of their respective derivative activities. |
• | the level of capital expenditures they make; | |
• | the level of costs related to litigation and regulatory compliance matters; | |
• | the cost of acquisitions, if any; | |
• | the levels of any margin calls that result from changes in commodity prices; | |
• | debt service requirements; | |
• | fluctuations in working capital needs; | |
• | their ability to make working capital borrowings under their respective credit facilities to make distributions; | |
• | their ability to access capital markets; | |
• | restrictions on distributions contained in their respective debt agreements; and | |
• | the amount, if any, of cash reserves established by the board of directors of their respective general partners in their discretion for the proper conduct of their respective businesses. |
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• | a significant portion of ETP’s and Regency’s cash flows from operations will be dedicated to the payment of principal and interest on then outstanding debt and will not be available for other purposes, including payment of distributions to us; | |
• | covenants contained in ETP’s and Regency’s existing debt arrangements require ETP and Regency to meet financial tests that may adversely affect their flexibility in planning for and reacting to changes in their respective businesses; | |
• | ETP’s and Regency’s ability to obtain additional financing for working capital, capital expenditures, acquisitions and general partnership purposes may be limited; | |
• | ETP and Regency may be at a competitive disadvantage relative to similar companies that have less debt; | |
• | ETP and Regency may be more vulnerable to adverse economic and industry conditions as a result of their significant debt levels; and | |
• | failure to comply with the various restrictive covenants of the debt agreements could negatively impact ETP’s and Regency’s ability to incur additional debt, including their ability to utilize the available capacity under their respective revolving credit facilities, and to pay distributions. |
• | to provide for the proper conduct of our business and the businesses of our operating subsidiaries (including reserves for future capital expenditures and for our anticipated future credit needs); | |
• | to reimburse our general partner for all expenses it has incurred on our behalf; |
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• | to provide funds for distributions to our unitholders and our general partner for any one or more of the next four calendar quarters; or | |
• | to comply with applicable law or any of our loan or other agreements. |
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Notional | Hedge | |||||||||||
Entity | Term | Amount | Type | Designation | ||||||||
ETE | May 2016 | $ | 300,000 | Pay an average fixed rate of 5.20% and receive a floating rate | Undesignated | |||||||
ETE | November 2012 | 500,000 | Pay a fixed rate of 4.57% and receive a floating rate | Undesignated | ||||||||
ETE | November 2012 | 700,000 | Pay an average fixed rate of 4.84% and receive a floating rate | Cash flow | ||||||||
ETP | July 2013 | 350,000 | Pay a floating rate (plus 3.75%) and receive a fixed rate of 6.00% | Fair value | ||||||||
ETP | August 2012 | 200,000 | Forward starting to pay a fixed rate of 3.80% and receive a floating rate | Cash flow | ||||||||
Regency | April 2012 | 250,000 | Pay a fixed rate of 1.325% and receive a floating rate | Undesignated |
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• | voluntarily withdraws from the partnership by giving notice to the other partners; | |
• | transfers all, but not less than all, of its partnership interests to another entity in accordance with the terms of ETP’s or Regency’s partnership agreement, as applicable; | |
• | makes a general assignment for the benefit of creditors, files a voluntary bankruptcy petition, seeks to liquidate, acquiesces in the appointment of a trustee, receiver or liquidator, or becomes subject to an involuntary bankruptcy petition; or | |
• | dissolves itself under Delaware law without reinstatement within the requisite period. |
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• | unitholders’ current proportionate ownership interest in ETP or Regency, as applicable, will decrease; | |
• | the amount of cash available for distribution on each common unit or partnership security may decrease; | |
• | the ratio of taxable income to distributions may increase; | |
• | the relative voting strength of each previously outstanding common unit may be diminished; and | |
• | the market price of ETP’s or Regency’s common units, as applicable, may decline. |
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• | the allocation of shared overhead expenses to ETP, Regency and us; | |
• | the interpretation and enforcement of contractual obligations between us and our affiliates, on the one hand, and ETP or Regency, on the other hand; | |
• | the determination of the amount of cash to be distributed to ETP’s or Regency’s partners and the amount of cash to be reserved for the future conduct of ETP’s or Regency’s business; | |
• | the determination of whether to make borrowings under ETP’s or Regency’s respective revolving credit facility to pay distributions to ETP’s or Regency’s partners, as applicable; and | |
• | any decision we make in the future to engage in business activities independent of ETP or Regency. |
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• | Our general partner is allowed to take into account the interests of parties other than us, including ETP, Regency and their respective affiliates and any general partners and limited partnerships acquired in the future, in resolving conflicts of interest, which has the effect of limiting its fiduciary duties to us. | |
• | Our general partner has limited its liability and reduced its fiduciary duties under the terms of our partnership agreement, while also restricting the remedies available for actions that, without these limitations, might constitute breaches of fiduciary duty. As a result of purchasing our units, unitholders consent to various actions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under applicable state law. | |
• | Our general partner determines the amount and timing of our investment transactions, borrowings, issuances of additional partnership securities and reserves, each of which can affect the amount of cash that is available for distribution. | |
• | Our general partner determines which costs it and its affiliates have incurred are reimbursable by us. | |
• | Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered, or from entering into additional contractual arrangements with any of these entities on our behalf, so long as the terms of any such payments or additional contractual arrangements are fair and reasonable to us. | |
• | Our general partner controls the enforcement of obligations owed to us by it and its affiliates. | |
• | Our general partner decides whether to retain separate counsel, accountants or others to perform services for us. |
• | permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner; | |
• | provides that our general partner is entitled to make other decisions in “good faith” if it reasonably believes that the decisions are in our best interests; | |
• | generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the Audit and Conflicts Committee of the board of directors of our general partner and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our general partner may consider the totality of the relationships among the parties involved, including other transactions that may be particularly advantageous or beneficial to us; and | |
• | provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non- |
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appealable judgment entered by a court of competent jurisdiction determining that the general partner or those other persons acted in bad faith or engaged in fraud, willful misconduct or gross negligence. |
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• | the impact of weather on the demand for oil and natural gas; | |
• | the level of domestic oil and natural gas production; | |
• | the availability of imported oil and natural gas; | |
• | actions taken by foreign oil and gas producing nations; | |
• | the availability of local, intrastate and interstate transportation systems; | |
• | the price, availability and marketing of competitive fuels; | |
• | the demand for electricity; | |
• | the impact of energy conservation efforts; and | |
• | the extent of governmental regulation and taxation. |
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• | inability to identify attractive acquisition candidates or negotiate acceptable purchase contracts with them; |
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• | inability to raise financing for such acquisitions on economically acceptable terms; or | |
• | inability to outbid competitors, some of which are substantially larger than ETP or Regency and may have greater financial resources and lower costs of capital. |
• | fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements; | |
• | decrease its liquidity by using a significant portion of its available cash or borrowing capacity to finance acquisitions; | |
• | significantly increase its interest expense or financial leverage if the acquisition is financed with additional debt; | |
• | encounter difficulties operating in new geographic areas or new lines of business; | |
• | incur or assume unanticipated liabilities, losses or costs associated with the business or assets acquired for which there is no indemnity or the indemnity is inadequate; | |
• | be unable to hire, train or retrain qualified personnel to manage and operate its growing business and assets; | |
• | less effectively manage its historical assets, due to the diversion of management’s attention from other business concerns; or | |
• | incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges. |
• | inability to identify pipeline construction opportunities with favorable projected financial returns; | |
• | inability to raise financing for its identified pipeline construction opportunities; or | |
• | inability to secure sufficient natural gas transportation commitments from potential customers due to competition from other Regency pipeline construction projects or for other reasons. |
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• | operating terms and conditions of service; | |
• | the types of services interstate pipelines may offer their customers; | |
• | construction of new facilities; | |
• | acquisition, extension or abandonment of services or facilities; |
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• | reporting and information posting requirements; | |
• | accounts and records; and | |
• | relationships with affiliated companies involved in all aspects of the natural gas and energy businesses. |
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• | price; | |
• | reliability and quality of service; | |
• | responsiveness to customer needs; |
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• | safety concerns; | |
• | long-standing customer relationships; | |
• | the inconvenience of switching tanks and suppliers; and | |
• | the lack of growth in the industry. |
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• | an actual basis; | |
• | an as adjusted basis to give effect to: |
(i) | ETP’s issuance of an aggregate of 501,500 common units under ETP’s equity distribution program subsequent to June 30, 2010 for net proceeds of approximately $23.1 million, which were used to repay amounts outstanding under ETP’s revolving credit facility; | |
(ii) | ETP’s public offering of 10,925,000 common units (including 1,425,000 common units pursuant to the exercise of the underwriters’ over-allotment option) which closed on August 23, 2010, with proceeds of $488.9 million, net of underwriting discounts and commissions and estimated expenses, and the application of a portion of the net proceeds therefrom to repay amounts outstanding under ETP’s revolving credit facility and to increase cash and cash equivalents pending the use of such proceeds to fund capital expenditures related to pipeline construction projects and for general partnership purposes; and | |
(iii) | Regency’s public offering of 17,537,500 common units (including 2,287,500 common units pursuant to the exercise of the underwriters’ over-allotment option) which closed on August 16, 2010, with proceeds of $399.8 million, net of underwriting discounts and commissions and estimated expenses, and the application of the proceeds therefrom to repay amounts outstanding under Regency’s revolving credit facility; and |
• | an as further adjusted basis to give effect to the sale of the notes and the application of the net proceeds therefrom as described in “Use of Proceeds.” |
June 30, 2010 | ||||||||||||
As | As Further | |||||||||||
Actual | Adjusted | Adjusted | ||||||||||
Cash and Cash Equivalents | $ | 84,249 | (1) | $ | 566,998 | $ | 566,998 | |||||
Debt, including current maturities: | ||||||||||||
Debt of Energy Transfer Equity | ||||||||||||
Existing $500 million Revolving Credit Facility | $ | 134,500 | $ | 134,500 | $ | — | ||||||
New $200 million Revolving Credit Facility | — | — | — | |||||||||
Term Loan Facility | 1,450,000 | 1,450,000 | 700,500 | |||||||||
Notes offered hereby | — | — | 1,000,000 | |||||||||
Debt of Energy Transfer Partners(2)(3) | ||||||||||||
$2,000 million ETP Revolving Credit Facility | 29,256 | — | — | |||||||||
ETP Senior Notes | 5,050,000 | 5,050,000 | 5,050,000 | |||||||||
Transwestern Senior Notes | 870,000 | 870,000 | 870,000 | |||||||||
HOLP Senior Secured Notes | 127,785 | 127,785 | 127,785 | |||||||||
Other long-term debt | 9,307 | 9,307 | 9,307 | |||||||||
Debt of Regency Energy Partners | ||||||||||||
Senior Notes | 607,500 | 607,500 | 607,500 | |||||||||
Revolving Credit Facility(4) | 655,650 | 255,814 | 255,814 | |||||||||
Unamortized discounts and fair value adjustments | 17,408 | 17,408 | 17,408 | |||||||||
Total Long-Term Debt | 8,951,406 | 8,522,314 | 8,638,314 | |||||||||
Total Equity | 5,630,258 | 6,542,099 | 6,542,099 | |||||||||
Total Capitalization | $ | 14,581,664 | $ | 15,064,413 | $ | 15,180,413 | ||||||
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(1) | As of August 31, 2010, ETE had cash and cash equivalents (on a consolidated basis) of $330.3 million, which includes approximately $190 million held by Regency as of August 31, 2010 to fund the acquisition of Zephyr Gas Services LP, which acquisition closed on September 1, 2010. | |
(2) | On February 29, 2008, MEP entered into a credit agreement that provides for a $1.4 billion senior revolving credit facility, which we refer to as the MEP Facility. Effective in May 2010, the commitment amount under the MEP Facility was reduced to $175.4 million. Following the completion of the Regency Transactions, ETP guarantees 50% of the obligations of MEP under the MEP Facility and is indemnified by Regency for any expenditures resulting from this guarantee, with the remaining 50% of MEP’s obligations guaranteed by KMP. As of September 8, 2010, there were $72.5 million of outstanding borrowings and $33.3 million of letters of credit issued under the MEP Facility. | |
(3) | On November 13, 2009, FEP entered into a credit agreement that provides for a $1.1 billion senior revolving credit facility. ETP has guaranteed 50% of the obligations of FEP under this facility, with the remaining 50% of FEP’s obligations guaranteed by KMP. As of September 8, 2010, there were $847.0 million of outstanding borrowings under FEP’s senior revolving credit facility. | |
(4) | As of September 8, 2010, Regency had outstanding $400.0 million in borrowings under the Revolving Credit Facility. |
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Six | ||||||||||||||||||||||||||||
Months | Four Months | |||||||||||||||||||||||||||
Ended | Years Ended | Ended | ||||||||||||||||||||||||||
June 30, | December 31, | December 31, | Years Ended August 31, | |||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007(1) | 2007 | 2006 | 2005 | ||||||||||||||||||||||
Ratio of Earnings to Fixed Charges | 1.67 | 2.39 | 2.74 | 2.58 | 2.75 | 3.55 | 2.98 |
(1) | In November 2007, we changed our fiscal year end from a year ending August 31 to a year ending December 31. Accordingly, the four months ended December 31, 2007 is treated as a transition period. |
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Four Months | ||||||||||||||||||||||||||||||||
Six Months Ended | Years Ended | Ended | ||||||||||||||||||||||||||||||
June 30, | December 31, | December 31, | Years Ended August 31, | |||||||||||||||||||||||||||||
2010 | 2009 | 2009 | 2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||
Investment in ETP | $ | 3,139,687 | $ | 2,781,917 | $ | 5,417,295 | $ | 9,293,868 | $ | 2,349,510 | $ | 6,792,037 | $ | 7,859,096 | $ | 6,168,798 | ||||||||||||||||
Investment in Regency | 102,980 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other | (2,157 | ) | (253 | ) | — | (501 | ) | (168 | ) | — | — | — | ||||||||||||||||||||
Total revenues | 3,240,510 | 2,781,664 | 5,417,295 | 9,293,367 | 2,349,342 | 6,792,037 | 7,859,096 | 6,168,798 | ||||||||||||||||||||||||
Gross margin | 1,171,285 | 1,196,532 | 2,295,239 | 2,355,287 | 675,688 | 1,713,831 | 1,290,780 | 787,283 | ||||||||||||||||||||||||
Depreciation and amortization | 184,816 | 154,888 | 325,024 | 274,372 | 75,406 | 191,383 | 129,636 | 105,751 | ||||||||||||||||||||||||
Operating income | 518,289 | 571,129 | 1,110,398 | 1,098,903 | 316,651 | 809,336 | 575,540 | 297,921 | ||||||||||||||||||||||||
Interest expense, net of interest capitalized | (250,734 | ) | (220,950 | ) | (468,420 | ) | (357,541 | ) | (103,375 | ) | (279,986 | ) | (150,646 | ) | (101,061 | ) | ||||||||||||||||
Income from continuing operations before income tax expense | 192,867 | 430,978 | 707,100 | 683,562 | 192,758 | 563,359 | 433,907 | 201,795 | ||||||||||||||||||||||||
Income tax expense | 9,264 | 9,470 | 9,229 | 3,808 | 9,949 | 11,391 | 23,015 | 4,397 | ||||||||||||||||||||||||
Net income attributable to noncontrolling interest | 51,558 | 165,597 | 255,398 | 304,710 | 90,132 | 232,608 | 303,752 | 162,242 | ||||||||||||||||||||||||
Net income attributable to partners | 132,045 | 255,911 | 442,473 | 375,044 | 92,677 | 319,360 | 107,140 | 146,746 | ||||||||||||||||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||||||||||||||
Current assets | 1,084,534 | 872,030 | 1,267,959 | 1,180,995 | 1,403,796 | 1,050,578 | 1,302,735 | 1,453,730 | ||||||||||||||||||||||||
Total assets | 16,361,954 | 11,435,309 | 12,160,509 | 11,069,902 | 9,462,094 | 8,183,089 | 5,924,141 | 4,905,672 | ||||||||||||||||||||||||
Current liabilities | 1,183,068 | 925,714 | 889,745 | 1,208,921 | 1,241,433 | 932,815 | 1,020,787 | 1,244,785 | ||||||||||||||||||||||||
Long-term debt, less current maturities | 8,776,173 | 7,265,314 | 7,750,998 | 7,190,357 | 5,870,106 | 5,198,676 | 3,205,646 | 2,275,965 | ||||||||||||||||||||||||
Total equity | 5,630,258 | 2,945,635 | 3,220,251 | 2,339,316 | 2,091,156 | 1,835,300 | 1,484,878 | 1,123,998 | ||||||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||||||||
Cash flow provided by operating activities | 801,936 | 653,488 | 723,461 | 1,143,720 | 208,635 | 1,006,320 | 502,928 | 155,272 | ||||||||||||||||||||||||
Cash flow used in investing activities | (786,185 | ) | (875,514 | ) | (1,345,756 | ) | (2,015,585 | ) | (995,943 | ) | (2,158,090 | ) | (1,244,406 | ) | (1,131,117 | ) | ||||||||||||||||
Cash flow provided by financing activities | 183 | 244,364 | 598,587 | 907,331 | 766,515 | 1,202,916 | 734,223 | 926,452 | ||||||||||||||||||||||||
Capital expenditures: | ||||||||||||||||||||||||||||||||
Maintenance (accrual basis) | 43,855 | 44,283 | 102,652 | 140,968 | 48,998 | 89,226 | 51,826 | 41,054 | ||||||||||||||||||||||||
Growth (accrual basis) | 600,944 | 402,240 | 530,333 | 1,921,679 | 604,371 | 998,075 | 677,861 | 155,405 | ||||||||||||||||||||||||
Cash (received in) paid for acquisitions | 129,390 | 6,362 | (30,367 | ) | 84,783 | 337,092 | 90,695 | 586,185 | 1,131,844 |
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General Partner | Incentive Distribution | |||||||||||
Interest | Rights | Common Units | ||||||||||
ETP | 1.8 | % | 100 | % | 50,226,967 | |||||||
Regency | 2.0 | % | 100 | % | 26,266,791 |
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• | ETP is a publicly traded Delaware limited partnership that owns and operates a diversified portfolio of energy assets. ETP’s natural gas operations include intrastate natural gas gathering and transportation pipelines, an interstate pipeline, natural gas gathering, processing and treating assets located in Texas, New Mexico, Arizona, Louisiana, Colorado and Utah, and three natural gas storage facilities located in Texas. ETP’s intrastate and interstate pipeline systems transport natural gas from several natural gas producing areas, including the Barnett Shale in the Fort Worth Basin in north Texas, the Bossier Sands in east Texas, the Permian Basin in west Texas and New Mexico, the San Juan Basin in New Mexico and other producing areas in south Texas and central Texas. ETP’s gathering and processing operations are conducted in many of these same producing areas as well as in the Piceance and Uinta Basins in Colorado and Utah. In addition to its natural gas operations, ETP is one of the largest retail marketers of propane in the United States, serving more than one million customers across the country. | |
• | Regency is a publicly traded Delaware limited partnership, formed in 2005, engaged in the gathering, treating, processing, compressing, marketing and transporting of natural gas and NGLs. Regency provides these services through systems primarily located in Louisiana, Texas, Arkansas, Pennsylvania and the mid-continent region of the United States, which includes Kansas, Colorado, and Oklahoma. Regency’s midstream assets are primarily located in well-established areas of natural gas production that have been characterized by long-lived, predictable reserves. |
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
Revenues | $ | 1,368,529 | $ | 1,151,690 | $ | 216,839 | $ | 3,240,510 | $ | 2,781,664 | $ | 458,846 | ||||||||||||
Cost of products sold | 844,360 | 625,993 | 218,367 | 2,069,225 | 1,585,132 | 484,093 | ||||||||||||||||||
Gross margin | 524,169 | 525,697 | (1,528 | ) | 1,171,285 | 1,196,532 | (25,247 | ) | ||||||||||||||||
Operating expenses | 181,285 | 176,681 | 4,604 | 352,033 | 358,454 | (6,421 | ) | |||||||||||||||||
Depreciation and amortization | 98,485 | 79,229 | 19,256 | 184,816 | 154,888 | 29,928 | ||||||||||||||||||
Selling, general and administrative | 65,038 | 54,756 | 10,282 | 116,147 | 112,061 | 4,086 | ||||||||||||||||||
Operating income | 179,361 | 215,031 | (35,670 | ) | 518,289 | 571,129 | (52,840 | ) | ||||||||||||||||
Interest expense, net of interest capitalized | (129,063 | ) | (119,559 | ) | (9,504 | ) | (250,734 | ) | (220,950 | ) | (29,784 | ) | ||||||||||||
Equity in earnings of affiliates | 12,193 | 1,673 | 10,520 | 18,374 | 2,170 | 16,204 | ||||||||||||||||||
Gains (losses) on disposal of assets | 1,375 | 181 | 1,194 | (489 | ) | (245 | ) | (244 | ) | |||||||||||||||
Gains (losses) on non-hedged interest rate derivatives | (22,468 | ) | 49,911 | (72,379 | ) | (36,892 | ) | 59,962 | (96,854 | ) | ||||||||||||||
Allowance for equity funds used during construction | 4,298 | (1,839 | ) | 6,137 | 5,607 | 18,588 | (12,981 | ) | ||||||||||||||||
Impairment of investment in affiliate | (52,620 | ) | — | (52,620 | ) | (52,620 | ) | — | (52,620 | ) | ||||||||||||||
Other, net | (9,502 | ) | (377 | ) | (9,125 | ) | (8,668 | ) | 324 | (8,992 | ) | |||||||||||||
Income tax expense | (4,053 | ) | (3,263 | ) | (790 | ) | (9,264 | ) | (9,470 | ) | 206 | |||||||||||||
Net (loss) income | $ | (20,479 | ) | $ | 141,758 | $ | (162,237 | ) | $ | 183,603 | $ | 421,508 | $ | (237,905 | ) | |||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
Equity in earnings of affiliates | $ | 75,362 | $ | 110,941 | $ | (35,579 | ) | $ | 221,740 | $ | 287,534 | $ | (65,794 | ) | ||||||||||
Selling, general and administrative | (15,079 | ) | (1,135 | ) | (13,944 | ) | (17,415 | ) | (2,822 | ) | (14,593 | ) | ||||||||||||
Interest expense, net of interest capitalized | (20,210 | ) | (18,797 | ) | (1,413 | ) | (36,916 | ) | (38,139 | ) | 1,223 | |||||||||||||
Gains (losses) on non-hedged interest rate derivatives | (20,753 | ) | 13,069 | (33,822 | ) | (35,177 | ) | 9,394 | (44,571 | ) | ||||||||||||||
Other, net | (88 | ) | (275 | ) | 187 | (212 | ) | (628 | ) | 416 |
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• | Investment in ETP — Reflects the consolidated operations of ETP and its General Partner, ETP GP. | |
• | Investment in Regency — Reflects the consolidated operations of Regency and its General Partner, Regency GP. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
Investment in ETP | $ | 42,843 | $ | 150,738 | $ | (107,895 | ) | $ | 282,954 | $ | 457,905 | $ | (174,951 | ) | ||||||||||
Investment in Regency | (4,895 | ) | — | (4,895 | ) | (4,895 | ) | — | (4,895 | ) | ||||||||||||||
Corporate and Other | (58,427 | ) | (8,980 | ) | (49,447 | ) | (94,456 | ) | (36,397 | ) | (58,059 | ) | ||||||||||||
Net (loss) income | $ | (20,479 | ) | $ | 141,758 | $ | (162,237 | ) | $ | 183,603 | $ | 421,508 | $ | (237,905 | ) | |||||||||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
Revenues | $ | 1,267,706 | $ | 1,151,817 | $ | 115,889 | $ | 3,139,687 | $ | 2,781,917 | $ | 357,770 | ||||||||||||
Cost of products sold | 770,857 | 625,993 | 144,864 | 1,995,722 | 1,585,132 | 410,590 | ||||||||||||||||||
Gross margin | 496,849 | 525,824 | (28,975 | ) | 1,143,965 | 1,196,785 | (52,820 | ) | ||||||||||||||||
Operating expenses | 169,533 | 176,681 | (7,148 | ) | 340,281 | 358,454 | (18,173 | ) | ||||||||||||||||
Depreciation and amortization | 83,877 | 76,174 | 7,703 | 167,153 | 148,777 | 18,376 | ||||||||||||||||||
Selling, general and administrative | 44,255 | 53,749 | (9,494 | ) | 93,009 | 109,481 | (16,472 | ) | ||||||||||||||||
Operating income (loss) | 199,184 | 219,220 | (20,036 | ) | 543,522 | 580,073 | (36,551 | ) | ||||||||||||||||
Interest expense, net of interest capitalized | (103,014 | ) | (100,680 | ) | (2,334 | ) | (207,976 | ) | (182,725 | ) | (25,251 | ) | ||||||||||||
Equity in earnings of affiliates | 4,072 | 1,673 | 2,399 | 10,253 | 2,170 | 8,083 | ||||||||||||||||||
Gains (losses) on disposal of assets | 1,385 | 181 | 1,204 | (479 | ) | (245 | ) | (234 | ) | |||||||||||||||
Gains (losses) on non-hedged interest rate derivatives | — | 36,842 | (36,842 | ) | — | 50,568 | (50,568 | ) | ||||||||||||||||
Allowance for equity funds used during construction | 4,298 | (1,839 | ) | 6,137 | 5,607 | 18,588 | (12,981 | ) | ||||||||||||||||
Impairment of investment in affiliate | (52,620 | ) | — | (52,620 | ) | (52,620 | ) | — | (52,620 | ) | ||||||||||||||
Other, net | (5,893 | ) | (100 | ) | (5,793 | ) | (4,860 | ) | 967 | (5,827 | ) | |||||||||||||
Income tax expense | (4,569 | ) | (4,559 | ) | (10 | ) | (10,493 | ) | (11,491 | ) | 998 | |||||||||||||
Net income | $ | 42,843 | $ | 150,738 | $ | (107,895 | ) | $ | 282,954 | $ | 457,905 | $ | (174,951 | ) | ||||||||||
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Three and Six Months | ||||||||||||
Ended June 30, | ||||||||||||
2010 | 2009 | Change | ||||||||||
Revenues | $ | 102,980 | $ | — | $ | 102,980 | ||||||
Cost of products sold | 74,081 | — | 74,081 | |||||||||
Gross margin | 28,899 | — | 28,899 | |||||||||
Operating expenses | 11,942 | — | 11,942 | |||||||||
Depreciation and amortization | 10,995 | — | 10,995 | |||||||||
Selling, general and administrative | 7,104 | — | 7,104 | |||||||||
Losses on disposal of assets | 10 | — | 10 | |||||||||
Operating loss | (1,152 | ) | — | (1,152 | ) | |||||||
Interest expense, net of interest capitalized | (8,109 | ) | — | (8,109 | ) | |||||||
Equity in earnings of affiliates | 8,121 | — | 8,121 | |||||||||
Other, net | (3,510 | ) | — | (3,510 | ) | |||||||
Income tax expense | (245 | ) | — | (245 | ) | |||||||
Net loss | $ | (4,895 | ) | $ | — | $ | (4,895 | ) | ||||
General Partner | Incentive Distribution | |||||||||||
Interest | Rights | Common Units | ||||||||||
ETP | 1.8 | % | 100 | % | 50,226,967 | |||||||
Regency | 2.0 | % | 100 | % | 26,266,791 |
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• | growth capital expenditures for its midstream and intrastate transportation and storage segments primarily for the construction of new pipelines and compression, for which ETP expects to spend between $200 million and $220 million for the remainder of 2010; | |
• | growth capital expenditures for its interstate transportation segment, excluding capital contributions to its joint ventures as discussed below, for the construction of new pipelines, for which ETP expects to spend between $550 million and $610 million for the remainder of 2010; | |
• | growth capital expenditures for its retail propane segment of between $15 million and $25 million for the remainder of 2010; and | |
• | maintenance capital expenditures of between $40 million and $55 million for the remainder of 2010, which include (i) capital expenditures for its intrastate operations for pipeline integrity and for connecting additional wells to its intrastate natural gas systems in order to maintain or increase throughput on existing assets; (ii) capital expenditures for its interstate operations, primarily for pipeline integrity; and (iii) capital expenditures for its propane operations to extend the useful lives of its existing propane assets in order to sustain its operations, including vehicle replacements on its propane vehicle fleet. |
• | cash generated from operations; | |
• | borrowings under its revolving credit facility, which we refer to as the Regency Credit Facility; | |
• | operating lease facilities; | |
• | asset sales; | |
• | debt offerings; and |
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• | issuance of additional partnership units. |
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June 30, | December 31, | |||||||
2010 | 2009 | |||||||
ETE Indebtedness: | ||||||||
Senior Secured Term Loan Facility | $ | 1,450,000 | $ | 1,450,000 | ||||
Senior Secured Revolving Credit Facility | 134,500 | 123,951 | ||||||
Subsidiary Indebtedness: | ||||||||
ETP Senior Notes | 5,050,000 | 5,050,000 | ||||||
Regency Senior Notes | 607,500 | — | ||||||
Transwestern Senior Unsecured Notes | 870,000 | 870,000 | ||||||
HOLP Senior Secured Notes | 127,785 | 140,512 | ||||||
ETP Revolving Credit Facility | 29,256 | 150,000 | ||||||
Regency Revolving Credit Facility | 655,650 | — | ||||||
HOLP Revolving Credit Facility | — | 10,000 | ||||||
Other long-term debt | 9,307 | 10,288 | ||||||
Unamortized premiums (discounts) | 1,031 | (12,829 | ) | |||||
Fair value adjustments related to interest rate swaps | 16,377 | — | ||||||
Total debt | $ | 8,951,406 | $ | 7,791,922 | ||||
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Payments Due by Period | ||||||||||||||||||||
Remainder | ||||||||||||||||||||
Contractual Obligations | Total | of 2010 | 2011-2012 | 2013-2014 | Thereafter | |||||||||||||||
Long-term debt | $ | 8,933,998 | $ | 26,774 | $ | 2,071,424 | $ | 1,829,394 | $ | 5,006,406 | ||||||||||
Interest on long-term debt(a) | 4,947,844 | 270,128 | 1,066,686 | 875,920 | 2,735,110 | |||||||||||||||
Payments on derivatives | 162,235 | 34,578 | 109,360 | 13,407 | 4,890 | |||||||||||||||
Purchase commitments(b) | 965,539 | 329,450 | 388,834 | 219,782 | 27,473 | |||||||||||||||
Lease obligations | 348,109 | 19,587 | 53,195 | 43,782 | 231,545 | |||||||||||||||
Distributions and Redemption of Preferred Units | 329,683 | 12,224 | 63,563 | 55,229 | 198,667 | |||||||||||||||
Totals | $ | 15,687,408 | $ | 692,741 | $ | 3,753,062 | $ | 3,037,514 | $ | 8,204,091 | ||||||||||
(a) | Interest payments on long-term debt are based on the principal amount of debt obligations at June 30, 2010. With respect to variable rate debt, the interest payments were estimated using the interest rate as of June 30, 2010. To the extent interest rates change, our contractual obligation for interest payments will change. See “Quantitative and Qualitative Disclosures About Market Risk” below for further discussion. | |
(b) | We define a purchase commitment as an agreement to purchase goods or services that is enforceable and legally binding (unconditional) on us that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transactions. We have long and short-term product purchase obligations for propane and energy commodities with third-party suppliers. These purchase obligations are entered into at either variable or fixed prices. The purchase prices that we are obligated to pay under variable price contracts approximate market prices at the time we take delivery of the volumes. Our estimated future variable price contract payment obligations are based on the June 30, 2010 market price of the applicable commodity applied to future volume commitments. Actual future payment obligations may vary depending on market prices at the time of delivery. The purchase prices that we are obligated to pay under fixed price contracts are established at the inception of the contract. Our estimated future fixed price contract payment obligations are based on the contracted fixed price under each commodity contract. Obligations shown in the table represent estimated payment obligations under these contracts for the periods indicated. |
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Quarter Ended | Record Date | Payment Date | Amount per Unit | |||||||
December 31, 2009 | February 8, 2010 | February 19, 2010 | $0.54 | |||||||
March 31, 2010 | May 7, 2010 | May 17, 2010 | $0.54 | |||||||
June 30, 2010 | August 9, 2010 | August 19, 2010 | $0.54 |
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Limited Partners | $ | 240,776 | $ | 236,272 | ||||
General Partner | 748 | 734 | ||||||
Total distributions declared | $ | 241,524 | $ | 237,006 | ||||
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Distributions received from ETP(1): | ||||||||
Limited Partners(2) | $ | 100,750 | $ | 111,720 | ||||
General Partner Interest | 9,754 | 9,721 | ||||||
Incentive Distribution Rights | 184,751 | 168,310 | ||||||
Total distributions received from ETP(3) | 295,255 | 289,751 | ||||||
Distributions received from Regency(4): | ||||||||
Limited Partners | 11,689 | — | ||||||
General Partner Interest | 1,105 | — | ||||||
Incentive Distribution Rights | 915 | — | ||||||
Total distributions received from Regency(5) | 13,709 | — | ||||||
Total distributions received | $ | 308,964 | $ | 289,751 | ||||
(1) | Includes distributions declared by ETP for the three months ended June 30, 2010 that were paid on August 16, 2010 to holders of record on August 9, 2010. | |
(2) | As of June 30, 2010, we held 50,226,967 ETP common units. This amount reflects the redemption of 12.3 million ETP common units in connection with the Regency Transactions. | |
(3) | The distributions paid by ETP for the periods prior to May 26, 2010, the date of the closing of the Regency Transactions, do not reflect the reduction in the number of ETP common units held by us as a result of the Regency Transactions and the associated expected reduction in distributions payable in respect of the incentive distribution rights. | |
On a pro forma basis assuming no change from ETP’s historical quarterly distribution rates, after giving effect to the reduction in ETP common units held by us as a result of the Regency Transactions and the associated reduction in distributions payable in respect of the incentive distribution rights as if the Regency Transactions had been completed on January 1, 2010, we would have received a $278.4 million |
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distribution from ETP for the six months ended June 30, 2010, of which $9.7 million would relate to our general partner interest, $178.9 million to our incentive distribution rights and $89.8 million to the approximately 50.2 million ETP common units we currently own. | ||
(4) | Includes distributions delivered by Regency for the three months ended June 30, 2010 that were paid on August 13, 2010 to holders of record on August 6, 2010. | |
(5) | Our equity interests in Regency consist of approximately 26.3 million common units, a 2.0% general partner interest and 100% of the incentive distribution rights | |
On a pro forma basis assuming no change from Regency’s historical quarterly distribution rates, after giving effect to the acquisition of our equity interests in Regency pursuant to the Regency Transactions, we would have received a $27.4 million distribution from Regency for the six months ended June 30, 2010, of which $2.2 million would relate to our general partner interest, $1.8 million to our incentive distribution rights and $23.4 million to the approximately 26.3 million Regency common units we currently own. |
Quarter Ended | Record Date | Payment Date | Amount per Unit | |||||
December 31, 2009 | February 8, 2010 | February 15, 2010 | $ | 0.89375 | ||||
March 31, 2010 | May 7, 2010 | May 17, 2010 | $ | 0.89375 | ||||
June 30, 2010 | August 9, 2010 | August 16, 2010 | $ | 0.89375 |
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Limited Partners: | ||||||||
Common Units | $ | 332,371 | $ | 301,738 | ||||
Class E Units | 6,242 | 6,242 | ||||||
General Partner Interest | 9,754 | 9,721 | ||||||
Incentive Distribution Rights | 184,751 | 168,310 | ||||||
Total distributions declared by ETP | $ | 533,118 | $ | 486,011 | ||||
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Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Limited Partners | $ | 53,229 | $ | — | ||||
General Partner Interest | 1,105 | — | ||||||
Incentive Distribution Rights | 915 | — | ||||||
Total distributions declared by Regency | $ | 55,249 | $ | — | ||||
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December 31, | ||||||||||||||||||||||||||||||||||||
June 30, 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||||||
Fair Value | Effect of | Fair Value | Effect of | Fair Value | Effect of | |||||||||||||||||||||||||||||||
Notional | Asset | Hypothetical | Notional | Asset | Hypothetical | Notional | Asset | Hypothetical | ||||||||||||||||||||||||||||
Volume | (Liability) | 10% Change | Volume | (Liability) | 10% Change | Volume | (Liability) | 10% Change | ||||||||||||||||||||||||||||
Mark to Market Derivatives | ||||||||||||||||||||||||||||||||||||
Basis Swaps IFERC/NYMEX — Natural Gas | $ | (23,182,500 | ) | $ | (752 | ) | $ | 176 | 72,325,000 | $ | 24,554 | $ | 491 | 15,720,000 | $ | 3,125 | $ | 865 | ||||||||||||||||||
Swing Swaps IFERC — Natural Gas | (23,592,500 | ) | 1,258 | 158 | (38,935,000 | ) | 1,718 | 2,142 | (58,045,000 | ) | (118 | ) | 1 | |||||||||||||||||||||||
Fixed Swaps/Futures — Natural Gas | 2,902,000 | (8,591 | ) | 2,098 | 4,852,500 | 9,949 | 3,126 | (20,880,000 | ) | 97,498 | 11,824 | |||||||||||||||||||||||||
Options Puts — Natural Gas | (8,140,000 | ) | 13,702 | 1,255 | 2,640,000 | 837 | 447 | — | — | — | ||||||||||||||||||||||||||
Options Calls — Natural Gas | (5,920,000 | ) | (8,314 | ) | 636 | (2,640,000 | ) | (819 | ) | 314 | — | — | — | |||||||||||||||||||||||
Propane Forwards/Swaps — Propane | — | — | — | 6,090,000 | 3,348 | 785 | 47,313,002 | (42,288 | ) | 3,074 | ||||||||||||||||||||||||||
Forwards/Swaps — Natural Gas Liquids | (1,442,000 | ) | 10,197 | 8,322 | — | — | — | — | — | — | ||||||||||||||||||||||||||
Forwards/Swaps — WTI Crude Oil | (323,000 | ) | 5,698 | 2,530 | — | — | — | — | — | — | ||||||||||||||||||||||||||
Fair Value Hedging Derivatives | ||||||||||||||||||||||||||||||||||||
Basis Swaps IFERC/NYMEX — Natural Gas | (5,410,000 | ) | 217 | 95 | (22,625,000 | ) | $ | (4,178 | ) | $ | 2 | — | $ | — | $ | — | ||||||||||||||||||||
Fixed Swaps/Futures — Natural Gas | (18,765,000 | ) | 1,087 | 9,628 | (27,300,000 | ) | (13,285 | ) | 15,669 | — | — | — | ||||||||||||||||||||||||
Cash Flow Hedging Derivatives | ||||||||||||||||||||||||||||||||||||
Basis Swaps IFERC/NYMEX — Natural Gas | (10,845,000 | ) | 105 | 172 | (13,225,000 | ) | $ | (1,640 | ) | $ | 81 | (9,085,000 | ) | $ | 3,268 | $ | 837 | |||||||||||||||||||
Fixed Swaps/Futures — Natural Gas | (18,502,500 | ) | 11,478 | 9,115 | (22,800,000 | ) | (4,464 | ) | 13,197 | (9,085,000 | ) | 6,691 | 5,577 | |||||||||||||||||||||||
Options — Puts | 25,800,000 | 5,539 | 5,161 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Options — Calls | (25,800,000 | ) | 2,172 | 2,795 | — | — | — | — | — | — | ||||||||||||||||||||||||||
Forwards/Swaps, Forecasted purchase of propane — Propane | 51,702,000 | (4,489 | ) | 5,209 | 20,538,000 | 8,443 | 2,609 | — | — | — |
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Notional | Hedge | |||||||||
Equity | Term | Amount | Type | Designation | ||||||
ETE | May 2016 | $ | 300,000 | Pay an average fixed rate of 5.20% and receive a floating rate | Undesignated | |||||
ETE | November 2012 | 500,000 | Pay a fixed rate of 4.57% and receive a floating rate | Undesignated | ||||||
ETE | November 2012 | 700,000 | Pay an average fixed rate of 4.84% and receive a floating rate | Cash flow | ||||||
ETP | July 2013 | 350,000 | Pay a floating rate (plus 3.75%) and receive a fixed rate of 6.00% | Fair value | ||||||
ETP | August 2012 | 200,000 | Forward starting to pay a fixed rate of 3.80% and receive a floating rate | Cash Flow | ||||||
Regency | April 2012 | 250,000 | Pay a fixed rate of 1.325% and receive a floating rate | Undesignated |
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General Partner | Incentive Distribution | |||||||||||
Interest | Rights (“IDRs”) | Common Units | ||||||||||
ETP | 1.8 | % | 100 | % | 50,226,967 | |||||||
Regency | 2.0 | % | 100 | % | 26,266,791 |
• | Natural gas operations, consisting of the following segments: |
• | natural gas midstream and intrastate transportation and storage through La Grange Acquisition, L.P., which conducts business under the assumed name of Energy Transfer Company, or ETC OLP; and | |
• | interstate natural gas transportation services through ET Interstate, the parent company of Transwestern and ETC MEP, ETC Fayetteville Express Pipeline, LLC and ETC Tiger Pipeline, LLC. |
• | Retail propane through HOLP and Titan. |
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• | Capacity of 5.2 Bcf/d | |
• | Approximately 2,620 miles of natural gas pipeline | |
• | 2 storage facilities with 12.4 Bcf of total working gas capacity |
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• | Capacity of 1.2 Bcf/d | |
• | Approximately 600 miles of natural gas pipeline | |
• | Connects Waha to Katy market hubs |
• | Capacity of 5.5 Bcf/d | |
• | Approximately 4,150 miles of natural gas pipeline | |
• | Bammel storage facility with 62 Bcf of total working gas capacity |
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• | Capacity of 2.4 Bcf/d | |
• | Approximately 370 miles of natural gas pipeline |
• | Capacity of 2.1 Bcf/d | |
• | Approximately 2,700 miles of interstate natural gas pipeline |
• | Initial planned capacity of 2.0 Bcf/d (expected to be in service by the end of 2010) | |
• | Approximately 185 miles of interstate natural gas pipeline | |
• | 50/50 joint venture with KMP |
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• | Initial planned capacity of 2.0 Bcf/d (expected to be in service in the first half of 2011) | |
• | Planned expansion of not less than 0.4 Bcf/d (expected to be completed in the second half of 2011) | |
• | Approximately 175 miles of interstate natural gas pipeline |
• | 5,100 miles of natural gas pipeline | |
• | 1 natural gas processing plant (the La Grange plant) with aggregate capacity of240 MMcf/d | |
• | 11 natural gas treating facilities with aggregate capacity of 1.3 Bcf/d | |
• | 4 natural gas conditioning facilities with aggregate capacity of670 MMcf/d |
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• | 160 miles of natural gas pipeline | |
• | 1 natural gas processing plant (the Godley plant) with aggregate capacity of500 MMcf/d | |
• | 1 natural gas conditioning facility with capacity of100 MMcf/d |
• | 1,390 miles of natural gas pipeline | |
• | 6 natural gas conditioning facilities with aggregate capacity of90 MMcf/d |
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• | Gathering, Treating and Processing: Regency provides“wellhead-to-market” services to producers of natural gas, which include transporting raw natural gas from the wellhead through gathering systems, treating raw natural gas to remove carbon dioxide and hydrogen sulfide, processing raw natural gas to separate NGLs and selling or delivering the pipeline-quality natural gas and NGLs to various markets and pipeline systems; | |
• | Transportation: Regency owns an approximate 49.99% interest in HPC, which, through its ownership of RIGS, delivers natural gas from northwest Louisiana to markets as well as downstream pipelines in northeast Louisiana through a 450-mile intrastate pipeline system. Following the completion of the Regency Transactions, Regency also owns an indirect 49.9% interest in MEP, a joint venture with KMP that owns the Midcontinent Express Pipeline. The Midcontinent Express Pipeline is an approximate500-mile interstate natural gas pipeline that originates near Bennington, Oklahoma, routes through Perryville, Louisiana, and terminates at an interconnect with Transco’s interstate natural gas pipeline in Butler, Alabama; | |
• | Contract Services: Regency provides turn-key natural gas compression services whereby Regency guarantees its customers 98% mechanical availability of its compression units for land installation and 96% mechanical availability for over-water installations. Regency also provides a full range of field services, including gas cooling, dehydration, JT plant leasing and sulfur treating services through the recently acquired Zephyr; |
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• | Corporate and Other: Regency owns and operate an interstate pipeline that consists of 10 miles of pipeline that extends from Harrison County, Texas to Caddo Parish, Louisiana. This pipeline has a FERC certificated capacity of150 MMcf/d. |
Pipeline | ||||||||||||
Length | Compression | |||||||||||
Region | (Miles) | Plants | (Horsepower) | |||||||||
North Louisiana | 435 | 4 | 58,937 | |||||||||
South Texas | 541 | 2 | 24,779 | |||||||||
West Texas | 806 | 1 | 58,008 | |||||||||
Mid-Continent | 3,470 | 1 | 43,519 | |||||||||
Total | 5,252 | 8 | 185,243 | |||||||||
• | Two cryogenic natural gas processing facilities; | |
• | A large integrated natural gas gathering and processing system located primarily in four parishes (Claiborne, Union, Lincoln, and Ouachita) of north Louisiana; | |
• | The Logansport Gathering System, which provides natural gas gathering, dehydration and compression services for producers in Shelby County, Texas and Desoto Parish, Louisiana. In 2009, Regency announced Logansport Expansion Phase I, a $47 million extension of the Logansport Gathering System in north Louisiana, and Logansport Expansion Phase II, a $40 million expansion to gather gas from acreage dedicated to Logansport Expansion Phase I. Logansport Expansion Phase I is expected to add approximately485 MMcf/d of gathering capacity and add approximately300 MMcf/d of new delivery interconnect capacity to CenterPoint Gas Transmission’s Line CP. Logansport Expansion Phase II includes the construction of an amine treating plant with capacity of300 MMcf/d, approximately 15 miles of gathering lines and expanded interconnect capacity at Tennessee Gas Pipeline and Crosstex LIG, LLC by100 MMcf/d and35 MMcf/d, respectively. The Logansport Expansion Phase I and II projects are expected to be completed during 2010; and | |
• | A refrigeration plant located in Bossier Parish and a conditioning plant in Webster Parish. |
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June 30, 2010 | ||||||||||||
Percentage of | ||||||||||||
Revenue | Revenue | |||||||||||
Generating | Generating | Number of | ||||||||||
Horsepower Range | Horsepower | Horsepower | Units | |||||||||
0-499 | 71,983 | 9 | % | 384 | ||||||||
500-999 | 73,361 | 9 | % | 119 | ||||||||
1,000+ | 645,150 | 82 | % | 424 | ||||||||
790,494 | 100 | % | 927 | |||||||||
December 31, 2009 | ||||||||||||
Percentage of | ||||||||||||
Revenue | Revenue | |||||||||||
Generating | Generating | Number of | ||||||||||
Horsepower Range | Horsepower | Horsepower | Units | |||||||||
0-499 | 65,397 | 9 | % | 361 | ||||||||
500-999 | 74,826 | 10 | % | 121 | ||||||||
1,000+ | 613,105 | 81 | % | 405 | ||||||||
753,328 | 100 | % | 887 | |||||||||
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• | the certification and construction of new facilities; |
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• | the review and approval of cost-based transportation rates; | |
• | the types of services that ETP’s and Regency’s regulated assets are permitted to perform; | |
• | the terms and conditions associated with these services; | |
• | the extension or abandonment of services and facilities; | |
• | the maintenance of accounts and records; | |
• | the acquisition and disposition of facilities; and | |
• | the initiation and discontinuation of services. |
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• | restricting how ETP and Regency can release materials or waste products into the air, water, or soils; | |
• | limiting or prohibiting construction activities in sensitive areas such as wetlands or areas of endangered species habitat, or otherwise constraining how or when construction is conducted; | |
• | requiring remedial action to mitigate pollution from former operations, or requiring plans and activities to prevent pollution from ongoing operations; and | |
• | imposing substantial liabilities on ETP and Regency for pollution resulting from its operations, including, for example, potentially enjoining the operations of facilities if it were determined that they were not in compliance with permit terms. |
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Name | Age | Position with Our General Partner | ||||
John W. McReynolds | 59 | Director, President and Chief Financial Officer | ||||
Kelcy L. Warren | 54 | Director and Chairman of the Board | ||||
Ray C. Davis | 68 | Director | ||||
Marshall S. McCrea, III | 51 | Director | ||||
David R. Albin | 51 | Director | ||||
K. Rick Turner | 52 | Director | ||||
Bill W. Byrne | 80 | Director | ||||
Paul E. Glaske | 77 | Director | ||||
John D. Harkey, Jr. | 50 | Director | ||||
Dr. Ralph S. Cunningham | 69 | Director |
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General Partner | Incentive Distribution | |||||||||||
Interest | Rights | Common Units | ||||||||||
ETP | 1.8 | % | 100 | % | 50,226,967 | |||||||
Regency | 2.0 | % | 100 | % | 26,266,791 |
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Six Months Ended | Year Ended | |||||||
June 30, 2010 | December 31, 2009 | |||||||
ETP’s Natural Gas Operations: | ||||||||
Sales | $ | 275,246 | $ | 414,333 | ||||
Purchases | 13,533 | 48,528 | ||||||
ETP’s Propane Operations: | ||||||||
Sales | 10,966 | 19,961 | ||||||
Purchases | 218,179 | 343,540 |
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Issue | Amount | |||
(In millions) | ||||
5.65% Senior Notes due 2012 | $ | 400.0 | ||
6.00% Senior Notes due 2013 | $ | 350.0 | ||
8.50% Senior Notes due 2014 | $ | 350.0 | ||
5.95% Senior Notes due 2015 | $ | 750.0 | ||
6.125% Senior Notes due 2017 | $ | 400.0 | ||
6.70% Senior Notes due 2018 | $ | 600.0 | ||
9.70% Senior Notes due 2019 | $ | 600.0 | ||
9.00% Senior Notes due 2019 | $ | 650.0 | ||
6.625% Senior Notes due 2036 | $ | 400.0 | ||
7.50% Senior Notes due 2038 | $ | 550.0 | ||
Total | $ | 5,050.0 | ||
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• | incur indebtedness; | |
• | grant liens; | |
• | enter into mergers; | |
• | dispose of assets; | |
• | make distributions; | |
• | make certain investments; | |
• | engage in certain types of transactions with affiliates; | |
• | engage in other businesses; | |
• | enter into restrictive agreements; | |
• | enter into speculative hedging contracts; | |
• | commingle deposit accounts with certain subsidiaries; | |
• | amend our organizational documents or material agreements; | |
• | enter into sale-leaseback transactions; | |
• | change our fiscal year; and | |
• | change the tax status of certain subsidiaries. |
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• | On a quarterly basis and on the dates that we acquire or dispose of units or make permitted distributions, our leverage ratio, as described in the revolving credit and term loan facilities, must not exceed 4.5 to 1.0, with a permitted increase to 5.0 to 1.0 during a specified acquisition period. | |
• | On a quarterly basis and on the dates that we acquire assets for a purchase price of at least $25,000,000 or make permitted distributions, our consolidated leverage ratio, as described in the revolving credit and term loan facilities and calculated using ETP’s earnings before interest, taxes, depreciation and amortization, must not exceed 5.5 to 1.0. | |
• | The interest coverage ratio, as described in the revolving credit and term loan facilities, must never be less than 3.0 to 1.0. | |
• | The value to loan ratio, as described in the revolving credit and term loan facilities, must never be less than 2.0 to 1.0. |
• | incur indebtedness; | |
• | grant liens; | |
• | enter into mergers; | |
• | dispose of assets; | |
• | make distributions during certain defaults and during any event of default; | |
• | make certain investments; | |
• | engage in business substantially different in nature than the business currently conducted by ETP and its subsidiaries; |
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• | engage in transactions with affiliates; | |
• | enter into restrictive agreements; and | |
• | enter into speculative hedging contracts. |
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Fixed Interest | ||||||
Principal Amount | Rate per Annum | Maturity Date | ||||
(In millions) | ||||||
$88.0 | 5.39% | November 17, 2014 | ||||
$125.0 | 5.54% | November 17, 2016 | ||||
$82.0 | 5.64% | May 24, 2017 | ||||
$150.0 | 5.89% | May 24, 2022 | ||||
$75.0 | 6.16% | May 24, 2037 | ||||
$175.0 | 5.36% | December 9, 2020 | ||||
$175.0 | 5.66% | December 9, 2024 |
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• | incur additional indebtedness; | |
• | pay distributions on, or repurchase or redeem equity interests; | |
• | make certain investments; | |
• | incur liens; | |
• | enter into certain types of transactions with affiliates; and | |
• | sell assets, consolidate or merge with or into other companies. |
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• | Regency’s consolidated total leverage ratio for any preceding four fiscal quarter period, as defined in the Regency Credit Facility, must not exceed 5.25 to 1. | |
• | Regency’s interest coverage ratio for any preceding four fiscal quarter period, as defined in the Regency Credit Facility, must not be less than 2.75 to 1. | |
• | Regency’s consolidated senior secured leverage ratio for any preceding four fiscal quarter period, as defined in the Regency Credit Facility, must not exceed 3.00 to 1. |
• | incur indebtedness; | |
• | grant liens; | |
• | enter into sale and leaseback transactions; | |
• | make certain investments, loans and advances; | |
• | dissolve or enter into a merger or consolidation; | |
• | enter into asset sales or make acquisitions; | |
• | enter into transactions with affiliates; |
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• | prepay other indebtedness or amend organizational documents or transaction documents (as defined in the Regency Credit Facility); | |
• | issue capital stock or create subsidiaries; or | |
• | engage in any business other than those businesses in which it was engaged at the time of the effectiveness of the Regency Credit Facility or reasonable extensions thereof. |
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• | be general senior obligations of ETE, ranking equally in right of payment with all other existing and future unsubordinated indebtedness of ETE; | |
• | rank senior in right of payment to all future subordinated indebtedness of ETE, if any; | |
• | unless the Collateral Release Event has occurred, be secured by a Lien on the Collateral as described below under “— Security for the Notes”; | |
• | initially be issued in an aggregate principal amount of $1,000,000,000; | |
• | mature on , 2020; | |
• | be issued in denominations of $2,000 and integral multiples of $1,000 in excess thereof; | |
• | bear interest at an annual rate of %; and | |
• | be redeemable at any time at our option at the redemption price described below under “— Optional Redemption.” |
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• | automatically upon any direct or indirect sale, transfer or other disposition, whether by way of merger or otherwise, to any Person that is not an Affiliate of ETE, of (a) all of the Capital Stock representing ownership of such Subsidiary Guarantor or (b) all or substantially all the assets of such Subsidiary Guarantor; | |
• | (a) in the case of a Subsidiary Guarantor that is not a Restricted Subsidiary, following delivery by ETE to the Trustee of an officer’s certificate to the effect that such Subsidiary Guarantor has been released from all guarantees or obligations in respect of any Indebtedness of ETE and (b) in the case of a Subsidiary Guarantor that is a Restricted Subsidiary, following delivery by ETE to the Trustee of an officer’s certificate to the effect that such Subsidiary Guarantor has been released from all guarantees or obligations in respect of any Indebtedness; or | |
• | upon legal defeasance or satisfaction and discharge of the indenture as provided below under the caption “— Defeasance and Discharge.” |
• | will rank senior in right of payment to all future obligations of ETE that are, by their terms, expressly subordinated in right of payment to the notes andpari passuin right of payment with all existing and future senior obligations of ETE that are not so subordinated; | |
• | will be structurally subordinated to all liabilities and preferred equity of Subsidiaries of ETE that are not Subsidiary Guarantors; and | |
• | will be guaranteed by each Subsidiary of ETE that in the future is required to become a Subsidiary Guarantor. |
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• | 100% of the principal amount of the notes to be redeemed; and | |
• | the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed that would be due after the related redemption date but for such redemption (exclusive of interest accrued to the redemption date) discounted to the redemption date on a semiannual basis (assuming a360-day year consisting of twelve30-day months) at the applicable Treasury Yield plus 50 basis points; |
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• | First, to the payment of all unpaid fees, expenses, reimbursements and indemnification of the Controlling Agent and to any Senior Secured Party that has advanced such fees, expenses, reimbursements and indemnification owed to the Controlling Agent; | |
• | Second, to the payment of all unpaid fees, expenses, reimbursements and indemnification of the Authorized Representatives, that do not relate to the Collateral or the exercise of rights and remedies with respect thereto, on a pro rata basis; | |
• | Third, to the payment of the Senior Loan Obligations, the Note Obligations and the Additional Senior Secured Debt Obligations, pro rata based on the aggregate amount of Senior Loan Obligations, Note Obligations and Additional Senior Secured Debt Obligations then due and owing and secured to the extent such Senior Obligations are so secured; and | |
• | Fourth, to ETE or the Restricted Subsidiaries or to whomever else may be lawfully entitled to receive the proceeds. |
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• | not to challenge in any proceeding the validity or enforceability of any Senior Obligations or any Collateral Document or the validity or enforceability of the priorities, rights or duties established by other provisions of the Intercreditor Agreement; | |
• | not to take or cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the Shared Collateral by the Controlling Agent; and | |
• | that (unless it is the Controlling Agent) it will not (A) direct any Senior Secured Party to exercise any right, remedy or power with respect to any Shared Collateral (including pursuant to any intercreditor agreement) or (B) consent to the exercise by the Controlling Agent or any Senior Secured Party of any right, remedy or power with respect to any Shared Collateral. | |
• | not to institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the Controlling Agent or any Senior Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to any Shared Collateral; and | |
• | not to seek, and to waive any right, to have any Shared Collateral or any part thereof marshaled upon any foreclosure or other disposition of such Shared Collateral. |
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• | Any (a) cash or cash equivalents that secure the Senior Loan Obligations or are otherwise held by the Senior Lenders, the administrative agent under the Credit Facilities or the Revolving Credit Facility Collateral Agent to secure letters of credit obligations under the Credit Facilities following an event of default under the Credit Facilities or (b) proceeds from mandatory prepayments under the Credit Facilities, will be applied as specified in the Credit Facilities, and | |
• | If ETE or any of its Subsidiaries, at any time, or from time to time, receives any net cash proceeds from specified asset sales or casualty/condemnation events(“Reduction Events”), an amount equal to the net cash proceeds will, in accordance with and to the extent required by the provisions of the Credit Facilities, be applied as a mandatory prepayment to the Credit Facilities. Net cash proceeds of a Reduction Event in excess of that applied in accordance with the foregoing provisions of this paragraph will be applied in accordance with the Intercreditor Agreement. |
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• | it delivers all outstanding notes to the Trustee for cancellation; or | |
• | all such notes not so delivered for cancellation have either become due and payable or will become due and payable at their stated maturity within one year or are called for redemption or are to be called for redemption under arrangements satisfactory to the Trustee within one year, and in the case of this bullet point, it has deposited with the Trustee in trust an amount of cash sufficient to pay the entire indebtedness of such notes, including interest to the stated maturity or applicable redemption date. |
• | a limited-purpose trust company organized under the New York Banking Law; |
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• | a “banking organization” under the New York Banking Law; | |
• | a member of the Federal Reserve System; | |
• | a “clearing corporation” under the New York Uniform Commercial Code; and | |
• | a “clearing agency” registered under the provisions of Section 17A of the Securities Exchange Act of 1934. |
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• | dealers in securities or currencies; | |
• | traders in securities that have elected themark-to-market method of accounting for their securities; | |
• | U.S. holders (as defined below) whose functional currency is not the U.S. dollar; | |
• | persons holding notes as part of a hedge, straddle, conversion or other “synthetic security” or integrated transaction; | |
• | U.S. expatriates; | |
• | financial institutions; | |
• | insurance companies; | |
• | regulated investment companies; | |
• | real estate investment trusts; | |
• | persons subject to the alternative minimum tax; | |
• | entities that are tax-exempt for U.S. federal income tax purposes; and | |
• | partnerships and other pass-through entities and holders of interests therein. |
• | an individual who is a U.S. citizen or U.S. resident alien; |
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• | a corporation, or other entity subject to tax as a corporation for U.S. federal income tax purposes, that was created or organized in or under the laws of the United States, any state thereof or the District of Columbia; | |
• | an estate whose income is subject to U.S. federal income taxation regardless of its source; or | |
• | a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or that has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United States person. |
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• | you do not own, actually or constructively, 10% or more of our capital or profits interests; | |
• | you are not a “controlled foreign corporation” that is related to us (actually or constructively); | |
• | you are not a bank whose receipt of interest on the notes is in connection with an extension of credit made pursuant to a loan agreement entered into in the ordinary course of your trade or business; and | |
• | interest on the notes is not effectively connected with your conduct of a U.S. trade or business. |
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• | the gain is effectively connected with the conduct by you of a U.S. trade or business (and, if required by an applicable income tax treaty, is treated as attributable to a permanent establishment maintained by you in the United States); or | |
• | you are an individual who has been present in the United States for 183 days or more in the taxable year of disposition and certain other requirements are met. |
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Principal | ||||||||
Amount of | ||||||||
Underwriters | Notes | |||||||
Credit Suisse Securities (USA) LLC | ||||||||
Morgan Stanley & Co. Incorporated | ||||||||
Wells Fargo Securities, LLC | ||||||||
Banc of America Securities LLC | ||||||||
Citigroup Global Markets Inc. | ||||||||
UBS Securities LLC | ||||||||
BNP Paribas Securities Corp. | ||||||||
Deutsche Bank Securities Inc. | ||||||||
SunTrust Robinson Humphrey, Inc. | ||||||||
Total | $ | 1,000,000,000 | ||||||
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• | to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; | |
• | to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or | |
• | in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive. |
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• | (A) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (B) it has not offered or sold and will not offer or sell the notes other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the notes would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 (the “FSMA”) by the Partnership; | |
• | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the notes in circumstances in which Section 21(1) of the FSMA does not apply to us; and | |
• | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, from or otherwise involving the United Kingdom. |
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• | the ability of our subsidiary, ETP, to make cash distributions to us, which is dependent on the results of operations, cash flows and financial condition of ETP; | |
• | the actual amount of cash distributions by ETP to us, which is affected by the amount, if any, of cash reserves established by the Board of Directors of the general partner of ETP and is outside of our control; | |
• | the amount of natural gas transported on ETP’s pipelines and gathering systems; | |
• | the level of throughput in ETP’s natural gas processing and treating facilities; | |
• | the fees ETP charges and the margins it realizes for its gathering, treating, processing, storage and transportation services; | |
• | the prices and market demand for, and the relationship between, natural gas and natural gas liquids, or NGLs; | |
• | energy prices generally; | |
• | the prices of natural gas and propane compared to the price of alternative and competing fuels; | |
• | the general level of petroleum product demand and the availability and price of propane supplies; | |
• | the level of domestic oil, propane and natural gas production; | |
• | the availability of imported oil and natural gas; | |
• | the ability to obtain adequate supplies of propane for retail sale in the event of an interruption in supply or transportation and the availability of capacity to transport propane to market areas; | |
• | actions taken by foreign oil and gas producing nations; | |
• | the political and economic stability of petroleum producing nations; | |
• | the effect of weather conditions on demand for oil, natural gas and propane; | |
• | availability of local, intrastate and interstate transportation systems; | |
• | the continued ability to find and contract for new sources of natural gas supply; | |
• | availability and marketing of competitive fuels; | |
• | the impact of energy conservation efforts; | |
• | energy efficiencies and technological trends; |
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• | governmental regulation and taxation; | |
• | changes to, and the application of, regulation of tariff rates and operational requirements related to ETP’s interstate and intrastate pipelines; | |
• | hazards or operating risks incidental to the gathering, treating, processing and transporting of natural gas and NGLs or to the transporting, storing and distributing of propane that may not be fully covered by insurance; | |
• | the maturity of the propane industry and competition from other propane distributors; | |
• | competition from other midstream companies, interstate pipeline companies and propane distribution companies; | |
• | loss of key personnel; | |
• | loss of key natural gas producers or the providers of fractionation services; | |
• | reductions in the capacity or allocations of third-party pipelines that connect with ETP’s pipelines and facilities; | |
• | the effectiveness of risk-management policies and procedures and the ability of ETP’s liquids marketing counterparties to satisfy their financial commitments; | |
• | the nonpayment or nonperformance by ETP’s customers; | |
• | regulatory, environmental, political and legal uncertainties that may affect the timing and cost of ETP’s internal growth projects, such as ETP’s construction of additional pipeline systems; | |
• | risks associated with the construction of new pipelines and treating and processing facilities or additions to ETP’s existing pipelines and facilities, including difficulties in obtaining permits andrights-of-way or other regulatory approvals and the performance by third-party contractors; | |
• | the availability and cost of capital and ETP’s ability to access certain capital sources; | |
• | the further deterioration of the credit and capital markets; | |
• | the ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to ETP’s financial results and to successfully integrate acquired businesses; | |
• | changes in laws and regulations to which we are subject, including tax, environmental, transportation and employment regulations or new interpretations by regulatory agencies concerning such laws and regulations; and | |
• | the costs and effects of legal and administrative proceedings. |
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Nine Months | Year | Four Months | ||||||||||||||||||||||||||
Ended | Ended | Ended | ||||||||||||||||||||||||||
September 30, | December 31, | December 31, | Year Ended August 31, | |||||||||||||||||||||||||
2009 | 2008 | 2007(1) | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
Ratio of earnings to fixed charges | 2.21 | 2.74 | 2.58 | 2.75 | 3.55 | 2.98 | 12.44 | |||||||||||||||||||||
(1) | In November 2007, we changed our fiscal year end from a year ending August 31 to a year ending December 31. Accordingly, the four months ended December 31, 2007 is treated as a transition period. |
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• | the form and title of the debt securities of that series; | |
• | the total principal amount of the debt securities of that series; | |
• | whether the debt securities will be issued in individual certificates to each holder or in the form of temporary or permanent global securities held by a depositary on behalf of holders; | |
• | the date or dates on which the principal of and any premium on the debt securities of that series will be payable; | |
• | any interest rate which the debt securities of that series will bear, the date from which interest will accrue, interest payment dates and record dates for interest payments; | |
• | any right to extend or defer the interest payment periods and the duration of the extension; | |
• | whether and under what circumstances any additional amounts with respect to the debt securities will be payable; | |
• | whether debt securities are entitled to the benefits of any guarantee of any Subsidiary Guarantor; | |
• | the place or places where payments on the debt securities of that series will be payable; | |
• | any provisions for optional redemption or early repayment; | |
• | any provisions that would require the redemption, purchase or repayment of debt securities; | |
• | the denominations in which the debt securities will be issued; |
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• | whether payments on the debt securities will be payable in foreign currency or currency units or another form and whether payments will be payable by reference to any index or formula; | |
• | the portion of the principal amount of debt securities that will be payable if the maturity is accelerated, if other than the entire principal amount; | |
• | any additional means of defeasance of the debt securities, any additional conditions or limitations to defeasance of the debt securities or any changes to those conditions or limitations; | |
• | any changes or additions to the events of default or covenants described in this prospectus; | |
• | any restrictions or other provisions relating to the transfer or exchange of debt securities; | |
• | any terms for the conversion or exchange of the debt securities for our other securities or securities of any other entity; and | |
• | any other terms of the debt securities of that series. |
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• | any debt security during a period beginning 15 business days prior to the mailing of the relevant notice of redemption and ending on the close of business on the day of mailing of such notice; or | |
• | any debt security that has been called for redemption in whole or in part, except the unredeemed portion of any debt security being redeemed in part. |
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• | our Annual Report onForm 10-K for the year ended December 31, 2008; | |
• | our Quarterly Reports onForm 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009; and | |
• | our Current Reports onForm 8-K filed January 26, 2009, March 18, 2009, July 29, 2009, October 28, 2009, December 23, 2009 and January 20, 2010. |
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