Energy Transfer Equity, L.P. (NYSE:ETE) and Southern Union
Company (NYSE:SUG) today announced that they have entered into an
amended and restated merger agreement under which ETE will acquire
SUG for $9.4 billion, including $5.7 billion in cash and ETE common
units.
Under the terms of the revised agreement, which has been
unanimously approved by the boards of directors of both companies,
SUG shareholders can elect to exchange their common shares for
$44.25 of cash or 1.000x ETE common unit. The maximum cash
component is 60% of the aggregate consideration and the common unit
component can fluctuate between 40% and 50%. Elections in excess of
either the cash or common unit limits will be subject to
proration.
“Our ability to be creative with our structure has improved the
tax efficiency, therefore allowing us to increase our price,” said
Kelcy Warren, ETE’s Chairman of the Board of Directors and largest
unitholder. “This is simply a superior transaction with upside
potential and the ability to close on an expedited basis. The terms
of this revised agreement demonstrate our commitment to executing
this transaction.”
ETE has received revised support agreements in connection with
the revised merger agreement from shareholders representing 14% of
SUG’s total shares outstanding, who have agreed to pre-elect to
receive ETE common units as their consideration, subject to the
same proration as all other shareholders.
George L. Lindemann, Chairman and CEO of SUG, said, “This
revised merger agreement provides our shareholders with superior
value, greater certainty to close, and unrivalled strategic
benefits that could not be achieved through any other industry
combination.”
Eric D. Herschmann, Vice Chairman, President and COO of SUG,
added, “We have negotiated the most compelling transaction for
Southern Union shareholders, both in terms of immediate cash value
and potential upside of the combined companies through long-term
equity ownership in ETE.”
The revised merger agreement provides, at the SUG shareholders’
option, certainty of value through substantial cash consideration
per SUG share and significant potential upside from ETE common
units at a compelling fixed exchange ratio and on a tax-deferred
basis. The merger is not subject to any financing condition and is
supported by approximately $3.7 billion in committed financing from
Credit Suisse.
In connection with the revised merger agreement, ETE has signed
an amended drop down agreement to sell SUG’s 50% interest in Citrus
Corp., which owns 100% of the Florida Gas Transmission pipeline
system, to Energy Transfer Partners, L.P. (NYSE: ETP) for total
consideration of $2.0 billion. The obligations of ETE are to be
assumed by SUG immediately prior to closing of the ETE/SUG merger.
The proceeds received will be used to fund a portion of the merger
consideration and to repay existing SUG-related debt to maintain
appropriate investment grade credit metrics. The sale of this
interest in Citrus Corp. is not subject to any financing condition
on the part of ETP or ETP unitholder approval and is not a
condition to the consummation of the SUG merger.
As previously announced, in a sign of its commitment and
confidence that it can complete this transaction in or before the
first quarter of 2012, ETE has agreed to divest businesses, to the
extent required by regulators, to ensure federal anti-trust
approvals for the proposed ETE / SUG transaction will not delay or
prohibit the closing. ETE has already begun the approval process
with its S-4 Proxy Filing, HSR and Missouri regulatory filings.
Credit Suisse Securities (USA) LLC acted as exclusive financial
advisor to ETE, with Latham & Watkins LLP, Bingham McCutchen
LLP and Potter Anderson having acted as legal counsel.
Evercore Partners and Goldman Sachs Group Inc are serving as
financial advisors to the Special Committee of the board of
directors of SUG. Sullivan & Cromwell LLP and Morris Nichols
Arhst and Tunnell LLP are serving as legal advisors to the Special
Committee. Locke Lord Bissell & Liddell LLP and Roberts &
Holland LLP are serving as legal counsel to SUG.
Energy Transfer Equity, L.P. (NYSE:ETE) is a
publicly traded partnership, which owns the general partner and 100
percent of the incentive distribution rights (IDRs) of ETP and
approximately 50.2 million ETP limited partner units; and owns the
general partner and 100 percent of the IDRs of RGNC and
approximately 26.3 million RGNC limited partner units. For more
information, visit the Energy Transfer Equity, L.P. web site at
www.energytransfer.com.
Energy Transfer Partners, L.P. (NYSE:ETP) is a
publicly traded partnership owning and operating a diversified
portfolio of energy assets. ETP has pipeline operations in Arizona,
Arkansas, Colorado, Louisiana, New Mexico, Utah and West Virginia
and owns the largest intrastate pipeline system in Texas. ETP
currently has natural gas operations that include more than 17,500
miles of gathering and transportation pipelines, treating and
processing assets, and three storage facilities located in Texas.
ETP also holds a 70 percent interest in Lone Star NGL LLC (“Lone
Star”), a joint venture that owns and operates NGL storage,
fractionation and transportation assets in Texas, Louisiana and
Mississippi. ETP is also one of the three largest retail marketers
of propane in the United States, serving more than one million
customers across the country. For more information, visit the
Energy Transfer Partners, L.P. web site at www.energytransfer.com.
Regency Energy Partners LP (NASDAQ:RGNC) is a
growth-oriented, midstream energy partnership engaged in the
gathering, contract compression, processing, marketing and
transporting of natural gas and natural gas liquids. RGNC also owns
the remaining 30 percent interest in Lone Star. RGNC’s general
partner is owned by ETE. For more information, visit the Regency
Energy Partners LP web site at www.regencyenergy.com.
Southern Union Company (NYSE:SUG), headquartered in
Houston, is one of the nation’s leading diversified natural gas
companies, engaged primarily in the transportation, storage,
gathering, processing and distribution of natural gas. The company
owns and operates one of the nation’s largest natural gas pipeline
systems with more than 20,000 miles of gathering and transportation
pipelines and one of North America’s largest liquefied natural gas
import terminals, along with serving more than half a million
natural gas end-user customers in Missouri and Massachusetts. For
further information, visit www.sug.com.
Forward-Looking Statements
This press release may include certain statements concerning
expectations for the future, including statements regarding the
anticipated benefits and other aspects of the proposed transactions
described above, that are forward-looking statements as defined by
federal law. Such forward-looking statements are subject to a
variety of known and unknown risks, uncertainties, and other
factors that are difficult to predict and many of which are beyond
the control of the management teams of ETE, ETP, RGNC or SUG. Among
those is the risk that conditions to closing the transactions are
not met or that the anticipated benefits from the proposed
transactions cannot be fully realized. An extensive list of factors
that can affect future results are discussed in the reports filed
with the Securities and Exchange Commission by ETE, ETP, RGNC and
SUG. Neither ETE, ETP, RGNC nor SUG undertakes any obligation to
update or revise any forward-looking statement to reflect new
information or events.
Additional Information
In connection with the transaction, ETE and SUG have filed a
proxy statement / prospectus and other documents with the SEC.
Investors and security holders are urged to carefully read the
definitive proxy statement / prospectus because it contains
important information regarding ETE, SUG and the
transaction.
A definitive proxy statement / prospectus will be sent to
stockholders of SUG seeking their approval of the transaction.
Investors and security holders may obtain a free copy of the
definitive proxy statement / prospectus and other documents filed
by ETE and SUG with the SEC at the SEC’s web site, www.sec.gov. The definitive proxy statement /
prospectus and such other documents relating to ETE may also be
obtained free of charge by directing a request to Energy Transfer
Equity, L.P., Attn: Investor Relations, 3738 Oak Lawn Avenue,
Dallas, Texas 75219, or from ETE’s web site, www.energytransfer.com. The definitive proxy
statement / prospectus and such other documents relating to SUG may
also be obtained free of charge by directing a request to Southern
Union Company, Attn: Investor Relations, 5444 Westheimer Road,
Houston, Texas 77056, or from SUG’s web site, www.sug.com.
ETE, SUG and their respective directors and executive officers
may, under the rules of the SEC, be deemed to be “participants” in
the solicitation of proxies in connection with the proposed
transaction. Information concerning the interests of the persons
who may be “participants” in the solicitation is set forth in the
proxy statement / prospectus.
The information contained in this press release is available on
the ETE web site at www.energytransfer.com.
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