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Energy Transfer Further Delivers on Commitment to Simplify Structure

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

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

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

Following discussions with the credit rating agencies, ETP and ETE have received feedback that the transaction will have no negative effect on existing credit ratings at any of the entities.

Energy Transfer Partners, L.P. (NYSE:ETP) is a master limited partnership owning and operating one of the largest and most diversified portfolios of energy assets in the United States. ETP currently has natural gas operations that include approximately 24,000 miles of gathering and transportation pipelines, treating and processing assets, and storage facilities. ETP also owns general partner interests, 100% of the incentive distribution rights, and a 32.4% limited partnership interest in Sunoco Logistics Partners L.P. (NYS: SXL) , which operates a geographically diverse portfolio of crude oil and refined products pipelines, terminalling and crude oil acquisition and marketing assets. ETP also holds a 70% interest in Lone Star NGL, a joint venture that owns and operates natural gas liquids storage, fractionation …read more
Source: FULL ARTICLE at DailyFinance

By Eric Savitz, Forbes Staff

The credit research firms Fitch Ratings and Gimme Credit have both reduced their debt ratings on Dell to reflect the substantial amount of debt the company will add to complete the pending leveraged buyout of the company to be led by founder Michael Dell and the private equity firm Silver Lake. Fitch Ratings reduced its long-term issuer default rating on Dell to BB+ from A, noting that a further reduction is possible. “Key details of the financing package for the proposed LBO have yet to be disclosed, but Fitch continues to expect pro forma leverage in the 3.5x – 4.5x range …. This would likely result in a long-term IDR in the mid to high single ‘B’ range,” Fitch said. “A ‘BB-‘ rating is a possibility based solely on leverage at the very low end of the range. However, various other factors need to be considered, including the highly competitive environment in which Dell operates, the uncertain macro economy, public sector weakness, reduced financial flexibility to pursue future acquisitions, a nascent track record of its recently acquired enterprise portfolio, and the potential to burn cash in down cycles due to its negative working capital position.” Gimme Credit analyst David Novosel today cut his credit score on Dell to deteriorating from stable. “The recently announced LBO will add a huge chunk of debt to the balance sheet, likely sending leverage to more than 4 times,” he writes. “Dell’s free cash flow has been declining and future cash flows may be directed to acquisitions as the company repositions its portfolio. Therefore leverage will probably remain elevated in the near term. … Although Dell is moving away from the business of selling PCs to consumers, that still comprises a large potion of total revenue. And the PC market has been weak lately, reflecting difficult economic conditions across the globe, delayed spending in emerging markets, and a shift toward smartphones and tablets. The soft top line is pressuring margins. Free cash flow has declined modestly, yet remains strong. However, extensive spending on acquisitions had led to higher debt. Combined with lower EBITDA, leverage has risen to more than 2x.” Dell shares are up 3 cents to $13.45, which is 20 cents below the $13.65 a share bid price. …read more
Source: FULL ARTICLE at Forbes Latest

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