USA: ETE Plans to Drop Interest in Southern Union Assets

Energy Transfer Equity, L.P. and Energy Transfer Partners, L.P. announced that ETE plans to drop down its interest in Southern Union Company into an ETP-controlled entity, which will also include assets to be acquired in the recently announced merger between Sunoco, Inc. and ETP.

Concurrent with the closing of the Sunoco merger, ETE will contribute its interest in SUG into an ETP-controlled entity in exchange for a 60 percent equity interest in the new entity, to be called ETP Holdco Corporation (HoldCo). In conjunction with ETE’s contribution, ETP will contribute its interest in Sunoco to HoldCo and will retain a 40 percent equity interest in HoldCo. Prior to the contribution of Sunoco to HoldCo, Sunoco’s interests in Sunoco Logistics Partners L.P. will be transferred to ETP.

“Through this transaction, we resolve the timing of ETE’s drop-down of the SUG assets, without the need for external equity or debt financing, and will enhance distribution growth prospects at both ETE and ETP,” said Kelcy Warren, ETE chairman of the board. “Furthermore, this new entity will increase ETP’s scale of operations and its ability to serve more customers in the rapidly expanding midstream marketplace.”

The transaction has been approved by the boards of directors of ETE’s general partner and ETP’s general partner and will not require the approval of Sunoco’s board. In addition, Energy Transfer has reviewed its plans with all three credit rating agencies and believes that the new structure enhances the overall credit profile of ETE, ETP and SUG and furthers ETP’s commitment to maintaining investment grade credit ratings. The transaction will not require ETE or ETP unitholder approval and no regulatory issues are expected.

Additional information concerning this announcement can be found in Current Reports on Form 8-K filed with the Securities and Exchange Commission today by both ETE and ETP.

Wells Fargo Securities, LLC acted as financial advisor to ETP, while Latham & Watkins LLP and Bingham McCutchen LLP acted as legal counsel. Evercore Partners acted as financial advisor to the ETP conflicts committee, while Morris, Nichols, Arsht & Tunnell LLP acted as legal counsel. RBS Securities, Inc. acted as financial advisor to the ETE conflicts committee and the ETE special committee, while Potter Anderson & Corroon LLP acted as legal counsel. Vinson & Elkins L.L.P. acted as legal counsel to ETE.

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LNG World News Staff, June 19, 2012