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 $8.9 billion, including $5.1 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
$40.00 of cash or 0.903 ETE common units. 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.
The revised purchase price represents a significant increase in
value being paid to SUG shareholders and more than a 42% premium to
the closing price of SUG common stock on June 15, 2011, the last
trading day prior to the announcement of the original merger
agreement.
The revised 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 contingency as ETE has
secured approximately $3.3 billion in committed financing from
Credit Suisse to fund the cash consideration to SUG
shareholders.
“We have listened to SUG shareholders and are providing a
superior yet simpler transaction, including a significant cash
component and the opportunity to benefit from ETE’s upside through
the ownership of ETE common units,” said Kelcy Warren, ETE’s
Chairman of the Board of Directors and largest unitholder. “The
revised ETE / Southern Union agreement delivers superior value,
highly compelling equity participation and certainty to close for
SUG shareholders. The Southern Union board and I strongly believe
that ETE is the right partner for Southern Union and that the
combination of our companies is in the best interests of our
investors, customers and employees.”
ETE has received signed support agreements from shareholders
representing 14% of SUG’s total shares outstanding, who will
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, “We are
pleased to be able to deliver superior value to our shareholders,
with greater certainty to close, through this transaction with ETE.
This deal creates strategic benefits that could not be achieved
through any other industry combination. Our businesses are highly
complementary and the combination will provide a broader range of
services and market access that our existing and future customers
demand.”
Eric D. Herschmann, Vice Chairman, President and COO of SUG,
added, “Our combination with ETE is the best path forward for this
company and our shareholders, who will be able to elect, subject to
the proration provision, to exchange their SUG shares for a
guaranteed cash payment at closing or opt to participate in the
potential upside of the combined companies through long-term equity
ownership in ETE.”
Prior to receipt of ETE’s revised offer, Messrs. Lindemann and
Herschmann informed ETE management and a Special Committee of SUG
directors that, given their significant combined shareholdings of
SUG, they had voluntarily determined to terminate their consulting
and non-compete agreements with ETE included in the original merger
agreement entered into on June 15, 2011. ETE has accepted the
voluntary termination of those agreements.
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 HSR and Missouri regulatory
filings.
In connection with the revised merger agreement, ETE also
announced a binding agreement for the drop down of Southern Union
Company’s 50% interest in Citrus Corp., which owns 100% of the
Florida Gas Transmission pipeline system, to Energy Transfer
Partners, L.P. (NYSE: ETP), a publicly traded partnership, for $1.9
billion in cash. The drop down of this interest in Citrus Corp. is
subject to the closing of ETE’s acquisition of SUG and is not
subject to any financing condition on the part of ETP or ETP
unitholder approval.
“The drop down of Citrus to ETP allows ETE to deleverage its
balance sheet upon closing and provides ETP with an interest in one
of the best pipeline systems in the United States,” said Mr.
Warren.
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.
Conference Call
ETE will host a conference call today at 8:00 a.m. central time
(9:00 a.m. eastern time) to discuss the transaction details. The
dial-in number for the call is 1-800-299-7928 in the United States,
or 1-617-614-3926 outside the United States. The participant pass
code is 24145462. Additionally, the conference call will be
broadcast live via an Internet web cast
at www.energytransfer.com. The call will be available for
replay on this web site or by dialing 1-888-286-8010 in the United
States, or 1-617-801-6888 outside the United States. The
participant pass code for the replay is 54319475. The replay will
be available for a limited time.
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 will file a
joint proxy statement / prospectus and other documents with the
SEC. Investors and security holders are urged to carefully read
the definitive joint proxy statement / prospectus when it becomes
available because it will contain important information regarding
ETE, SUG and the transaction.
A definitive joint 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 joint proxy statement / prospectus (when available) and
other documents filed by ETE and SUG with the SEC at the SEC’s web
site, www.sec.gov. The definitive
joint proxy statement / prospectus (when available) 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 joint proxy statement / prospectus (when available) 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 will be set forth in
the joint proxy statement / prospectus when it becomes
available.
The information contained in this press release is available on
the ETE web site at www.energytransfer.com.
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