RGNC Regency Energy Partners LP - Common Units Representing Limited Partner Interests (MM)

NEW YORK (Dow Jones)--Kelcy Warren, the chairman of Energy Transfer Equity LP (ETE), is so confident in his company's prospects that he has almost all of his net worth invested in its units.

Last week, Warren spent another $31.6 million to buy 750,000 ETE units, bringing his ownership Dallas-based limited partnership to just under a 20% stake, worth nearly $2 billion. ETE owns two other public partnerships that process and distribute natural gas.

Warren's purchases come as ETE maneuvers against rival suitor Williams Cos. (WMB) to buy Southern Union Co. (SUG). Southern Union had agreed last week to ETE's sweetened, cash-and-unit deal that valued Southern Union at $40 per share, but Thursday morning, Williams announced it had hiked its all-cash offer to $44 from $39 per share, valuing Southern Union at roughly $9.4 billion on an enterprise basis, a measure that combines a company's stock market value and its total debt, less cash.

Williams said in a letter to Southern Union that it believes it and Southern Union can finalize terms of a new deal by Tuesday, at which point Southern Union would tell ETE it was going to accept the Williams offer.

A Williams spokesman declined to comment beyond the press release announcing the new proposed deal. A spokeswoman for ETE didn't immediately respond to an email request for comment. A Southern Union spokesman didn't immediately return a phone call.

So far, Warren's investment, made at an average purchase price of $42.18 per unit, has looked savvy. The units were off 36 cents at $44.42 in Thursday morning trading following the Williams announcement, but are up 5.3% since his purchase.

Acquiring Southern Union would add to ETE's capacity, allowing it to participate in an expected boom in natural-gas usage. Even if the deal isn't successful, however, ETE will likely benefit as the U.S. increasingly turns to natural gas for electricity generation; as demand for natural gas rises, companies that serve the industry, like ETE, are likely to benefit.

Five of seven analysts tracked by FactSet research rate ETE buy or overweight, while two rate the units at hold. The average price target on ETE is $48.67, a 9.6% premium to recent ETE prices. The units, which went public at $21 each in early 2006, hit an all-time high of $47.34 apiece last month, after recovering from an all-time low of $14.92 near the end of 2008.

Warren says his ETE purchases, which were disclosed in regulatory filings, are only tangentially related to the Southern Union deal. He says the proposed acquisition, which has been complicated by the back-and-forth with Williams, caused his company's units to trade "on the noise," rather than the fundamentals.

In a Tuesday interview arranged by the company, Warren noted that he has bought significant blocks of ETE in the past. He says he only buys when he gets the approval of his general counsel--which isn't often given the strict requirements for when insiders can buy and sell--and that he's staying in ETE for the long haul.

"I can't think of a better place to put my money," Warren, 55 years old, told Dow Jones Newswires. He praised ETE's "nice yield," currently around 5.6% annually, and ETE's potential for growth with or without Southern Union. He added that he'll "never sell" any of his ETE stake.

Warren's holdings generate a payout--a distribution similar to a dividend--of more than $100 million a year at current distribution levels, which can vary with the partnership's earnings.

ETE owns the general partners of Energy Transfer Partners LP (ETP) and Regency Energy Partners LP (RGNC). Partnerships like these are formed to limit or eliminate federal and state tax burdens, instead paying out most or all of their profits to the unit-holders and partners, who in turn pay taxes on those distributions.

Units are akin to common stock, but carry different tax responsibilities and voting rights as defined under the issuing partnership.

-By Maxwell Murphy, Dow Jones Newswires; 212-416-2171; maxwell.murphy@dowjones.com

Regency Energy Partners LP - Common Units Representing Limited Partner Interests (MM) (NASDAQ:RGNC)
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Regency Energy Partners LP - Common Units Representing Limited Partner Interests (MM) (NASDAQ:RGNC)
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부터 6월(6) 2023 으로 6월(6) 2024