Energy Transfer Partners Agrees to Contribute Propane Operations to AmeriGas Partners in Exchange for $2.9 Billion

abarrelfullabarrelfull wrote on 17 Oct 2011 12:39
Tags: deals energy-transfer lpg usa

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Energy Transfer Partners, L.P. (NYSE:ETP) today announced it has entered into an agreement to contribute its propane operations, consisting of Heritage Operating, L.P. and Titan Energy Partners, L.P., to AmeriGas Partners, L.P. (NYSE:APU) in exchange for approximately $2.9 billion.

Under the terms of the agreement, which has been unanimously approved by ETP's Board of Directors, ETP will receive $1.5 billion in cash and approximately $1.3 billion of APU common units. In addition, APU has agreed to assume approximately $71 million of existing Heritage debt. Following the transaction, ETP will own approximately 34% of the common units of APU and has committed to retain those units until at least 2013. UGI Corporation, through subsidiaries will remain as the General Partner of APU and ETP will appoint 1 director to the APU General Partner Board post-closing.

"First and foremost, I want to thank the employees of Heritage and Titan who have contributed greatly to the success of Energy Transfer," said Kelcy Warren, Energy Transfer Partners, L.P.'s Chairman and Chief Executive Officer. "I am proud of the exemplary job they have done, and they should be very proud as well. Our exit from our successful propane operations was not an easy decision; however, the structure and corresponding benefits of this transaction with AmeriGas, a company we have always admired in this business, make this the right move at the right time for Energy Transfer as we focus our efforts and resources on opportunities in the pipeline sector - our primary business. We expect the combined Heritage, Titan and AmeriGas companies to be a strong, efficient and financially successful partnership in the retail propane industry."

"The contribution of Heritage and Titan is tax-efficient to the ETP unitholders, and while neutral to distributions, provides substantial funds toward reduction of ETP's debt, thereby significantly reducing ETP's external capital requirements, including equity issuances," said Martin Salinas, Energy Transfer Partners, L.P.'s Chief Financial Officer. "We have verified with the ratings agencies that this transaction and the proposed structure support maintaining ETP's investment grade credit ratings."

The transaction, which is subject to customary closing conditions including approval under the Hart-Scott-Rodino Act, is expected to close late in 2011 or early in 2012. Neither ETP nor APU unitholder approval is required in connection with this transaction.

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