Slide 1: Energy Transfer Equity, L.P. Acquisition of Southern Union Company
Energy Transfer Equity, L.P. Acquisition of Southern Union Company Investor Presentation
Slide 2: Legal Disclaimer
1 Legal Disclaimer This presentation may contain statements about future events, outlook and expectations of Energy Transfer Partners, L.P. (ETP), Energy Transfer Equity, L.P. (ETE), Regency Energy Partners LP (RGNC), and Southern Union Company (SUG) (collectively, the “Companies”), all of which are
Slide 3: A Compelling Strategic Transaction
2 A Compelling Strategic Transaction Creates a $40 billion(1) group of integrated midstream companies in the U.S. natural gas industry The largest consolidated natural gas pipeline company in the U.S. Meaningful accretion to ETE unitholders both immediately and over the long-term Fixed exchange rati
Slide 4: Combined Asset Footprint
3 Florida Gas Transmission Panhandle Eastern Pipeline Trunkline Gas Sea Robin Pipeline Southern Union Gas Services Missouri Gas Energy New England Gas Company Storage Trunkline LNG Southern Union assets ETP natural gas pipelines Lonestar pipeline RGNC pipelines RGNC gathering system Lonestar fractio
Slide 5: Transaction Overview
4 Transaction Overview ETE will purchase all of SUG’s outstanding common stock in exchange for newly issued ETE Series B Units (the “Series B Units”) Implied value of Series B Units represents a 17% premium to the SUG closing price on June 15, 2011 and 18% premium to the average closing price on a y
Slide 6: Immediate and long-term accretion to ETE's distributable cash flow
5 Immediate and long-term accretion to ETE’s distributable cash flow Strong commercial and operational fit with existing controlled natural gas and natural gas liquids operations Attractive, complementary assets aligned with ETE’s growth strategy Provides larger, more competitive interstate and mids
Slide 7: The acquisition will enhance and further diversify ETE's asset base and cash flow profile
6 The acquisition will enhance and further diversify ETE’s asset base and cash flow profile while reducing ETE’s overall risk profile Diversity will be both operational and geographic The quality of ETE’s future cash flows will improve due to the nature of SUG’s assets Approximately 77% of SUG’s EBI
Slide 8: Immediate financial impact for SUG shareholders
7 Immediate financial impact for SUG shareholders 17% premium to the closing price on June 15, 2011 and 18% premium to the average closing price on a year-to-date basis Increase in annualized dividend yield from 2% to 8.25% Potential for conversion into ETE / ETP units provides opportunity for signi
Slide 9: Overview of Series B Units
8 Overview of Series B Units Convertible by the holder into ETE common units, at any time, after the first anniversary of closing Immediate and long-term cash flow accretion to ETE means that the right to convert on a fixed exchange ratio basis should be highly attractive to Series B unitholders Mec
Slide 10: Series B Unit Decision Tree
9 Series B Unit Decision Tree Series B Units Receive cash equal to $33.00 per former SUG share Convert into ETP units at a fixed value equal to $33.00 per former SUG share No conversion(1) Receive cash equal to $33.00 per former SUG share Convert into ETE common units at a fixed exchange ratio of 0.
Slide 11: Pro forma ownership and capital structure
10 ($ in billions) Note: Credit ratings reflect senior unsecured ratings for SUG and ETP and corporate credit ratings (S&P) or corporate family ratings (Moody’s) for ETE and RGNC. (1) Based on ETP, RGNC and ETE closing prices as of June 15, 2011; units outstanding and debt balances as of 3/31/2011,
Slide 12: Preliminary Synergy Analysis
11 Preliminary Synergy Analysis Potential Annual Synergies by Source We have conservatively identified approximately $100 million per annum in potential commercial / operational synergies, including: Estimated $25 million through corporate overhead rationalizations: Corporate overhead expenses Reduc
Slide 13: Proven Track Record of Successful Integrations
12 Proven Track Record of Successful Integrations Energy Transfer management team has a proven track record of successfully integrating acquisitions LDH Energy (2011), Regency (2010), Canyon (2007), Transwestern (2006), HPL (2005), ET Fuel (2004) Significant knowledge of regulated interstate busines
Slide 14: Illustrative Transaction Timeline
13 Illustrative Transaction Timeline June 2011 Begin drafting proxy Begin regulatory approval process File proxy statement SUG shareholder meeting Q1 2012: Complete merger ~9 months from announcement to closing due to regulatory approvals Integration plan will be put in place immediately resulting i
Slide 15: Large, diversified assets well positioned to serve multiple market outlets
14 Large, diversified assets well positioned to serve multiple market outlets Upon closing, consolidated Energy Transfer family will have an enterprise value of ~$40 billion(1) Pro forma for the transaction, will own and operate ~45,000 miles of intrastate and interstate natural gas pipelines in add
Slide 16: ETE / ETP Relative Performance
15 ETE / ETP Relative Performance ETE Distribution Growth Relative ETE Unit Performance – Total Return ETP Distribution Growth Relative ETP Unit Performance – Total Return 104% 68% 40% 104% 212% 40% Source: FactSet Research Systems. Since January 2009, ETE and ETP unitholders have experienced total
Slide 17: Appendix
16 Appendix
Slide 18: Series B Units terms summary
17 Distributions: Cash distribution paid quarterly. Distribution Rate: Years 1 to 3: annualized rate equal to 8.25%. Thereafter: annualized rate equal to the greater of (i) 8.25% and (ii) the then current 3-month LIBOR rate plus 750 basis points. ETE Conversion Rights: Convertible into ETE common un
Slide 19: Side-by-Side Overview
18 Side-by-Side Overview Southern Union Company(3) Energy Transfer Partners, L.P.(5) Regency Energy Partners LP(6) (1) Implied value of GP interest based on 3/31/2011 annualized GP distributions for ETP and RGNC divided by the current LP yield for illustrative purposes. (2) Adjusted EBITDA is a non-
Slide 20: SUG Primary Operating Segments
19 SUG Primary Operating Segments Transportation and Storage ~12,950 mi of interstate gas pipelines with 7.1 Bcf/d capacity and 100 Bcf of storage(1) Panhandle PEPL (6,200 mi, 4-line system) Trunkline (3,600 mi, 2-line system) Sea Robin (400 mi offshore gathering system) Citrus (50% interest) Primar
Slide 21: ETP / RGNC Segments Overview
20 ETP / RGNC Segments Overview Energy Transfer Partners, L.P. More than 17,500 mi of natural gas gathering and transportation pipelines, 3 natural gas storage facilities with 74 Bcf of working capacity and a retail propane business serving 1.2 million customers Intrastate Transportation and Storage
Slide 22: Non-GAAP Reconciliations
21 Non-GAAP Reconciliations Energy Transfer Partners, L.P. Regency Energy Partners LP Southern Union Company Energy Transfer Equity, L.P. ($ in thousands) Three months ended FY 2010 3/31/2011 3/31/2010 LTM 3/31/11 ETP GP distributions $395,503 $108,078 $99,797 $403,784 ETP LP distributions 190,531 4