Business Context and Reporting Period
This Form 8-K Current Report was filed by Energy Transfer Equity, L.P. on October 9, 2007. The filing primarily addresses a material definitive agreement entered into on October 5, 2007, and the completion of an acquisition on the same date.
Key Financial Metrics and Agreements
- Debt Facility: Entered into a $310.0 million 364-day term loan credit facility with Wachovia Bank, National Association, as administrative agent.
- Use of Proceeds: Funds were utilized to finance the purchase price for the acquisition of Canyon Gas Resources, LLC and for general corporate purposes.
- Interest Rate: Borrowings bear interest based on either a Eurodollar or a prime rate.
- Security Status: The indebtedness is unsecured and not guaranteed by any of the Partnership's subsidiaries.
- Financial Covenants: The Leverage Ratio must not exceed 5.0 to 1 on dates when Distributions are made, with a permitted increase to 5.5 to 1 during a specified Acquisition Period.
Material Changes and Acquisitions
On October 5, 2007, the Partnership completed the acquisition of Canyon Gas Resources, LLC. This target company is engaged in the business of gathering and processing natural gas in the Piceance and Uinta basins in Colorado and Utah. The acquisition was funded in part by the new credit facility described above.
Guidance, Outlook, and Management Commentary
Management announced plans to meet with securities analysts on October 10, 2007, in Dallas, Texas. The presentation is expected to cover:
- Preliminary estimates of results of operations for the fiscal year ended August 31, 2007.
- Status of capital projects.
- Outlook for fiscal 2008 and fiscal 2009.
- Status of proceedings with the FERC and CFTC.
Additionally, the Partnership issued a press release regarding two planned expansion projects related to its Texas intrastate pipeline system. The filing text does not provide specific revenue, profit, or cash flow figures for the current period.
Investor Verification Checklist
- Verify the full terms of the Credit Agreement (Exhibit 10.1) regarding covenants limiting indebtedness, liens, mergers, and asset dispositions.
- Confirm the final purchase price and integration status of Canyon Gas Resources, LLC.
- Review the press release (Exhibit 99.1) for details on the Texas intrastate pipeline expansion projects.
- Monitor the upcoming analyst presentation for preliminary fiscal 2007 results and fiscal 2008/2009 guidance.
- Track the status of regulatory proceedings with the FERC and CFTC as mentioned by management.