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8-K - FORM 8-K - Energy Transfer, LP | d343802d8k.htm |
EX-99.1 - JOINT PRESS RELEASE - Energy Transfer, LP | d343802dex991.htm |
Energy Transfer Partners, L.P.
Acquisition of Sunoco, Inc.
April 30, 2012 | Investor Presentation
Exhibit 99.2 |
1
Legal Disclaimer
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
Energy Transfer Partners, L.P.
Sunoco, Inc.
3738 Oak Lawn Ave.
1818 Market Street, Suite 1500
Dallas, TX 75219
Philadelphia, PA 19103
Attention: Investor Relations
Attention: Investor Relations
Phone: (214) 981-0795
Phone: (215) 977-6764
E-mail: InvestorRelations@energytransfer.com
E-mail: SunocoIR@sunocoinc.com
PARTICIPANTS IN THE SOLICITATION
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
In connection with the proposed business combination transaction between Energy Transfer Partners,
L.P. (ETP) and Sunoco, Inc. (Sunoco), ETP plans to file with the U.S.
Securities and Exchange Commission (the SEC) a registration statement on Form S-4 that
will contain a proxy statement/prospectus to be mailed to the Sunoco shareholders in connection
with the proposed transaction. THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION
ABOUT ETP, SUNOCO, THE PROPOSED TRANSACTION AND RELATED MATTERS. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY/PROSPECTUS CAREFULLY WHEN THEY
BECOME AVAILABLE. Investors and security holders will be able to obtain free copies of the
registration statement and the proxy statement/prospectus and other documents filed with the SEC by
ETP and Sunoco through the web site maintained by the SEC at www.sec.gov. In
addition, investors and security holders will be able to obtain free copies of the registration statement and the proxy statement/prospectus by phone, e-mail or written request by
contacting the investor relations department of ETP or Sunoco at the following:
ETP and Sunoco, and their respective directors and executive officers, may be deemed to be
participants in the solicitation of proxies in respect of the proposed transactions
contemplated by the merger agreement. Information regarding directors and executive officers of
ETPs general partner is contained in ETPs Form 10-K for the year ended
December 31, 2011, which has been filed with the SEC. Information regarding Sunocos
directors and executive officers is contained in Sunocos definitive proxy statement dated
March 16, 2012, which is filed with the SEC. A more complete description will be available in
the registration statement and the proxy statement/prospectus. Statements in this document regarding the proposed transaction between ETP and Sunoco, the
expected timetable for completing the proposed transaction, future financial and operating
results, benefits and synergies of the proposed transaction, future opportunities for the combined company, and any other statements about ETP, Energy Transfer Equity,
L.P. (ETE), Sunoco Logistics Partners, L.P. (SXL) or Sunoco managements
future expectations, beliefs, goals, plans or prospects constitute forward looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not
statements of historical fact (including statements containing the words believes,
plans, anticipates, expects, estimates and similar expressions)
should also be considered to be forward looking statements. There are a number of important factors that
could cause actual results or events to differ materially from those indicated by such forward looking
statements, including: the ability to consummate the proposed transaction; the ability to
obtain the requisite regulatory approvals, Sunoco shareholder approval and the satisfaction of other conditions to consummation of the transaction; the ability of ETP to
successfully integrate Sunocos operations and employees; the ability to realize anticipated
synergies and cost savings; the potential impact of announcement of the transaction or
consummation of the transaction on relationships, including with employees, suppliers, customers and
competitors; the ability to achieve revenue growth; national, international, regional and local
economic, competitive and regulatory conditions and developments; technological developments; capital and credit markets conditions; inflation rates; interest
rates; the political and economic stability of oil producing nations; energy markets, including
changes in the price of certain commodities; weather conditions; environmental conditions;
business and regulatory or legal decisions; the pace of deregulation of retail natural gas and electricity and certain agricultural products; the timing and success of
business development efforts; terrorism; and the other factors described in the Annual Reports on Form
10-K for the year ended December 31, 2011 filed with the SEC by ETP, ETE, SXL and
Sunoco. ETP, ETE, SXL and Sunoco disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the
date of this document.
|
2
A Compelling Strategic Transaction
Energy Transfer Partners, L.P. (ETP) will acquire 100% of Sunoco,
Inc.s (SUN) outstanding common stock for $50.13 per share
($5.3 billion) Creates a best in class
natural gas, crude oil, NGLs
and
refined product logistics platform
Provides customers with a full suite of capabilities in key geographic locations
across the U.S.
Diversifies ETPs existing natural gas and NGL infrastructure assets into
crude oil and refined products transportation, terminalling and
logistics
Provides
a
growth
engine
for
ETP
through
ownership
of
the
Sunoco
Logistics
Partners
L.P.
(SXL) general partner, incentive distribution rights (IDRs)
and 32.4% limited partner interests
Combination with Energy Transfer platform dramatically expands scale, operational
diversity and geographic footprint of SUN and SXL, enabling businesses to
fully deliver on potential Accretive to ETP cash flow both immediately and
over the long-term, while providing SUN shareholders increased value now
and into the future
Allows SUN shareholders continued participation in potential upside from synergies
and complementary organic growth projects
Key SUN and SXL management to remain and continue to run businesses and oversee
integration Transaction provides immediate accretion and furthers ETPs
long-term initiative to enhance the services provided to customers while
expanding its fee-based tariff / margin business mix |
3
ETP Has Rapidly Evolved Into a Diversified
Energy Logistics Company
2004
2007
2008
2009
2010
2011
2012
Acquired TUFCO Pipeline,
Houston Pipeline and
Transwestern Interstate
Pipeline
Completed the first 42-inch
diameter natural gas pipeline in
the state of Texas in 2007
Since that time, have
completed and placed in
service nearly 2,500 miles of
large diameter pipe in major
U.S. shale plays
Initiated open season for new
interstate gas pipeline,
Midcontinent Express Pipeline
(MEP), a 50/50 joint venture
with Kinder Morgan Energy
Partners (KMP)
MEP completed and placed
in-service
Completed Phoenix and San
Juan projects, expanding
Transwestern Pipeline
Initiated open season for new
interstate gas pipeline, Tiger
Pipeline
Initiated open season for new
interstate gas pipeline,
Fayetteville Express Pipeline
(FEP), another 50/50 joint
venture with KMP
FEP and Tiger completed
ahead of schedule and
significantly under budget
ETP and Regency acquired
LDHE and formed Lone Star
NGL JV
Lone Star NGL JV announced
new Mt. Belvieu fractionation
plant and West Texas NGL
pipeline projects to significantly
expand liquids platform
Expansion of Eagle Ford shale
projects with the Rich Eagle
Ford Mainline (REM) pipeline
and new processing facility in
Jackson County, TX
Completed exit from the propane
business through contribution to
AmeriGas Partners, L.P.
ETP acquired 50% interest in
Citrus, which owns Florida Gas
Transmission
Further announced expansion in
liquids-rich Eagle Ford Shale area
that includes a second Mt. Belvieu
fractionation plant and extensive
organic pipeline infrastructure
supported by long-term fee-based
contracts
ETP announces acquisition of
SUN, creating a best in class
natural gas, crude oil, NGLs and
refined product logistics
platform
ETP
has
undertaken
several
initiatives
to
diversify
its
business
with
an
emphasis
on
fee-based
opportunities that expand the services provided to customers
The
acquisition
of
LDH
Energy
Asset
Holdings
LLC
("LDHE)
in
2011
increased
the
fee-based
services ETP could provide to customers by offering NGL solutions from wellhead to
fractionator The acquisition of SUN further positions ETP as a diversified
midstream company that provides services across the entire midstream value
chain |
4
Our
business
is
moving
hydrocarbons
and
the
SUN
acquisition
provides
an
established
and
attractive
platform
to
significantly
increase
our
crude
oil,
refined
products
and
NGL
service
capability
ETP customers
desire for a fully integrated midstream services company is driving this
transaction Furthers ETPs long-term initiative to expand its
business mix and diversify and grow its cash flow
ETP
will
immediately
become
a
leader
in
the
crude
oil,
refined
products
and
NGLs
markets
Significant and growing portion of fee-based cash flow derived from these
markets Enhances the size and scale of the Energy Transfer platform while
reinforcing its position as one of the largest MLPs
Enhances the growth profile of ETP while maintaining investment grade credit
metrics Complementary asset base provides numerous commercial opportunities
anchored by significant inventory of attractive, highly accretive organic
growth projects Retail business with an iconic brand name provides additional
stable cash flow to ETP's overall business mix
Clear line of sight to the exit of SUNs refining business creates the optimal
timing for a transaction
SUN will continue pursuing announced potential Carlyle joint venture
Rationale for ETP |
5
Diversified Energy Logistics Business
The acquisition significantly diversifies ETPs existing infrastructure assets
into crude oil and refined products transportation, terminalling and
logistics Pipelines
Storage
ETP
SXL
Processing
Treating
Pipelines
Terminals |
6
23,000
Diversified Asset Mix Enhances Credit Profile
Pipeline Mileage
Throughput*
Storage Capacity*
* Throughput and storage capacity converted on a 6:1 Mcf:Bbl basis
Summary Asset Overview
Status Quo
SUN &
Pro Forma
ETP
SXL
ETP
Pipelines (miles):
Natural Gas
21,500
-
21,500
NGL
1,500
40
1,540
Crude Oil
-
5,400
5,400
Refined Products
-
2,500
2,500
Total
7,940
30,940
Operating Metrics:
Natural Gas Throughput (Bcfpd)
22
-
22
NGL Throughput (Mbpd)
576
107
683
Crude Oil Throughput (Mbpd)
-
1,747
1,747
Refined Products Throughput (Mbpd)
-
522
522
Natural Gas Processing Capacity (MMcfpd)
2,662
-
2,662
Natural Gas Treating Capacity (MMcfpd)
1,985
-
1,985
Natural Gas Conditioning Capacity (MMcfpd)
846
-
846
NGL Processing Capacity (Mbpd)
176
-
176
Natural Gas Storage (Bcf)
74
-
74
NGL Storage (MMbbl)
33
1
34
Crude Oil Storage (MMbbl)
-
25
25
Refined Products Storage (MMbbl)
-
16
16
Facilities:
Natural Gas Storage Facilities
3
-
3
NGL Storage Facilities
2
1
3
Crude Oil Storage Facilities
-
4
4
Refined Products Storage Facilities
-
44
44
Natural Gas Process., Treat., Cond. Facilities
35
-
35
NGL Processing Facilities
4
-
4
Retail Marketing Outlets
-
4,900
4,900
Source:
Partnership and company filings
Note:
Joint venture assets reflective of ownership percentage
Includes previously announced projects under construction
|
7
52%
47%
38%
26%
14%
21%
22%
15%
16%
14%
21%
25%
18%
18%
13%
5%
4%
10%
20%
2009
2010
2011
2011
pro forma
Intrastate
Midstream
Interstate
Propane
NGL
Retail
Crude & Refined Products
Diversified Pro Forma Cash Flow
Note:
Adjusted EBITDA reconciliation in appendix. ETP adjusted EBITDA excludes
Other. (1)
2011 ETP pro forma for contribution of propane to AmeriGas Partners, L.P. and
Citrus acquisition. Excludes distributions from AmeriGas Partners, L.P.
Assumes full consolidation of SXL.
The acquisition diversifies ETPs business mix and provides an enhanced
portfolio of fee-based tariff / margin organic growth opportunities
Acquisition further enhances ETPs long-term
initiative to increase fee-based services provided
to producers while expanding ETPs business mix
and balancing its sources of cash flows
Inventory of attractive identified organic NGL and
crude oil projects at SXL augments ETPs slate of
growth projects and provides visibility to
meaningful EBITDA growth
Pro
forma
combined
2012
growth
capex
of
~$2.2 billion with the vast majority of spending
allocated to NGLs, midstream and crude oil
projects
Retail business provides an additional stable
segment to ETP's overall business mix
(1)
ETP Adjusted EBITDA |
8
LOGISTICS
Sunoco Has Become a Logistics Company
with a Stable Retail Business
Chemicals
Bayport plant closed
Refining
Tulsa refinery sold
Eagle Point refinery
permanently idled
Retail / Marketing
Fulton ethanol plant purchased
Heating oil / propane business
sold
Chemicals
Polypropylene business sold
Retail / Marketing
Purchased 25 retail locations
in NY State
Chemicals
Frankford plant sold
Haverhill plant sold
Refining
Toledo refinery sold
Eagle Point tank farm sold to SXL
Marcus Hook refinery permanently
idled
Retail / Marketing
Expansion into Alabama
Coke
Initial public offering
Refining
exit announced
Philadelphia refinery
Potential JV with Carlyle
(minority interest, Carlyle to
operate, no additional
capital required from SUN)
If no suitable exit
transaction can be reached,
expect to idle by August
2012
Coke
Complete spin-off of coke to
SUN shareholders
Retail / Marketing
Acquired 11 retail locations in
Daytona, FL
RETAIL
LOGISTICS
COKE
REFINING
RETAIL
COKE
REFINING
RETAIL
CHEM
CHEM
LOGISTICS
LOGISTICS
COKE
RETAIL
2008 / 2009
2010
2011
2012
REFINING
CHEM |
9
Attractive premium with continued participation in potential upside of a
well-managed, diversified business
Immediately crystallizes shareholder value during a time of transition, with recent
full exit from coke and chemicals as well as announced exit from refining
business
29.0%
premium
to
the
20-day
average
SUN
closing
share
price
(1)
50% cash / 50% unit mix allows shareholders to earn attractive ETP yield (~7.5%
based on $3.575 per unit cash distribution on an annualized basis) with an
improved distribution growth profile
Combination with Energy Transfer platform dramatically expands scale, operational
diversity and geographic footprint of SUN and SXL, enabling businesses to
fully deliver on potential Meaningful commercial and operational synergies
with the Energy Transfer family Minimal integration risk and disruptions
given key SUN and SXL managers will remain Key presence to be retained in
Philadelphia region Rationale for SUN and SXL
(1)
As of April 27, 2012. |
10
Transaction Overview
ETP will acquire 100% of SUNs outstanding common stock for $50.13 per share
($5.3 billion)
29.0%
premium
to
the
20-day
average
SUN
closing
share
price
(1)
Acquisition
of
SUN
shares
funded
with
ETP
common
units
(50%)
and
cash
(50%)
Consideration consists of $25.00 of cash and 0.5245x ETP common units per SUN
share SUN shareholders can elect cash, ETP common units or a mix of cash and
ETP common units, subject to pro-ration
$965 million of existing SUN notes (excluding debt at SXL) will remain
outstanding
No change of control triggered in SUNs existing notes
Energy Transfer Equity, L.P. (ETE) to provide a GP subsidy of $70
million per annum for a period of 3 years to ETP to support the transaction
post-closing SXL will remain a separate, publicly-traded MLP
Transaction offers compelling value to SUN shareholders with an attractive yield and
improved distribution growth profile
(1)
As of April 27, 2012. |
11
Integration Plan
Energy Transfer management team has a proven
track record of successfully integrating
acquisitions
Southern Union (2012), LDHE (2011), Regency
(2010), Canyon (2007), Transwestern (2006),
Titan (2006), HPL (2005), ET Fuel (2004)
Southern Union integration to be substantially
complete by time of SUN transaction closing
The transaction is a bolt-on acquisition, similar to
the LDHE acquisition, and ETP expects minimal
integration risk given key SUN and SXL
management team will remain in place
ETP, SUN and SXL have conservatively identified
$70 million of annual run-rate commercial /
operational synergies
Commercial &
Operational
Synergies
$55
Compensation
& Benefits
$5
Corporate
Overhead
$10
79%
7%
14%
Note:
Based on estimated $70 million of run-rate synergies per annum.
($ in millions)
SUN Synergy Breakdown |
May
2012 Begin drafting
Proxy / registration
statement
Begin regulatory
approval process
File proxy
statement /
S-4
registration
statement
Integration plan will be put in place immediately resulting in one functional
organization at closing Only major regulatory approval is HSR; no issues
expected given business mix 4 -
6 months expected timing from announcement to closing
File for regulatory
approval
-
HSR
-
Other minor approvals
Subject to SEC review
and regulatory approval
2 -
4
weeks
8 -
20 weeks
Q3 / Q4 2012:
SUN
shareholder
vote and
close
Illustrative Transaction Timeline
12
No financing contingency or ETP / SXL unitholder vote provides for high level of deal certainty |
13
Conclusions
Elevates ETP to a leading player in crude oil, refined products and NGL
transportation, terminalling and logistics
Delivers
immediate
premium
to
SUN
shareholders
with
the
ETP
unit
consideration
providing
an
attractive
yield
and
continued
potential
upside
with
an
improved
distribution
profile
Significant, tangible commercial and operational synergies
Enhances the growth profile of ETP while maintaining investment grade credit
metrics High degree of transaction certainty
Key SUN and SXL management to continue to run businesses and oversee
integration A win-win
transaction for investors of SUN, SXL and ETP |
Appendix |
15
Side-by-Side Overview
($ in millions, except per share / unit amounts)
(4)
ETP
(1)
SUN
(2)
SXL
Share / Unit Price (as of 4/27/12)
$47.92
$50.13
$40.99
LP equity market cap
$11,001
$5,321
$4,244
Illustrative GP value
(3)
6,415
1,397
Market Capitalization
(3)
$17,415
$5,321
$5,641
Total Debt
8,884
1,020
1,698
Minority Interest
629
98
Cash
(710)
(1,531)
(5)
Enterprise Value
$26,218
$4,810
$7,432
Current Yield
7.5%
1.6%
4.2%
Corporate Credit Ratings
Moody's
Baa3
Ba1
Baa2
S&P
BBB-
BB+
BBB
Fitch
BBB-
BB+
BBB
Source: ETP, SUN and SXL public filings. Balance sheet data as of 12/31/2011.
(1)
Pro forma for Citrus acquisition, Propane sale, January 2012 $2,000 million senior notes offering and
January 2012 $750 million tender offer. (2)
SXL not consolidated in SUN data. SUN contribution debt pro forma for $100 million PEDFA bond
redemption. SUN cash pro forma for $100 million PEDFA bond redemption and $200 million
funding of VEBA trust. SUN pro forma for $100 million of total share repurchases through March and April 2012.
(3)
Includes implied value of GP / IDR interest at ETP and SXL based on current yield for illustrative
purposes. (4)
Acquisition price per share.
|
16
Retail Marketing
Logistics
(MLP)
Refining
Announced exit of refining
business in September 2011
Marcus Hook, PA refinery (175
Mbbls/d) permanently idled in
December 2011 but continues to
operate in a terminal capacity
Philadelphia refinery (330
Mbbls/d)
Potential JV with Carlyle
(minority interest, Carlyle
to operate, no additional
capital required from
SUN)
If no suitable exit
transaction can be
reached, expect to idle
by August 2012
SUN Primary Operating Segments
~2,500 miles of refined products
pipelines located in the
Northeast, Midwest and
Southwest
~5,400 miles of crude oil
pipelines, located principally in
Oklahoma and Texas
~42 million barrels of refined
products and crude oil terminal
capacity
Engaged in the acquisition and
marketing of crude oil
SUN owns:
100% of the SXL GP
interest and IDRs
32.4% of SXL common
units
Historical SUN distributions
received from SXL (pre-tax)
2011 = $97 million
2010 = $91 million
(1)
2009 = $98 million
~4,900 retail outlets for the sale
of gasoline and middle distillates
~5 billion gallons of gasoline and
diesel fuel and ~$500 million of
merchandise sales per year
Strong brand and station image
recognition
Located on the East Coast /
Midwest / Southeast
Historical retail EBITDA
2011 = $261 million
2010 = $269 million
2009 = $241 million
Source: SUN filings and investor presentations.
(1)
SXL distributions to SUN declined in 2010 due to IDR reset which provided SUN with $201 million in cash
proceeds. |
17
Intrastate Transportation
and Storage
Interstate Transportation
Midstream
ETP Primary Operating Segments
Approximately 23,000 miles of natural gas gathering and transportation pipelines, 3
natural gas storage facilities with 74 Bcf of working capacity and 70%
interest in Lone Star NGL joint venture NGL
Oasis Pipeline (600 mi, 1.2
Bcf/d capacity west-to-east, 750
MMcf/d capacity east-to-west)
East Texas Pipeline (370 mi)
Energy Transfer Fuel System
(2,950 mi, total capacity of 5.2
Bcf/d)
Includes Bethel storage
facility (6.4 Bcf working
capacity), Bryson storage
facility (6.0 Bcf working
capacity), Godley plant
HPL System (4,350 mi, total
capacity of 5.5 Bcf/d)
Includes Bammel storage
facility (62 Bcf working
capacity)
Transwestern Pipeline (2,690
mi; 1,225 MMcf/d mainline
capacity and 1,610 MMcf/d San
Juan Lateral capacity)
Tiger Pipeline (195 mi, 42-inch
pipeline; 2.4 Bcf/d of capacity
sold under 10-15 year
agreements)
FEP Pipeline Joint Venture (185
mi, 42-inch pipeline; initial
capacity of 2.0 Bcf/d with 1.85
Bcf/d sold under 10-12 year
agreements)
50/50 joint venture with
Kinder Morgan Energy
Partners, L.P.
Citrus
50/50 joint venture with El
Paso Corporation (5,400 mi;
3.1 Bcf/d mainline capacity)
~7,400 mi of natural gas
gathering pipelines
2 natural gas processing plants
15 natural gas treating facilities
11 natural gas conditioning
plants
Joint venture owned 70% by
ETP and 30% by Regency
Energy Partners LP (RGP);
ETP operates on behalf of the
joint venture; stand-alone entity
with equal board representation
NGL Storage
Mont Belvieu storage facility
(43
million Bbls working
capacity)
Hattiesburg storage facility (4
million Bbls of working
capacity)
NGL Pipeline Transportation
West Texas NGL Pipeline
(1,066 mi, 144,000 Bbls/d
working capacity)
NGL Fractionation &
Processing (2 cryogenic
processing plants; 25,000
Bbls/d fractionator; Sea Robin
gas processing plant) |
18
Pro Forma Simplified Structure
ETE
ETP
NGL
Interstate
Transportation
100% ETP IDRs
1.5% GP Interest
22% LP Interest
Midstream
Intrastate
Transportation
and
Storage
100% SXL IDRs
2% GP Interest
32% LP Interest |
19
Adjusted EBITDA reconciliation
Energy Transfer Partners, L.P.
($ in millions)
Fiscal Year Ended December 31,
2009
2010
2011
Net income
$792
$617
$697
Interest expense, net of interest capitalized
394
413
474
Income tax expense
13
16
19
Depreciation and amortization
313
343
431
Non-cash unit-based compensation expense
24
27
37
Losses on disposals of assets
2
5
3
Gains on non-hedged interest rate derivatives
(39)
(5)
77
Allowance for equity funds used during construction
(11)
(29)
(1)
Unrealized (gains) losses on commodity risk management activities
(30)
78
11
Impairment of investment in affiliate
53
5
Proportionate share of JV's interest, depreciation and allowance
for equity funds used during construction
22
22
30
Adjusted EBITDA attributable to noncontrolling interest
(38)
Other, net
(2)
0
(4)
Adjusted EBITDA
$1,477
$1,541
$1,743
Sunoco Retail
($ in millions)
Fiscal Year Ended December 31,
2009
2010
2011
Retail Pretax Income
$146
$176
$169
Depreciation and amortization
95
93
92
Retail Adjusted EBITDA
(1)
$241
$269
$261
(1)
Excludes items deemed to be unusual. |