Energy Transfer 2012 Annual Report Download - page 103

95
The credit agreement relating to the ETP Credit Facility contains covenants that limit (subject to certain exceptions) the Partnership’s
and certain of the Partnership’s subsidiaries’ ability to, among other things:
• incur indebtedness;
• grant liens;
• enter into mergers;
• dispose of assets;
• make certain investments;
• make Distributions (as defined in such credit agreement) during certain Defaults (as defined in such credit agreement) and
during any Event of Default (as defined in such credit agreement);
• engage in business substantially different in nature than the business currently conducted by the Partnership and its subsidiaries;
• engage in transactions with affiliates; and
• enter into restrictive agreements;
The credit agreement relating to the ETP Credit Facility also contains a financial covenant that provides that the Leverage Ratio,
as defined in the ETP Credit Facility, shall not exceed 5.0 to 1 as of the end of each quarter, with a permitted increase to 5.5 to 1
during a Specified Acquisition Period, as defined in the ETP Credit Facility.
The agreements relating to the Transwestern senior notes contain certain restrictions that, among other things, limit the incurrence
of additional debt, the sale of all or substantially all assets and the payment of dividends and specify a maximum debt to capitalization
ratio.
We are required to assess compliance quarterly and were in compliance with all requirements, limitations, and covenants related
to debt agreements as of December 31, 2012.
Each of the agreements referred to above are incorporated herein by reference to our reports previously filed with the SEC under
the Exchange Act. See “Item 1. Business – SEC Reporting.”
Covenants Related to Southern Union's Credit Agreements
Southern Union is not party to any lending agreement that would accelerate the maturity date of any obligation due to a failure to
maintain any specific credit rating, nor would a reduction in any credit rating, by itself, cause an event of default under any of
Southern Union’s lending agreements. Financial covenants exist in certain of Southern Union’s debt agreements. A failure by
Southern Union to satisfy any such covenant would give rise to an event of default under the associated debt, which could become
immediately due and payable if Southern Union did not cure such default within any permitted cure period or if Southern Union
did not obtain amendments, consents or waivers from its lenders with respect to such covenants.
Southern Union’s restrictive covenants include restrictions on debt levels, restrictions on liens securing debt and guarantees,
restrictions on mergers and on the sales of assets, capitalization requirements, dividend restrictions, cross default and cross-
acceleration and prepayment of debt provisions. A breach of any of these covenants could result in acceleration of Southern
Union’s debt and other financial obligations and that of its subsidiaries. Under the current credit agreements, the financial covenants
are as follows:
• Under the Southern Union Credit Facility, the ratio of consolidated funded debt to consolidated earnings before interest, taxes,
depreciation and amortization, as defined therein, cannot exceed 5.25 times through December 31, 2012 and 5.00 times
thereafter;
• Under the Southern Union Credit Facility, in the event Southern Union's credit rating falls below investment grade, the ratio
of consolidated earnings before interest, taxes, depreciation and amortization to consolidated interest expense, as defined
therein, cannot be less than 2.00 times; and
• Under LNG Holding's $455 million term loan, the ratio of consolidated funded debt to consolidated earnings before interest,
taxes, depreciation and amortization, as defined therein, for Panhandle cannot exceed 5.00 times.
In addition to the above financial covenants, Southern Union and/or its subsidiaries are subject to certain additional restrictions
and covenants. These restrictions and covenants include limitations on additional debt at some of its subsidiaries; limitations on
the use of proceeds from borrowing at some of its subsidiaries; limitations, in some cases, on transactions with its affiliates;
limitations on the incurrence of liens; potential limitations on the abilities of some of its subsidiaries to declare and pay dividends
Table of Contents