Energy Transfer 2012 Annual Report Download - page 180

F - 35
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 significant
debt covenants and cross defaults 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 and potential limitations on some of its subsidiaries to participate in Southern Union’s cash management program;
and limitations on Southern Union’s ability to prepay debt.
Covenants Related to Sunoco Logistics
The $350 and $200 million Credit Facilities contain various covenants limiting the Partnership’s ability to incur indebtedness;
grant certain liens; make certain loans, acquisitions and investments; make any material change to the nature of its business;
or enter into a merger or sale of assets, including the sale or transfer of interests in the Operating Partnership’s subsidiaries.
The credit facilities also limit the Partnership, on a rolling four-quarter basis, to a maximum total consolidated debt to
consolidated EBITDA ratio, as defined in the underlying credit agreements, of 5.0 to 1, which can generally be increased to
5.5 to 1 during an acquisition period. The Partnership’s ratio of total debt to EBITDA was 2.0 to 1 at December 31, 2012, as
calculated in accordance with the credit agreements.
The $35 million Credit Facility limits West Texas Gulf, on a rolling four-quarter basis, to a minimum fixed charge coverage
ratio, as defined in the underlying credit agreement. The ratio for the fiscal quarter ending December 31, 2012 shall not be
less than 1.00 to 1. The minimum ratio fluctuates between 0.80 to 1 and 1.00 to 1 throughout the term of the revolver as
specified in the credit agreement. In addition, the credit facility limits West Texas Gulf to a maximum leverage ratio of 2.00
to 1. West Texas Gulf’s fixed charge coverage ratio and leverage ratio were 1.29 to 1 and 0.62 to 1, respectively, at December 31,
2012.
7. EQUITY:
Limited Partner interests are represented by Common, Class E Units and Class F Units that entitle the holders thereof to the
rights and privileges specified in the Partnership Agreement. As of December 31, 2012, there were issued and outstanding
301,485,604 Common Units representing an aggregate 99.1% Limited Partner interest in us. There are also 8,853,832 Class
E Units and 90,706,000 Class F Units outstanding that are reported as treasury units, which units are entitled to receive
distributions in accordance with their terms.
No person is entitled to preemptive rights in respect of issuances of equity securities by us, except that ETP GP has the right,
in connection with the issuance of any equity security by us, to purchase equity securities on the same terms as equity securities
are issued to third parties sufficient to enable ETP GP and its affiliates to maintain the aggregate percentage equity interest
in us as ETP GP and its affiliates owned immediately prior to such issuance.
IDRs represent the contractual right to receive an increasing percentage of quarterly distributions of Available Cash (as defined
in our Partnership Agreement) from operating surplus after the minimum quarterly distribution has been paid. Please read
“Quarterly Distributions of Available Cash” below. ETP GP owns all of the IDRs.
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