Energy Transfer 2013 Annual Report Download - page 37

Table of Contents
Cost reimbursements due to our General Partner may be substantial and may reduce our ability to pay the distributions to Unitholders.
Prior to making any distributions to our Unitholders, we will reimburse our General Partner for all expenses it has incurred on our behalf. In addition, our
General Partner and its affiliates may provide us with services for which we will be charged reasonable fees as determined by the General Partner. The
reimbursement of these expenses and the payment of these fees could adversely affect our ability to make distributions to the Unitholders. Our General Partner
has sole discretion to determine the amount of these expenses and fees.
Unitholders may have liability to repay distributions.
Under certain circumstances, Unitholders may have to repay us amounts wrongfully distributed to them. Under Delaware law, we may not make a
distribution to Unitholders if the distribution causes our liabilities to exceed the fair value of our assets. Liabilities to partners on account of their partnership
interests and non-recourse liabilities are not counted for purposes of determining whether a distribution is permitted. Delaware law provides that a limited
partner who receives such a distribution and knew at the time of the distribution that the distribution violated Delaware law, will be liable to the limited
partnership for the distribution amount for three years from the distribution date. Under Delaware law, an assignee who becomes a substituted limited partner
of a limited partnership is liable for the obligations of the assignor to make contributions to the partnership. However, such an assignee is not obligated for
liabilities unknown to him at the time he or she became a limited partner if the liabilities could not be determined from the partnership agreement.
We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets.
We are a holding company, and our subsidiaries conduct all of our operations and own all of our operating assets. We do not have significant assets other than
the partnership interests and the equity in our subsidiaries. As a result, our ability to pay distributions to our Unitholders and to service our debt depends on
the performance of our subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us may be restricted by,
among other things, credit facilities and applicable state partnership laws and other laws and regulations. If we are unable to obtain funds from our
subsidiaries we may not be able to pay distributions to our Unitholders or to pay interest or principal on our debt when due.
We do not have the same flexibility as other types of organizations to accumulate cash, which may limit cash available to service our debt or to
repay debt at maturity.
Unlike a corporation, our partnership agreement requires us to distribute, on a quarterly basis, 100% of our Available Cash (as defined in our partnership
agreement) to our Unitholders of record and our General Partner. Available Cash is generally all of our cash on hand as of the end of a quarter, adjusted for
cash distributions and net changes to reserves. Our General Partner will determine the amount and timing of such distributions and has broad discretion to
establish and make additions to our reserves or the reserves of our operating subsidiaries in amounts it determines in its reasonable discretion to be necessary
or appropriate:
•to provide for the proper conduct of our business and the businesses of our operating subsidiaries (including reserves for future capital expenditures and
for our anticipated future credit needs);
•to provide funds for distributions to our Unitholders and our General Partner for any one or more of the next four calendar quarters; or
•to comply with applicable law or any of our loan or other agreements.
A downgrade of our credit rating could impact our liquidity, access to capital and our costs of doing business, and maintaining credit ratings is
under the control of independent third parties.
A downgrade of our credit rating might increase our cost of borrowing and could require us to post collateral with third parties, negatively impacting our
available liquidity. Our ability to access capital markets could also be limited by a downgrade of our credit rating and other disruptions. Such disruptions
could include:
•economic downturns;
•deteriorating capital market conditions;
•declining market prices for natural gas, NGLs and other commodities;
•terrorist attacks or threatened attacks on our facilities or those of other energy companies; and
•the overall health of the energy industry, including the bankruptcy or insolvency of other companies.
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