Energy Transfer 2015 Annual Report Download - page 39

Table of Contents
• the ratio of taxable income to distributions may increase;
• the relative voting strength of each previously outstanding common unit may be diminished; and
• the market price of Sunoco Logistics’ common units may decline.
The payment of distributions on any additional units issued by Sunoco Logistics may increase the risk that Sunoco Logistics may not have sufficient cash
available to maintain or increase its per unit distribution level, which in turn may impact the available cash that we have to meet our obligations.
Future sales of our units or other limited partner interests in the public market could reduce the market price of Unitholders’ limited partner interests.
As of December 31, 2015, ETE owned 2.6 million ETP Common Units. If ETE were to sell and/or distribute its Common Units to the holders of its equity
interests in the future, those holders may dispose of some or all of these units. The sale or disposition of a substantial portion of these units in the public
markets could reduce the market price of our outstanding Common Units.
Unitholders may not have limited liability if a court finds that Unitholder actions constitute control of our business.
Under Delaware law, a Unitholder could be held liable for our obligations to the same extent as a general partner if a court determined that the right of
Unitholders to remove our general partner or to take other action under our partnership agreement constituted participation in the “control” of our business.
Our general partner generally has unlimited liability for our obligations, such as our debts and environmental liabilities, except for those contractual
obligations that are expressly made without recourse to our general partner. Our partnership agreement allows the general partner to incur obligations on our
behalf that are expressly non-recourse to the general partner. The general partner has entered into such limited recourse obligations in most instances
involving payment liability and intends to do so in the future.
In addition, Section 17-607 of the Delaware Revised Uniform Limited Partnership Act provides that under some circumstances, a Unitholder may be liable to
us for the amount of a distribution for a period of three years from the date of the distribution.
Our debt level and debt agreements may limit our ability to make distributions to Unitholders and may limit our future financial and operating flexibility.
As of December 31, 2015, we had approximately $28.68 billion of consolidated debt, excluding the debt of our joint ventures. Our level of indebtedness
affects our operations in several ways, including, among other things:
• a significant portion of our and our subsidiaries’ cash flow from operations will be dedicated to the payment of principal and interest on outstanding debt
and will not be available for other purposes, including payment of distributions;
• covenants contained in our and our subsidiaries’ existing debt agreements require us and them, as applicable, to meet financial tests that may adversely
affect our flexibility in planning for and reacting to changes in our business;
• our and our subsidiaries’ ability to obtain additional financing for working capital, capital expenditures, acquisitions and general partnership, corporate
or limited liability company purposes, as applicable, may be limited;
• we may be at a competitive disadvantage relative to similar companies that have less debt;
• we may be more vulnerable to adverse economic and industry conditions as a result of our significant debt level; and
• failure by us or our subsidiaries to comply with the various restrictive covenants of our respective debt agreements could negatively impact our ability to
incur additional debt, including our ability to utilize the available capacity under our revolving credit facility, and our ability to pay our distributions.
Capital projects will require significant amounts of debt and equity financing, which may not be available to us on acceptable terms, or at all.
We plan to fund our growth capital expenditures, including any new pipeline construction projects and improvements or repairs to existing facilities that we
may undertake, with proceeds from sales of our debt and equity securities and borrowings under our revolving credit facility; however, we cannot be certain
that we will be able to issue our debt and equity securities on terms satisfactory to us, or at all. If we are unable to finance our expansion projects as expected,
we could be required to seek alternative financing, the terms of which may not be attractive to us, or to revise or cancel our expansion plans.
A significant increase in our indebtedness that is proportionately greater than our issuance of equity could negatively impact our and our subsidiaries’ credit
ratings or our ability to remain in compliance with the financial covenants under our revolving credit agreement, which could have a material adverse effect
on our financial condition, results of operations and cash flows.
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