Energy Transfer 2015 Annual Report Download - page 40

Table of Contents
Increases in interest rates could adversely affect our business, results of operations, cash flows and financial condition.
In addition to our exposure to commodity prices, we have exposure to changes in interest rates. Approximately $3.59 billion of our consolidated debt as of
December 31, 2015 bears interest at variable interest rates and the remainder bears interest at fixed rates. To the extent that we have debt with floating interest
rates, our results of operations, cash flows and financial condition could be materially adversely affected by increases in interest rates. We manage a portion
of our interest rate exposures by utilizing interest rate swaps.
An increase in interest rates may also cause a corresponding decline in demand for equity investments, in general, and in particular for yield-based equity
investments such as our Common Units. Any such reduction in demand for our Common Units resulting from other more attractive investment opportunities
may cause the trading price of our Common Units to decline.
The credit and risk profile of our General Partner and its owners could adversely affect our credit ratings and profile.
The credit and business risk profiles of our General Partner, and of ETE as the indirect owner of our General Partner, may be factors in credit evaluations of us
as a publicly traded limited partnership due to the significant influence of our General Partner and ETE over our business activities, including our cash
distributions, acquisition strategy and business risk profile. Another factor that may be considered is the financial condition of our General Partner and its
owners, including the degree of their financial leverage and their dependence on cash flow from the Partnership to service their indebtedness.
ETE has significant indebtedness outstanding and is dependent principally on the cash distributions from its general and limited partner equity interests in us
to service such indebtedness. Any distributions by us to ETE will be made only after satisfying our then current obligations to our creditors. Although we
have taken certain steps in our organizational structure, financial reporting and contractual relationships to reflect the separateness of us, ETP GP and ETP
LLC from the entities that control ETP GP (ETE and its general partner), our credit ratings and business risk profile could be adversely affected if the ratings
and risk profiles of such entities were viewed as substantially lower or riskier than ours.
Unitholders have limited voting rights and are not entitled to elect the General Partner or its directors. In addition, even if Unitholders are dissatisfied,
they cannot easily remove the General Partner.
Unlike the holders of common stock in a corporation, Unitholders have only limited voting rights on matters affecting our business, and therefore limited
ability to influence management’s decisions regarding our business. Unitholders did not elect our General Partner and will have no right to elect our General
Partner on an annual or other continuing basis. Although our General Partner has a contractually-limited fiduciary duty to our Unitholders, the directors of
our General Partner and its general partner have a fiduciary duty to manage the General Partner and its general partner in a manner beneficial to the owners of
those entities.
Furthermore, if the Unitholders are dissatisfied with the performance of our General Partner, they may be unable to remove our General Partner. The General
Partner generally may not be removed except upon the vote of the holders of 66 2/3% of the outstanding units voting together as a single class, including
units owned by the General Partner and its affiliates. As of December 31, 2015, ETE and its affiliates held approximately 0.5% of our outstanding Common
Units and our officers and directors held less than 1% of our outstanding Common Units.
Furthermore, Unitholders’ voting rights are further restricted by the partnership agreement provision providing that any units held by a person that owns 20%
or more of any class of units then outstanding, other than the General Partner and its affiliates, cannot be voted on any matter.
Our General Partner may, in its sole discretion, approve the issuance of partnership securities and specify the terms of such partnership securities.
Pursuant to our partnership agreement, our General Partner has the ability, in its sole discretion and without the approval of the Unitholders, to approve the
issuance of securities by the Partnership at any time and to specify the terms and conditions of such securities. The securities authorized to be issued may be
issued in one or more classes or series, with such designations, preferences, rights, powers and duties (which may be senior to existing classes and series of
partnership securities), as shall be determined by our General Partner, including:
• the right to share in the Partnership’s profits and losses;
• the right to share in the Partnership’s distributions;
• the rights upon dissolution and liquidation of the Partnership;
• whether, and the terms upon which, the Partnership may redeem the securities;
• whether the securities will be issued, evidenced by certificates and assigned or transferred; and
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