Energy Transfer 2010 Annual Report Download - page 31

ETE has significant indebtedness outstanding and is dependent principally on the cash distributions from its
general and limited partner equity interests in us and in Regency 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.
The General Partner is not elected by the Unitholders and cannot be removed without its consent.
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 fiduciary duty to manage us in a manner beneficial 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 will have little
ability 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, 2010, ETE and its affiliates held approximately 25% of our
outstanding units, with an additional approximate 1% of our outstanding units held by our officers and directors.
Consequently, it could be difficult to remove the General Partner without the consent of the General Partner and
our related parties.
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.
The control of our General Partner may be transferred to a third party without Unitholder consent.
The General Partner may transfer its general partner interest to a third party without the consent of the
Unitholders. Furthermore, the general partner of our General Partner may transfer its general partner interest in
our General Partner to a third party without the consent of the Unitholders. Any new owner of the General
Partner or the general partner of the General Partner would be in a position to replace the officers of the General
Partner with its own choices and to control the decisions taken by such officers.
Unitholders may be required to sell their units to the General Partner at an undesirable time or price.
If at any time less than 20% of the outstanding units of any class are held by persons other than the General
Partner and its affiliates, the General Partner will have the right to acquire all, but not less than all, of those units
at a price no less than their then-current market price. As a consequence, a Unitholder may be required to sell his
Common Units at an undesirable time or price. The General Partner may assign this purchase right to any of its
affiliates or to us.
The interruption of distributions to us from our operating subsidiaries and equity investees may affect our
ability to satisfy our obligations and to make distributions to our partners.
We are a holding company with no business operations other than that of our operating subsidiaries. Our only
significant assets are the equity interests we own in our operating subsidiaries and equity investees. As a result,
we depend upon the earnings and cash flow of our operating subsidiaries and equity investees and any
interruption of distributions to us may effect our ability to meet our obligations and to make distributions to our
partners.
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