Energy Transfer 2010 Annual Report Download - page 83

• engage in transactions with affiliates;
• enter into restrictive agreements; and
• enter into speculative hedging contracts.
The credit agreement related to the ETP Credit Facility also contains a financial covenant that provides that on
each date we make a distribution, the Leverage Ratio, as defined in the ETP Credit Facility, shall not exceed 5.0
to 1, with a permitted increase to 5.5 to 1 during a specified acquisition period, as defined in the ETP Credit
Facility. This financial covenant could therefore restrict our ability to make cash distributions to our Unitholders,
our general partner and the holder of our incentive distribution rights.
The agreements related to the HOLP Senior Secured Notes contain customary restrictive covenants, including the
maintenance of financial covenants and limitations on substantial disposition of assets, changes in ownership, the
level of additional indebtedness and creation of liens.
The agreements related to the Transwestern senior unsecured notes contain certain restrictions that, among other
things, limit the incurrence of additional debt, the sale of assets and the payment of dividends and specify a
maximum debt to capitalization ratio.
Failure to comply with the various restrictive and affirmative covenants of our debt agreements could require us
to pay debt balances prior to scheduled maturity and could negatively impact the Operating Companies’ ability to
incur additional debt and/or our ability to pay distributions.
We are required to assess compliance quarterly and were in compliance with all requirements, limitations, and
covenants related to debt agreements as of December 31, 2010. We plan to fund our working capital needs and
growth capital expenditures with cash on hand, cash flow from operations, and borrowings under the ETP Credit
Facility. However, we may issue debt or equity securities prior to that time as we deem prudent to provide
liquidity for new capital projects or other partnership purposes. Please read “Risk Factors — Risks Related to
Our Business — Construction of new pipeline projects will require significant amounts of debt and equity
financing which may not be available to us on acceptable terms, or at all.” While we expect that our financing for
future projects will result in an increase in our level of indebtedness in future quarters, we also expect that the
incremental cash flow from the projects will allow us to satisfy the financial ratio covenants related to our
existing debt during 2011.
Each of the agreements referred to above are incorporated herein by reference to our reports previously filed with
the SEC under the Exchange Act. See “Item 1. Business – SEC Reporting.”
Contractual Obligations
The following table summarizes our long-term debt and other contractual obligations as of December 31, 2010
(in thousands):
Payments Due by Period
Contractual Obligations Total
Less Than
1 Year 1-3 Years 3-5 Years
More Than 5
Years
Long-term debt $ 6,434,995 $ 35,265 $ 1,198,756 $ 1,200,039 $ 4,000,935
Interest on long-term
debt (a) 4,311,125 428,050 822,884 678,002 2,382,189
Payments on derivatives 32,652 — — 6,080 26,572
Purchase commitments
(b) 738,967 373,342 225,000 140,625 —
Operating lease
obligations 263,188 23,670 40,116 33,999 165,403
Totals $ 11,780,927 $ 860,327 $ 2,286,756 $ 2,058,745 $ 6,575,099
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