HOUSTON--(BUSINESS WIRE)--Jun. 29, 2009--
Enterprise Products Partners L.P. (NYSE:EPD) (referred to as
“Enterprise”), TEPPCO Partners, L.P. (NYSE:TPP) (referred to as
“TEPPCO”) and Enterprise GP Holdings L.P. (NYSE:EPE) (referred to as
“Enterprise GP”) today announced that Enterprise and TEPPCO have entered
into definitive agreements to merge Enterprise and TEPPCO (along with
TEPPCO’s general partner) to form the largest publicly traded energy
partnership with an enterprise value of more than $26 billion. The
combined partnership, which will retain the name Enterprise Products
Partners L.P., will access the largest producing basins of natural gas,
natural gas liquids (NGLs) and crude oil in the U.S., and serve some of
the largest consuming regions for natural gas, NGLs, refined products,
crude oil and petrochemicals.
The combined partnership will own almost 48,000 miles of pipelines
comprised of over 22,000 miles of NGL, refined product and petrochemical
pipelines, over 20,000 miles of natural gas pipelines and more than
5,000 miles of crude oil pipelines. The merged partnership’s logistical
assets will include approximately 200 million barrels of NGL, refined
product and crude oil storage capacity; 27 billion cubic feet of natural
gas storage capacity; one of the largest NGL import/export terminals in
the U.S., located on the Houston Ship Channel; 60 NGL, refined product
and chemical terminals spanning the U.S. from the west coast to the east
coast; and crude oil import terminals on the Texas Gulf Coast. The
combined partnership will own interests in 17 fractionation plants with
over 600,000 barrels per day of net capacity; 25 natural gas processing
plants with a net capacity of approximately 9 billion cubic feet per
day; and 3 butane isomerization facilities with a capacity of 116,000
barrels per day. The combined partnership would also be one of the
largest inland tank barge companies in the U.S.
“We are excited to announce this merger, which will establish Enterprise
as the largest pipeline partnership as measured by miles of pipe,
enterprise value and equity market capitalization,” said Michael A.
Creel, President and Chief Executive Officer of Enterprise. “We believe
this combination will provide long-term accretion for Enterprise’s
unitholders and general partner, driven by our scale, broad geographic
and business diversification and the benefits of our integrated
midstream energy system. This transaction expands Enterprise’s lines of
business beyond its strong operating presence in providing services to
producers and consumers of natural gas and NGLs into the transportation
and storage of refined products and crude oil. We expect the merger to
be accretive in 2010 as we begin to generate cash flow from incremental
commercial and organic growth opportunities, in addition to at least $20
million of cost savings and overall system optimization. We also believe
the size, financial stability and liquidity of the combined company will
appeal to our customers and our debt and equity investors.”
Jerry E. Thompson, President and Chief Executive Officer of TEPPCO,
said, “With our foundation of fee-based businesses, TEPPCO complements
Enterprise’s strategic philosophy and provides an added dimension of
asset diversification. The strength of the combined partnership should
benefit TEPPCO investors through a lower cost of capital and improved
access to the capital markets, both of which should enhance our ability
to participate in accretive projects and support our ability to increase
distributions to partners in the future. Additionally, TEPPCO customers
can expect to continue receiving the same outstanding service to which
they have become accustomed.”
Under the terms of the definitive agreement, TEPPCO and TEPPCO’s general
partner, Texas Eastern Products Pipeline Company, LLC (referred to as
“TEPPCO GP”), will become wholly-owned subsidiaries of Enterprise. In
consideration, TEPPCO unitholders, except for a certain affiliate of
EPCO, Inc., will receive 1.24 Enterprise common units for each TEPPCO
unit, representing: a 14.5 percent premium to the initial offer made by
Enterprise on March 9, 2009; an 18.8 percent premium to the exchange
rate based on the last 10-day average closing prices of TEPPCO units and
Enterprise common units on March 6, 2009, the business day prior to the
date on which Enterprise made its initial offer; and a 9.3 percent
premium to the closing price of TEPPCO units on June 26, 2009.
An affiliate of EPCO, Inc., a private company controlled by Dan L.
Duncan, will exchange its 11,486,711 TEPPCO units for 14,243,521
Enterprise units, based on the 1.24 exchange rate, which will consist of
9,723,090 Enterprise common units and 4,520,431 Enterprise Class B
units. The Enterprise Class B units will not be entitled to regular
quarterly cash distributions for the sixteen quarters following the
closing of the merger. The Class B units will convert automatically into
the same number of common units on the date immediately following the
payment date of the sixteenth distribution following the closing of the
merger. The total distributions forgone by the Class B units would be
more than $40 million based on expected increases in the cash
distribution rate for Enterprise’s common units during this period. The
Class B units will be entitled to vote together with the common units as
a single class on partnership matters.
In exchange for the merger of TEPPCO GP with a subsidiary of Enterprise,
Enterprise GP will receive 1,331,681 Enterprise common units and an
increase in the capital account of Enterprise’s general partner,
Enterprise Products GP, LLC (referred to as “EPD GP”), to maintain the
general partner’s two percent interest in Enterprise. EPD GP will
continue to be wholly owned by Enterprise GP after the merger.
The respective Audit, Conflicts and Governance Committees for the
general partners of Enterprise and Enterprise GP and the Special
Committee of the Audit, Conflicts and Governance Committee of the
general partner of TEPPCO each voted unanimously in favor of the merger.
“We fully support the combination of Enterprise and TEPPCO and believe
there will be long-term value created for our unitholders,” said Ralph
S. Cunningham, President and Chief Executive Officer of Enterprise GP.
“Enterprise’s and TEPPCO’s underlying businesses are very complementary.
We expect the simplified partnership structure will lead to additional
commercial opportunities, cost savings and an overall lower cost of
capital which should result in additional distributable cash flow.
Initially, we expect the merger will be essentially neutral in terms of
the distributions we receive from our existing limited and general
partnership interests in Enterprise and TEPPCO and will become accretive
as the incremental benefits of the merger are realized.”
Following the closing of the merger, Enterprise expects affiliates of
EPCO, Inc., including Enterprise GP, will own approximately 29.5 percent
of Enterprise’s outstanding limited partner units and that Enterprise GP
will own approximately 3.4 percent of Enterprise’s outstanding limited
partner units.
The executive management team of the general partner of Enterprise after
the merger closes will continue to include Dan L. Duncan, Chairman;
Michael A. Creel, President and Chief Executive Officer; A. J. Teague,
Executive Vice President and Chief Commercial Officer; Richard H.
Bachmann, Executive Vice President and Chief Legal Officer; William
Ordemann, Executive Vice President and Chief Operating Officer; and W.
Randall Fowler, Executive Vice President and Chief Financial Officer.
The completion of the merger is subject to the approval of at least a
majority of the outstanding TEPPCO units. The vote approving the merger
must also include at least a majority of the votes cast by TEPPCO
unitholders excluding certain unitholders affiliated with EPCO and other
specified officers and directors of TEPPCO GP, Enterprise GP and
Enterprise. Affiliates of EPCO Inc., including Enterprise GP, have
executed a support agreement in which they have agreed to vote in favor
of the TEPPCO merger and in which Enterprise GP acknowledges and agrees
that it has executed a written consent as the sole member of TEPPCO’s
general partner approving the merger of TEPPCO’s general partner. The
closing is also subject to customary regulatory approvals, including
that under the Hart-Scott-Rodino Antitrust Improvements Act. Completion
of the merger is expected to occur during the fourth quarter of 2009.
In accordance with generally accepted accounting principles, Enterprise,
TEPPCO and Enterprise GP expense merger-related costs as they are
incurred. The partnerships expect that the largest amount of these costs
will be incurred in the quarter in which the merger closes.
Pursuant to a Memorandum of Understanding based upon, and executed
contemporaneously with the merger agreements, Enterprise, TEPPCO, EPCO,
TEPPCO GP and all individual defendants have agreed in principle with
plaintiffs to the settlement of a consolidated class action lawsuit
filed on April 29, 2009 in the Delaware Court of Chancery (the “Court”)
on behalf of TEPPCO unitholders challenging the fairness of Enterprise's
initial merger proposal, as well as the settlement of a separate class
and derivative action brought by a TEPPCO unitholder pending in the
Court. That action alleges, among other things, that the joint venture
to further expand TEPPCO’s Jonah system entered into by TEPPCO and
Enterprise in August 2006 and the sale by TEPPCO of its Pioneer natural
gas processing plant and certain gas processing rights to Enterprise in
March 2006 were unfair to TEPPCO. The effectiveness of the settlement is
subject, among other things, to the drafting and execution of definitive
settlement documents, approval of the Court, and consummation of the
merger.
Financial advisors for this transaction were Barclays Capital Inc. for
Enterprise; Lazard Frères & Co. LLC for the Audit, Conflicts and
Governance Committee of the general partner of Enterprise; Credit Suisse
Securities (USA) LLC for the independent Special Committee of the Audit,
Conflicts and Governance Committee of the general partner of TEPPCO; and
Morgan Stanley & Co. Incorporated for the Audit, Conflicts and
Governance Committee of the general partner of Enterprise GP. Legal
counsels were Andrews Kurth LLP for Enterprise; Skadden, Arps, Slate,
Meagher and Flom LLP for the Audit, Conflicts and Governance Committee
of the general partner of Enterprise; Baker Botts L.L.P. for TEPPCO;
Mayer Brown LLP for the independent Special Committee of the Audit,
Conflicts and Governance Committee of the general partner of TEPPCO; and
Baker & Hostetler LLP for the Audit, Conflicts and Governance Committee
of the general partner of Enterprise GP.
Enterprise, TEPPCO and Enterprise GP will host a joint conference call
to discuss this transaction at 9:00 a.m. central daylight time this
morning. The call will be broadcast live over the Internet and may be
accessed by visiting Enterprise’s website at www.epplp.com
under the “Investor Relations” tab; TEPPCO’s website at www.teppco.com
under the “Investors” tab or Enterprise GP’s website at www.enterprisegp.com
under the “Investor Relations” tab. Participants should access the
website at least ten minutes prior to the start of the conference call
to download and install any necessary audio software.
Enterprise Products Partners L.P. is one of the largest publicly traded
partnerships and is a leading North American provider of midstream
energy services to producers and consumers of natural gas, NGLs, crude
oil and petrochemicals. Enterprise transports natural gas, NGLs, crude
oil and petrochemicals through approximately 36,000 miles of onshore and
offshore pipelines. Services include natural gas transportation,
gathering, processing and storage; NGL fractionation (or separation),
transportation, storage, and import and export terminaling; crude oil
transportation; offshore production platform services; and petrochemical
transportation and services. Additional information about Enterprise is
available online at www.epplp.com.
Enterprise Products Partners L.P. is managed by its general partner,
Enterprise Products GP LLC, which is wholly owned by Enterprise GP
Holdings L.P.
TEPPCO Partners, L.P., is a publicly traded energy logistics partnership
with operations that span much of the continental United States. TEPPCO
owns and operates an extensive network of assets that facilitate the
movement, marketing, gathering and storage of various commodities and
energy-related products. TEPPCO’s midstream network is comprised of
approximately 12,500 miles of pipelines that gather and transport
refined petroleum products, crude oil, natural gas, liquefied petroleum
gases (LPGs) and natural gas liquids, including one of the largest
common carrier pipelines for refined petroleum products and LPGs in the
United States. TEPPCO's storage assets include approximately 27 million
barrels of capacity for refined petroleum products and LPGs and about 14
million barrels of capacity for crude oil. TEPPCO also owns a marine
transportation business that transports refined petroleum products,
crude oil and lube products primarily on the United States inland and
Intracoastal Waterway systems, and in the Gulf of Mexico. For more
information, visit TEPPCO's website, www.teppco.com.
Texas Eastern Products Pipeline Company, LLC, the general partner of
TEPPCO Partners, L.P., is owned by Enterprise GP Holdings L.P.
Enterprise GP Holdings L.P. is one of the largest publicly traded GP
partnerships. It owns the general partner and certain limited partner
interests in Enterprise Products Partners L.P. and TEPPCO Partners, L.P.
as well as certain non-controlling general partner and limited partner
interests in Energy Transfer Equity, L.P. For more information on
Enterprise GP Holdings L.P., visit its website at www.enterprisegp.com.
INVESTOR NOTICE
In connection with the proposed merger, a registration statement of
Enterprise, which will include a prospectus of Enterprise and a proxy
statement of TEPPCO and other materials, will be filed with the
Securities and Exchange Commission (“SEC”). INVESTORS AND SECURITY
HOLDERS ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT AND THE
DEFINITIVE PROXY STATEMENT/ PROSPECTUS AND THESE OTHER MATERIALS
REGARDING THE PROPOSED TRANSACTION WHEN THEY BECOME AVAILABLE, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ENTERPRISE, TEPPCO AND THE
PROPOSED MERGER. A definitive proxy statement/prospectus will be sent to
security holders of TEPPCO seeking their approval of the proposed
merger. Investors and security holders may obtain a free copy of the
proxy statement/prospectus (when it is available) and other documents
containing information about Enterprise and TEPPCO, without charge, at
the SEC’s website at www.sec.gov.
Copies of the registration statement and the definitive proxy
statement/prospectus and the SEC filings that will be incorporated by
reference in the proxy statement/prospectus may also be obtained for
free by directing a request to: (i) Investor Relations: Enterprise
Products Partners L.P., (866) 230-0745, or (ii) Investor Relations,
TEPPCO Partners, L.P., (800) 659-0059.
TEPPCO, its general partner and the directors and management of their
general partner may be deemed to be “participants” in the solicitation
of proxies from TEPPCO’s security holders in respect of the proposed
merger. INFORMATION ABOUT THESE PERSONS CAN BE FOUND IN TEPPCO’S 2008
ANNUAL REPORT ON FORM 10-K AND SUBSEQUENT STATEMENTS OF CHANGES IN
BENEFICIAL OWNERSHIP ON FILE WITH THE SEC. ADDITIONAL INFORMATION ABOUT
THE INTERESTS OF SUCH PERSONS IN THE SOLICITATION OF PROXIES IN RESPECT
OF THE PROPOSED MERGER WILL BE INCLUDED IN THE REGISTRATION STATEMENT
AND THE PROXY STATEMENT/PROSPECTUS TO BE FILED WITH THE SEC.
FORWARD LOOKING STATEMENTS
This document includes “forward-looking statements” as defined by the
SEC. All statements, other than statements of historical fact, included
herein that address activities, events or developments that Enterprise
GP, Enterprise or TEPPCO expect, believe or anticipate will or may occur
in the future, including anticipated benefits and other aspects of the
proposed merger, are forward-looking statements. These forward-looking
statements are subject to risks and uncertainties that may cause actual
results to differ materially, including required approvals by
unitholders and regulatory agencies, the possibility that the
anticipated benefits from the proposed mergers cannot be fully realized,
the possibility that costs or difficulties related to integration of the
two companies will be greater than expected, the impact of competition
and other risk factors included in the reports filed with the SEC by
Enterprise GP, Enterprise and TEPPCO. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as
of their dates. Except as required by law, neither Enterprise GP,
Enterprise or TEPPCO intends to update or revise its forward-looking
statements, whether as a result of new information, future events or
otherwise.
Source: Enterprise Products Partners L.P.
Enterprise Products Partners L.P. and Enterprise GP Holdings L.P.
Randy
Burkhalter, 713-381-6812 or 866-230-0745 (Investor Relations)
Rick
Rainey, 713-381-3635 (Media Relations)
or
TEPPCO
Partners, L.P.
Mark Stockard, 713-381-4707 or 800-659-0059
(Investor Relations)
Rick Rainey, 713-381-3635 (Media
Relations)
