Energy Transfer LP Announces Full Redemption Of Series E Preferred Units

Rhea-AI Summary

Energy Transfer LP (ET) announces the redemption of its Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units on May 15, 2024, at a price of $25.00 per Unit. Holders of Units as of May 1, 2024, will receive accrued distributions of $0.4750 per Unit. Energy Transfer LP is a leading energy infrastructure company in the U.S. with a vast network of pipelines and energy assets across 44 states.

Insights

Financial Analyst

The decision by Energy Transfer LP to redeem its Series E Preferred Units has direct financial implications for the company and its investors. The redemption of preferred units is a strategic financial decision, often indicating a company's cash flow position and capital structure optimization. By redeeming these units at $25.00 each, the company is likely aiming to reduce its cost of capital, as preferred units typically carry higher dividend rates compared to debt.

Investors holding these units will need to reassess their portfolios, as the redemption will result in the cessation of quarterly distributions these instruments offer. The accrued distribution of $0.4750 per unit until the redemption date provides a clear exit payment, which could be seen as a positive for current holders. However, for long-term investors relying on the steady income from these distributions, this move might necessitate looking for alternative income-generating investments.

From a broader perspective, this could signal Energy Transfer's confidence in its liquidity and financial stability. The company's extensive energy asset portfolio and strategic positioning across major U.S. production basins suggest a robust business model capable of generating sufficient operational cash flow to manage such redemptions without hindering its growth trajectory.

Energy Market Analyst

Energy Transfer LP's redemption of its Series E Preferred Units should be viewed within the context of the energy sector's dynamics. The energy infrastructure industry, characterized by its extensive capital requirements, often utilizes various financing instruments, including preferred units, to support its growth and operations. Energy Transfer's move might reflect an industry-wide trend where companies are restructuring their capital to better align with the current low-interest-rate environment.

Given Energy Transfer's diversified portfolio and presence across 44 states, this redemption aligns with the company's strategic focus on optimizing its asset base. The redemption could be a precursor to reallocating capital towards higher growth areas or deleveraging the balance sheet, which is often well-received by the market. Additionally, the company's ownership stakes in Sunoco LP and USA Compression Partners, LP, provide it with additional strategic levers to manage its capital allocation effectively.

For stakeholders and potential investors, the redemption action serves as an indicator of Energy Transfer's proactive capital management. It is essential to monitor the company's subsequent investment decisions, as these will shape its competitive position in the evolving energy landscape, particularly in the context of the energy transition and the increasing importance of sustainable energy infrastructure.

DALLAS--(BUSINESS WIRE)-- Energy Transfer LP (NYSE: ET) today issued a notice to redeem all of its outstanding Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (the “Units”) on May 15, 2024 at a redemption price per Unit of $25.00. Holders of Units as of May 1, 2024, the record date for quarterly distributions on the Units, will separately receive accrued distributions to, but excluding, May 15, 2024, in an amount of $0.4750 per Unit.

This press release shall not constitute a notice of redemption or an offer to sell or the solicitation of an offer to buy the securities described herein.

Energy Transfer LP owns and operates one of the largest and most diversified portfolios of energy assets in the United States, with more than 125,000 miles of pipeline and associated energy infrastructure. Energy Transfer’s strategic network spans 44 states with assets in all of the major U.S. production basins. Energy Transfer is a publicly traded limited partnership with core operations that include complementary natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (“NGL”) and refined product transportation and terminalling assets; and NGL fractionation. Energy Transfer also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights and approximately 34% of the outstanding common units of Sunoco LP (NYSE: SUN), and the general partner interests and approximately 45% of the outstanding common units of USA Compression Partners, LP (NYSE: USAC).

Forward-Looking Statements

Statements in this press release that are not historical facts, including, but not limited to, those relating to the proposed redemption and amounts or proceeds to be used for the redemption, are forward-looking statements that are based on current expectations. Forward-looking statements can be identified by words such as “anticipates,” “believes,” “intends,” “projects,” “plans,” “expects,” “continues,” “estimates,” “goals,” “forecasts,” “may,” “will” and other similar expressions. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of Energy Transfer, and a variety of risks that could cause results to differ materially from those expected by management of Energy Transfer, including the terms of the redemption, other sources and uses of funds for Energy Transfer and actions by the holders of outstanding Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units. Important information about issues that could cause actual results to differ materially from those expected by management of Energy Transfer can be found in Energy Transfer’s public periodic filings with the SEC, including its Annual Report on Form 10-K. Energy Transfer undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240320254089/en/

Energy Transfer LP



Investor Relations:

Bill Baerg, Brent Ratliff, Lyndsay Hannah, 214-981-0795



Media Relations:

Media@energytransfer.com

214-840-5820

Source: Energy Transfer LP

FAQ

When will Energy Transfer LP redeem its Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units?

Energy Transfer LP will redeem its Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units on May 15, 2024.

What is the redemption price per Unit for the Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units?

The redemption price per Unit for the Series E Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units is $25.00.

How much will holders of Units receive as accrued distributions?

Holders of Units as of May 1, 2024, will receive accrued distributions of $0.4750 per Unit.

What is Energy Transfer LP known for in the energy sector?

Energy Transfer LP is known for owning and operating one of the largest and most diversified portfolios of energy assets in the United States, including over 125,000 miles of pipeline and various energy infrastructure.

What are some of the core operations of Energy Transfer LP?

Energy Transfer LP's core operations include natural gas midstream, intrastate and interstate transportation and storage assets; crude oil, natural gas liquids (NGL), and refined product transportation and terminalling assets; and NGL fractionation.