Newspaper article THE JOURNAL RECORD

Tulsa-Based Heritage Propane Partners Plans Energy Transfer Merger

Newspaper article THE JOURNAL RECORD

Tulsa-Based Heritage Propane Partners Plans Energy Transfer Merger

Article excerpt

Heritage Propane Partners of Tulsa has entered a merger agreement with Energy Transfer Co. in a deal valued at $980 million.

This will create a diversified master limited partnership by adding natural gas midstream operations to Heritage's existing retail propane operations, the firm said Friday.

This transaction is a positive strategic development for the partnership as the natural gas midstream business is less dependent on weather and somewhat counter seasonal to the retail propane business, said H. Michael Krimbill, president and chief executive of Heritage.

We believe that the transaction will be immediately accretive to the unitholders. Combining with Energy Transfer will join the operational strengths of Heritage's propane business with a more diversified base of natural gas gathering, treating, processing, and transportation assets.

Affiliates of Energy Transfer will buy U.S. Propane LP, the general partner of Heritage Propane Partners, and U.S. Propane LLC, from subsidiaries of AGL Resources, Atmos Energy, TECO Energy and Piedmont Natural Gas Co.

Energy Transfer will contribute substantially all of its assets to Heritage in exchange for $300 million in cash, repayment of outstanding indebtedness, and a combination of Partnership Common Units, Class D Units and Special Units. Also, Heritage will acquire the stock of Heritage Holdings, which owns 4.4 million common units of Heritage, for $100 million.

These transactions are subject to customary conditions to closing, including existing lender and regulatory approvals, and obtaining requisite financing for the transaction.

We will continue to grow our propane business by focusing on cash flow improvements through cost management, customer additions in our existing service territories, and acquisitions in the propane industry, said Krimbill. With our new partners, we can now capitalize on opportunities to improve Partnership cash flows through expanding natural gas throughput on Energy Transfer's existing assets and investing capital to grow its midstream business. …

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