More recently, Canada-based energy infrastructure giant Enbridge Inc. Please Sign In and use this article's on page print button to print this article. Aug 2, Related Content.
Energy Transfer Partners says cyber attack has been handled. That reduction, however, is a necessary step given the fact that Energy Transfer Partners paid out much more than it brought in this year, and that is with a helping hand from Energy Transfer Equity. However, while the Sunoco deal implies an even deeper cut, it does put the company on a path to deliver double-digit near-term distribution growth while maintaining a greater than 1. That growth should get Energy Transfer Partners' distribution back to its former level in a couple of years.
Meanwhile, if it opted just to cut the payout, it could have taken even longer to get back to even due to the company's high leverage and substantial capex requirements. The final reason why the two companies chose this particular deal structure is that it was the best way to protect the parent company. Given how the math and ownership structures work out, Energy Transfer Equity will not feel the impact of the deal to the same degree as Energy Transfer Partner's unitholders.
Because of that, it should be able to maintain its current payout, which is already on solid ground thanks to a 1. Energy Transfer Equity chose a unique deal structure to consolidate two of its MLPs so it could accomplish all its goals in one deal. Clearly, it did just that, by reducing complexity while improving the consolidated distribution coverage of the MLPs and still managing to protect most of its income streams.
While common unitholders do not benefit to the same degree in the short term, they would have likely seen their distribution decrease whether the companies made this deal or not. At least now they get the benefit of greater scale, increased diversification, improving metrics, and a simpler corporate structure to ease the pain.
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The deal, which is expected to close early next year, is unrelated to the ongoing controversy over the pipeline, which Native American groups and some environmentalists have effectively brought to a halt with rallies and protests.
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