2011-07-28-2011-07-19

To acquire an indirect 50% interest in company which owns 100% of the Florida Gas Transmission pipeline system.

Energy Transfer Partners LP (NYSE: ETP) and Energy Transfer Equity LP (NYSE: ETE) plan to acquire an indirect 50% interest in Citrus Corp., which owns 100% of the Florida Gas Transmission pipeline system, for approximately $2 billion.

The merger is subject to the successful consummation of the merger between Southern Union Co., Houston (NYSE: SUG) and ETE. Citrus Corp. is currently jointly owned by SUG and El Paso Corp., Houston, (NYSE: EP).

ETE and Southern Union on July 19 entered an amended and restated merger agreement under which Energy Transfer will acquire all of the outstanding common stock of Southern Union for cash and ETE common units. That acquisition is expected to close in the first quarter of 2012.

ETP would receive the interest in Citrus in exchange for $1.9 billion of cash and $100 million of ETP common units. The remaining terms of the amended agreement between ETP and ETE are substantially similar to the agreement announced on July 5, 2011.

ETP expects to fund substantially all of the cash portion of the purchase price initially through the issuance of debt and borrowings from our revolving credit facility. In turn, ETE will use these proceeds to repay a substantial portion of the acquisition financing incurred by ETE to fund the cash consideration to be paid to Southern Union shareholders. ETP also intends to issue sufficient additional equity to maintain its investment grade credit rating and to use the proceeds from such equity issuances to repay other indebtedness and fund capital expenditures.

In order to increase the expected accretion to be derived from Citrus, ETE has agreed to relinquish its rights to approximately $220 million of the incentive distributions from ETP that ETE would otherwise be entitled to receive over 16 consecutive quarters following the closing of the transaction. Based on the projections used in connection with the transaction, it is expected that Citrus would be immediately accretive to ETP unitholders.

As part of the transaction, ETE has also granted ETP a right of first offer with respect to any disposition of another SUG subsidiary, Southern Union Gas Services (SUGS). SUGS owns and operates a natural gas gathering and processing system serving the Permian Basin in West Texas and New Mexico.

ETP was advised by Vinson & Elkins LLP with respect to the transaction and Prickett, Jones & Elliott PA served as counsel to the committee. RBS Securities Inc. acted as financial advisor to the committee.

Credit Suisse Securities LLC acted as exclusive financial advisor to ETE, with Latham & Watkins LLP having acted as legal counsel.