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Energy Transfer Partners, L.P. Message Board

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  • scooter_in_fl scooter_in_fl Dec 24, 2008 8:00 AM Flag

    ETE/ETP.

    Given the recent market volatility and given that I have a majority of my investment portfolio in ETP; I have been a little concerned about the recent unit price decline and decided to get in contact with investor relations to see if I could get a better handle on the JV with OGE and the $600M debt offering.

    They actually called me after I sent them an email requesting information on this debt offering and expressed my concerns over the over 9% rate. I also asked about the JV with OGE. It should be noted; I emailed at 8:30pm EST and got a call within 15 minutes. Talk about customer service... 5 STARS

    Here is what I learned:

    As suspected ETP does NOT have a cash flow problem, but given the potential for inflation and to hedge against possible higher interest rates if the credit markets once again over tighten, they decided to increase liquidity now and use some of that money to pay down revolving credit. This would effectively reduce the cost of the debt offering and build a reserve 'war chest' to fund future expansion.

    With regard to the JV with OGE; ETP is moving forward to spite possible complications other parties may have. While they recognize the other parties may be having difficulties at the moment; not one of the parties involved is talking about terminating this JV.

    The gas reserves in OK and the additional infrastructure are very exciting prospects. While ETP has not included the potential benefit in estimates for 2009 earnings I was told it has the potential to be very substantial.

    While it is purely speculative on my part I was left with the impression that something is in the works which may provide a pleasant surprise to unit holders. But when pressed I was told that it could not be disclosed at this time.

    I hope this helps clarify some of the recent news releases out there...

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    • The undisclosed issue is the settlment of the Fed complaint on restraint of trade. EXpect an announcement in a week or less.

      Disagree that ETP has no cash flow problem. If the credit markets do not open up they and everyone else in the US has a BIG problem. They borrowed $500M at 9% with a 3 year put. If interest rates spike they will need to refi in only 3 years. They and other MLPs also cannot sell additional equity at any reasonable cost. Too many sellers. To go borrow much additional money would require more equity too or they will need to pay more for debt and possibly lose their investment rating.

      They borrowed the $600M to keep liquidity as you said but what is their cash burn right now. As they do a bit of processing that will be a significant drag on DCF. You are right on that the future is not clear - but there certainly are stormclouds out there.

      The JV projects are a great idea but again ETP needs the credit markets to cooperate a bit. Jan 20th may give us a better idea of the future, but right now most of the JVs are dropping away due to credit costs.

      THe new connections in OK as definately cost effective as you said and production to DCF now and in the future.

      ETP is one of the stronger MLPs but it too has significant issues in this strange marketplace.

      ARB

    • "I was told that it could not be disclosed at this time.
      I hope this helps clarify some of the recent news releases out there..."

      Things clarified by undisclosed issues??

 
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