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Energy Transfer sells Rover pipeline stake

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World Pipelines,

Energy Transfer Partners, L.P. announced yesterday that its wholly owned subsidiaries, Energy Transfer Interstate Holdings, LLC (ETIH) and ET Rover Pipeline LLC (HoldCo), have signed an agreement with funds managed by Blackstone Energy Partners and Blackstone Capital Partners.

Blackstone will contribute approximately US$1.57 billion in cash in exchange for a 49.9% interest in HoldCo. HoldCo owns a 65% interest in Rover Pipeline LLC. HoldCo and Rover Pipeline LLC are constructing the Rover Pipeline and will be the operator of the pipeline once in service.

Upon completion, the Rover Pipeline will be an approximately 700 mile pipeline designed to transport 3.25 billion ft3/d of natural gas from the Marcellus and Utica Shale production areas to markets across the United States as well as into Union Gas Dawn Hub in Ontario, Canada for redistribution back into the US or into the Canadian market.

The Blackstone investment will reimburse ETP for its pro rata share of the construction costs incurred by ETP through the closing date in connection with the Rover Pipeline, specified amounts of future construction costs and certain additional payments to ETP. ETP plans to use the proceeds to pay down debt and help fund its current growth projects, thereby greatly reducing its equity issuances. The transaction is expected to close in the fourth quarter of 2017, subject to customary closing conditions.

Upon closing, HoldCo will be owned 50.1% by Energy Transfer and 49.9% by Blackstone.

Latham & Watkins LLP acted as legal counsel to ETP. Vinson & Elkins acted as legal counsel to Blackstone. Blackstone was advised by Intrepid Partners LLC and by Morgan Stanley & Co. LLC, who was also the sole provider of the committed debt financing.

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