As filed with the Securities and Exchange Commission on September 16, 2010

Registration No. 333-      

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

Enterprise Products Partners L.P.

(Exact name of registrant as specified in its charter)

 

 

1100 Louisiana Street, 10th Floor

Houston, Texas 77002

(713) 381-6500

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Stephanie C. Hildebrandt, Esq.

1100 Louisiana Street, 10th Floor

Houston, Texas 77002

(713) 381-6500

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

 

 

Approximate date of commencement of proposed sale to the public:  As soon as practicable after this registration statement becomes effective and upon consummation of the merger described in the enclosed proxy statement/prospectus.

 

If the securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box  o

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)         o

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  o

 

CALCULATION OF REGISTRATION FEE

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

PRELIMINARY — SUBJECT TO COMPLETION DATED SEPTEMBER 16, 2010

 

 

Dear Enterprise GP Holdings L.P. Unitholders:

 

On September 3, 2010, Enterprise Products Partners L.P. (the “Partnership”), Enterprise Products GP, LLC (the “Partnership GP”), which is the general partner of the Partnership, Enterprise ETE LLC (“MergerCo”), which is a wholly owned subsidiary of the Partnership, Enterprise GP Holdings L.P. (“Holdings”), and EPE Holdings, LLC (“Holdings GP”), which is the general partner of Holdings, entered into a merger agreement (the “merger agreement”). Pursuant to the merger agreement, Holdings will merge with and into MergerCo (the “merger”), a wholly owned subsidiary of the Partnership, and will cease to exist, the outstanding limited partner interests in Holdings (“Holdings units”) will be cancelled in exchange for common units representing limited partner interests in the Partnership (“Partnership common units”) and Holdings GP will become the general partner of the Partnership. The Partnership GP is owned by Holdings, and Holdings GP is owned by Dan Duncan LLC (“DDLLC”), an affiliate of Enterprise Products Company (“EPCO”), a private company formerly named EPCO, Inc. EPCO and DDLLC together beneficially own approximately 76% of the outstanding Holdings units. EPCO and DDLLC are each controlled by three voting trustees pursuant to separate voting trusts. In connection with the merger and in accordance with an amended and restated agreement of limited partnership of the Partnership to be effective upon the consummation of the merger (the “Sixth Partnership Agreement”), the incentive distribution rights of the Partnership (“IDRs”) currently held by the Partnership GP will be cancelled and the 2.0% economic general partner interest of the Partnership will be converted into a non-economic general partner interest. The merger agreement is attached as Annex A to this proxy statement/prospectus and is incorporated into this proxy statement/prospectus by reference. The form of the Sixth Partnership Agreement is attached as Annex B to this proxy statement/prospectus and is incorporated into this proxy statement/prospectus by reference.

 

In the merger, Holdings unitholders will receive 1.50 Partnership common units for each Holdings unit owned. Consequently, the Partnership expects to issue, in the aggregate, 208,813,477 Partnership common units in the merger. The 21,563,177 Partnership common units currently owned by Holdings will be cancelled by the Partnership immediately after the merger. A privately held affiliate of EPCO will agree to designate and waive its rights to quarterly distributions with respect to a specified number of Partnership common units over a five-year period after the merger closing date as set forth in a distribution waiver agreement, the form of which is attached as Annex C to this proxy statement/prospectus and is incorporated into this proxy statement/prospectus by reference.

 

The merger agreement and the merger must receive the affirmative vote of the Holdings unitholders holding at least a majority of the outstanding Holdings units. Affiliates of EPCO have agreed to vote approximately 105.7 million Holdings units, representing approximately 76% of the outstanding Holdings units, in favor of the merger agreement and the merger, subject to the terms and conditions of a support agreement, a copy of which is attached to this proxy statement/prospectus as Annex D and is incorporated into this proxy statement/prospectus by reference. Holdings has scheduled a special meeting of its unitholders to vote on the merger agreement and the merger on          , 2010 at  :00 .m., local time, at the Hyatt Regency Hotel, 1200 Louisiana Street, Houston, Texas 77002. Voting instructions are set forth inside this proxy statement/prospectus.

 

The members of the Audit, Conflicts and Governance Committee of the board of directors of Holdings GP (the “Holdings Board”) who participated in the merger evaluation and negotiation process (the “Holdings ACG Committee”) have unanimously determined that the merger agreement and the merger are fair and reasonable, advisable to and in the best interests of Holdings and the Holdings unaffiliated unitholders. “Holdings unaffiliated unitholders” means Holdings unitholders other than those, including EPCO and its affiliates, controlling, controlled by or under common control with Holdings GP. Accordingly, the Holdings ACG Committee has recommended that the Holdings Board approve the merger agreement and the merger. Based on the Holdings ACG Committee’s determination and recommendation, the Holdings Board has unanimously approved and declared the advisability of the merger agreement and the merger and, together with the Holdings ACG Committee, recommends that the Holdings unaffiliated unitholders vote in favor of the merger proposal.

 

This proxy statement/prospectus provides you with detailed information about the proposed merger and related matters. Holdings encourages you to read the entire document carefully. In particular, please read “Risk Factors” beginning on page 26 of this proxy statement/prospectus for a discussion of risks relevant to the merger and the Partnership’s business following the merger.

 

The Partnership’s common units are listed on the New York Stock Exchange (“NYSE”) under the symbol “EPD,” and Holdings’ units are listed on the NYSE under the symbol “EPE.” The last reported sale price of the Partnership’s common units on the NYSE on          , 2010 was $          . The last reported sale price of the Holdings units on the NYSE on          , 2010 was $          .

 

Dr. Ralph S. Cunningham

President and Chief Executive Officer

EPE Holdings, LLC

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this proxy statement/prospectus or has determined if this document is truthful or complete. Any representation to the contrary is a criminal offense.

 

All information in this document concerning the Partnership has been furnished by the Partnership. All information in this document concerning Holdings has been furnished by Holdings. The Partnership has represented to Holdings, and Holdings has represented to the Partnership, that the information furnished by and concerning it is true and correct in all material respects.

 

This proxy statement/prospectus is dated          , 2010 and is being first mailed to Holdings unitholders on or about          , 2010.

 

Houston, Texas

          , 2010

 

Notice of Special Meeting of Unitholders

 

To the Unitholders of Enterprise GP Holdings L.P.:

 

A special meeting of unitholders of Enterprise GP Holdings L.P. (“Holdings”) will be held on          , 2010 at  :00 .m., local time, at the Hyatt Regency Hotel, 1200 Louisiana Street, Houston, Texas 77002, for the following purposes:

 

 

Pursuant to the Holdings partnership agreement, approval of the merger agreement and the merger requires the affirmative vote of the Holdings unitholders owning at least a majority of Holdings’ outstanding units. Affiliates of Enterprise Products Company (the “Holdings supporting unitholders”), which collectively beneficially own approximately 76% of the outstanding Holdings units, have agreed to vote all of their Holdings units in favor of the merger agreement and the merger, subject to the terms and conditions of a support agreement described in the attached proxy statement/prospectus. The Holdings supporting unitholders have a sufficient number of Holdings units to approve the merger agreement and the merger without the affirmative vote of any other Holdings unitholder. As a result of the support agreement, the approval of the merger proposal at the special meeting is assured unless the conditions of the support agreement are not met and the support agreement is terminated. Failures to vote, abstentions and broker non-votes will have the same effect as a vote against the merger proposal for purposes of the majority vote required under the Holdings partnership agreement.

 

The members of the Audit, Conflicts and Governance Committee of the board of directors of Holdings GP (the “Holdings Board”) who participated in the merger evaluation and negotiation process (the “Holdings ACG Committee”) have unanimously determined that the merger agreement and the merger are fair and reasonable, advisable to and in the best interests of Holdings and the Holdings unaffiliated unitholders. “Holdings unaffiliated unitholders” means Holdings unitholders other than those, including EPCO and its affiliates, controlling, controlled by or under common control with Holdings GP. Accordingly, the Holdings ACG Committee has recommended that the Holdings Board approve the merger agreement and the merger. Based on the Holdings ACG Committee’s determination and recommendation, the Holdings Board has unanimously approved and declared the advisability of the merger agreement and the merger and, together with the Holdings ACG Committee, recommends that the Holdings unaffiliated unitholders vote in favor of the merger proposal.

 

Only unitholders of record at the close of business on          , 2010 are entitled to notice of and to vote at the meeting and any adjournments or postponements of the meeting. A list of unitholders entitled to vote at the meeting will be available for inspection at Holdings’ offices in Houston, Texas for any purpose relevant to the meeting during normal business hours for a period of 10 days before the meeting and at the meeting.

 

We urge you to carefully consider the information contained in the attached proxy statement/prospectus. You may vote by signing, dating and returning the enclosed proxy card.

 

By order of the Board of Directors of EPE Holdings, LLC, as the general partner of Enterprise GP Holdings L.P.

 

Stephanie C. Hildebrandt

Senior Vice President, General Counsel and Secretary

EPE Holdings, LLC

 

PROXY STATEMENT/PROSPECTUS

 

TABLE OF CONTENTS

 

 

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the Securities and Exchange Commission, which is referred to as the “SEC” or the “Commission,” constitutes a proxy statement of Holdings under Section 14(a) of the Securities Exchange Act of 1934, as amended, which is referred to as the “Exchange Act,” with respect to the solicitation of proxies for the special meeting of Holdings unitholders to, among other things, approve the merger agreement and the merger. This proxy statement/prospectus is also a prospectus of the Partnership under Section 5 of the Securities Act of 1933, as amended, which is referred to as the “Securities Act,” for Partnership common units that will be issued to Holdings unitholders in the merger pursuant to the merger agreement.

 

As permitted under the rules of the SEC, this proxy statement/prospectus incorporates by reference important business and financial information about the Partnership and Holdings from other documents filed with the SEC that are not included in or delivered with this proxy statement/prospectus. Please read “Where You Can Find More Information” beginning on page 156. You can obtain any of the documents incorporated by reference into this document from the Partnership or Holdings, as the case may be, or from the SEC’s website at http://www.sec.gov. This information is also available to you without charge upon your request in writing or by telephone from the Partnership or Holdings at the following addresses and telephone numbers:

 

 

Please note that copies of the documents provided to you will not include exhibits, unless the exhibits are specifically incorporated by reference into the documents or this proxy statement/prospectus.

 

You may obtain certain of these documents at the Partnership’s website, www.epplp.com, by selecting “Investor Relations” and then selecting “SEC Filings,” and at Holdings’ website, www.enterprisegp.com, by selecting “Investor Resources” and then selecting “SEC Filings.” Information contained on Holdings’ and the Partnership’s websites is expressly not incorporated by reference into this proxy statement/prospectus.

 

In order to receive timely delivery of the documents in advance of the Holdings special meeting of unitholders, your request should be received no later than          , 2010. If you request any documents, the Partnership or Holdings will mail them to you by first class mail, or another equally prompt means, within one business day after receipt of your request.

 

The Partnership and Holdings have not authorized anyone to give any information or make any representation about the merger, the Partnership and/or Holdings that is different from, or in addition to, that contained in this proxy statement/prospectus or in any of the materials that have been incorporated by reference into this proxy statement/prospectus. Therefore, if anyone distributes this type of information, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this proxy statement/prospectus or the solicitation of proxies is unlawful, or you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this proxy statement/prospectus does not extend to you. The information contained in this proxy statement/prospectus speaks only as of the date of this proxy statement/prospectus, or in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies. All information in this document concerning the Partnership has been furnished by the Partnership. All information in this document concerning Holdings has been furnished by Holdings. The Partnership has represented to Holdings, and Holdings has represented to the Partnership, that the information furnished by and concerning it is true and correct in all material respects.

 

The following terms have the meanings set forth below for purposes of this proxy statement/prospectus, unless the context otherwise indicates:

 

 

Important Information and Risks.  The following are brief answers to some questions that you may have regarding the proposed merger and the proposals being considered at the special meeting of Holdings unitholders. You should read and consider carefully the remainder of this proxy statement/prospectus, including the Risk Factors beginning on page 26 and the attached Annexes, because the information in this section does not provide all of the information that might be important to you. Additional important information and descriptions of risk factors are also contained in the documents incorporated by reference in this proxy statement/prospectus. Please read “Where You Can Find More Information” beginning on page 156.

 

 

 

 

 

Your presence without voting at the meeting will not automatically revoke your proxy, and any revocation during the meeting will not affect votes previously taken.

 

 

SUMMARY

 

The Merger Parties’ Businesses (page 98)

	•	the indirect ownership of all of the outstanding IDRs in the Partnership, through its ownership of all of the outstanding limited liability company interests in Partnership GP;
	•	the indirect ownership of the general partner interest in the Partnership (representing a 2.0% economic interest in the Partnership), through its ownership of all of the outstanding limited liability company interests in Partnership GP; and
	•	21,563,177 Partnership common units, representing an approximate 3.4% limited partner interest in the Partnership.

														For the Six
														Months
														Ended
		For the Year Ended December 31,												June 30,
		2007				2008				2009				2010
Cash distributions to Holdings:
Investment in the Partnership and Partnership GP:
From IDRs		$	104.7			$	123.9			$	161.3			$	110.8
From Partnership common units			25.8				27.5				33.5				24.1
From 2% economic general partner interest in the Partnership			16.9				18.2				21.8				14.4
Investment in Energy Transfer Equity and LE GP(1)			29.9				76.5				82.7				42.5
Investment in TEPPCO and TEPPCO GP(2)			60.3				67.4				56.1				—
Total cash distributions received by Holdings		$	237.6			$	313.5			$	355.4			$	191.8

(1)		Includes 38,976,090 common units of Energy Transfer Equity and a member interest in LE GP.
(2)		Included 4,400,000 common units of TEPPCO Partners L.P. (“TEPPCO”) and the 2% general partner interest and IDRs in TEPPCO. On October 26, 2009, the TEPPCO merger was completed and TEPPCO and Texas Eastern Products Pipeline Company, LLC (“TEPPCO GP”) became wholly owned subsidiaries of the Partnership. As a result, Holdings’ ownership interest in the TEPPCO units was converted into 5,456,000 Partnership common units. In addition, Holdings’ membership interests in TEPPCO GP were exchanged for (i) 1,331,681 Partnership common units and (ii) an increase in the capital account of Partnership GP in the Partnership to maintain its 2% economic general partner interest in the Partnership. The issuance of Partnership common units in the TEPPCO merger also resulted in Holdings benefiting from increased distributions with respect to the IDRs in the Partnership.

 

Structure of the Merger (page 64)

 

Transactions Related to the Merger (page 62)

		Number of Partnership
		Common Units on Which
Period		Distributions Are Waived
First four-quarter period following closing			30,610,000
Second four-quarter period following closing			26,130,000
Third four-quarter period following closing			23,700,000
Fourth four-quarter period following closing			22,560,000
Fifth four-quarter period following closing			17,690,000

 

Directors and Officers of the Partnership GP and Holdings GP (page 111)

	•	Michael A. Creel
	•	W. Randall Fowler*
	•	Richard H. Bachmann*
	•	A. James Teague
	•	William Ordemann*
	•	Lynn L. Bourdon, III
	•	Bryan F. Bulawa*
	•	James M. Collingsworth
	•	Mark Hurley
	•	Michael J. Knesek*
	•	Christopher Skoog
	•	Thomas M. Zulim

 

Market Prices of Partnership Common Units and Holdings Units Prior to Announcing the Proposed Merger (page 25)

		Partnership				Holdings
Date/Period		Common Units				Units
September 3, 2010		$	38.45			$	49.90
20-day Average		$	37.17			$	48.79

 

The Special Unitholder Meeting (page 34)

 

Recommendation to Holdings Unitholders (page 45)

 

Holdings’ Reasons for the Merger (page 45)

	•	The pro forma increase of approximately 54% in quarterly cash distributions expected to be received by Holdings unitholders, based upon the 1.50 exchange ratio and quarterly cash distribution rates paid by

		Holdings and the Partnership in August 2010, together with the expectation that the merger will be accretive to cash distributions received by Holdings unitholders in each year through 2015 (the period for which projections were provided).

	•	In the merger, Holdings unitholders will receive common units representing limited partner interests in the Partnership, which Partnership common units have substantially more liquidity than Holdings units because of the Partnership common units’ larger average daily trading volume, as well as the Partnership being a significantly larger entity with a broader investor base and a larger public float, along with less volatility in the trading market for the Partnership common units.
	•	The exchange ratio in the merger, which based upon the closing prices of Holdings units and Partnership common units on September 3, 2010, the last trading date before the Holdings ACG Committee and Holdings Board approved the merger agreement, represented a premium of:

	•	approximately 16% above the closing price of Holdings units of $49.90 on September 3, 2010; and
	•	approximately 40% above the average closing price of Holdings units of $41.32 during the one-year period ended on September 3, 2010.

	•	The opinion of the Holdings ACG Committee’s financial advisor, Morgan Stanley & Co. Incorporated (“Morgan Stanley”), rendered to the Holdings ACG Committee on September 3, 2010 to the effect that, as of such date and based upon and subject to the various assumptions, considerations, qualifications and limitations set forth in its written opinion, the exchange ratio under the merger agreement was fair, from a financial point of view, to the Holdings unitholders (other than the Holdings supporting unitholders).
	•	That the merger provides Holdings unitholders with an opportunity to benefit from price appreciation and increased distributions through ownership of Partnership common units, which should benefit from the lower long-term cost of capital associated with the permanent cancellation of the IDRs and the Partnership’s enhanced ability to compete for future acquisitions and finance organic growth projects.
	•	The stronger credit profile of the Partnership relative to that of Holdings.
	•	That Holdings unitholders, generally, should not recognize any income or gain, for U.S. federal income tax purposes, solely as a result of the receipt of the Partnership common units pursuant to the merger.

	•	The risk that the merger might not be completed in a timely manner, or that the merger might not be consummated as a result of a failure to satisfy the conditions contained in the merger agreement, including any failure to close by December 31, 2010, which would result in the termination of the obligations of (i) the Holdings supporting unitholders under the support agreement and (ii) DFIDH to execute the distribution waiver agreement, and that any failure to complete the merger could negatively impact the trading price of Holdings units.
	•	That the exchange ratio is fixed, and the possibility that the Partnership common unit price could decline relative to the Holdings unit price prior to closing, reducing the premium available to Holdings unitholders.
	•	The possibility that Holdings unitholders could be foregoing appreciation principally associated with the IDRs, which might be realized either in the form of increased distributions or appreciation in unit value if the business of the Partnership performs materially better than anticipated and the Partnership increases its distributions to levels substantially higher than anticipated.
	•	The possibility that the proposed “carried interest” federal tax legislation could be enacted with an effective date, or a retroactive effective date, before consummation of the merger, and the potential material tax liabilities that could be incurred by Holdings unitholders as a consequence thereof.

	•	The limitations on Holdings considering unsolicited offers from third parties not affiliated with Holdings GP,

 

Opinion of Holdings ACG Committee’s Financial Advisor (page 51)

 

Certain Relationships; Interests of Certain Persons in the Merger (page 101)

	•	The non-management directors of Holdings GP hold equity-based awards under Holdings benefit plans that will generally be converted into equity awards with respect to Partnership common units, adjusted for the exchange ratio.
	•	All of the directors and executive officers of Holdings GP will receive continued indemnification for their actions as directors and executive officers.
	•	Most of the directors of Holdings GP directly or beneficially own Partnership common units, including Ms. Williams, Dr. Cunningham, Mr. Bachmann, Thurmon M. Andress, O.S. Andras and Edwin E. Smith.

	•	In addition to serving as a director and Executive Vice President of Holdings GP, Mr. Bachmann also serves as the Executive Vice President, Chief Legal Officer and Secretary of the Partnership GP, and has certain duties to the limited partners of the Partnership.
	•	Three of the directors of Holdings GP, Ms. Williams, Mr. Bachmann and Dr. Cunningham (who is also CEO of Holdings GP), also serve as both the DDLLC voting trustees and the EPCO voting trustees. These three individuals also serve as independent executors of the estate of Dan L. Duncan. Through these positions, these persons effectively own or control approximately 76% of the outstanding Holdings units and approximately 27% of the outstanding Partnership common units and Class B units, collectively, which securities represented an aggregate fair market value of approximately $5.3 billion and $7.0 billion, respectively, based on the closing prices of the Holdings units and Partnership common units on September 3, 2010, the last trading day before announcement of the merger. In their capacities as trustees of those voting trusts or as a majority of the directors of certain affiliated entities, Ms. Williams, Mr. Bachmann and Dr. Cunningham have authorized or caused the Holdings supporting unitholders to enter into the support agreement, pursuant to which the Holdings supporting unitholders have agreed to vote approximately 76% of the outstanding Holdings units in favor of the merger agreement and the merger.

 

The Merger Agreement (page 64)

	•	the approval of the merger agreement and the merger by the requisite vote of the Holdings unitholders, which approval is contractually assured by the Holdings supporting unitholders’ agreement to vote in favor of the merger and the merger agreement unless the support agreement is terminated upon, among other things, a termination of the merger agreement or a change in recommendation by the Holdings ACG Committee;
	•	the making of all required filings and the receipt of all required governmental consents, approvals, permits and authorizations from any applicable governmental authorities prior to the merger effective time, except where the failure to obtain such consent, approval, permit or authorization would not be reasonably likely to result in a material adverse effect on Holdings or the Partnership;
	•	the absence of any decree, order, injunction or law that enjoins, prohibits or makes illegal the consummation of any of the transactions contemplated by the merger agreement, and any action, proceeding or investigation by any governmental authority seeking to restrain, enjoin, prohibit or delay such consummation;
	•	the continued effectiveness of the registration statement of which this proxy statement/prospectus is a part;
	•	the approval for listing on the NYSE of the Partnership common units to be issued in the merger, subject to official notice of issuance;

	•	the consummation of the GP merger;
	•	the execution of the Sixth Partnership Agreement of the Partnership, the form of which is attached as Annex B to this proxy statement/prospectus, and the admittance of Holdings GP as the new general partner of the Partnership; and
	•	the execution and delivery by certain affiliates of EPCO of the distribution waiver agreement.

	•	the representations and warranties of each of Holdings and Holdings GP set forth in the merger agreement being true and correct in all material respects, and Holdings and Holdings GP having performed all of their obligations under the merger agreement in all material respects;
	•	The Partnership having received an opinion of Andrews Kurth LLP, counsel to the Partnership (“Andrews Kurth”), as to the treatment of the merger for U.S. federal income tax purposes and as to certain other tax matters; and
	•	No material adverse effect (as defined under the merger agreement) having occurred with respect to Holdings.

	•	the representations and warranties of each of the Partnership and Partnership GP set forth in the merger agreement being true and correct in all material respects, and the Partnership and Partnership GP having performed all of their obligations under the merger agreement in all material respects;
	•	Holdings having received an opinion of Vinson & Elkins L.L.P., counsel to Holdings (“Vinson & Elkins”), as to the treatment of the merger for U.S. federal income tax purposes and as to certain other tax matters; and
	•	No material adverse effect (as defined under the merger agreement) having occurred with respect to the Partnership.

	•	the merger is not completed on or before December 31, 2010;
	•	any legal prohibition to completing the merger has become final and non-appealable, provided that the terminating party is not in breach of its covenant to use commercially reasonable best efforts to complete the merger promptly; or
	•	any condition to the closing of the merger cannot be satisfied.

 

Material U.S. Federal Income Tax Consequences of the Merger (page 133)

 

Other Information Related to the Merger

 

Summary of Risk Factors (page 26)

	•	Holdings’ partnership agreement limits the fiduciary duties of Holdings GP to unitholders and restricts the remedies available to unitholders for actions taken by Holdings GP that might otherwise constitute breaches of fiduciary duty.
	•	The directors and executive officers of Holdings GP may have interests relating to the merger that differ in certain respects from the interests of the Holdings unaffiliated unitholders.
	•	The exchange ratio is fixed and the market value of the merger consideration to Holdings unitholders will be equal to 1.50 times the price of Partnership common units at the closing of the merger, which market value will decrease if the market value of the Partnership’s common units decreases.
	•	The transactions contemplated by the merger agreement may not be consummated even if Holdings unitholders approve the merger agreement and the merger.
	•	Financial projections by the Partnership and Holdings may not prove accurate.
	•	The merger agreement may be terminated and the support agreement will automatically terminate on December 31, 2010 if the merger has not been completed, and the failure to complete the merger for any reason could negatively impact the price of Holdings units and Partnership common units.
	•	The number of outstanding Partnership common units will increase as a result of the merger, which could make it more difficult to maintain the Partnership’s current positive distribution coverage ratio or increase the level of future quarterly distributions.

	•	While the merger agreement is in effect, Holdings may lose opportunities to enter into different business combination transactions with other parties on more favorable terms, and both the Partnership and Holdings may be limited in their ability to pursue other attractive business opportunities.
	•	No ruling has been requested with respect to the U.S. federal income tax consequences of the merger.
	•	The intended U.S. federal income tax consequences of the merger are dependent upon each of the Partnership and Holdings being treated as a partnership for U.S. federal income tax purposes.
	•	The U.S. federal income tax treatment of the merger is subject to potential legislative change and differing judicial or administrative interpretations.
	•	Holdings unitholders could recognize taxable income or gain for U.S. federal income tax purposes as a result of the merger.

 

Organizational Chart

(1)		Includes Holdings units beneficially owned by the estate of Dan L. Duncan, Randa Duncan Williams, and certain trusts and privately held affiliates.
(2)		EPCO and its private affiliates beneficially own an approximate 26.9% limited partner interest in the Partnership.

										Partnership
Beneficial Owners of Limited Partner Units (as of September 3, 2010)		Partnership				Holdings				Pro Forma
EPCO and privately held affiliates(1)			27.4	%			76.6	%			40.5	%
Holdings			3.4	%			—	%
Public unitholders			69.2	%			23.4	%			59.5	%
Total			100.0	%			100.0	%			100.0	%

(1)		Partnership percentage includes 4,520,431 Class B units of the Partnership owned by a privately held affiliate of EPCO. Holdings percentage includes 13,921 Holdings units to be issued in connection with the GP merger immediately prior to the merger as part of a transformation of the current 0.01% general partner interest in Holdings. Partnership Pro Forma percentage also includes 30,610,000 Partnership common units designated initially under a distribution waiver agreement. Please read “The Merger — Transactions Related to the Merger — Distribution Waiver Agreement.”

 

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING INFORMATION OF THE PARTNERSHIP AND HOLDINGS

 

Summary Historical and Pro Forma Financial and Operating Information of the Partnership

																						Partnership Pro Forma
		Partnership Consolidated Historical																				For the				For the
														For the Six Months								Year Ended				Six Months
		For the Year Ended December 31,												Ended June 30,								December 31,				Ended June 30,
		2007				2008				2009				2009				2010				2009				2010
		(In millions, except per unit amounts)
														(Unaudited)								(Unaudited)
Income statement data:
Revenues		$	26,713.8			$	35,469.6			$	25,510.9			$	10,321.2			$	16,087.9			$	25,510.9			$	16,087.9
Costs and expenses			25,529.3				33,756.1				23,738.1				9,482.1				15,021.6				23,748.6				15,026.9
Equity in income of unconsolidated affiliates			10.5				34.9				51.2				17.0				32.7				92.3				37.6
Operating income			1,195.0				1,748.4				1,824.0				856.1				1,099.0				1,854.6				1,098.6
Other income (expense):
Interest expense			(413.0	)			(540.7	)			(641.8	)			(311.0	)			(317.2	)			(687.3	)			(337.1	)
Other, net			71.7				12.2				(1.8	)			2.0				0.5				(1.7	)			0.5
Total other expense, net			(341.3	)			(528.5	)			(643.6	)			(309.0	)			(316.7	)			(689.0	)			(336.6	)
Income before provision for income taxes			853.7				1,219.9				1,180.4				547.1				782.3				1,165.6				762.0
Provision for income taxes			(15.7	)			(31.0	)			(25.3	)			(19.1	)			(15.2	)			(25.3	)			(15.2	)
Net income			838.0				1,188.9				1,155.1				528.0				767.1				1,140.3				746.8
Net income attributable to noncontrolling interests			(304.4	)			(234.9	)			(124.2	)			(116.1	)			(32.1	)			(110.7	)			(32.1	)
Net income attributable to the Partnership		$	533.6			$	954.0			$	1,030.9			$	411.9			$	735.0			$	1,029.6			$	714.7
Earnings per unit:
Basic earnings per unit		$	0.95			$	1.84			$	1.73			$	0.73			$	0.97			$	1.60			$	0.91
Diluted earnings per unit		$	0.95			$	1.84			$	1.73			$	0.73			$	0.96			$	1.53			$	0.87
Distributions to limited partners:
Per common unit (declared with respect to period)		$	1.9475			$	2.0750			$	2.1950			$	1.0825			$	1.1425			$	2.1950			$	1.1425
Balance sheet data (at period end):
Total assets		$	22,515.5			$	24,211.6			$	26,151.6			$	25,545.4			$	28,289.5				n/a			$	29,740.1
Total long-term debt, including current maturities			8,771.1				11,637.9				11,346.4				12,139.5				12,671.5				n/a				13,766.3
Total equity			9,016.5				9,295.9				10,042.3				9,516.8				10,925.4				n/a				11,276.9
Other financial data:
Net cash flows provided by operating activities		$	1,953.6			$	1,567.1			$	2,377.2			$	635.0			$	900.3				n/a				n/a
Cash used in investing activities			2,871.8				3,246.9				1,546.9				887.3				1,891.8				n/a				n/a
Cash provided by (used in) financing activities			946.3				1,690.7				(837.1	)			261.5				1,431.2				n/a				n/a
Distributions received from unconsolidated affiliates			87.0				80.8				86.6				33.5				58.8			$	169.3			$	101.3
Total gross operating margin(1)			1,964.4				2,609.0				2,839.8				1,336.2				1,610.1				2,880.9				1,615.0
Adjusted EBITDA(1)			2,004.6				2,546.1				2,686.1				1,279.8				1,577.2				2,760.0				1,615.6

(1)		Unaudited. Please read “— Non-GAAP Financial Measures” below beginning on page 21 for a reconciliation of non-GAAP total gross operating margin and Adjusted EBITDA to their most closely-related GAAP measures.

		Partnership Consolidated Historical
														For the Six Months
		For the Year Ended December 31,												Ended June 30,
		2007				2008				2009				2009				2010
Selected volumetric operating data by segment:
NGL Pipelines & Services, net:
NGL transportation volumes (MBPD)			1,877				2,021				2,196				2,057				2,217
NGL fractionation volumes (MBPD)			405				441				461				450				468
Equity NGL production (MBPD)			88				108				117				116				124
Fee-based natural gas processing (MMcf/d)			2,565				2,524				2,650				2,908				2,833
Onshore Natural Gas Pipelines & Services, net:
Natural gas transportation volumes (BBtus/d)			8,465				9,612				10,435				10,506				11,300
Onshore Crude Oil Pipelines & Services, net:
Crude oil transportation volumes (BBtus/d)			652				696				680				698				675
Offshore Pipelines & Services, net:
Natural gas transportation volumes (BBtus/d)			1,641				1,408				1,420				1,501				1,359
Crude oil transportation volumes (MBPD)			163				169				308				219				338
Platform natural gas processing (MMcf/d)			494				632				700				765				600
Platform crude oil processing (MBPD)			24				15				12				6				18
Petrochemical Services, net:
Butane isomerization volumes (MBPD)			90				86				97				95				86
Propylene fractionation volumes (MBPD)			68				58				68				67				79
Octane additive production volumes (MBPD)			9				9				10				7				12
Transportation volumes, primarily refined products and petrochemicals (MBPD)			882				818				806				814				795

 

Summary Historical Financial Information of Holdings

		Holdings Consolidated Historical
														For the Six Months
		For the Year Ended December 31,												Ended June 30,
		2007				2008				2009				2009				2010
														(Unaudited)
		(In millions, except per unit amounts)
Income statement data:
Revenues		$	26,713.8			$	35,469.6			$	25,510.9			$	10,321.2			$	16,087.9
Costs and expenses			25,534.0				33,763.7				23,748.6				9,488.8				15,026.9
Equity in income of unconsolidated affiliates			13.6				66.2				92.3				43.6				37.6
Operating income			1,193.4				1,772.1				1,854.6				876.0				1,098.6
Other income (expense):
Interest expense			(487.4	)			(608.3	)			(687.3	)			(337.3	)			(337.1	)
Other, net			71.8				12.3				(1.7	)			2.1				0.5
Total other expense, net			(415.6	)			(596.0	)			(689.0	)			(335.2	)			(336.6	)
Income before provision for income taxes			777.8				1,176.1				1,165.6				540.8				762.0
Provision for income taxes			(15.8	)			(31.0	)			(25.3	)			(19.1	)			(15.2	)
Net income			762.0				1,145.1				1,140.3				521.7				746.8
Net income attributable to noncontrolling interests			(653.0	)			(981.1	)			(936.2	)			(419.7	)			(622.8	)
Net income attributable to Holdings		$	109.0			$	164.0			$	204.1			$	102.0			$	124.0
Earnings per unit:
Basic earnings per unit		$	0.97			$	1.33			$	1.48			$	0.75			$	0.89
Diluted earnings per unit		$	0.97			$	1.33			$	1.48			$	0.75			$	0.89
Distributions to limited partners:
Per unit (declared with respect to period)		$	1.550			$	1.790			$	2.030			$	0.985			$	1.105
Balance sheet data (at period end):
Total assets		$	24,084.4			$	25,780.4			$	27,686.3			$	27,109.2			$	29,786.8
Total long-term debt, including current maturities			9,861.2				12,714.9				12,427.9				13,208.0				13,766.3
Equity			9,530.0				9,759.4				10,473.1				9,984.3				11,300.9
Other financial data:
Net cash flows provided by operating activities		$	1,936.8			$	1,566.4			$	2,410.3			$	650.6			$	920.4
Cash used in investing activities			4,541.1				3,246.9				1,547.7				888.1				1,891.8
Cash provided by (used in) financing activities			2,622.5				1,695.9				(863.9	)			253.0				1,412.5
Total cash distributions received			116.9				157.2				169.3				74.2				101.3
Total gross operating margin(1)			1,967.5				2,640.3				2,880.9				1,362.8				1,615.0

(1)		Unaudited. Please read “— Non-GAAP Financial Measures” below beginning on page 21 for a reconciliation of non-GAAP total gross operating margin to its most closely-related GAAP measures.

 

Non-GAAP Financial Measures

																						Partnership Pro Forma
																										For the
		Partnership Consolidated Historical																				For the				Six Months
														For the Six Months								Year Ended				Ended
		For the Year Ended December 31,												Ended June 30,								December 31,				June 30,
		2007				2008				2009				2009				2010				2009				2010
		(In millions)
Total segment gross operating margin		$	1,964.4			$	2,609.0			$	2,839.8			$	1,336.2			$	1,610.1			$	2,880.9			$	1,615.0
Adjustments to reconcile total segment gross operating margin to operating income:
Depreciation, amortization and accretion in operating costs and expenses			(647.9	)			(725.4	)			(809.3	)			(396.9	)			(439.4	)			(809.3	)			(439.4	)
Non-cash asset impairment charges in operating costs and expenses			—				—				(33.5	)			(2.3	)			(1.5	)			(33.5	)			(1.5	)
Operating lease expenses paid by EPCO			(2.1	)			(2.0	)			(0.7	)			(0.3	)			(0.3	)			(0.7	)			(0.3	)
Gains from asset sales and related transactions in operating costs and expenses			7.8				4.0				—				0.4				5.6				—				5.6
General and administrative costs			(127.2	)			(137.2	)			(172.3	)			(81.0	)			(75.5	)			(182.8	)			(80.8	)
Operating income			1,195.0				1,748.4				1,824.0				856.1				1,099.0				1,854.6				1,098.6
Other expense, net			(341.3	)			(528.5	)			(643.6	)			(309.0	)			(316.7	)			(689.0	)			(336.6	)
Income before provision of income taxes		$	853.7			$	1,219.9			$	1,180.4			$	547.1			$	782.3			$	1,165.6			$	762.0

		Holdings Consolidated Historical
														For the Six Months
		For the Year Ended December 31,												Ended June 30,
		2007				2008				2009				2009				2010
		(In millions)
														(Unaudited)
Total segment gross operating margin		$	1,967.5			$	2,640.3			$	2,880.9			$	1,362.8			$	1,615.0
Adjustments to reconcile total segment gross operating margin to operating income:
Depreciation, amortization and accretion in operating costs and expenses			(647.9	)			(725.4	)			(809.3	)			(396.9	)			(439.4	)
Non-cash asset impairment charges in operating costs and expenses			—				—				(33.5	)			(2.3	)			(1.5	)
Operating lease expenses paid by EPCO			(2.1	)			(2.0	)			(0.7	)			(0.3	)			(0.3	)
Gains from asset sales and related transactions in operating costs and expenses			7.8				4.0				—				0.4				5.6
General and administrative costs			(131.9	)			(144.8	)			(182.8	)			(87.7	)			(80.8	)
Operating income			1,193.4				1,772.1				1,854.6				876.0				1,098.6
Other expense, net			(415.6	)			(596.0	)			(689.0	)			(335.2	)			(336.6	)
Income before provision of income taxes		$	777.8			$	1,176.1			$	1,165.6			$	540.8			$	762.0

	•	the financial performance of the Partnership’s assets without regard to financing methods, capital structures or historical cost basis;
	•	the ability of the Partnership’s assets to generate cash sufficient to pay interest cost and support our indebtedness; and
	•	the viability of projects and the overall rates of return on alternative investment opportunities.

																						Partnership Pro Forma
																										For the
		Partnership Consolidated Historical																				For the				Six Months
														For the Six Months								Year Ended				Ended
		For the Year Ended December 31,												Ended June 30,								December 31,				June 30,
		2007				2008				2009				2009				2010				2009				2010
		(In millions)
Net income		$	838.0			$	1,188.9			$	1,155.1			$	528.0			$	767.1			$	1,140.3			$	746.8
Adjustments to GAAP net income to derive non-GAAP Adjusted EBITDA:
Equity in income of unconsolidated affiliates			(10.5	)			(34.9	)			(51.2	)			(17.0	)			(32.7	)			(92.3	)			(37.6	)
Distributions received from unconsolidated affiliates			87.0				80.8				86.6				33.5				58.8				169.3				101.3
Interest expense (including related amortization)			413.0				540.7				641.8				311.0				317.2				687.3				337.1
Provision for income taxes			15.7				31.0				25.3				19.1				15.2				25.3				15.2
Depreciation, amortization and accretion in costs and expenses			661.4				739.6				828.5				405.2				451.6				830.1				452.8
Adjusted EBITDA		$	2,004.6			$	2,546.1			$	2,686.1			$	1,279.8			$	1,577.2			$	2,760.0			$	1,615.6
Adjustments to non-GAAP Adjusted EBITDA to derive GAAP net cash flows provided by operating activities:
Interest expense			(413.0	)			(540.7	)			(641.8	)			(311.0	)			(317.2	)
Provision for income taxes			(15.7	)			(31.0	)			(25.3	)			(19.1	)			(15.2	)
Operating lease expenses paid by EPCO			2.1				2.0				0.7				0.3				0.3
Gain from asset sales and related transactions			(67.4	)			(4.0	)			—				(0.4	)			(5.7	)
Loss on forfeiture of Texas Offshore Port System			—				—				68.4				68.4				—
Miscellaneous non-cash and other amounts to reconcile Adjusted EBITDA and net cash flows provided by operating activities			8.1				5.8				43.2				(5.5	)			(2.6	)
Net effect of changes in operating accounts			434.9				(411.1	)			245.9				(377.5	)			(336.5	)
Net cash flows provided by operating activities		$	1,953.6			$	1,567.1			$	2,377.2			$	635.0			$	900.3