Fitch affirms Southern Union, Panhandle

Fitch Ratings said it affirmed the issuer default ratings of Southern Union Co. and Panhandle Eastern Pipe Line Co., LP at BBB- following news of the acquisition by Energy Transfer Equity, LP.

Energy Transfer said it will purchase all of Southern Union's outstanding common stock in exchange for newly issued Energy Transfer series B units, Fitch said.

The total purchase price is $7.9 billion, including $4.2 billion in equity units and assumed debt of $3.7 billion, the agency said.

The transaction is expected to close in the first quarter of 2012 subject to approvals.

The affirmation considers the impact this change in ownership is expected to have on the financial profile of both Southern Union and Panhandle Eastern going forward, Fitch said.

While no additional debt is expected to be issued at either entity, the pace of previously anticipated de-leveraging through free cash flow could slow given higher equity distributions under the new ownership structure, the agency said.

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