On January 9,
2018, Texas Eastern Transmission, LP (“Texas Eastern”), an indirect subsidiary of Spectra Energy Partners, LP (“SEP”),
issued $400 million in aggregate principal amount of 3.50% Senior Notes due 2028 (the “2028 Notes”) and $400 million
in aggregate principal amount of 4.15% Senior Notes due 2048 (the “2048 Notes” and together with the 2028 Notes, the
“Notes”). The Notes were offered and sold in a transaction exempt from the registration requirements of the Securities
Act of 1933, as amended (the “Securities Act”). The Notes were resold by the initial purchasers in reliance on Rule
144A and Regulation S of the Securities Act.
Texas Eastern
intends to use a portion of the net proceeds from the offering to fund expansion projects and capital expenditures on the Texas
Eastern pipeline system. In addition, Texas Eastern expects to use a portion of the net proceeds from the offering to make a distribution
to SEP in respect of funds advanced to Texas Eastern in September 2017, which Texas Eastern used to repay its 6.00% Senior Notes
due 2017. SEP expects to use the proceeds received from Texas Eastern for the repayment of its commercial paper debt, which was
incurred primarily to fund Texas Eastern’s capital expenditures, as well as those of its other U.S. subsidiaries.
The Notes were
issued pursuant to an indenture dated December 1, 2000, as amended and supplemented, including by the Seventh Supplemental Indenture
dated January 9, 2018 (the “Indenture”), between Texas Eastern and The Bank of New York Mellon Trust Company, N.A.,
as trustee (the “Trustee”).
The Notes are
general unsecured senior obligations of Texas Eastern. Payments of principal, premium, if any, and interest in respect of the notes
are solely Texas Eastern’s obligations. Under the Indenture, noteholders do not have recourse against Texas Eastern’s
general partner, Texas Eastern’s limited partners, their respective owners or SEP. The Notes rank equally in right of payment
with all of Texas Eastern’s existing and future senior unsecured debt and senior in right of payment to any of Texas Eastern’s
future subordinated debt. The Notes will effectively be subordinated in right of payment to all of Texas Eastern’s future
secured debt and other obligations, to the extent of the value of the assets securing such debt and other obligations. The Notes
will be structurally subordinated to all future debt and other liabilities, including trade payables, of Texas Eastern’s
subsidiaries.
Interest and Maturity
The 2028 Notes will mature on January 15,
2028 and the 2048 Notes will mature on January 15, 2048. Interest on the notes will be paid semi-annually in arrears on January
15 and July 15 of each year, commencing July 15, 2018.
Optional Redemption
Texas Eastern
has the option to redeem the 2028 Notes, in whole or in part, at any time prior to October 15, 2027, and the 2048 Notes, in whole
or in part, at any time prior to July 15, 2047, in each case, at Texas Eastern’s option, at a “make-whole premium”
redemption price set forth in the Indenture. At any time on or after those dates, Texas Eastern may redeem some or all of the notes
of the applicable series, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued
and unpaid interest, if any, to, but excluding, the redemption date. Texas Eastern is not required to make mandatory redemption
or sinking fund payments with respect to the Notes.
Certain Covenants
The Indenture
contains certain covenants that, among other things, limit Texas Eastern’s ability and the ability of certain of Texas Eastern’s
subsidiaries to incur debt secured by liens.
Events of Default
The Indenture
provides for the following events of default with respect to the Notes of a series: (i) failure to pay principal of or any
premium on any Note of such series when due; (ii) failure to pay when due any interest on any Note of such series that continues
for 60 days; (iii) failure to perform any covenant in the Indenture (other than a covenant expressly included solely for the
benefit of other series of debt securities issued under the Indenture) that continues for 90 days after the Trustee or the holders
of at least 33% in principal amount of the outstanding Notes of such series give Texas Eastern written notice of the default; or
(iv) certain events involving Texas Eastern’s bankruptcy, insolvency or reorganization. If an event of default with
respect to the Notes of such series occurs and is continuing, then the trustee or the holders of at least 33% in principal amount
of the outstanding Notes of such series may declare the principal amount of all Notes of such series to be immediately due and
payable.
Relationships
The initial purchasers
of the Notes and certain of their affiliates have provided and may in the future provide financial advisory, investment banking,
commodity trading and commercial banking services in the ordinary course of business to Texas Eastern and its affiliates, including
SEP, for which they receive customary fees and expense reimbursement.
