Filed pursuant to Rule 424(b)(3)
Registration No. 333-141809

(To Prospectus Dated July 23, 2007)

 

10,000,000 Common Units

 

 

Representing Limited Partner Interests

 

We are selling 10,000,000 common units representing limited partner interests in Regency Energy Partners LP. Our common units trade on the NASDAQ Global Select Market under the symbol “RGNC.” The last reported sales price of our common units on the NASDAQ Global Select Market on July 19, 2007 was $34.12 per common unit.

 

Investing in our common units involves risks. Please read “Risk Factors” beginning on page S-14 of this prospectus supplement and on page 4 of the accompanying prospectus.

 

 

We have granted the underwriters a 30-day option to purchase up to an additional 1,500,000 common units from us on the same terms and conditions as set forth above if the underwriters sell more than 10,000,000 common units in this offering.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

The underwriters expect to deliver the common units on or about          , 2007.

 

Joint Book-Running Managers

 

 

 

 

 

This document is in two parts. The first part is the prospectus supplement, which describes the specific terms of this offering of common units. The second part is the accompanying prospectus, which gives more general information, some of which may not apply to the common units. If the information relating to the offering varies between the prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus supplement.

 

You should rely only on the information contained in or incorporated by reference in this prospectus supplement or the accompanying prospectus. We have not authorized anyone to provide you with additional or different information. If anyone provides you with additional, different or inconsistent information, you should not rely on it. We are offering to sell the common units, and seeking offers to buy the common units, only in jurisdictions where offers and sales are permitted. You should not assume that the information contained in this prospectus supplement or the accompanying prospectus is accurate as of any date other than the date on the front of those documents or that any information we have incorporated by reference is accurate as of any date other than the date of the document incorporated by reference. Our business, financial condition, results of operations and prospects may have changed since such dates.

 

TABLE OF CONTENTS

 

 

 

i

 

Summary

Ø	Gathering and Processing:  in which we provide “wellhead-to-market” services to producers of natural gas, which include transporting raw natural gas from the wellhead through gathering systems, treating to remove impurities such as hydrogen sulfide and carbon dioxide, processing raw natural gas to separate natural gas liquids, or NGLs, from the raw natural gas and selling or delivering the pipeline-quality natural gas and NGLs to various markets and pipeline systems; and
Ø	Transportation:  in which we deliver natural gas from northwest Louisiana to more favorable markets in northeast Louisiana through our 320-mile Regency Intrastate Pipeline system.

 

S-1 

Ø	Pursuing strategic acquisitions of midstream assets from GE EFS.  GE EFS’s energy asset base is considerably larger than our own and includes midstream assets that we believe are strategically aligned with our existing operations or provide attractive operations in new regions. GE EFS has not committed to and does not have any obligation to sell assets to us.
Ø	Utilizing our relationship with GE EFS to facilitate acquisitions from third parties.  We intend to pursue strategic acquisitions of midstream assets from third parties in or near our current areas of

 

 S-2

	operation that offer the opportunity for operational efficiencies and the potential for increased utilization and expansion of those assets. We also intend to pursue opportunities in new regions with significant natural gas reserves and high levels of drilling activity. We believe our relationship with GE EFS will provide increased access to such opportunities.

Ø	Maximizing the profitability of our existing assets.  We intend to increase the profitability of our existing asset base by actively controlling and reducing operating costs, identifying new business opportunities, scaling our operations by adding new volumes of natural gas supplies, and undertaking additional initiatives to enhance efficiency.
Ø	Implementing cost-effective organic growth opportunities.  We intend to build natural gas gathering assets, processing facilities and transportation lines that will enhance our existing systems, further our ability to aggregate supply, and enable us to access premium markets for that supply. Where applicable, we will seek to coordinate each expansion with the needs of significant producers in the area to mitigate speculative risk associated with securing through-put volumes.
Ø	Continuing to reduce our exposure to commodity price risk.  We operate our business in a manner designed to allow us to generate stable cash flows while mitigating the impact of fluctuations in commodity prices.
Ø	Improving our credit ratings.  We are committed to achieving an investment grade rating on our debt. Our current Corporate Family Rating from Moody’s is B1, and our current Corporate Credit Rating from Standard & Poor’s is B+.

Ø	Our acquisition strategy and growth opportunities will benefit from our affiliation with GE EFS.  As indicated above, we believe our affiliation with GE EFS enhances our ability to consummate accretive acquisitions and capitalize on market opportunities.
Ø	We have the financial flexibility and adequate access to capital to pursue acquisition and organic growth opportunities.  We remain committed to maintaining a capital structure that will afford us the financial strength to fund expansion projects and other attractive investment opportunities. We believe our relationship with GE increases our access to capital and enables us to pursue strategic opportunities that we may otherwise not be able to pursue. In addition, we have sufficient liquidity under our credit facility to fund our near term growth capital requirements.
Ø	We have a significant market presence in major natural gas supply areas.  We have a significant market presence in each of our operating areas, which are located in some of the largest and most prolific gas-producing regions of the United States: the Louisiana-Mississippi-Alabama Salt basin in north Louisiana, the Permian basin of west Texas, the Hugoton and Anadarko basins in the mid-continent area, the East Texas basin and Edwards, Olmos and Wilcox trends in south Texas. Our geographical diversity reduces our reliance on any particular region, basin or gathering system. Each of these producing regions is well-established with generally long-lived, predictable reserves, and our assets are strategically located in each of the regions. These areas are experiencing high levels of natural gas exploration, development and production activities as a result of strong demand for natural gas, attractive recent discoveries, infill drilling opportunities and the implementation of new exploration and production techniques.
Ø	Our Regency Intrastate Pipeline System provides us with significant fee-based transportation through-put volumes and cash flow.  The Regency Intrastate Pipeline System allows us to capitalize on the flow of natural gas from producing fields in north Louisiana to intrastate and interstate markets in northeast Louisiana. These transportation through-put volumes have limited commodity price exposure and provide us with a stable, fee-based cash flow.

 

S-3 

Ø

We have an experienced, knowledgeable management team with a proven track record.  Our senior management team has an average of over 20 years of industry related experience. Our team’s extensive experience and contacts within the midstream industry provide a strong foundation and focus for managing and enhancing our operations, for accessing strategic acquisition opportunities and for constructing new assets. Additionally, members of our management team have a substantial economic interest in us through an indirect 8.2% ownership interest in the Managing General Partner and the General Partner.

 

 S-4

Public Common Units			65.7	%
GE EFS, Management and Affiliates Subordinated Units			32.3	%
GE EFS, Management and Affiliates General Partner Interest			2.0	%
			100.0	%

(1)		Includes 17,763,809 subordinated units owned by GE EFS, 1,116,509 subordinated units owned by our management and 223,578 subordinated units held by two other individuals.
(2)		Twenty-nine members of our management currently own or have subscribed to purchase interests in an affiliate of GE EFS that represent an indirect economic interest in approximately 8.2% of the equity of our Managing General Partner and our General Partner.
(3)		Includes 8,148,672 Common Units owned by affiliates of HM Capital Partners LLC that are subject to contractual restrictions against sale for six months (57.6%) and a year (42.4%).
(4)		Includes 355,000 restricted Common Units issued to our management and employees under our Long-Term Incentive Plan at the time of the GP Acquisition.

 

S-5 

 

The offering

Common units offered by Regency Energy Partners LP		10,000,000 common units
		11,500,000 common units if the underwriters exercise in full their option to purchase additional common units.
Units outstanding after this offering		38,927,212 common units, or 40,427,212 common units if the underwriters exercise in full their option to purchase additional common units, and 19,103,896 subordinated units.
Use of proceeds		We expect to receive, based on an assumed offering price of $34.12 per common unit, approximately $332.8 million from the sale of the 10,000,000 common units offered hereby, including our general partner’s proportionate capital contribution and after deducting underwriting discounts and commissions and estimated offering expenses. We will apply approximately $208.6 million of the net proceeds to redeem $192.5 million in principal amount, or 35%, of the $550 million in principal amount of our outstanding 83/8% senior notes due 2013. In addition, we will use $50.0 million of the net proceeds to repay the remaining term loan outstanding under our credit facility and $74.1 million of the net proceeds to repay outstanding revolving credit indebtedness under our credit facility. We will pay the accrued interest on all indebtedness repaid to the date of payment from cash on hand. We will use any net proceeds from the underwriters’ exercise of their option to purchase additional common units to repay additional borrowings outstanding under our revolving credit facility. Please read “Use of Proceeds.”
Cash distributions		We intend to make distributions on our common units equal to or greater than the minimum quarterly distribution of $0.35 per unit to the extent we have sufficient cash from our operations after establishment of cash reserves and payment of fees and expenses of our General Partner.
		On May 15, 2007, we paid a quarterly cash distribution for the quarter ended March 31, 2007 of $0.38 per unit to the holders of our common and subordinated units, or $1.52 per unit on an annualized basis.
		If cash distributions exceed $0.4025 per unit in a quarter, our general partner will receive increasing percentages, up to 50%, of the cash we distribute in excess of that amount. We refer to these distributions as “incentive distributions.” Please see “How We Make Cash Distributions—Incentive Distribution Rights” in the accompanying prospectus.
		Under our partnership agreement, we must distribute all of our cash on hand at the end of each quarter, less reserves established by our General Partner in its sole discretion. These reserve funds are meant to provide for the proper conduct of our business including funds needed to provide for our operations as well as to comply with applicable debt

 

 S-6

		instruments. As we cannot estimate the size of these reserves for any given quarter at this time, we cannot assure you that, after the establishment of reserves, we will have cash on hand for distribution to our unitholders. We refer to this cash available for distribution as “available cash,” and we define its meaning in our partnership agreement. Please see “How We Make Cash Distributions” in the accompanying prospectus for a description of available cash. The amount of available cash may be greater than or less than the minimum quarterly distribution.
		We expect to pay our distribution for the quarter ended June 30, 2007 on August 14, 2007 to the holders of our common units on August 7, 2007. If you purchase common units in this offering, you will receive this distribution.
Estimated ratio of taxable income to distributions		We estimate that if you own the common units you purchase in this offering through December 31, 2010, you will be allocated, on a cumulative basis, an amount of federal taxable income for that period that will be 20% or less of the cash distributed to you with respect to that period. Please read “Tax Considerations” in this prospectus supplement for the basis of this estimate.
Exchange listing		Our common units are traded on the NASDAQ Global Select Market under the symbol “RGNC.”
Risk factors		There are risks associated with this offering and our business. You should consider carefully the risk factors beginning on page 4 of the accompanying prospectus before making a decision to purchase common units in this offering.

 

S-7 

 

Summary financial and other data

Ø	Regency Gas Services LLC acquired certain natural gas gathering and processing assets from Duke Energy Field Services, LP in March 2004. As a result, our historical financial results for the periods prior to March 2004 do not include the financial results from the operation of these assets.
Ø	In connection with the acquisition of Regency Gas Services LLC by investors affiliated with HM Capital Partners LLC on December 1, 2004 (the “HM Acquisition”), the purchase price was “pushed down” to the financial statements of Regency Gas Services LLC. As a result of this “push-down” accounting, the book basis of our assets was increased to reflect the purchase price, which had the effect of increasing our depreciation expense. Also, the increased amount of debt we incurred in connection with the acquisition increased our interest expense subsequent to December 1, 2004.
Ø	In December 2004 we undertook a hedging program. Effective July 1, 2005 we designated certain commodity and interest rate swap instruments for hedge accounting treatment in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” For the periods from December 1, 2004 through June 30, 2005, unrealized and realized gains and losses on the commodity swaps were recorded in unrealized/realized gain (loss) from risk management activities in our statement of operations. For the six months ended June 30, 2005, unrealized gains and losses on the interest rate swap were recorded in interest expense, net. Effective July 1, 2005, to the extent the hedges were effective, any unrealized gains or losses on these instruments were recorded in other comprehensive income (loss) during the lives of the instruments, which we believe results in financial results that are not comparable for the affected periods.
Ø	TexStar acquired assets from subsidiaries of Enbridge Energy Partners L.P. on December 7, 2005. As a result, our historical results for periods prior to December 1, 2005 do not include the financial results from the operation of these assets. TexStar also acquired assets from Valence Midstream Ltd. and EEC Midstream, Ltd. on July 25, 2006. As a result, our historical results from the periods prior to August 1, 2006 do not include the financial results from the operation of these assets.
Ø	We have spent $335.2 million in organic growth projects: $176.1 million in 2005, $121.8 million in 2006 and $37.3 million in the first quarter of 2007. We completed our Regency Intrastate Enhancement Project and other key projects included two new refrigeration dewpoint control facilities in north Louisiana; electrification and adding an acid gas injection well at our Tilden Processing Plant; adding acid gas injection at our Waha Processing Plant, re-building and activating an existing nitrogen rejection unit at our Eustace Processing Plant; and constructing 31 miles of 12 inch diameter pipeline in south Texas.
Ø	The TexStar acquisition is a transaction between commonly controlled entities and we accounted for this acquisition in a manner similar to a pooling of interests. As a result, our historical financial statements and the historical financial statements of TexStar have been combined to reflect the historical operations, financial position and cash flows at the dates and for the periods after December 1, 2004 (being the period of common control). Most of the TexStar operating activity occurred since December 2005. As a result, the TexStar historical operations, financial position and cash flows are not comparable to prior periods.

 

 S-8

		Regency
		LLC
		Predecessor					Regency Energy Partners LP
							Period from
							Acquisition
		Period from					Date
		January 1,					(December 1,				Year				Year					Three Months				Three Months
		2004 to					2004) to				Ended				Ended					Ended				Ended
		November 30,					December 31,				December 31,				December 31,					March 31,				March 31,
Statement of Operations Data:		2004					2004				2005				2006					2006				2007
							($ in thousands except per unit data)
Total revenue		$	432,321				$	47,857			$	709,401			$	896,865				$	231,266			$	256,428
Total operating expenses			(404,251	)				(45,112	)			(695,366	)			(857,005	)				(229,766	)			(242,948	)
Operating income			28,070					2,745				14,035				39,860					1,500				13,480
Other income and deductions:
Interest expense, net			(5,097	)				(1,335	)			(17,880	)			(37,182	)				(8,001	)			(14,885	)
Loss on debt refinancing			(3,022	)				—				(8,480	)			(10,761	)				—				—
Equity income			—					56				312				532					91				43
Other income and deductions, net			186					8				421				307					91				67
Total other income and deductions			(7,933	)				(1,271	)			(25,627	)			(47,104	)				(7,819	)			(14,775	)
Net income (loss) from continuing operations			20,137					1,474				(11,592	)			(7,244	)				(6,319	)			(1,295	)
Discontinued operations			(121	)				—				732				—					—				—
Net (loss) income		$	20,016				$	1,474			$	(10,860	)		$	(7,244	)			$	(6,319	)		$	(1,295	)
Less:
Net income through January 31, 2006																1,564					1,564				—
Net loss for partners															$	(8,808	)			$	(7,883	)		$	(1,295	)
General partner interest																(176	)				(158	)			(26	)
Limited partner interest															$	(8,632	)			$	(7,725	)		$	(1,269	)
Basic and diluted net loss per common and subordinated unit															$	(0.21	)			$	(0.18	)		$	(0.03	)
Cash distributions declared per common and subordinated unit																0.94					0.2217				0.38
Basic and diluted net loss per Class B common unit																(0.12	)				(0.18	)			—
Cash distributions declared per Class B common unit																—					—				—
Basic and diluted net loss per Class C common unit																—					—				—
Cash distributions declared per Class C common unit																—					—				—
Balance Sheet Data (at period end):
Property, plant and equipment, net							$	328,784			$	609,157			$	734,034								$	762,120
Total assets								492,170				806,740				1,013,085									1,031,559
Long-term debt (long-term portion only)								248,000				428,250				664,700									698,100
Partners’ capital or member interest								181,936				230,962				212,657									185,352

S-9 

		Regency
		LLC
		Predecessor					Regency Energy Partners LP
							Period from
							Acquisition
		Period from					Date
		January 1,					(December 1,				Year				Year					Three Months				Three Months
		2004 to					2004) to				Ended				Ended					Ended				Ended
		November 30,					December 31,				December 31,				December 31,					March 31,				March 31,
		2004					2004				2005				2006					2006				2007
							($ in thousands except per unit data)
Cash Flow Data:
Net cash flows provided by (used in):
Operating activities		$	32,401				$	(4,311	)		$	37,340			$	44,156				$	(471	)		$	27,470
Investing activities			(84,721	)				(130,478	)			(279,963	)			(223,650	)				(30,378	)			(46,891	)
Financing activities			56,380					132,515				242,949				184,947					30,951				18,786
Other Financial Data:
Total segment margin		$	69,559				$	6,870			$	77,059			$	158,049				$	34,530			$	44,491
EBITDA			35,242					4,470				30,191				69,592					10,851				25,017
Maintenance capital expenditures			5,548					358				9,158				16,433					3,833				864
Segment Financial and Operating Data:
Gathering and Processing Segment:
Financial Data:
Segment margin		$	61,347				$	6,262			$	61,387			$	113,002				$	24,643			$	30,178
Operating Data:
Throughput (MMbtu/d)			303,345					314,812				345,398				529,467					423,593				729,218
NGL gross production (Bbls/d)			14,487					16,321				14,883				18,587					17,478				20,047
Transportation Segment:
Financial data:
Segment margin		$	8,212				$	608			$	15,672			$	45,047				$	9,887			$	14,313
Operating data:
Throughput (MMbtu/d)			192,236					161,584				258,194				587,098					438,396				704,458

 S-10

 

Non-GAAP financial measures

Ø	financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
Ø	the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness and make cash distributions to our unitholders and General Partner;
Ø	our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing methods or capital structure; and
Ø	the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

 

S-11 

		Regency
		LLC
		Predecessor					Regency Energy Partners LP
							Period from
							Acquisition
		Period from					Date
		January 1,					(December 1,				Year				Year					Three Months				Three Months
		2004 to					2004) to				Ended				Ended					Ended				Ended
		November 30,					December 31,				December 31,				December 31,					March 31,				March 31,
		2004					2004				2005				2006					2006				2007
							($ in thousands)
Reconciliation of “EBITDA” to net cash flows provided by (used in) operating activities and to net (loss) income:
Net cash flows provided by (used in) operating activities		$	32,401				$	(4,311	)		$	37,340			$	44,156				$	(471	)		$	27,470
Add (deduct):
Depreciation and amortization			(10,461	)				(1,793	)			(24,286	)			(39,287	)				(9,318	)			(11,986	)
Equity income			—					56				312				532					91				43
Loss on debt refinancing			(3,022	)				—				(8,480	)			(10,761	)				—				—
Risk management portfolio valuation changes			—					322				(11,191	)			2,262					191				124
Loss on sale of assets			—					—				—				—					—				(1,808	)
Unit based compensation expenses			—					—				—				(2,906	)				(314	)			(1,103	)
Gain on the sale of Regency Gas Treating LP assets			—					—				626				—					—				—
Gain on the sale of NGL line pack			—					—				628				—					—				—
Accounts receivable			19,832					(2,568	)			43,012				5,506					(16,938	)			1,959
Other current assets			1,169					2,456				2,644				(104	)				(921	)			(598	)
Accounts payable and accrued liabilities			(18,122	)				(548	)			(52,651	)			1,359					23,535				(5,220	)
Accrued taxes payable			(1,475	)				921				(806	)			(492	)				(273	)			(203	)
Interest payable			—					—				—				—					—				(11,918	)
Other current liabilities			(502	)				242				(1,269	)			(3,148	)				(12	)			1,504
Proceeds from termination of interest rate swap			—					—				—				(4,940	)				—				—
Amount of swap termination proceeds reclassified into earnings			—					—				—				3,862					—				—
Other assets			196					6,697				3,261				(3,014	)				(2,515	)			441
Other liabilities			—					—				—				(269	)				626				—
Net (loss) income		$	20,016				$	1,474			$	(10,860	)		$	(7,244	)			$	(6,319	)		$	(1,295	)
Add:
Interest expense, net			5,097					1,335				17,880				37,182					8,001				14,885
Depreciation and amortization			10,129					1,661				23,171				39,654					9,169				11,427
EBITDA		$	35,242				$	4,470			$	30,191			$	69,592				$	10,851			$	25,017

 S-12

		Regency
		LLC
		Predecessor					Regency Energy Partners LP
							Period from
							Acquisition
		Period from					Date
		January 1,					(December 1,				Year				Year					Three Months				Three Months
		2004 to					2004) to				Ended				Ended					Ended				Ended
		November 30,					December 31,				December 31,				December 31,					March 31,				March 31,
		2004					2004				2005				2006					2006				2007
							($ in thousands)
Reconciliation of “total segment margin” to net (loss) income:
Net (loss) income		$	20,016				$	1,474			$	(10,860	)		$	(7,244	)			$	(6,319	)		$	(1,295	)
Add (deduct):
Operation and maintenance			17,786					1,819				24,291				39,496					9,445				10,925
General and administrative			6,571					645				15,039				22,826					5,416				6,851
Management services contract termination fees			—					—				—				12,542					9,000				—
Loss on sale of assets			—					—				—				—					—				1,808
Related party expenses			—					—				523				1,630					—				—
Transaction expenses			7,003					—				—				2,041					—				—
Depreciation and amortization			10,129					1,661				23,171				39,654					9,169				11,427
Interest expense, net			5,097					1,335				17,880				37,182					8,001				14,885
Equity income			—					(56	)			(312	)			(532	)				(91	)			(43	)
Loss on debt refinancing			3,022					—				8,480				10,761					—				—
Other income and deductions, net			(186	)				(8	)			(421	)			(307	)				(91	)			(67	)
Discontinued operations			121					—				(732	)			—					—				—
Total segment margin		$	69,559				$	6,870			$	77,059			$	158,049				$	34,530			$	44,491

S-13 

 

An investment in our common units involves risk. You should carefully read the risk factors included under the caption “Risk Factors” beginning on page 4 of the accompanying prospectus, as well as the risk factors discussed in our 2006 annual report on Form 10-K and in our quarterly report for the quarter ended March 31, 2007, which are incorporated by reference herein.

 

 S-14

 

Based on an assumed offering price of $34.12 per common unit, we expect to receive proceeds of approximately $332.8 million from the sale of the 10,000,000 common units offered hereby, including our general partner’s proportionate capital contribution and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We estimate that the total expenses of this offering payable by us, not including the underwriting discount, will be approximately $1.5 million. An increase or decrease in the public offering price of $1.00 per common unit would cause the net proceeds from the offering, including our general partner’s proportionate capital contribution and after deducting applicable underwriting discounts and commissions, to increase or decrease by $9.8 million.

 

We will use approximately $208.6 million of the net proceeds to redeem $192.5 million, or 35%, of the $550 million in aggregate principal amount of our 83/8% senior notes due December 15, 2013, or senior notes, that were issued by us in a private placement to qualified institutional buyers pursuant to an indenture dated as of December 12, 2006. Under the terms of the indenture, we may, prior to December 15, 2009 but within 90 days following an Equity Offering (as defined therein), redeem out of the net cash proceeds of that Equity Offering up to 35% of the $550 million in aggregate principal amount of the senior notes originally issued at a redemption price equal to 108.375% of the aggregate principal amount of the notes being redeemed, plus accrued and unpaid interest to the date of redemption. We used the proceeds from the sale of the senior notes, plus additional revolving credit borrowings under our credit facility, to repay $550 million in term loans outstanding under our credit facility.

 

In addition, we intend to apply $50.0 million of the net proceeds to repay the remaining term loan outstanding under our credit facility and the remaining $74.1 million of net proceeds to pay outstanding indebtedness under our revolving credit facility. The remaining term loan under our credit facility had an average interest rate for the six months ended June 30, 2007 of 7.835% and matures on August 15, 2013. Indebtedness under our revolving credit facility, which matures on August 15, 2011, was $178.9 million as of July 12, 2007 and had a weighted average annual interest rate of 7.57%, without giving effect to interest rate hedges. Substantially all of the outstanding indebtedness under the term loan and the revolving credit facility was incurred to fund our acquisition of TexStar Field Service, L.P., or TexStar, in August 2006, to refinance our existing indebtedness prior to our acquisition of TexStar, to fund organic growth projects and to fund a portion of the acquisition price for Pueblo Midstream Gas Corporation. Some of the underwriters or their affiliates are lenders under our credit facility and will receive a portion of the net proceeds of this offering as a result of our repayment of outstanding indebtedness thereunder.

 

We will pay the accrued interest on all indebtedness redeemed or repaid to the date of redemption or payment from cash on hand.

 

We will use any net proceeds from the underwriters’ exercise of their option to purchase additional common units to repay additional borrowings outstanding under our revolving credit facility. If the underwriters exercise their option to purchase additional common units after August 7, 2007, the record date for our distribution for the quarter ended June 30, 2007, the underwriters will pay an amount equal to this distribution on those units and will deduct this amount from the proceeds we receive.

 

Pending application of the net proceeds to redeem senior notes, we intend to use those net proceeds to pay outstanding indebtedness under our revolving credit agreement.

 

S-15 

 

The following table sets forth our capitalization as of March 31, 2007:

 

 

You should read our financial statements and notes that are included or incorporated by reference elsewhere in this prospectus supplement for additional information regarding us.

 

 

 

 

 S-16

 

Our common units were first offered and sold to the public on February 3, 2006. Our common units are listed on the NASDAQ Global Select Market under the symbol “RGNC.” As of July 10, 2007, the number of holders of record of common units was 56, including Cede & Co., as nominee for the Depository Trust Company, which held of record 15,787,502 common units. Additionally, there were 12 unitholders of record of our subordinated units. The following table sets forth, for the periods indicated, the high and low quarterly sales prices per common unit, as reported on the NASDAQ Global Select Market, and the cash distributions declared per common unit.

 

 

 

 

S-17 

 

Regency GP LP is our General Partner. Our General Partner manages and directs all of our activities. The activities of the General Partner are managed and directed by its general partner, Regency GP LLC, our Managing General Partner. Our officers and directors are officers and directors of our Managing General Partner. The owners of our Managing General Partner may appoint up to ten persons to serve on the Board of Directors of the Managing General Partner. Although there is no requirement that he do so, the President and Chief Executive Officer of our Managing General Partner is currently a director of the Managing General Partner and serves as Chairman of the Board of Directors.

 

CHANGES IN BOARD COMPOSITION

 

The board of directors of our Managing General Partner was, until the resignation of Robert W. Shower in February 2007 for reasons of health, in compliance with the NASDAQ Stock Market, LLC., or NASDAQ, requirement that limited partnerships have three directors who qualify as “independent” under the NASDAQ standards for independence for audit committee members. In accordance with Marketplace rule 4350(d)(4), NASDAQ has provided us a cure period of one year within which to reestablish compliance. We are currently in the process of identifying a suitable nominee and must appoint another independent director by February 2008 to remain in compliance with NASDAQ rules.

 

In connection with the consummation of the acquisition of our Managing General Partner and our General Partner by GE EFS and the resulting change in control, effective June 18, 2007, four members of the board of directors of the Managing General Partner, Joe Colonnetta, Jason H. Downie, Jack E. Furst and J. Edward Herring, all of whom are partners of HM Capital Partners LLC, together with two additional directors, Robert D. Kincaid and Gary W. Luce, resigned as directors of our Managing General Partner. An indirect subsidiary of GE EFS designated James Burgoyne, Daniel Castagnola, Paul Halas, Mark Mellana and Brian Ward to serve as directors of our Managing General Partner. A. Dean Fuller and J. Otis Winters continue to serve as independent directors of our Managing General Partner and our Chief Executive Officer, James W. Hunt, continues to serve as a director and Chairman of the Board.

 

 S-18

 

Management

 

DIRECTORS AND EXECUTIVE OFFICERS

 

The following table shows information regarding the current directors and executive officers of Regency GP LLC. Directors are elected for one-year terms.

 

 

 

 

James W. Hunt was elected Chairman of the Board of Directors of Regency GP LLC and Regency Gas Services in November 2005. Mr. Hunt has served as President and Chief Executive Officer of Regency GP LLC from September 2005 to present. Mr. Hunt has, since his election effective December 1, 2004, served as President, Chief Executive Officer and Director of Regency Gas Services LP and its predecessor. From 1978 until January 1981, Mr. Hunt served as President and Chief Executive Officer of Diamond M Company, a major offshore drilling company and the predecessor of Diamond Offshore Company. From 1981 through 1987, he served as Chairman and Chief Executive Officer of Cenergy Corporation, a NYSE listed oil and gas exploration, production and pipeline company. During the period from 1987 to 1989, Mr. Hunt was an independent financial consultant. From 1989 until December 2004, Mr. Hunt was engaged in energy investment banking, three years as head of the Houston office of Lehman Brothers Incorporated and most recently as head of the U.S. Energy Group of UBS Securities LLC. Mr. Hunt is an attorney and member of the State Bar of Texas.

 

Richard D. Moncrief was elected Executive Vice President and Chief Operating Officer of Regency GP LLC in June 2007. From April 2006 to June 2007, Mr. Moncrief served as Senior Vice President of Gas Supply and Business Development of Regency GP LLC. Prior to April 2006, Mr. Moncrief was associated with Sid Richardson Energy Services, of Fort Worth, Texas, where, until that company’s sale,

 

S-19 

 

Management

 

he was Vice President, Business Development, and more recently Vice President, Engineering & Business Development. He previously held management positions at Koch Midstream Services Company and at Delhi Gas Pipeline Corporation.

 

Stephen L. Arata was elected Executive Vice President and Chief Financial Officer of Regency GP LLC in September 2005. From June 2005 to the present, Mr. Arata served as Executive Vice President and Chief Financial Officer of Regency Gas Services LP and its predecessor. From September 1996 to June 2005, Mr. Arata worked for UBS Investment Bank, covering the power and pipeline sectors; he was Executive Director from 2000 through June 2005. Prior to UBS, Mr. Arata worked for Deloitte Consulting, focusing on the energy sector.

 

William E. Joor III was elected Executive Vice President, Chief Legal and Administrative Officer and Secretary of Regency GP LLC in September 2005. Mr. Joor has, since his election effective January 1, 2005, served as Executive Vice President, Chief Legal and Administrative Officer and Secretary of Regency Gas Services LP and its predecessor. From May 1966 through December 1973, Mr. Joor was associated with, and from then until December 31, 2004 was a partner of, Vinson & Elkins LLP. Mr. Joor’s area of specialization was the law of corporate finance and mergers and acquisitions with particular emphasis in the energy sector.

 

Charles M. Davis, Jr. was elected Senior Vice President, Corporate Development for Regency GP LLC in March 2006. From September 2004 to February 2005, Mr. Davis was Managing Director and Head of Mergers and Acquisitions for Challenger Capital Group Ltd. From July 2002 until September 2004, Mr. Davis was a Managing Director in the Energy and Power Group of UBS Investment Bank. From March 1992 until August 2002, Mr. Davis was a Managing Director in the Global Energy and Power Group of Merrill Lynch. Prior to Merrill, Mr. Davis worked in the Energy Groups of The First Boston Corporation and McKinsey & Co. Mr. Davis has over 20 years experience with mergers and acquisitions as well as financing in the pipeline industry.

 

James A. Scott was elected to serve as Senior Vice President, Gas Supply and Business Development in June 2007. From May 2006 to present, Mr. Scott served in various roles at Regency GP LLC relating to gas supply and business development. From 2003 to May 2006, Mr. Scott served as the Vice President, Corporate Development of Crosstex Energy Services with responsibilities including development of Crosstex’s grass roots pipeline and processing assets in the Fort Worth Basin and lead roles in Crosstex’s acquisition efforts. From 1998 to 2003, Mr. Scott served as Vice President, Business Development of J-W Operating Company with responsibilities for growth initiatives including approximately 20 acquisitions in the energy services business. Prior to 1998, Mr. Scott held management positions with Koch Midstream Services Company and Delhi Gas Pipeline Corporation.

 

Alvin Suggs was elected Senior Vice President and General Counsel of Regency GP LLC in March 2007. From June 2005 to March 2007, Mr. Suggs served as Vice President and General Counsel of Regency Gas Services LLC. From June 2003 to June 2005, Mr. Suggs engaged in the private practice of law representing clients in the energy sector, first as a sole practitioner and, after June 2004, with Thompson & Knight, LLP. From September 1997 to June 2003, Mr. Suggs served as counsel to three entities controlled by El Paso Corporation, mostly recently (after September 1999) as Vice President and Associate General Counsel with El Paso Energy Corporation and General Counsel of El Paso Field Services, L.P. From 1987 to 1999 he served Texas Oil & Gas Corp., American Oil and Gas Corporation and KN Energy, Inc. in various capacities as legal counsel. Prior to that service, Mr. Suggs was in private practice of law for five years, and also served as Assistant District Attorney for the Fifth Circuit Court District in Mississippi in 1978.

 

Lawrence B. Connors was elected Vice President of Finance and Chief Accounting Officer of Regency GP LLC in September 2005. From December 2004 to the present, Mr. Connors served as Vice President, Finance and Chief Accounting Officer of Regency Gas Services LLC. From June 2003 through November 2004, Mr. Connors served as Controller of Regency Gas Services LLC. From August

 

 S-20

 

Management

 

2000 through November 2001, Mr. Connors was an independent accounting and financial consultant. From 2001 through May 2003, Mr. Connors was a Registered Representative with Foster Financial Group. From 1996 through July 2000, Mr. Connors was the Controller and Chief Accounting Officer of Central and South West Corporation, or CSW; he had managerial responsibilities at three CSW operating companies and CSW Services. Prior to his employment at CSW, he was with Arthur Andersen working with energy and health care audit clients. Mr. Connors is a Certified Public Accountant.

 

James M. Richter was elected Vice President, Human Resources in June 2007. From January 2007 to the present, Mr. Richter served as the human resources manager at Regency GP LLC. From October 2005 to August 2006, Mr. Richter worked for USAA as Senior People Officer. From June 2001 to August 2005, Mr. Richter was employed by Argonaut Group, Inc. as Vice President, Human Resources. Prior to Argonaut Group, Mr. Richter held the position of Vice President, Human Resources for PG&E’s National Energy Group from August 1997 to March 2001. Prior to joining PG&E, Mr. Richter held various senior management positions at Aquila Energy and Honeywell, Inc.

 

Houston C. Ross III was elected Vice President of Financial Analysis and Planning of Regency GP LLC in March 2007. From February 2004 until the present, Mr. Ross served as Director of Financial Analysis and Planning for Regency Gas Services LP and its predecessor. From February 2003 until February 2004, Mr. Ross worked for Energy, Economic, and Environmental Consultants, Inc., as a Senior Economic Analyst specializing in natural gas royalty litigation support. From May 2002 until February 2003, Mr. Ross was an independent consultant. From May 1998 until May 2002, Mr. Ross worked for Engage Energy US LP and its corporate successor, El Paso Merchant Energy, trading electricity in the US markets from May 1999 until May 2002. Mr. Ross graduated from Rice University in 1998 with a B.S. in Mechanical Engineering.

 

Christofer D. Rozzell was elected Vice President of Corporate Development of Regency GP LLC in March 2007. From June 2005 to the present, Mr. Rozzell served in various roles at Regency GP LLC, most recently as Director of Corporate Development. From May 2001 to May 2005, Mr. Rozzell held managerial positions in the strategic planning and enterprise risk groups of TXU Corp. Prior to TXU Corp., Mr. Rozzell worked in the investment banking division of Bear, Stearns & Co. Inc., focusing on mergers and acquisitions advisory and financings across multiple industries.

 

Ramon Suarez, Jr. was elected Vice President, Treasurer of Regency GP LLC in March 2007. From February 2006 to the present, Mr. Suarez was Director of Treasury for Regency GP LLC. Mr. Suarez worked for CompUSA as Director of Corporate Finance from March 1999 to December 2005. Prior to March 1999, Mr. Suarez worked for Raytheon as a Director of Finance. Mr. Suarez has over 21 years of financial experience.

 

James F. Burgoyne is a Managing Director and global leader of GE Energy Financial Services’ Diversified Energy business, which invests in mid- and downstream oil & gas infrastructure, producing oil, gas and coal reserves, and in a broad range of energy infrastructure in Europe. Mr. Burgoyne has headed this commercial unit within GE Energy Financial Services since it was formed in 2004. Prior to this position, Mr. Burgoyne was a Managing Director with GE Structured Finance’s global energy team, where he was responsible for client development and the origination of business opportunities with US energy companies domestically and internationally. Before joining GE in 1997, Mr. Burgoyne was an Executive Director at SBC Warburg.

 

Daniel R. Castagnola is a Managing Director at GE Energy Financial Services and is responsible for a team of professionals investing in North America. Additionally, Mr. Castagnola leads all equity origination efforts for GE Energy Financial Services in Latin America. Mr. Castagnola joined GE in 2002. Mr. Castagnola serves as a director of Port Berre, LLC, a gas storage company, and Cash Creek LLC, a coal gasification company. Prior to joining GE, Mr. Castagnola worked for nine years at Enron Corp. in its international division and three years at KPMG.

 

S-21 

 

Management

 

A. Dean Fuller was elected to the Board of Directors of Regency GP LLC on November 14, 2005. Having sold in 1993 a company he co-founded, Mr. Fuller became President and Chief Executive Officer of Transok, Inc., the natural gas pipeline subsidiary of Central and South West Corporation, until its sale in 1996. Mr. Fuller continued to manage the fuels and gas marketing function of CSW until late 2000 at which time he became Senior Vice President of the midstream business of Aquila, Inc. At the time of the acquisition of Aquila’s midstream business by Energy Transfer, Mr. Fuller continued to manage those assets as Senior Vice President, and served as President of Oasis Pipeline Company after its acquisition by Energy Transfer. Mr. Fuller resigned his positions with Energy Transfer in August 2004.

 

Paul J. Halas was elected to the Board of Directors of Regency GP LLC in June 2007, at the time of the change in ownership of our General Partner. From June 2006 to the present, Mr. Halas has served as a Managing Director and General Counsel of GE EFS. Mr. Halas served as the Senior Vice President Business Development at the National Grid USA Service Company Inc. from May 2005 to June 2006. From August 2003 to May 2005, Mr. Halas served as the President of GridAmerica LLC (Independent Electric Transmission Company, subsidiary of National Grid USA). He also served as Senior VP & General Counsel of GridAmerica LLC from May 2002 to August 2003. Prior to joining GridAmerica LLC, he held positions at Ropes & Gray, Oak Industries Inc., Timex Group Limited and All Energy Marketing Company LLC, a subsidiary of New England Electric System.

 

Mark T. Mellana is a Managing Director at GE Energy Financial Services, and has been with the firm since 1999. Mr. Mellana has held various positions at GE Energy Financial Services and is currently a Managing Director—Operations and Development responsible for equity and development investments. Prior to joining GE, Mr. Mellana worked for the unregulated subsidiary of GPU, Inc. as the Director of Finance, Director of Mergers and Acquisitions and the Director of New Business Development. Mr. Mellana serves on a number of boards, including those of Source Gas LLC and Bobcat Gas Storage LLC.

 

Brian P. Ward is Managing Director and Chief Risk Officer for GE Energy Financial Services. In this role, he is responsible for underwriting and portfolio risk management for GE EFS’s domestic and international assets. He has held this position since January 2004. Immediately prior to joining this unit, Mr. Ward served as Quality Leader for GE Structured Finance, the predecessor business of GE Energy Financial Services. Mr. Ward has worked for GE for more than 25 years. He has held a number of management roles in Risk, Finance and Business Development in a variety of industries and regions.

 

J. Otis Winters was elected to the Board of Directors of Regency GP LLC on November 14, 2005. The following are exemplary of Mr. Winters’ extensive business experience: Vice President of Warren American Oil Company from 1964 to 1965; President and a director of Educational Development Corporation from 1966 to 1973; Executive Vice President and a director of The Williams Companies, Inc. from 1973 to 1977; Executive Vice President and a director of First National Bank of Tulsa from 1978 to 1979; President and a director of Avanti Energy Corporation from 1980 to 1987; Managing Director of Mason Best Company from 1988 to 1989; Chairman, director and co-founder of the PWS Group from 1990 to 2000 and from 2001 to date Chairman and Chief Executive Officer of Oriole Oil Company. Mr. Winters has served on the board of directors of 20 publicly owned corporations, including Alton Box Board Company, AMFM, Inc., AMX Corporation, Dynegy, Inc., Liberty Bancorp., Inc., Tidel Engineering, Inc., Trident NGL, Inc. and Walden Residential Properties, Inc.

 

 S-22

 

The tax consequences to you of an investment in our common units will depend in part on your own tax circumstances. For a discussion of the principal federal income tax considerations associated with our operations and the purchase, ownership and disposition of our common units, please read “Material Tax Considerations” in the accompanying prospectus. You are urged to consult with your own tax advisor about the federal, state, local and foreign tax consequences peculiar to your circumstances.

 

The anticipated after-tax economic benefit of an investment in our common units depends largely on our being treated as a partnership for federal income tax purposes. We have not requested, and do not plan to request, a ruling from the IRS on this or any other tax matter affecting us.

 

If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate, which is currently a maximum of 35%, and would likely pay state income tax at varying rates. Distributions to you would generally be taxed again as corporate distributions, and no income, gains, losses or deductions would flow through to you. Because a tax would be imposed upon us as a corporation, our cash available for distribution to you would be substantially reduced. Therefore, treatment of us as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to the unitholders, likely causing a substantial reduction in the value of our common units.

 

We will be considered to have been terminated for federal income tax purposes if, within a twelve-month period, there is a sale or exchange of 50% or more of the total interests in our capital and profits interests, which includes sales of our general partner’s interest, together with all other common units and subordinated units sold during such period. We believe, and will take the position, that the combination of the GP Acquisition and the public trading of our common units in the twelve months preceding the GP Acquisition resulted in our termination and immediate reconstitution as a new partnership for federal income tax purposes on June 18, 2007. Accordingly, our taxable year closed for all existing unitholders. We were required to make new tax elections after the termination, including a new election under Section 754 of the Internal Revenue Code. Moreover, because our termination results in a significant deferral to unitholders of depreciation deductions allowable in computing taxable income this year, you will be allocated an increased amount of federal taxable income for this year as a percentage of the cash distributed to you with respect to that period.

 

We estimate that, taking into account the tax termination described above, if you purchase common units in this offering and own them through December 31, 2010, then you will be allocated, on a cumulative basis, an amount of federal taxable income for that period that will be 20% or less of the cash distributed with respect to that period. Thereafter, we anticipate that the ratio of allocable taxable income to cash distributions to the unitholders will increase. These estimates are based upon the assumption that gross income from operations will approximate the amount required to make the minimum quarterly distribution on all units and other assumptions with respect to capital expenditures, cash flow, net working capital and anticipated cash distributions. These estimates and assumptions are subject to, among other things, numerous business, economic, regulatory, competitive and political uncertainties beyond our control. Further, the estimates are based on current tax law and tax reporting positions that we will adopt and with which the IRS could disagree. Accordingly, we cannot assure you that these estimates will prove to be correct. The actual percentage of distributions that will constitute taxable income could be higher or lower than expected, and any differences could be material and could materially affect the value of the common units. For example, the ratio of allocable taxable

 

S-23 

 

Tax considerations

 

income to cash distributions to a purchaser of common units in this offering will be greater, and perhaps substantially greater, than our estimate with respect to the period described above if:

 

 

Ownership of common units by tax-exempt entities, regulated investment companies and non-U.S. investors raises issues unique to such persons. Please read “Tax Considerations—Tax-Exempt Organizations and Other Investors” in the accompanying prospectus.

 

 S-24

 

We are offering our common units described in this prospectus through the underwriters named below. UBS Securities LLC, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated are the representatives of the underwriters. Subject to the terms and conditions of an underwriting agreement, which will be filed as an exhibit to the registration statement, each of the underwriters has severally agreed to purchase the number of common units listed next to its name in the following table:

 

 

The underwriting agreement provides that the underwriters must buy all of the common units if they buy any of them. However, the underwriters are not required to take or pay for the common units covered by the underwriters’ option to purchase additional common units described below.

 

Our common units and the common units to be sold upon the exercise of the underwriters’ option to purchase additional common units, if any, are offered subject to a number of conditions, including:

 

 

We have been advised by the representatives that the underwriters intend to make a market in our common units, but that they are not obligated to do so and may discontinue making a market at any time without notice.

 

In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses electronically.

 

OPTION TO PURCHASE ADDITIONAL COMMON UNITS

 

We have granted the underwriters an option to buy up to an aggregate 1,500,000 additional common units. This option may be exercised if the underwriters sell more than 10,000,000 common units in connection with this offering. The underwriters have 30 days from the date of this prospectus to exercise this option. If the underwriters exercise this option, they will each purchase additional common units approximately in proportion to the amounts specified in the table above.

 

COMMISSIONS AND DISCOUNTS

 

Common units sold by the underwriters to the public will initially be offered at the offering price set forth on the cover of this prospectus. Any common units sold by the underwriters to securities dealers may be sold at a discount of up to $      per common unit from the offering price. Any of these securities dealers may resell any common units purchased from the underwriters to other brokers or dealers at a discount of up to $      per common unit from the public offering price. If all the common units are not sold at the offering price, the representatives may change the offering price and the other selling terms. Sales of common units made outside of the United States may be made by affiliates of the

 

S-25 

 

Underwriting

 

underwriters. Upon execution of the underwriting agreement, the underwriters will be obligated to purchase the common units at the prices and upon the terms stated therein, and, as a result, will thereafter bear any risk associated with changing the offering price to the public or other selling terms.

 

The following table shows the per unit and total underwriting discounts and commissions we will pay to the underwriters assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional 1,500,000 units.

 

 

We estimate that the total expenses of this offering payable by us, not including the underwriting discounts and commissions, will be approximately $1.5 million.

 

INDEMNIFICATION

 

We and certain of our affiliates have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, and to contribute to payments that may be required to be made in respect of these liabilities. If we are unable to provide this indemnification, we will contribute to payments the underwriters may be required to make in respect of those liabilities.

 

LOCK-UP AGREEMENTS

 

We, our subsidiaries, our General Partner and its affiliates, including the executive officers and directors of our General Partner, have entered into lock-up agreements with the underwriters. Under these agreements, we and each of the these persons may not, without the prior written approval of UBS Securities LLC, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated, offer, sell, contract to sell or otherwise dispose of or hedge our common units or securities convertible into or exchangeable for our common units, enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common units, make any demand for or exercise any right or file or cause to be filed a registration statement with respect to the registration of any common units or securities convertible, exercisable or exchangeable into common units or any of our other securities or publicly disclose the intention to do any of the foregoing, provided that the foregoing restrictions do not apply to sales made by certain executive officers of our Managing General Partner in connection with pre-existing contractual obligations to acquire an indirect ownership interest in our Managing General Partner and the General Partner and the sale by GE EFS or its affiliates of certain subordinated units to certain executive officers of our Managing General Partner. These restrictions will be in effect for a period of 90 days after the date of this prospectus. The lock-up period will be extended under certain circumstances where we release, or pre-announce a release of our earnings or announce material news or a material event during the 17 days before or 16 days after the termination of the 90-day period in which case the restrictions described will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the materials news or material event.

 

At any time and without public notice, UBS Securities LLC, Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated may in their discretion, release all or some of the securities from these lock-up agreements.

 

 S-26

 

Underwriting

 

PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS

 

In connection with this offering, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our common units including:

 

 

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our common units while this offering is in progress. These transactions may also include making short sales of our common units, which involves the sale by the underwriters of a greater number of common units than they are required to purchase in this offering, and purchasing common units on the open market to cover positions created by short sales. Short sales may be “covered” shorts, which are short positions in an amount not greater than the underwriters’ option to purchase additional common units referred to above, or may be “naked” shorts, which are short positions in excess of that amount.

 

The underwriters may close out any covered short position by either exercising their option to purchase additional common units, in whole or in part, or by purchasing common units in the open market. In making this determination, the underwriters will consider, among other things, the price of common units available for purchase in the open market as compared to the price at which they may purchase common units through their option to purchase additional common units.

 

Naked short sales are in excess of the underwriters’ option to purchase additional common units. The underwriters must close out any naked short position by purchasing common units in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common units in the open market that could adversely affect investors who purchased in this offering.

 

LISTING

 

Our common units are traded on the NASDAQ Global Select Market under the symbol “RGNC.”

 

AFFILIATIONS

 

The underwriters and their affiliates may from time to time in the future engage in transactions with us and perform services for us in the ordinary course of business. In addition, some of the underwriters have engaged in, and may in the future engage in, transactions with us and our predecessor and perform services for us in the ordinary course of their business. In particular, affiliates of UBS Securities LLC, J.P. Morgan Securities Inc., Credit Suisse Securities (USA) LLC and Wachovia Capital Markets LLC are lenders under Regency Gas Services LLC’s credit facilities. Morgan Stanley served as an advisor to us in connection with the GE Acquisition. Additionally, an affiliate of UBS Securities LLC is the counterparty to one of our interest rate swaps and an affiliate of J.P. Morgan Securities Inc. was a counterparty to some of our prior interest rate swaps.

 

NASD CONDUCT RULES

 

Because the National Association of Securities Dealers, Inc., or NASD, views the common units offered by this prospectus supplement as interests in a direct participation program, this offering is being made in compliance with Rule 2810 of the NASD’s Conduct Rules.

 

S-27 

 

Underwriting

 

Pursuant to a requirement by the NASD, the maximum commission or discount to be received by any NASD member or independent broker/dealer may not be greater than eight percent (8%) of the gross proceeds received by us for the sale of any securities being registered pursuant to SEC Rule 415 under the Securities Act of 1933.

 

ELECTRONIC DISTRIBUTION

 

A prospectus supplement in electronic format may be made available by one or more of the underwriters or their affiliates. The representatives may agree to allocate a number of common units to underwriters for sale to their online brokerage account holders. The representatives will allocate common units to underwriters that may make Internet distributions on the same basis as other allocations. In addition, common units may be sold by the underwriters to securities dealers who resell common units to online brokerage account holders.

 

Other than the prospectus supplement in electronic format, the information on any underwriter’s web site and any information contained in any other web site maintained by an underwriter is not part of the prospectus supplement or the registration statement of which this prospectus supplement forms a part, has not been approved and/or endorsed by us or any underwriter in its capacity as an underwriter and should not be relied upon by investors.

 

DISCRETIONARY SALES

 

The underwriters have informed us they do not intend to confirm sales to discretionary accounts that exceed 5% of the total number of units offered by them.

 

 S-28

 

The validity of the common units will be passed upon for us by Vinson & Elkins L.L.P., Houston, Texas. Certain legal matters in connection with the common units offered hereby will be passed upon for the underwriters by Andrews Kurth LLP, Houston, Texas.

 

The (1) consolidated financial statements of Regency Energy Partners LP and subsidiaries and (2) the consolidated balance sheet of Regency GP LP incorporated in this prospectus supplement by reference from Regency Energy Partners LP’s Annual Report on Form 10-K have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference, and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

 

The consolidated financial statements of Pueblo Midstream Gas Corporation and subsidiary as of and for the year ended December 31, 2006 incorporated in this prospectus supplement by reference from the Regency Energy Partners LP’s Current Report on Form 8-K dated May 10, 2007 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

 

S-29 

 

Some of this information in this prospectus supplement and the documents that we have incorporated herein by reference may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Statements using words such as “anticipate,” “believe,” “intend,” “project,” “plan,” “expect,” “continue,” “estimate,” “goal,” “forecast,” “may” or similar expressions help identify forward-looking statements. Although we believe our forward-looking statements are based on reasonable assumptions and current expectations and projections about future events, we cannot give assurances that such expectations will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions including the following:

 

 

If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may differ materially from those anticipated, estimated, projected or expected.

 

Each forward-looking statement speaks only as of the date of the particular statement and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this prospectus supplement and the documents that we have incorporated by reference. We will not update these statements unless the securities laws require us to do so.

 

 S-30

 

We file annual, quarterly and current reports and other information with the SEC. You may read and copy any document we file with the SEC at the principal offices of the SEC located at Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such materials can be obtained by mail at prescribed rates from the Public Reference Room of the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information about the operation of the Public Reference Room. Materials also may be obtained from the SEC’s web site (http://www.sec.gov), which contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC.

 

We “incorporate by reference” information into this prospectus supplement, which means that we disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus supplement, except for any information superseded by information contained expressly in this prospectus supplement, and the information we file later with the SEC will automatically supersede this information. You should not assume that the information in this prospectus supplement is current as of any date other than the date on the front page of this prospectus supplement.

 

Any information that we file under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, and that is deemed “filed” with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below:

 

 

You may request a copy of these filings at no cost, by making written or telephone requests for such copies to:

 

Regency Energy Partners LP
Investor Relations
1700 Pacific Avenue, Suite 2900
Dallas, Texas 75201
(214) 750-1771

 

You should rely only on the information incorporated by reference or provided in this prospectus supplement. If information in incorporated documents conflicts with information in this prospectus supplement, you should rely on the most recent information. If information in an incorporated document conflicts with information in another incorporated document, you should rely on the most recent incorporated document. You should not assume that the information in this prospectus supplement or any document incorporated by reference is accurate as of any date other than the date of those documents. We have not authorized anyone else to provide you with any information.

 

S-31 

 

Prospectus

 

$691,322,449

 

Regency Energy Partners LP

Regency Energy Finance Corp.

 

 

Common Units

 

Debt Securities

 

 

We may offer, from time to time, in one or more series, the following securities under this prospectus:

 

 

Regency Energy Finance Corp. may act as co-issuer of the debt securities, and all other direct or indirect subsidiaries of Regency Energy Partners LP, other than “minor” subsidiaries as such item is interpreted in the securities regulation governing financial reporting for guarantors, may guarantee the debt securities.

 

Our common units are listed on the Nasdaq Stock Market LLC under the symbol “RGNC.” We will provide information in the prospectus supplement for the trading market, if any, for any debt securities we may offer.

 

We may offer and sell these securities to or through one or more underwriters, dealers and agents, or directly to purchasers, on a continuous or delayed basis. This prospectus describes the general terms of these securities. The specific terms of any securities and the specific manner in which we will offer them will be included in a supplement to this prospectus relating to that offering.

 

You should carefully read this prospectus and any prospectus supplement before you invest. You also should read the documents we have referred you to in the “Where You Can Find More Information” section of this prospectus for information on us and our financial statements. This prospectus may not be used to consummate sales of securities unless accompanied by a prospectus supplement.

 

Investing in our securities involves risks. Limited partnerships are inherently different from corporations. You should carefully consider the risk factors beginning on page 4 of this prospectus and in the applicable prospectus supplement before you make an investment in our securities.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is July 23, 2007.

In making your investment decision, you should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with any other information. If anyone provides you with different or inconsistent information, you should not rely on it.

 

You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus. You should not assume that the information contained in the documents incorporated by reference in this prospectus is accurate as of any date other than the respective dates of those documents. Our business, financial condition, results of operations and prospects may have changed since those dates.

 

Table of Contents

 

 

ABOUT THIS PROSPECTUS

 

REGENCY ENERGY PARTNERS LP

	•	Gathering and Processing:  in which we provide “wellhead-to-market” services to producers of natural gas, which include transporting raw natural gas from the wellhead through gathering systems, treating to remove impurities such as hydrogen sulfide and carbon dioxide, processing raw natural gas to separate natural gas liquids, or NGLs, from the raw natural gas and selling or delivering the pipeline-quality natural gas and NGLs to various markets and pipeline systems; and

	•	Transportation:  in which we deliver natural gas from northwest Louisiana to more favorable markets in northeast Louisiana through our 320-mile Regency Intrastate Pipeline system.

 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

	•	changes in laws and regulations impacting the gathering and processing industry;
	•	the level of creditworthiness of our counterparties;
	•	our ability to access the debt and equity markets;
	•	our use of derivative financial instruments to hedge commodity and interest rate risks;
	•	the amount of collateral required to be posted from time to time in our transactions;
	•	changes in commodity prices, interest rates, demand for our services;
	•	weather and other natural phenomena;