Former Energy Transfer Equity LP (ETE) CFO Jamie Welch is suing his old company for breach of contract, asserting in a court filing that, among other things, the master limited partnership provided “no reasonable explanation for his termination” and that his ouster “was motivated by an agenda unrelated to Mr. Welch’s performance.”
The lawsuit, filed in district court in Dallas County, TX, last week, comes amid uncertainty over Energy Transfer’s planned merger with The Williams Companies (WMB) (see Daily GPI, Sept. 28, 2015), a deal announced while Welch was still ETE’s CFO and which he has been credited with helping to orchestrate.
After the Dallas, TX-based ETE disclosed last month that it was replacing Welch with current CFO Thomas Long, shares/units of ETE and Energy Transfer Partners, as well as those of WMB and Williams Partners LP, fell sharply in the following trading day amid uncertainty over how it would affect the merger (see Daily GPI, Feb. 8).
More recently, news reports citing unnamed sources suggested Welch is now trying to scuttle the $37.7 billion merger, which would require a $6 billion cash payout from ETE and has become less appealing as commodity prices have continued to languish. The companies’ stock prices have tumbled since the merger was first announced.
Welch’s lawsuit against ETE claims the company failed to live up to various commitments spelled out in the terms of his employment, including common units in the company and an interest in the ETE-backed Lake Charles LNG (liquefied natural gas) project. The suit claims Welch was promised an interest in the Lake Charles, LA, facility and that this served as incentive for him to “[accept] employment and [perform] the ongoing role of quarterbacking” the project.
“Recognizing the critical role Mr. Welch has played in this project over the last four years, ETE has asked Mr. Welch to continue to provide consulting services for Lake Charles LNG but without respecting its obligation to grant him his stake in the project,” according to the suit.
Management for ETE and affiliate Energy Transfer Partners LP touched on the Williams merger briefly during a joint earnings call last month, but they declined to take any questions from analysts regarding the deal (see Daily GPI, Feb. 25).
During the call, ETE CEO Kelcy Warren was also asked about the CFO change, saying only that “to be respectful to Jamie, I’ll keep this to a minimum, and we talked to many, many that are on this call. Jamie is a very talented guy, but the decision was made by me that we needed to make a move, and we did. And Tom Long is now our CFO.”
A spokeswoman for ETE did not respond to a request for comment Monday.
The ETE family of companies operates roughly 71,000 miles of natural gas, natural gas liquids, refined products and crude oil pipelines in the United States. Williams, headquartered in Tulsa, OK, owns a range of midstream gathering and processing assets, as well as interstate natural gas pipelines. Its preeminent asset is the 10.9 Bcf/d Transco pipeline, which connects the Gulf of Mexico to the Northeast.