The following table sets forth the debt obligations of Southern Union and Panhandle at the dates indicated.


		December 31, 2011				December 31, 2010
		Carrying Amount		Fair Value		Carrying Amount		Fair Value

			(In thousands)

Long-Term Debt Obligations:

Southern Union:
7.60% Senior Notes due 2024		$	359,765	$	417,666	$	359,765	$	392,144
8.25% Senior Notes due 2029			300,000		386,112		300,000		332,922
7.24% to 9.44% First Mortgage Bonds
	due 2020 to 2027		19,500		23,439		19,500		21,473
7.20% Junior Subordinated Notes due 2066 (1)			600,000		546,480		600,000		609,743
Term Loan due 2013			250,000		251,854		250,000		249,915
Note Payable			7,746		7,746		8,297		8,297
			1,537,011		1,633,297		1,537,562		1,614,494

Panhandle:
6.05% Senior Notes due 2013			250,000		265,573		250,000		268,988
6.20% Senior Notes due 2017			300,000		340,494		300,000		322,893
8.125% Senior Notes due 2019			150,000		185,301		150,000		169,671
7.00% Senior Notes due 2029			66,305		75,128		66,305		69,911
7.00% Senior Notes due 2018			400,000		467,072		400,000		442,120
Term Loans due 2012			797,386		794,751		815,391		799,084
Net premiums on long-term debt			2,924		2,924		2,731		2,731
			1,966,615		2,131,243		1,984,427		2,075,398

Total Long-Term Debt Obligations			3,503,626		3,764,540		3,521,989		3,689,892

Credit Facilities			200,000		200,009		297,051		301,312

Total consolidated debt obligations			3,703,626	$	3,964,549		3,819,040	$	3,991,204
	Less current portion of long-term debt (2)		343,254				1,083
	Less short-term debt		200,000				297,051
Total long-term debt		$	3,160,372			$	3,520,906

The fair value of the Company's term loans and credit facilities as of December 31, 2011 and 2010 were determined using the market approach, which utilized reported recent loan transactions for parties of similar credit quality and remaining life, as there is no active secondary market for loans of these types and sizes.

The fair value of the Company's other long-term debt as of December 31, 2011 and 2010 was also determined using the market approach, which utilized observable market data to corroborate the estimated credit spreads and prices for the Company's non-bank long-term debt securities in the secondary market. Those valuations were based in part upon the reported trades of the Company's non-bank long-term debt securities where available and the actual trades of debt securities of similar credit quality and remaining life where no secondary market trades were reported for the Company's non-bank long-term debt securities.

Long-Term Debt. Southern Union has approximately $3.5 billion of long-term debt, including net premiums of $2.9 million, recorded at December 31, 2011, of which $343.3 million is current. Debt of $2.83 billion is at fixed rates ranging from 3.63 percent to 9.44 percent. Southern Union also has floating rate debt totaling $667.4 million, bearing an interest rate of 0.85 to 3.45 percent as of December 31, 2011.

As of December 31, 2011, the Company has scheduled long-term debt payments, excluding net premiums on debt, as follows:

Each note or bond is an obligation of Southern Union or a unit of Panhandle, as noted above. Panhandle's debt is non-recourse to Southern Union. All debts that are listed as debt of Southern Union are direct obligations of Southern Union. None of the Company's long-term debt is cross-collateralized and most of its long-term debt obligations contain cross-default provisions.

Junior Subordinated Notes. The Company has interest rate swap agreements that effectively fix the interest rate applicable to the floating rate on $525 million of the $600 million Junior Subordinated Notes due 2066 (Junior Subordinated Notes). See Note 11 – Derivative Instruments and Hedging Activities – Interest Rate Contracts – Interest Rate Swaps for more information regarding these swap agreements. The interest rate on the remaining notes is a variable rate based upon the three-month LIBOR rate plus 3.0175 percent. The balance of the variable rate portion of the Junior Subordinated Notes was $75 million at an effective interest rate of 3.45 percent at December 31, 2011. The balance and effective interest rate at February 17, 2012 were $75 million and 3.45 percent, respectively.

Term Loans. On August 3, 2010, the Company entered into an Amended and Restated $250 million Credit Agreement, maturing on August 3, 2013 (2010 Term Loan). The 2010 Term Loan bears interest at a rate of LIBOR plus 2.125 percent. The balance of the 2010 Term Loan was $250 million and $250 million at effective interest rates of 2.40 percent and 2.39 percent at December 31, 2011 and 2010, respectively. The balance and effective interest rate of the 2010 Term Loan at February 17, 2012 were $250 million and 2.38 percent, respectively.

On March 15, 2007, LNG Holdings, as borrower, and PEPL and Trunkline LNG, as guarantors, entered into a $455 million unsecured term loan facility due March 13, 2012 (2012 Term Loan). The interest rate under the 2012 Term Loan is a floating rate tied to LIBOR or the prime rate, at the Company's option, in addition to a margin based on the rating of PEPL's senior unsecured debt. LNG Holdings has entered into interest rate swap agreements that effectively fix the interest rate applicable to the 2012 Term Loan at 4.98 percent plus a credit spread of 0.625 percent, based upon PEPL's credit rating for its senior unsecured debt. The balance of the 2012 Term Loan was $455 million at December 31, 2011 and 2010. See Note 11 – Derivative Instruments and Hedging Activities – Interest Rate Swaps for information regarding interest rate swaps.

On June 29, 2007, LNG Holdings, as borrower, and PEPL and CrossCountry Citrus, LLC, as guarantors, entered into an amended and restated $465 million term loan facility (Amended Credit Agreement) due June 29, 2012, with an interest rate of LIBOR plus 55 basis points, based upon the current credit rating of PEPL's senior unsecured debt. The balance of the Amended Credit Agreement was $342.4 million and $360.4 million at effective interest rates of 0.85 and 0.81 percent at December 31, 2011 and 2010, respectively. The balance and effective interest rate of the Amended Credit Agreement at February 17, 2012 were $342.4 million and 0.82 percent, respectively.

Credit Facilities. During the second quarter of 2011, the Company entered into the Seventh Amended and Restated Revolving Credit Agreement with the banks named therein in the amount of $550 million (2011 Revolver). The 2011 Revolver is an amendment, restatement and refinancing of the Company's $550 million revolving credit facility, which was otherwise scheduled to mature on May 28, 2013. The 2011 Revolver will mature on May 20, 2016. Borrowings on the 2011 Revolver are available for the Company's working capital, other general corporate purposes and letter of credit requirements. The interest rate and commitment fee under the 2011 Revolver are calculated using a pricing grid, which is based upon the credit rating for the Company's senior unsecured notes. The annualized interest rate and commitment fee rate bases for the 2011 Revolver at December 31, 2011 were LIBOR, plus 162.5 basis points, and 25 basis points, respectively.

The Company's additional $25 million short-term committed credit facility was renewed in July 2011 for an additional 364-day period.

Balances of $200 million and $297.1 million were outstanding under the Company's credit facilities at effective interest rates of 1.88 and 3.02 percent at December 31, 2011 and 2010, respectively. The Company classifies its borrowings under the credit facilities as short-term debt as the individual borrowings are generally for periods of 15 to 180 days. At maturity, the Company may (i) retire the outstanding balance of each borrowing with available cash on hand and/or proceeds from a new borrowing, or (ii) at the Company's option, extend the borrowing's maturity date for up to an additional 90 days. As of February 17, 2012, there was a balance of $148.3 million outstanding under the Company's credit facilities at an average effective interest rate of 1.86 percent.

Restrictive Covenants. The Company is not party to any lending agreement that would accelerate the maturity date of any obligation due to a failure to maintain any specific credit rating, nor would a reduction in any credit rating, by itself, cause an event of default under any of the Company's lending agreements. Covenants exist in certain of the Company's debt agreements that require the Company to maintain a certain level of net worth, to meet certain debt to total capitalization ratios and to meet certain ratios of earnings before depreciation, interest and taxes to cash interest expense. A failure by the Company to satisfy any such covenant would give rise to an event of default under the associated debt, which could become immediately due and payable if the Company did not cure such default within any permitted cure period or if the Company did not obtain amendments, consents or waivers from its lenders with respect to such covenants.

The Company's restrictive covenants include restrictions on debt levels, restrictions on liens securing debt and guarantees, restrictions on mergers and on the sales of assets, capitalization requirements, dividend restrictions, cross default and cross-acceleration and prepayment of debt provisions. A breach of any of these covenants could result in acceleration of Southern Union's debt and other financial obligations and that of its subsidiaries. Under the current credit agreements, the significant debt covenants and cross defaults are as follows:

In addition to the above restrictions and default provisions, the Company and/or its subsidiaries are subject to a number of additional restrictions and covenants. These restrictions and covenants include limitations on additional debt at some of its subsidiaries; limitations on the use of proceeds from borrowing at some of its subsidiaries; limitations, in some cases, on transactions with its affiliates; limitations on the incurrence of liens; potential limitations on the abilities of some of its subsidiaries to declare and pay dividends and potential limitations on some of its subsidiaries to participate in the Company's cash management program; and limitations on the Company's ability to prepay debt.

Retirement of Debt Obligations. The Company refinanced LNG Holdings' $455 million term loan due March 13, 2012 on February 23, 2012 with an unsecured three-year term loan facility due February 23, 2015, with LNG Holdings as borrower and PEPL and Trunkline LNG as guarantors and a floating interest rate tied to LIBOR plus a margin based on the rating of PEPL's senior unsecured debt. The Company expects to retire the $465 million term loan due June 2012 ($342.4 million of which is outstanding at December 31, 2011) utilizing a portion of the $445 million in merger consideration to be received by Southern Union in connection with the Citrus Merger. Should the Citrus Merger not occur by the June 2012 maturity date, the Company would expect to refinance and/or extend the $465 million term loan, or alternatively the Company might choose to retire such debt upon maturity by utilizing some combination of cash flows from operations, draw downs under existing credit facilities and altering the timing of controllable expenditures, among other things. The Company reasonably believes, based on its investment grade credit ratings and general financial condition, successful historical access to capital and debt markets and market expectations regarding the Company's future earnings and cash flows, that it will be able to refinance and/or retire these obligations, as applicable, under acceptable terms prior to their maturity. There can be no assurance, however, that the Company will be able to achieve acceptable refinancing terms in any negotiation of new capital market debt or bank financings. Moreover, there can be no assurance the Company will be successful in its implementation of these refinancing and/or retirement plans and the Company's inability to do so could cause a material adverse effect on the Company's financial condition and liquidity.