We’re at the stage of the Energy Transfer Equity (NYSE: ETE) drama where if CEO Kelcy Warren cured the common cold at no charge people would still question his motives.

A lot of that is predictable fallout from the 81% drop in the share price over the last nine months.

But it certainly isn’t helping matters that Energy Transfer’s former chief financial officer, the one fired without a public explanation and now suing his former employer for breach of contract, was reportedly lobbying Williams investors against the merger with Energy Transfer while still employed by the partnership.

Or that Energy Transfer’s management issued itself convertible units over Williams’ objections under terms that appear to shield it from some of the near-term risks facing its public unitholders.

Investor confidence is the most precious resource for any equity promoter, as SunEdison (NYSE: SUNE) can testify. And Energy Transfer’s reservoir of trust is at a very low ebb, as reflected in its shrunken valuation.

The upside here is immense, because as energy markets normalize and the uncertainty related to the troubled Williams merger resolves, the long-term value of this leading midstream franchise should start to matter once again.  But the financial strains exacerbated by the $6 billion cash component of the Williams acquisition price are very real, and until they abate the distribution and the equity’s near-term prospects will remain in jeopardy.

The insider deal unveiled last week sought to address those very strains, by allowing ETE unitholders to defer 60% of the current distribution for just over two years, recouping the foregone cash in May 2018 in the form of additional ETE equity, priced at $6.56 per unit based on 95% of recent market valuation.

At first glance, this looks like a reasonable effort to address worries that borrowing the additional $6 billion will saddle ETE with untenable leverage. If every ETE unitholder could take the deal it would save the partnership $732 million annually in deferred distributions.

Unfortunately, every unitholder couldn’t take the deal, because Williams refused to sign off, as it needed to do to permit a public offering. As a result ETE placed the deal privately with a select group of insiders and other unitholders qualified as accredited investors and representing 31.5% of its equity, including the 18% held by Warren.

Instead of the $732 million if everyone could have signed up and had, the annual savings go down to just $230 million.

It’s not hard to see why Williams would refuse to swallow this poison pill (typically the resort of the merger quarry rather than merger hunter.) The terms of the convertible offering would allow holders of the units to keep collecting the full current distribution in cash and deferred stock even if the distribution on the common units were cut or eliminated sometime in the next two years.

Yet, in addition to the $6 billion in cash, Williams shareholders have been promised tracking stock paying out the same distributions as ETE and accounting for 52% of the merged company’s equity. They would not be protected against a distribution cut with deferred stock as ETE’s current shareholders would have been, had Williams given its approval.

The fact that ETE insiders have awarded themselves such protection over objections from Williams might provide them with some leverage (the good kind) in any last-minute talks seeking to modify merger terms. The implied threat is that the large cash component of the purchase price could very well force ETE to cut its distribution, further discounting the equity Williams shareholders would receive while shielding Warren and other ETE insiders.

Unfortunately, the decision to proceed with a private placement after Williams blocked the public offering turned that threat and that conflict of interest against ETE’s public unitholders as well, at a time when they really didn’t need any more reasons to be nervous.

Which in turn renders the threat hollow, even if ETE might be hoping that Williams shareholders don’t see it that way.

And that’s because, in the event ETE did cut its distribution while shielding insiders from the action’s full effect, the capital losses would dwarf the relative advantage claimed by insiders. And if ETE’s own chart doesn’t make that obvious enough for Warren he need only consult SunEdison’s to see what happens when investors come to believe a stock promoter means  only to exploit them.

I believe Warren is smarter and better than that. But the fine print of last week’s offering isn’t pretty, and the sooner the CEO clarifies that all shareholders will be offered similar terms before any distribution cut, the better.

Because while the ETE/WMB soap opera played on last week energy prices continued to firm, offering hope that midstream investors will not obsess over worst-case scenarios forever. The partnership controls extremely valuable assets that produce plenty of cash flow now, with the potential for much more within a couple of years whether or not the Williams deal closes.

Energy Transfer also has other options for raising some of the cash due Williams shareholders, including the Sunoco (NYSE: SUN) filling stations MLP that it reportedly shopped in the recent past.

And although the merger agreement is airtight, Energy Transfer could still choose to break it and take its chances in court, as other regretful buyers have done in the past with mixed but generally not disastrous results.

Making the deal only to cut the distribution for everyone but the CEO and other insiders truly seems like the nuclear option.

Mutually assured destruction kept the peace throughout the Cold War, so perhaps it will work out for Warren, ETE and Williams.

But we are all justified in feeling a little more nervous as a result, and in reviewing our ETE and WMB positions one more time to make sure we’re not dangerously overexposed.

What we don’t want to do is to forget how cheap the equity already is, and the considerable incentives Warren and other insiders have not to do anything that would sink it further.

ETE remains the #2 Best Buy below $15 in the Growth portfolio; WMB remains a Growth buy below $20.