DALLAS and HOUSTON, Nov. 16,
2015 /PRNewswire/ -- Energy Transfer Partners, L.P. (NYSE:
ETP) and Sunoco LP (NYSE: SUN) announced today the dropdown to SUN
of the remaining 68.42% interest in Sunoco, LLC and 100% interest
in the legacy Sunoco retail business for approximately $2.226 billion. The transaction will be effective
as of January 1, 2016 and is expected
to close in February 2016.
SUN will pay to ETP approximately $2.2
billion in cash (including the expected value of working
capital) and will issue to ETP approximately 5.7 million SUN common
units valued at approximately $194
million based on the five-day volume-weighted average price
of SUN's common units as of November 13,
2015. Pro forma for the dropdown transaction and related
equity private placement, ETP will remain the largest unitholder of
SUN with an approximate 46% LP interest , reflecting ETP's
continued confidence in SUN's business and future growth
prospects.
The timing of this dropdown transaction is driven by the view
that accelerating the dropdown of the remaining retail marketing
and wholesale fuel assets to SUN was in the best interest of all
parties. SUN expects that, following the completion of this
transaction, it will not need to raise any additional equity
financing in 2016. The transaction is also expected to be
credit neutral to SUN and to be accretive to distributable cash
flow and expected distributions per unit for SUN in 2016 and
thereafter.
This transaction will complete SUN's transformation into one of
the leading wholesale fuel and retail marketing platforms in
the United States with tremendous
geographic scale and a unique diversity of business drivers. With
the completion of the dropdown program, SUN will be able to focus
on a broad range of opportunities to grow via third-party
acquisitions and capital projects. The strong growth in EBITDA at
Susser Holdings Corporation, which was contributed to SUN earlier
this year, and the legacy Sunoco retail business creates a
favorable runway for increasing distributable cash flow beginning
in 2016 and into 2017.
For ETP, this transaction is expected to be breakeven to
distributable cash flow for 2016 and beyond and significantly
reduces the amount of equity funding for ETP's 2016 capital
program. In addition, the SUN units ETP will receive in this
transaction have a strong distribution growth profile and represent
an attractive investment for ETP. The upfront cash helps fund ETP's
2016 capital program and reduces the remaining equity required by
ETP for 2016 to a modest amount that will be issued under its
at-the-market program or through non-core asset monetization
proceeds. The ability to pre-fund ETP's capital needs, reduce its
equity issuance requirements and retain an attractive LP investment
in SUN results in an opportunity that is compelling for ETP.
A significant portion of the consideration for the transaction
will be provided by a $2.035 billion
term loan due October 2019 fully
underwritten by Credit Suisse, Bank of America Merrill Lynch,
Compass Bank, Mizuho Bank and
Toronto Dominion. The terms of the term loan will substantially
mirror SUN's existing $1.5 billion
revolving credit facility. The pricing of the term loan is LIBOR +
250 bps (with stepdowns in pricing tied to Debt/EBITDA levels at
SUN).
A group of private investors (for $685.5
million) and ETE (for $64.5
million) have also fully committed to purchase $750 million of SUN common units in an
unregistered private placement, at a gross price of $31.00 per unit, prior to adjustments. The
private placement is expected to close and fund in early
December 2015, with the exception of
ETE's portion, which will fund at the closing of the dropdown
transaction. The proceeds from the private placement will be used
to repay borrowings under the revolving credit facility and for
general partnership purposes.
Sunoco, LLC distributes motor fuels across more than 26 states
in the east, midwest and southeast regions of the United States to:
- Approximately 860 Sunoco-branded dealer locations under
long-term fuel supply agreements.
- Other distributors of Sunoco-branded fuel that supply 3,700
third-party retail fuel outlets.
- Approximately 400 other commercial customers under short-term
contracts.
The fuel sold by Sunoco's retail business is supplied by Sunoco,
LLC at 438 company-operated Sunoco and APlus branded convenience
stores and other retail fuel outlets across the country.
All of the income from the Sunoco retail assets will be
non-qualifying income to SUN and therefore those assets will be
immediately contributed to SUN's wholly owned corporate subsidiary,
Susser Petroleum Property Co. LLC ("PropCo"). SUN anticipates that
cash taxes at PropCo going forward will remain minimal.
The dropdown transaction is expected to close in February 2016, subject to customary closing
conditions.
Tudor, Pickering, Holt & Co. acted as financial advisor to
the ETP conflicts committee. Akin Gump Strauss Hauer & Feld LLP
acted as legal advisor to ETP and Richards Layton & Finger,
P.A. acted as legal advisor to the ETP conflicts committee.
Perella Weinberg Partners acted as financial advisor to the SUN
special committee. Andrews Kurth LLP acted as legal advisor to SUN
and Potter Anderson & Corroon acted as legal advisor to the SUN
special committee.
For additional information on the transaction and pro forma
financial information, please refer to filings made by SUN and ETP
on Form 8-K with the U.S. Securities and Exchange
Commission.
Sunoco LP and Energy Transfer Partners management will hold a
conference today at 7:30 a.m. CT
(8:30 a.m. ET) to discuss the
dropdown transaction. To participate, dial 412-902-0003
approximately 10 minutes early and ask for the Sunoco LP / Energy
Transfer Partners conference call. The call will also be accessible
live and for later replay via webcast in the Investor Relations
sections of the partnerships' websites at www.SunocoLP.com and
www.energytransfer.com under Presentations. A presentation of
the dropdown will be posted to the partnerships' Investor Relations
sections prior to today's call. A telephone replay will be
available through November 30 by
calling 201-612-7415 and using the access code 13625133.
Sunoco LP will make an investor presentation today at
3:45 p.m. CT as part of the Energy
Transfer family of partnerships' Analyst Meeting in Dallas.
The accompanying materials to the presentation will be available
shortly before the presentation begins on the partnership's
Investor Relations website at www.SunocoLP.com. Energy Transfer
Partners will make its presentation tomorrow at 9:00 a.m. CT. Prior to its presentation, ETP will
post its prepared materials on its home page and Investor Relations
section at www.energytransfer.com under Presentations &
Webcasts.
Sunoco LP (NYSE: SUN) is a master limited partnership
that operates more than 850 convenience stores and retail fuel
sites and distributes motor fuel to convenience stores, independent
dealers, commercial customers and distributors located in 30 states
at approximately 6,800 sites, both directly as well as through its
31.58 percent interest in Sunoco, LLC, in partnership with an
affiliate of Energy Transfer Partners, L.P. (NYSE: ETP).
SUN's general partner is owned by Energy Transfer
Equity, L.P. (NYSE: ETE). For more information, visit
the Sunoco LP website at www.SunocoLP.com.
Energy Transfer Partners, L.P. (NYSE:
ETP) is a master limited partnership owning and operating
one of the largest and most diversified portfolios of energy assets
in the United States. ETP's
subsidiaries include Panhandle Eastern Pipe Line Company,
LP (the successor of Southern Union Company)
and Lone Star NGL LLC, which owns and operates natural gas
liquids storage, fractionation and transportation assets. In total,
ETP currently owns and operates more than 62,500 miles of natural
gas and natural gas liquids pipelines. ETP also owns the general
partner, 100% of the incentive distribution rights, and
approximately 67.1 million common units in Sunoco Logistics
Partners L.P. (NYSE: SXL), which operates a geographically
diverse portfolio of crude oil and refined products pipelines,
terminalling and crude oil acquisition and marketing assets.
Additionally, ETP owns fuel distribution and retail marketing
assets and approximately 50.8% of the limited partner interests
in Sunoco LP (NYSE: SUN), a wholesale fuel distributor and
convenience store operator. ETP's general partner is owned
by Energy Transfer Equity, L.P. (NYSE: ETE). For more
information, visit the Energy Transfer Partners, L.P. web
site at www.energytransfer.com.
Energy Transfer Equity, L.P. (NYSE: ETE) is a
master limited partnership which owns the general partner and 100%
of the incentive distribution rights (IDRs) of Energy Transfer
Partners, L.P. (NYSE: ETP) and Sunoco LP(NYSE: SUN) and
approximately 2.6 million ETP Common Units, approximately 81.0
million ETP Class H Units, which track 90% of the underlying
economics of the general partner interest and the IDRs
of Sunoco Logistics Partners L.P. (NYSE: SXL), and 100
ETP Class I Units. On a consolidated basis, ETE's family of
companies owns and operates approximately 71,000 miles of natural
gas, natural gas liquids, refined products, and crude oil
pipelines. For more information, visit the Energy Transfer
Equity, L.P. web site at www.energytransfer.com.
Forward-Looking Statements
This news release contains "forward-looking statements" which
may describe SUN's and/or ETP's objectives, expected results of
operations, targets, plans, strategies, costs, anticipated capital
expenditures, potential acquisitions, new store openings and/or new
dealer locations, management's expectations, beliefs or goals
regarding the proposed dropdown transaction between ETP and SUN,
the expected timing of the dropdown transaction and related
financing and the future financial and/or operating impact of the
dropdown transaction, including the anticipated integration process
and any related benefits, opportunities or synergies. These
statements are based on current plans, expectations and projections
and involve a number of risks and uncertainties that could cause
actual results and events to vary materially, including but not
limited to: execution, integration, environmental and other risks
related to acquisitions (including the Sunoco retail business
drop-down) and the partnerships' overall business strategy;
competitive pressures from convenience stores, gasoline stations,
other non-traditional retailers and other wholesale fuel
distributors located in SUN's markets; dangers inherent in storing
and transporting motor fuel; SUN's ability to renew or renegotiate
long-term distribution contracts with customers; changes in the
price of and demand for motor fuel; changing consumer preferences
for alternative fuel sources or improvement in fuel efficiency;
competition in the wholesale motor fuel distribution industry;
seasonal trends; severe or unfavorable weather conditions;
increased costs; environmental laws and regulations; dangers
inherent in the storage of motor fuel; reliance on suppliers to
provide trade credit terms to adequately fund ongoing operations;
acts of war and terrorism; dependence on information technology
systems; SUN's and ETP's ability to consummate any proposed
transactions (including the dropdown transaction), or to satisfy
the conditions precedent to the consummation of such transactions
(including the dropdown transaction); successful development and
execution of integration plans; ability to realize anticipated
synergies or cost-savings and the potential impact of the
transactions on employee, supplier, customer and competitor
relationships; and other unforeseen factors. For a full discussion
of these and other risks and uncertainties, refer to the "Risk
Factors" section of SUN's and ETP's most recently filed annual
reports on Form 10-K. These forward-looking statements are based on
and include the partnerships' estimates as of the date hereof.
Subsequent events and market developments could cause the
partnerships' estimates to change. While the partnerships may elect
to update these forward-looking statements at some point in the
future, they specifically disclaim any obligation to do so, even if
new information becomes available, except as may be required by
applicable law.
Contacts
Sunoco LP
Scott Grischow, Director –
Investor Relations and Treasury
(361) 884-2463, scott.grischow@sunoco.com
Dennard-Lascar Associates
Anne Pearson
(210) 408-6321, apearson@dennardlascar.com
Energy Transfer Partners, L.P.
Brent Ratliff, Vice President,
Investor Relations
(214) 981-0700, brent.ratliff@energytransfer.com
Lyndsay Hannah, Director of
Finance and Investor Relations
(214) 840-5477, lyndsay.hannah@energytransfer.com
Granado Communications
Vicki Granado
(214) 599-8785, vicki@granadopr.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/energy-transfer-partners-and-sunoco-lp-announce-approximately-2226-billion-dropdown-of-remaining-wholesale-fuel-and-retail-marketing-assets-300179012.html
SOURCE Energy Transfer Partners, L.P.; Sunoco LP