SUN
Sunoco Lp
NYSE
8-K: Sunoco LP Issues $1.5 Billion in Senior Notes to Fund NuStar Merger
Sentiment:
Debt Offering Announcement
30 April 2024 4:45 PM
Sunoco LP has successfully completed a private offering of $1.5 billion in senior notes to finance its merger with NuStar Energy L.P.
Capital raise
Sunoco LP completed a private offering of $1.5 billion in senior notes.
The net proceeds will be used to repay NuStar's debt, redeem NuStar's preferred units, and cover offering expenses.
Summary
- Sunoco LP has issued $750 million in 7.000% senior notes due in 2029 and $750 million in 7.250% senior notes due in 2032.
- The net proceeds from the offering, approximately $1.485 billion, will be used to repay NuStar's debt, redeem NuStar's preferred units, and cover offering expenses.
- The notes are senior unsecured obligations, guaranteed by Sunoco's subsidiaries, and rank equally with other senior obligations.
- The notes are effectively subordinated to secured debt and structurally subordinated to non-guarantor subsidiary obligations.
- A special mandatory redemption at 100% of the issue price plus accrued interest is triggered if the NuStar merger doesn't close by April 22, 2025, or if Sunoco terminates the merger agreement.
- Sunoco has the option to redeem the notes at specified prices starting in 2026 for the 2029 notes and 2027 for the 2032 notes, or at a make-whole premium before those dates.
- A change of control event, followed by a ratings decline, allows noteholders to require Sunoco to repurchase their notes at 101% of the principal amount plus accrued interest.
Sentiment
Score: 7
Explanation: The document is a standard debt offering announcement, which is generally neutral. The terms of the notes are reasonable, and the special mandatory redemption clause provides some protection for investors. The sentiment is slightly positive due to the successful completion of the offering and the progress towards the NuStar merger.
Positives
- The offering provides Sunoco with substantial capital to complete the NuStar merger.
- The notes are senior unsecured obligations, providing a relatively high level of security for investors.
- The notes have a special mandatory redemption clause, which protects investors if the merger does not occur.
- The notes have optional redemption features, providing Sunoco with flexibility in managing its debt.
Negatives
- The notes are effectively subordinated to Sunoco's secured debt.
- The notes are structurally subordinated to the obligations of Sunoco's non-guarantor subsidiaries.
- The notes are subject to a special mandatory redemption if the NuStar merger does not close by April 22, 2025, which could be a negative for investors if the merger is expected to be beneficial.
Risks
- The NuStar merger may not be completed by the Outside Date, triggering a special mandatory redemption.
- The notes are subject to credit risk, as they are unsecured obligations of Sunoco.
- The notes are effectively subordinated to Sunoco's secured debt, which could reduce recovery in the event of default.
- The notes are structurally subordinated to the obligations of Sunoco's non-guarantor subsidiaries, which could reduce recovery in the event of default.
Future Outlook
The document outlines the terms of the notes and their relationship to the pending NuStar merger, including the special mandatory redemption clause if the merger does not close by April 22, 2025. It also details the optional redemption features and change of control provisions.
Industry Context
This announcement is typical for companies undertaking large mergers or acquisitions, as they often need to raise capital through debt offerings. The terms of the notes, including the interest rates and redemption features, are consistent with market conditions for similar types of debt instruments.
Comparison to Industry Standards
- The interest rates on the notes are within the typical range for senior unsecured debt of companies with similar credit profiles.
- The make-whole premium redemption feature is a common provision in corporate debt offerings.
- The change of control provision is standard in debt agreements to protect investors in the event of a significant ownership change.
- The special mandatory redemption clause is specific to the NuStar merger and is designed to protect investors if the merger does not occur.
Stakeholder Impact
- Shareholders: The offering provides capital for the NuStar merger, which could impact shareholder value.
- Creditors: The notes are senior unsecured obligations, ranking equally with other senior obligations.
- Employees: The merger could impact employees of both Sunoco and NuStar.
- Customers: The merger could impact the services and products offered by Sunoco.
- Suppliers: The merger could impact the relationships with suppliers of both Sunoco and NuStar.
Next Steps
- Sunoco will use the proceeds from the notes offering to complete the NuStar merger.
- Sunoco will make semi-annual interest payments on the notes starting November 1, 2024.
- Sunoco may redeem the notes at specified prices starting in 2026 for the 2029 notes and 2027 for the 2032 notes.
- Sunoco may be required to repurchase the notes in the event of a change of control.
Key Dates
- 2024-04-30: Date of the indenture and the closing of the private offering of senior notes.
- 2024-04-30: Date of the 8-K filing.
- 2024-11-01: First interest payment date for the notes.
- 2025-04-22: Outside date for the NuStar merger, triggering special mandatory redemption if not completed.
- 2026-05-01: Earliest date Sunoco can optionally redeem the 2029 notes at specified prices.
- 2027-05-01: Earliest date Sunoco can optionally redeem the 2032 notes at specified prices.
- 2029-05-01: Maturity date of the 2029 notes.
- 2032-05-01: Maturity date of the 2032 notes.
Keywords
senior notes, debt financing, NuStar merger, Sunoco LP, private offering, redemption, change of control, unsecured debt, guarantees
SUN
Sunoco Lp
NYSE
Sector: Energy
Filings with Classifications
Better than expected
29 May 2025 7:00 AM
Merger Announcement
- The transaction offers a 25% premium to Parkland shareholders based on recent trading prices.
- It provides flexible consideration options, including immediate cash liquidity and participation in future upside via SunocoCorp units.
- The deal is expected to generate significant annual run-rate synergies of US$250 million, indicating improved financial performance for the combined entity.
- The creation of SunocoCorp offers a more tax-efficient structure for non-U.S. and institutional investors, enhancing shareholder value.
Capital raise
29 May 2025 7:00 AM
Merger Announcement
- Committed bridge financing is in place for the cash portion of the acquisition.
Worse than expected
28 May 2025 9:29 PM
Acquisition Update
- The unaudited pro forma net income attributable to limited partners for the full year ended December 31, 2024, shows a loss of $(262) million, which is a negative financial outcome for the combined entity.
Capital raise
28 May 2025 9:29 PM
Acquisition Update
- Sunoco has secured a $2.65 billion 364-day bridge term loan to fund the cash consideration for the Parkland Acquisition.
- In connection with the Parkland Acquisition, Sunoco would issue $1 billion in preferred units.
- Sunoco would issue $1.7 billion in aggregate principal amount of senior notes for the Parkland Acquisition.
- SunocoCorp (a wholly-owned subsidiary of SunocoCorp) is expected to issue 51,442,494 common units to Parkland shareholders as part of the acquisition consideration.
Worse than expected
28 May 2025 9:25 PM
Acquisition Update
- The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024, shows a net loss attributable to limited partners of $(262) million, which is a negative financial outcome for the combined entity on a pro forma basis.
- The pro forma basic net income (loss) per limited partner unit for the year ended December 31, 2024, is also negative at $(1.40).
Capital raise
28 May 2025 9:25 PM
Acquisition Update
- Sunoco has secured a $2.65 billion 364-day bridge term loan to fund the proposed cash consideration for the Parkland Acquisition.
- In connection with the Parkland Acquisition, Sunoco would issue $1 billion in preferred units.
- In connection with the Parkland Acquisition, Sunoco would issue $1.7 billion aggregate principal amount of senior notes.
Worse than expected
8 May 2025 4:25 PM
Quarterly Report
- Net income decreased compared to the same period last year, primarily due to increased operating expenses, depreciation, and interest expense.
Capital raise
8 May 2025 4:25 PM
Quarterly Report
- Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration of the Parkland acquisition.
- The transaction is expected to be funded using cash on hand and amounts available under the Partnership's Credit Facility.
Capital raise
6 May 2025 8:50 AM
Merger Announcement
- The $2.6 billion cash consideration is supported by a fully committed bridge facility.
- Sunoco expects to permanently finance this through a combination of senior notes and preferred equity prior to close.
- The transaction includes the creation of SUNCorp, a new publicly traded vehicle, to support growth and attract a new investor base.
Better than expected
6 May 2025 7:12 AM
Earnings Release
- Adjusted EBITDA and Distributable Cash Flow were significantly higher than the same quarter last year.
Capital raise
5 May 2025 9:45 PM
Merger Announcement
- Sunoco has secured debt financing commitments of $7.55 billion to fund the acquisition.
- The transaction involves the issuance of new SUNCorp Units to Parkland shareholders.
Delay expected
5 May 2025 9:43 PM
Merger Announcement
- The Effective Time does not occur on or prior to February 4, 2026, or such later date as may be agreed to in writing by the parties (the Outside Date ) (provided that the Outside Date may be extended by either party for 90 days following February 4, 2026 if certain required regulatory approvals have not yet been obtained).
Capital raise
5 May 2025 9:21 AM
Merger Announcement
- Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration.
- The bridge loan is expected to be permanently financed through a combination of senior notes and a preferred equity offering prior to closing.
Capital raise
5 May 2025 8:36 AM
Merger Announcement
- Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration.
- The bridge facility is expected to be permanently financed through a combination of senior notes and a preferred equity offering prior to closing.
Capital raise
20 March 2025 5:03 PM
Debt Offering Announcement
- Sunoco LP is conducting a private offering of $1 billion in senior notes due 2033.
- The offering was upsized from an initial $750 million.
- The proceeds will be used to repay existing indebtedness.
Capital raise
20 March 2025 8:06 AM
Current Report on Form 8-K
- Sunoco LP announced a private offering of $750 million in senior notes due 2033.
- The company intends to use the net proceeds from the offering to repay indebtedness, including redeeming in full NuStar Logistics, L.P.'s 5.750% senior notes due 2025 and repaying a portion of the outstanding borrowings under Sunoco's revolving credit facility.
- The Notes Offering is not conditioned on the consummation of the acquisition of the German and Polish terminalling assets.
Capital raise
14 February 2025 1:59 PM
Annual Results
- The company has the ability to further incur additional debt under its Credit Facility and the indentures governing its senior notes.
- The company may issue debt or equity securities prior to that time as it deems prudent to provide liquidity for new capital projects or other partnership purposes.
Better than expected
11 February 2025 7:21 AM
Earnings Release
- The company's net income, Adjusted EBITDA, and Distributable Cash Flow all significantly increased compared to the previous year.
- The company is targeting a distribution growth rate of at least 5% for 2025, indicating confidence in future performance.
- The company anticipates strong Adjusted EBITDA growth in 2025.
Better than expected
27 January 2025 7:18 AM
Distribution Announcement
- The company announced a 1.25% increase in the quarterly distribution, which is better than the previous quarter.
- The company also announced a target of at least 5% distribution growth for 2025, which is a positive outlook for investors.
Worse than expected
7 November 2024 12:04 PM
Quarterly Report
- The company's net income decreased significantly due to unfavorable inventory valuation adjustments and increased expenses, indicating worse than expected results.
Worse than expected
6 November 2024 8:04 AM
Quarterly Report
- The net income decreased significantly from $272 million to $2 million year-over-year, indicating a substantial decline in profitability despite improvements in other areas.
Better than expected
8 August 2024 11:59 AM
Quarterly Report
- The company's net income and adjusted EBITDA were significantly better than the same period last year due to the gain on the West Texas sale and the positive impact of acquisitions.
Capital raise
8 August 2024 11:59 AM
Quarterly Report
- Sunoco issued $1.5 billion in senior notes in April 2024 to fund the NuStar acquisition and related transactions.
- The company may issue debt or equity securities prior to the end of 2024 as deemed prudent to provide liquidity for new capital projects or other partnership purposes.
Better than expected
7 August 2024 7:36 AM
Quarterly Report
- The company reported a record net income of $501 million, significantly higher than the $87 million reported in the same quarter last year.
- Adjusted EBITDA, excluding transaction-related expenses, was $400 million, exceeding the $250 million reported in the same quarter last year.
- Distributable Cash Flow, as adjusted, was $295 million, up from $175 million in the prior year's second quarter.
Better than expected
9 May 2024 11:56 AM
Quarterly Report
- Net income and Adjusted EBITDA both increased year-over-year, indicating better than expected financial performance.
- The company's motor fuel sales volume increased by 9%, demonstrating strong operational performance.
Capital raise
9 May 2024 11:56 AM
Quarterly Report
- The Partnership issued $750 million of 7.000% senior notes due 2029 and $750 million of 7.250% senior notes due 2032 in a private offering on April 30, 2024.
- The net proceeds from the offering were used to repay NuStar's debt, fund the redemption of NuStar's preferred units, and pay offering fees and expenses in connection with the merger.
Capital raise
8 May 2024 7:27 AM
Quarterly Report
- The company issued $1.5 billion in unsecured notes on April 30, 2024.
- The proceeds from this offering will be used to fund the repayment of NuStar's credit and receivables facilities, and redeem NuStar's preferred equity and subordinated notes.
Better than expected
8 May 2024 7:27 AM
Quarterly Report
- The company reported a record first quarter net income of $230 million, significantly higher than the $141 million reported in the same period last year.
- Adjusted EBITDA for the quarter was $242 million, up from $221 million in the first quarter of 2023.
- The company increased its full-year Adjusted EBITDA guidance to $1.46 billion to $1.52 billion.
Better than expected
3 May 2024 4:45 PM
Merger Announcement
- The acquisition is expected to be immediately accretive to distributable cash flow per LP unit, growing to greater than 10% accretion by the third year following close.
- The company also expects to realize at least $150 million of expense and commercial synergies and at least $50 million per year of additional cash flow from refinancing activity.
Capital raise
30 April 2024 4:47 PM
Debt Offering Announcement
- Sunoco LP completed a private offering of $1.5 billion in senior notes.
- The offering included $750 million in 7.000% Senior Notes due 2029 and $750 million in 7.250% Senior Notes due 2032.
- Net proceeds were approximately $1.485 billion after deducting discounts and commissions.
- The funds will be used to repay NuStar Energy debt, redeem NuStar's preferred units, and cover offering expenses related to the merger.
Capital raise
30 April 2024 4:45 PM
Debt Offering Announcement
- Sunoco LP completed a private offering of $1.5 billion in senior notes.
- The net proceeds will be used to repay NuStar's debt, redeem NuStar's preferred units, and cover offering expenses.
Capital raise
16 April 2024 7:06 PM
Debt Offering Announcement
- Sunoco LP has priced a private offering of $1.5 billion in senior notes.
- The offering includes $750 million of 7.000% senior notes due 2029 and $750 million of 7.250% senior notes due 2032.
- The proceeds will be used to refinance debt and redeem preferred units of NuStar Energy in connection with the pending merger.
Capital raise
16 April 2024 6:59 PM
Debt Offering Announcement
- Sunoco has priced a private offering of $1.5 billion in senior notes.
- The offering is split into $750 million of 7.000% notes due 2029 and $750 million of 7.250% notes due 2032.
- The proceeds will be used to refinance NuStar's debt and preferred units, and to fund the merger.
Capital raise
16 April 2024 8:36 AM
Current Report on Form 8-K
- Sunoco is conducting a private offering of $1.5 billion in senior notes due 2029 and 2032.
- The proceeds will be used to repay NuStar Energy's debt, fund the redemption of NuStar's preferred units, and pay offering fees and expenses related to the pending merger.
- The offering is not contingent on the completion of the NuStar Merger.
Capital raise
16 April 2024 8:34 AM
Debt Offering Announcement
- Sunoco is conducting a private offering of $1.5 billion in senior notes.
- The notes are split into $750 million due in 2029 and $750 million due in 2032.
Capital raise
16 February 2024 12:21 PM
Partnership Agreement Details
- The partnership agreement authorizes the issuance of an unlimited number of additional partnership interests without unitholder approval.
- The document mentions that the partnership may fund acquisitions through the issuance of additional common units or other partnership interests.
Worse than expected
14 February 2024 9:43 AM
Quarterly Report
- The company reported a net loss for the fourth quarter of 2023, compared to a net income in the same period of 2022.
- The company's net income for the full year 2023 decreased compared to 2022.
Capital raise
22 January 2024 5:26 PM
Merger Announcement
- Sunoco has secured a $1.6 billion 364-day bridge term loan to refinance NuStar's existing debt.
- The transaction is an all-equity deal, with NuStar unitholders receiving Sunoco units.
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