SUN
Sunoco Lp
NYSE
10-K: Sunoco LP Outlines Securities and Distribution Policies in 10-K Filing
Sentiment:
Partnership Agreement Details
16 February 2024 12:21 PM
Sunoco LP's 10-K filing details the structure of its common units, cash distribution policy, and various operational and financial aspects.
Capital raise
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.
Summary
- This document is an exhibit from Sunoco LP's 10-K filing, detailing the company's common units and cash distribution policies.
- The common units represent limited partner interests in Sunoco LP and are listed on the New York Stock Exchange under the symbol SUN.
- Holders of common units are entitled to one vote per unit on all matters voted on by unitholders.
- In the event of liquidation, holders of common units are entitled to receive distributions of assets remaining after satisfaction of all liabilities.
- Computershare Trust Company, N.A. serves as the transfer agent and registrar for the common units.
- The partnership agreement requires that, within 60 days after the end of each quarter, Sunoco LP will distribute all of its available cash to unitholders of record.
- Available cash is defined as all cash and cash equivalents on hand at the end of the quarter, less cash reserves established by the general partner, plus any cash on hand immediately prior to the distribution date.
- Cash distributions are characterized as being paid from either operating surplus or capital surplus.
- Operating surplus is defined as $25 million plus all cash receipts, excluding cash from interim capital transactions, plus working capital borrowings, less operating expenditures and cash reserves.
- Capital surplus is defined as any distribution of available cash in excess of operating surplus.
- Distributions from operating surplus are made first to Class C unit holders, then to common unitholders up to the minimum quarterly distribution, and then to the holder of incentive distribution rights (IDRs).
- Incentive distribution rights (IDRs) represent the right to receive an increasing percentage (15%, 25%, and 50%) of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and target distribution levels have been achieved.
- The document also defines maintenance, expansion, and investment capital expenditures, and how they affect operating surplus.
- The partnership agreement was organized in June 2012 and will have a perpetual existence unless terminated.
- The purpose of the partnership is limited to any business activity that is approved by the general partner and that lawfully may be conducted by a limited partnership organized under Delaware law.
- The document outlines voting rights, amendment procedures, and other key aspects of the partnership agreement.
- The partnership agreement is governed by Delaware law and requires that certain claims be brought exclusively in the Court of Chancery of the State of Delaware.
- The partnership agreement authorizes the issuance of an unlimited number of additional partnership interests without unitholder approval.
- As of December 31, 2023, there were 16,410,780 Class C units outstanding.
- The document also details the process for liquidation, withdrawal or removal of the general partner, and transfer of general partner interest.
Sentiment
Score: 6
Explanation: The document is primarily factual and descriptive, outlining the legal and financial structure of the partnership. There are some potential negatives related to the general partner's control and limited liability, but overall the sentiment is neutral.
Positives
- The document provides a clear definition of available cash and how it is distributed.
- The structure of incentive distribution rights is clearly outlined, providing transparency for investors.
- The document details the rights and privileges of limited partners, including voting and liquidation rights.
- The partnership agreement is governed by Delaware law, which is a well-established legal framework.
- The document outlines the process for transfer of common units and the rights acquired upon transfer.
Negatives
- The general partner has significant discretion in establishing cash reserves, which could impact the amount of available cash for distribution.
- The partnership agreement allows for the issuance of an unlimited number of additional partnership interests, which could dilute existing unitholder value.
- The general partner has the ability to amend the partnership agreement without unitholder approval in certain circumstances.
- The general partner can transfer its interest without unitholder approval under certain conditions.
- The document states that the general partner has no fiduciary duty to act in the best interests of the limited partners.
Risks
- The general partner has significant control over the partnership and may favor its own interests over those of the limited partners.
- The partnership agreement limits the liability of the general partner.
- The partnership agreement restricts the remedies available to limited partners for actions taken by the general partner.
- The partnership agreement contains a forum selection clause that may discourage lawsuits against the general partner and its affiliates.
- The partnership agreement allows for the potential for the general partner to purchase outstanding limited partner interests at an undesirable time or price.
- The partnership agreement allows for the potential for the partnership to redeem units held by non-taxpaying or non-citizen assignees.
- The partnership agreement allows for the potential for the partnership to reduce the minimum quarterly distribution and target distribution levels if legislation is enacted that makes the partnership taxable as a corporation.
Future Outlook
The document does not contain specific forward-looking statements about future financial performance, but it does outline the mechanisms for future distributions and potential changes to the partnership structure.
Management Comments
- Our general partner has the ability to cause us and our subsidiaries to engage in activities other than the business of the wholesale distribution of motor fuels and other petroleum products and the retail sale of motor fuel and the operation of convenience stores, our general partner has no plans to do so and may decline to do so free of any fiduciary duty or obligation whatsoever to us or our limited partners, including any duty to act in good faith or in the best interests of us or our limited partners.
- Our general partner is generally authorized to perform all acts it determines to be necessary or appropriate to carry out our purposes and to conduct our business.
Industry Context
This document provides insight into the operational and financial structure of a master limited partnership in the energy sector, which is common in the midstream industry. It highlights the importance of cash flow and distribution policies for these types of entities.
Comparison to Industry Standards
- The structure of Sunoco LP as a master limited partnership (MLP) is typical for companies in the midstream energy sector, such as Energy Transfer LP (ET), which owns Sunoco's general partner and IDRs.
- The cash distribution policy, with its tiered structure and IDRs, is a common feature of MLPs, designed to incentivize the general partner to grow distributions to unitholders.
- The definitions of operating surplus and capital surplus are standard for MLPs, although the specific formulas and thresholds may vary between companies.
- The use of a transfer agent and registrar like Computershare is a standard practice for publicly traded partnerships.
- The governance structure, with a general partner managing the partnership and limited partner voting rights, is typical for MLPs.
- The legal framework under Delaware law is also a common choice for MLPs due to its well-established body of corporate law.
- The inclusion of a forum selection clause is a common practice for MLPs to ensure consistency in the application of Delaware law.
- The ability to issue additional units without unitholder approval is a common feature of MLP partnership agreements, which allows for flexibility in raising capital.
- The limited liability provisions for limited partners are standard for MLPs, protecting them from the debts and obligations of the partnership.
- The inclusion of a limited call right is a common feature of MLP partnership agreements, which allows the general partner to acquire all outstanding units if it owns more than 80%.
Stakeholder Impact
- Shareholders will receive distributions of available cash as outlined in the partnership agreement.
- Limited partners have limited voting rights and are subject to the terms of the partnership agreement.
- The general partner has significant control over the partnership and its operations.
Next Steps
- The partnership will continue to distribute available cash to unitholders on a quarterly basis.
- The general partner may consider future acquisitions or other business activities.
- The partnership may issue additional partnership interests in the future.
Key Dates
- June 2012: The partnership was organized.
- January 1, 2016: The partnership issued 16,410,780 Class C units.
- September 30, 2022: The date before which the general partner agreed not to withdraw voluntarily without unitholder approval.
- December 31, 2023: As of this date, there were 16,410,780 Class C units outstanding.
Keywords
common units, partnership agreement, cash distribution, operating surplus, capital surplus, incentive distribution rights, limited partner, general partner, transfer agent, liquidation rights
SUN
Sunoco Lp
NYSE
Sector: Energy
Filings with Classifications
Capital raise
29 May 2025 7:00 AM
Merger Announcement
- Committed bridge financing is in place for the cash portion of the acquisition.
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
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 9:29 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 9:25 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
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).
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.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.