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Current SUN Stock Info

Sunoco will purchase an interest in Energy Transfer Partners fuel distribution business

Sunoco LP (ticker: SUN) and Energy Transfer Partners LP (ticker: ETP) announced today the second dropdown of a portion of ETP’s retail business to SUN, according to a company press release.

SUN has agreed to acquire from ETP Retail Holdings, an affiliate of ETP, a 31.58% equity interest in Sunoco LLC, which distributes approximately 5.3 billion gallons of motor fuel annually to the east, Midwest and southeast regions of the United States. The transaction is valued at approximately $816 million. SUN will pay $755 million in cash and issue $40.8 million of SUN common units to ETP Retail Holdings, based on the five-day volume-weighted average price of SUN’s common units as of March 20, 2015.

The company plans to fund the acquisition through a private offering of $800 million in senior notes due 2023. Sunoco Finance Corp., a wholly owned direct subsidiary of Sunoco, will serve as co-issuer of the notes. The company plans to use the proceeds to help repay outstanding borrowings under its senior secured revolving credit facility in addition to funding the ETP deal.

The first Sunoco dropdown was completed on October 1, 2014, and focused on the company’s convenience outlets. According to Martin Salinas, ETP’s CFO, “We dropped the Mid-Atlantic Convenience Stores and Tigermarket or MACS for short in a transaction valued at $768 million, consisting of $556 million in cash and approximately 4 million newly issued Sunoco LP units.” According to Salinas, the cash received from the dropdown was used to repay the company’s revolver borrowings.

Source: Energy Transfer Equity LP

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.