| Item 1.01. | Entry into a Material Definitive Agreement. |
Purchase Agreement
On March 11, 2019, Sunoco GP LLC (the “General Partner”), Sunoco LP (the “Partnership”), Sunoco Finance Corp. (“SUN Finance” and, together with the Partnership, the “Issuers”) and certain subsidiary guarantors of the Partnership (the “Guarantors”) entered into a purchase agreement (the “Purchase Agreement”) with Goldman Sachs & Co. LLC and Mizuho Securities USA LLC, as representatives of the several initial purchasers named therein (the “Initial Purchasers”), with respect to a private offering to eligible purchasers (the “Notes Offering”) by the Issuers of $600,000,000 aggregate principal amount of new 6.000% senior notes due 2027 (the “Notes”), along with the related guarantees of the Notes.
The Notes Offering closed on March 14, 2019, in accordance with the terms of the Purchase Agreement. The Issuers received net proceeds of approximately $593 million from the Notes Offering, after deducting the Initial Purchasers’ discount and commissions and estimated offering expenses payable by the Partnership, and the Partnership used such net proceeds to repay a portion of the outstanding borrowings under its existing $1.5 billion revolving credit facility (the “Revolving Credit Facility”). The Notes were issued in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and were resold by the Initial Purchasers in reliance on Rule 144A and Regulation S of the Securities Act.
The Purchase Agreement contains customary representations, warranties and agreements by the General Partner, the Issuers and the Guarantors and customary conditions to closing, obligations of the parties and termination provisions. The Issuers and the Guarantors have agreed to indemnify the Initial Purchasers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the Initial Purchasers may be required to make because of any of those liabilities.
The Initial Purchasers and their respective affiliates have provided, and may in the future provide, various financial advisory, sales and trading, commercial and investment banking and other financial andnon-financial activities and services to the Partnership and its affiliates, for which they received or will receive customary fees and expenses. Certain affiliates of each of the Initial Purchasers are lenders under the Revolving Credit Facility and, accordingly, will receive their pro rata share of the amounts used from the net proceeds of the Notes Offering to repay indebtedness under the Revolving Credit Facility.
The foregoing description is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed as Exhibit 1.1 to this Current Report on Form8-K and which is incorporated in this Item 1.01 by reference.
Indenture and Senior Notes
The Notes were issued under and are governed by an indenture dated March 14, 2019 (the “Indenture”), among the Issuers, the Guarantors and U.S. Bank National Association, as trustee (the “Trustee”). The Notes will mature on April 15, 2027 and interest on the Notes is payable semi-annually on April 15 and October 15 of each year, commencing October 15, 2019.
The Notes are senior obligations of the Issuers and are guaranteed on a senior basis by all of the Partnership’s current subsidiaries (other than SUN Finance) that guarantee its obligations under the Revolving Credit Facility and certain of its future subsidiaries. The Notes and guarantees are unsecured and rank equally with all of the Issuers’ and each Guarantor’s existing and future senior obligations. The Notes are senior in right of payment to any of the Issuers’ and each Guarantor’s future obligations that are, by their terms, expressly subordinated in right of payment to the Notes and guarantees. The Notes and guarantees are effectively subordinated to the Issuers’ and each Guarantor’s secured obligations, including obligations under the Revolving Credit Facility, to the extent of the value of the collateral securing such obligations, and structurally subordinated to all indebtedness and obligations, including trade payables, of the Partnership’s subsidiaries that do not guarantee the Notes.
The Issuers may, at their option, redeem some or all of the Notes at any time on or after April 15, 2022, at the redemption prices specified in the Indenture. Prior to such time, the Issuers may redeem some or all of the Notes at a redemption price equal to 100% of the aggregate principal amount of the Notes redeemed, plus the “applicable premium” and accrued and unpaid interest, if any, to, but not including, the applicable redemption date. In addition, before April 15, 2022, the Issuers may redeem up to 35% of the aggregate principal amount of the Notes with an amount of cash not greater than the net cash proceeds from certain equity offerings at the redemption price specified in the Indenture.
