| Item 1.01 | Entry into a Material Definitive Agreement |
On September 20, 2023, Sunoco LP (NYSE: SUN) (the “Partnership”) and Sunoco Finance Corp. (“Finance Corp.” and, together with the Partnership, the “Issuers”) completed a private offering to eligible purchasers (the “Notes Offering”) of $500,000,000 aggregate principal amount of 7.000% senior notes due 2028 (the “Notes”), along with the related guarantees of the Notes. The Issuers received net proceeds of approximately $494 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 the Partnership’s 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 under the Securities Act.
Indenture and Senior Notes
The Notes were issued under and are governed by an indenture dated September 20, 2023 (the “Indenture”), among the Issuers, certain subsidiary guarantors of the Partnership (the “Guarantors”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The Notes will mature on September 15, 2028, and interest on the Notes is payable semi-annually in cash in arrears on March 15 and September 15 of each year, commencing on March 15, 2024.
The Notes are senior unsecured obligations of the Issuers and are guaranteed on a senior unsecured basis by all of the Partnership’s current subsidiaries (other than Finance Corp.) that guarantee its obligations under the Revolving Credit Facility, as well as by certain of its future subsidiaries. The Notes and related guarantees are unsecured and rank equally with all of the Issuers’ and each Guarantor’s existing and future senior obligations. The Notes and related guarantees are senior in right of payment to all of the Issuers’ and each Guarantor’s future indebtedness and other obligations that are, by their terms, expressly subordinated in right of payment to the Notes and guarantees. The Notes and related guarantees are effectively subordinated to the Issuers’ and each Guarantor’s existing and future secured indebtedness, including obligations under the Revolving Credit Facility, to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all obligations, including trade payables, of the Issuers’ 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 September 15, 2025, 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 a customary “make-whole premium” and accrued and unpaid interest, if any, to, but not including, the redemption date. In addition, before September 15, 2025, 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 prices specified in the Indenture.
Upon the occurrence of a Change of Control (as defined in the Indenture), which occurrence (other than one involving the adoption of a plan relating to liquidation or dissolution) is followed by a ratings decline within 90 days after the consummation of the transaction, each holder of the Notes may require the Issuers to repurchase all or a portion of the holder’s Notes at a purchase price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but not including, the date of settlement. Additionally, if the Partnership sells certain assets and does not apply the proceeds from the sale in a certain manner, the Issuers must use certain excess proceeds to offer to repurchase the Notes at 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but not including, the repurchase date.
The Indenture contains customary events of default (each an “Event of Default”), including the following:
(1) default for 30 days in the payment when due of interest on the Notes;
(2) default in the payment when due (at stated maturity, upon optional or mandatory redemption or otherwise) of the principal of, or premium, if any, on the Notes;
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