Sunoco, Energy Transfer Partners Report $816 Mln Dropdown Of Stake In Fuel Unit

(RTTNews) - Sunoco LP (SUN) and Energy Transfer Partners L.P. (ETP) announced the second dropdown of a portion of ETP's retail business to SUN.

Sunoco has agreed to acquire from ETP Retail Holdings, an affiliate of ETP, a 31.58 percent equity interest in Sunoco, LLC, which distributes about 5.3 billion gallons per year of motor fuel to customers in the east, midwest and southeast regions of the U.S. The transaction is valued at about $816 million.

Sunoco noted that it will pay $775 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.

SUN expects to fund the acquisition using proceeds from the private offering of senior notes.

The transaction is expected to close in April, subject to customary closing conditions and completion of financing arrangements. It is expected to be immediately accretive to distributable cash flow of both SUN and ETP for 2015 and beyond.

Separately, Sunoco LP announced a private offering of $800 million of senior notes due 2023 . Sunoco Finance Corp., a wholly owned direct subsidiary of Sunoco, will serve as co-issuer of the notes.

Sunoco intends to use the net proceeds from the offering to fund the cash consideration for its acquisition of a 31.58% membership interest in Sunoco, LLC from a wholly owned subsidiary of Energy Transfer Partners, L.P. and repay outstanding borrowings under its senior secured revolving credit facility.