A dropdown transaction to Sunoco LP is expected to increase the company’s distributable cash flow.
The previously announced dropdown transaction between Energy Transfer Partners L.P. (ETP) and Sunoco LP is now officially complete, as of March 31, 2016. The transaction includes the dropdown of the remaining 68.42% interest in Sunoco LLC to Sunoco LP, along with 100% interest in Sunoco Retail LLC, which owns the legacy Sunoco convenience store business, for approximately $2.226 billion.
The transaction has an effective date of Jan. 1, 2016 and is expected to be accretive to distributable cash flow and expected distributions per unit for Sunoco LP in 2016 and thereafter.
Sunoco LP paid ETP approximately $2.2 billion in cash including the expected value of working capital and issued to ETP 5,710,922 million Sunoco LP common units valued at approximately $194 million based on the five-day volume-weighted average price of Sunoco LP’s common units as of Nov. 13, 2015. In connection with the closing of the acquisition, Sunoco LP entered into a $2.035 billion senior secured term loan facility to fund a portion of the cash consideration for the acquisition, with the remaining portion funded with borrowings under Sunoco LP’s revolving credit facility.
This final dropdown completes a total of $5.7 billion of dropdowns from ETP to Sunoco LP since the fourth quarter of 2014, transforming into one of the leading wholesale fuel and retail marketing platforms in the U.S., with tremendous geographic scale and a unique diversity of business drivers.
Simultaneously with the closing of the acquisition, Sunoco LP completed its previously announced sale of 2,263,518 Sunoco LP common units to Energy Transfer Equity L.P. (ETE) and received $64.5 million in proceeds which were used to repay borrowings under Sunoco LP’s revolving credit facility.