Sunoco 2006 Annual Report Download - page 61

in the credit facility) of at least 3 to 1. At December 31,
2006, the Partnership’s ratio of its consolidated debt to its
consolidated EBITDA was 2.9 to 1 and the interest cover-
age ratio was 4.9 to 1.
12. Long-Term Debt
December 31
(Millions of Dollars) 2006 2005
9
3
⁄ 8 % debentures, paid in 2006 $— $56
9% debentures due 2024 65 65
7
3
⁄ 4 % notes due 2009 146 146
7
1
⁄ 4 % notes due 2012 250 250
6
7
⁄ 8 % notes paid in 2006 —54
6
3
⁄ 4 % notes due 2011 177 177
6
3
⁄ 4 % convertible subordinated debentures
due 2012 (Note 16) 77
6
1
⁄ 8 % notes due 2016 175 —
5
3
⁄ 4 % notes due 2017 400 —
4
7
⁄ 8 % notes due 2014 250 250
Floating-rate notes (interest of 4.11% at
December 31, 2006) due 2034 (Note 11) 103 103
Revolving credit loan, floating interest rate
(5.70% at December 31, 2006) due
2010 (Note 11) 68 107
Floating-rate notes paid by Sunoco, as
guarantor, in 2006 —120
Other 75 79
1,716 1,414
Less: unamortized discount 43
current portion 7177
$1,705 $1,234
The aggregate amount of long-term debt maturing and
sinking fund requirements in the years 2007 through
2011 is as follows (in millions of dollars):
2007 $7 2010 $75
2008 $5 2011 $282
2009 $148
Epsilon, the Company’s consolidated joint venture, was
unable to repay its $120 million term loan that was due in
September 2006 and $31 million of borrowings under its
$40 million revolving credit facility that matured in Sep-
tember 2006. Upon such default, the lenders made a
demand on Sunoco, Inc., as guarantor, and Sunoco, Inc.
satisfied its guarantee obligations in the third quarter of
2006. Sunoco, Inc. is now subrogated to the rights and
privileges of the former debtholders. In January 2007,
Sunoco, Inc., as subrogee, made a demand for payment of
the outstanding amounts, but Epsilon was unable to make
payment. Sunoco, Inc., Epsilon and the Epsilon joint-
venture partners are currently in litigation to resolve this
matter.
In 2006, the Company issued $400 million of 5
3
⁄ 4 percent
senior notes due in 2017 under its shelf registration
statement and redeemed its 9
3
⁄ 8 percent debentures with
a book value of $56 million. The Company recognized a
loss of less than $1 million on the early extinguishment of
the debentures. Also, in 2006, Sunoco Logistics Partners
L.P. issued $175 million of 6
1
⁄ 8 percent senior notes due
in 2016 under its shelf registration statement. Proceeds
from this offering and from the Partnership’s issuance of
2.7 million limited partnership interests also under its
shelf registration statement (Note 15) were used in part
to repay the then outstanding borrowings under the Part-
nership’s revolving credit facility (Note 11) with the bal-
ance used to fund a portion of its 2006 growth capital
program.
In 2004, the Company repurchased long-term debt with a
par value of $352 million utilizing the net proceeds from
the issuance under its shelf registration statement of the
4
7
⁄ 8 percent notes due 2014 and $154 million of cash. Of
the debt repurchased, $240 million was attributable to
tender offer purchases of the 9
3
⁄ 8 percent debentures and
the 6
7
⁄ 8 percent notes and $112 million was attributable
to open market purchases of the 9 percent debentures,
7
3
⁄ 4 percent notes and 6
3
⁄ 4 percent notes. Sunoco recog-
nized a $53 million loss ($34 million after tax) on the
early extinguishment of this debt, which is reflected in
other income (loss), net, in the 2004 consolidated state-
ment of income (Note 3).
The $103 million of floating-rate notes due in 2034,
which are remarketed weekly, have been classified as
long-term debt as the Company intends to continue the
remarketing of the notes. In the event the notes are not
remarketed, the Company can refinance them on a long-
term basis utilizing its revolving credit facility (Note 11).
Cash payments for interest related to short-term borrow-
ings and long-term debt (net of amounts capitalized)
were $84, $67 and $98 million in 2006, 2005 and 2004,
respectively.
The following table summarizes Sunoco’s long-term debt
(including current portion) by issuer:
December 31
(Millions of Dollars) 2006 2005
Sunoco, Inc. $1,043 $ 700
Sunoco Logistics Partners L.P. 492 356
Epsilon Products Company, LLC —120
Other 177 235
$1,712 $1,411
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