Sunoco 2011 Annual Report Download - page 32

The banks that participate in our credit facilities are subject to the turmoil and volatility of the global
economic market. If one or more of these banks were to declare bankruptcy or otherwise be unable to fund its
loan commitments under our credit facilities, we may be unable to obtain the full amount of the funds available
under the credit facilities and therefore be unable to satisfy our cash requirements.
If funding is not available when needed, or is available only on unfavorable terms, meeting our capital needs
or otherwise taking advantage of business opportunities or responding to competitive pressures may become
challenging, which could have a material adverse effect on our revenues and results of operations.
We have various credit agreements and other financing arrangements that impose certain restrictions on us
and may limit our flexibility to undertake certain types of transactions. If we fail to comply with the terms and
provisions of our debt instruments, the indebtedness under them may become immediately due and payable,
which could have a material adverse effect on our financial position.
Several of our existing debt instruments and financing arrangements contain restrictive covenants and that
limit our financial flexibility and that of our subsidiaries. Our credit facilities require the maintenance of
collateral and certain financial ratios, satisfaction of certain financial condition tests and, subject to certain
exceptions, impose restrictions on:
• incurrence of additional indebtedness;
• issuance of preferred stock by our subsidiaries;
• incurrence of liens;
• sale and leaseback transactions;
• agreements by our subsidiaries, which would limit their ability to pay dividends, make distributions or
repay loans or advances to us; and
• fundamental changes, such as certain mergers and dispositions of assets.
The Partnership has credit facilities which also contain certain covenants. Increased borrowings by this
subsidiary will raise the level of our total consolidated net indebtedness, and could restrict our ability to borrow
money or otherwise incur additional debt.
If we do not comply with the covenants and other terms and provisions of our credit facilities, we will be
required to request a waiver under, or an amendment to, those facilities. If we cannot obtain such a waiver or
amendment, or if we fail to comply with the covenants and other terms and provisions of our indentures, we
would be in default under our debt instruments. Any defaults may cause the indebtedness under the facilities to
become immediately due and payable, which could have a material adverse effect on our financial position.
Our ability to meet our debt service obligations depends upon our future performance, which is subject to
general economic conditions, industry cycles and financial, business and other factors affecting our operations,
many of which are beyond our control. A portion of our cash flow from operations is needed to pay the principal
of, and interest on, our indebtedness and is not available for other purposes. If we are unable to generate
sufficient cash flow from operations, we may have to sell assets, refinance all or a portion of our indebtedness or
obtain additional financing. Any of these actions could have a material adverse effect on our financial position.
Any reduction in our credit ratings or in the Partnership’s credit ratings could materially and adversely affect
our business, financial condition, liquidity or ability to raise capital, and results of operations.
It is possible that our current ratings could be lowered or withdrawn entirely by a rating agency if, in its
judgment, circumstances so warrant. Specifically, if Fitch, Moody’s or S&P were to downgrade our long-term
rating, our borrowing costs would increase, which could adversely affect our ability to attract potential investors
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