Sunoco 2008 Annual Report Download - page 52

tangible net worth was $3.1 billion and its targeted tangible net worth was $1.9 billion. The Facility also requires
that Sunoco’s ratio of consolidated net indebtedness, including borrowings of Sunoco Logistics Partners L.P., to
consolidated capitalization (as those terms are defined in the Facility) not exceed .60 to 1. At December 31, 2008,
this ratio was .37 to 1. At December 31, 2008, the Facility was being used to support $207 million of commercial
paper and $103 million of floating-rate notes due in 2034, which are remarketed on a weekly basis. The
Company intends to continue remarketing these notes. However, any inability to remarket them would have no
impact on the Company’s liquidity as they currently represent a reduction in available funds under the Facility
which would be available for future borrowings if the notes were repaid.
Sunoco Logistics Partners L.P. has a $400 million revolving credit facility with a syndicate of 11
participating banks, which expires in November 2012. This facility is available to fund the Partnership’s working
capital requirements, to finance acquisitions, and for general partnership purposes. In September 2008, Lehman
Brothers, one of the participating banks with a commitment under the facility amounting to $5 million, declared
bankruptcy and then failed to fund its share of the Partnership’s borrowings under this facility. Amounts
outstanding under this facility totaled $323 and $91 million at December 31, 2008 and 2007, respectively. The
facility was used to initially fund the Partnership’s 2008 refined products pipeline system acquisition in Texas
and Louisiana. The facility contains a covenant requiring the Partnership to maintain a ratio of up to 4.75 to 1 of
its consolidated total debt (including letters of credit) to its consolidated EBITDA (each as defined in the
facility). At December 31, 2008, the Partnership’s ratio of its consolidated debt to its consolidated EBITDA was
2.3 to 1. In connection with the refined product pipeline system acquisition in Texas and Louisiana, the
Partnership entered into an additional $100 million 364-day revolving credit facility in May 2008, which is
available to fund the same activities as under its $400 million revolving credit facility. The new facility contains
the same covenant requirement as the $400 million revolving credit facility. At December 31, 2008, there were
no outstanding borrowings under the 364-day credit facility.
In August 2008, a wholly owned subsidiary of the Company, Sunoco Receivables Corporation, Inc.
(“SRC”), entered into a 364-day accounts receivable securitization facility, which permits borrowings and
supports the issuance of letters of credit by SRC up to a total of $200 million. Under the receivables facility,
certain subsidiaries of the Company will sell their accounts receivable from time to time to SRC. In turn, SRC
may sell undivided ownership interests in such receivables to commercial paper conduits in exchange for cash or
letters of credit. The Company has agreed to continue servicing the receivables for SRC. Upon the sale of the
interests in the accounts receivable by SRC, the conduits have a first priority perfected security interest in such
receivables and, as a result, the receivables will not be available to the creditors of the Company or its other
subsidiaries. At December 31, 2008, there were no borrowings under the receivables facility.
The following table sets forth Sunoco’s outstanding debt (in millions of dollars):
December 31
2008 2007
Short-term borrowings .......................................... $ 310 $ —
Current portion of long-term debt ................................. 148 4
Long-term debt ................................................ 1,705 1,724
Total debt* ................................................ $2,163 $1,728
*Includes $748 and $515 million at December 31, 2008 and 2007, respectively, attributable to Sunoco Logistics Partners L.P.
Management believes there is sufficient borrowing capacity available to pursue strategic opportunities as
they arise. In addition, the Company has the option of issuing additional common or preference stock or selling
an additional portion of its Sunoco Logistics Partners L.P. interests, and Sunoco Logistics Partners L.P. has the
option of issuing additional common units.
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