Sunoco 2010 Annual Report Download - page 98

11. Short-Term Borrowings and Credit Facilities
The Company has a $1.28 billion revolving credit facility with a syndicate of 18 participating banks (the
“Facility”), of which $1.2045 billion matures in August 2012 with the balance to mature in August 2011. The
Facility provides the Company with access to short-term financing and is intended to support the issuance of
commercial paper, letters of credit and other debt. The Company also can borrow directly from the participating
banks under the Facility. The Facility is subject to commitment fees, which are not material. Under the terms of
the Facility, Sunoco is required to maintain tangible net worth (as defined in the Facility) in an amount greater
than or equal to targeted tangible net worth (targeted tangible net worth being determined by adding $1.125
billion and 50 percent of the excess of net income attributable to Sunoco, Inc. shareholders over share
repurchases (as defined in the Facility) for each quarter ended after March 31, 2004). At December 31, 2010, the
Company’s tangible net worth was $3.6 billion and its targeted tangible net worth was $2.1 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, 2010, this ratio was .20 to 1. At December 31, 2010, the Facility was being used to support $115
million of floating-rate notes due in 2034 (with a weighted-average interest rate of .36 percent). The Company
remarkets the floating-rate notes on a weekly basis. However, any inability to remarket the floating-rate notes
would have no impact on the Company’s liquidity as they currently represent a reduction in funds under the
Facility which would be available for future borrowings if the notes were repaid.
Sunoco Logistics Partners L.P. has a $395 million revolving credit facility with a syndicate of 10
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. Amounts outstanding under
this facility totaled $— and $238 million at December 31, 2010 and 2009, respectively. In March 2009, the
Partnership entered into an additional $63 million revolving credit facility with two participating banks, which
expires in September 2011. At December 31, 2010 and 2009, there was $31 million outstanding under this
facility. This amount has been classified as long-term debt as the Partnership has the ability and intent to
refinance it on a long-term basis. The $395 million facility contains a covenant requiring the Partnership to
maintain a ratio not to exceed 4.75 to 1 of its consolidated total debt (including letters of credit) to its
consolidated EBITDA (each as defined in the facility). The $63 million facility contains a similar covenant, but
the ratio in this covenant may not exceed 4.5 to 1. At December 31, 2010, the Partnership’s ratio of its
consolidated debt to its consolidated EBITDA was 3.0 to 1.
In July 2010, a wholly owned subsidiary of the Company, Sunoco Receivables Corporation, Inc. (“SRC”),
executed an agreement with two participating banks extending an existing accounts receivable securitization
facility that was scheduled to expire in August 2010 by an additional 364 days. The updated facility permits
borrowings and supports the issuance of letters of credit by SRC up to a total of $275 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, 2010, there was approximately $370 million of accounts
receivable eligible to support this facility; however, there were no borrowings outstanding under the facility as of
that date.
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