Sunoco 2012 Annual Report Download - page 22

ITEM 1A. RISK FACTORS
We believe that the following risk factors address the known material risks related to our business,
partnership structure and debt obligations, as well as the material tax risks to our common unitholders. If any of
the following risks were to actually occur, our business, results of operations, financial condition and cash flows
as well as any related benefits of owning our securities, could be materially and adversely affected.
On October 5, 2012, Sunoco, Inc. (“Sunoco”) was acquired by Energy Transfer Partners, L.P. (“ETP”).
Prior to this transaction, Sunoco (through its wholly-owned subsidiary Sunoco Partners LLC) served as the
Partnership’s general partner and owned a two percent general partner interest, all of the incentive distribution
rights and a 32.4 percent limited partner interest in the Partnership. In connection with the acquisition, Sunoco’s
interests in the general partner, including the incentive distribution rights, and limited partnership were
contributed to ETP. This resulted in a change in control of the general partner, and as a result, the Partnership
became a consolidated subsidiary of ETP on the acquisition date.
The risk factor information presented below reflects the impacts of these transactions, including the change
in the general partner ownership, and the ongoing business implications.
RISKS RELATED TO OUR BUSINESS
If we are unable to generate sufficient cash flow, our ability to pay quarterly distributions to our common
unitholders at current levels or to increase our quarterly distributions in the future, could be materially
impaired.
Our ability to pay quarterly distributions depends primarily on cash flow, including cash flow from financial
reserves and credit facilities, and not solely on profitability, which is affected by non-cash items. As a result, we
may pay cash distributions during periods when we record net losses and may be unable to pay cash distributions
during periods when we record net income. Our ability to generate sufficient cash from operations is largely
dependent on our ability to successfully manage our business which may also be affected by economic, financial,
competitive, and regulatory factors that are beyond our control. To the extent we do not have adequate cash
reserves, our ability to pay quarterly distributions to our common unitholders at current levels could be materially
impaired.
An increase in interest rates may cause the market price of our units to decline.
Like all equity investments, an investment in our units is subject to certain risks. In exchange for accepting
these risks, investors may expect to receive a higher rate of return than would otherwise be obtainable from
lower-risk investments. Accordingly, as interest rates rise, the ability of investors to obtain higher risk-adjusted
rates of return by purchasing government-backed debt securities may cause a corresponding decline in demand
for riskier investments generally, including yield-based equity investments such as publicly traded limited
partnership interests. Reduced demand for our units resulting from investors seeking other more favorable
investment opportunities may cause the trading price of our units to decline.
We depend upon Sunoco for a substantial portion of the volumes transported on our refined products
pipelines and handled at our terminals. If Sunoco were to significantly reduce these volumes, it could
materially and adversely affect our results of operations, financial condition or cash flows.
Our refined products pipelines and terminal assets provide an efficient outlet to supply Sunoco’s retail
marketing network, and as such, we expect that Sunoco will continue to utilize our assets going forward.
However, if Sunoco were to reduce its use of our facilities, it could adversely affect our results of operations,
financial condition, or cash flows.
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