Sunoco 2012 Annual Report Download - page 32

We could incur a substantial amount of debt in the future, which could prevent us from fulfilling our debt
obligations.
We are permitted to incur additional debt, subject to certain limitations under our revolving credit facilities
and, in the case of secured debt, under the indenture governing the notes. If we incur additional debt in the future,
our increased leverage could, for example:
• make it more difficult for us to satisfy our obligations under our debt securities or other indebtedness
and, if we fail to comply with the requirements of the other indebtedness, could result in an event of
default under our debt securities or such other indebtedness;
• require us to dedicate a substantial portion of our cash flow from operations to required payments on
indebtedness, thereby reducing the availability of cash flow from working capital, capital expenditures
and other general corporate activities;
• limit our ability to obtain additional financing in the future for working capital, capital expenditures
and other general corporate activities;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate;
• detract from our ability to successfully withstand a downturn in our business or the economy generally;
and
• place us at a competitive disadvantage against less leveraged competitors.
Our notes and related guarantees are effectively subordinated to any secured debt of ours or the guarantor as
well as to any debt of our non-guarantor subsidiaries, and, in the event of our bankruptcy or liquidation,
holders of our notes will be paid from any assets remaining after payments to any holders of our secured debt.
Our notes and related guarantees are general unsecured senior obligations of us and the guarantor,
respectively, and effectively subordinated to any secured debt that we or the guarantor may have to the extent of
the value of the assets securing that debt. The indentures permit the guarantor and us to incur secured debt
provided certain conditions are met. Our notes are effectively subordinated to the liabilities of any of our
subsidiaries unless such subsidiaries guarantee such notes in the future.
If we are declared bankrupt or insolvent, or are liquidated, the holders of our secured debt will be entitled to be
paid from our assets securing their debt before any payment may be made with respect to our notes. If any of the
preceding events occur, we may not have sufficient assets to pay amounts due on our secured debt and our notes.
We do not have the same flexibility as other types of organizations to accumulate cash, which may limit cash
available to service our debt or to repay debt at maturity.
Our partnership agreement requires us to distribute, on a quarterly basis, 100 percent of our available cash to
our general partner and Sunoco Logistics Partners L.P. within 45 days following the end of every quarter. The
Sunoco Logistics Partners L.P. partnership agreement requires it to distribute, on a quarterly basis, 100 percent of its
available cash to its unitholders of record within 45 days following the end of every quarter. Available cash with
respect to any quarter is generally all of our or Sunoco Logistics Partners L.P.’s, as applicable, cash on hand at the
end of such quarter, less cash reserves for certain purposes. The sole director of our general partner and the board of
directors of Sunoco Logistics Partners L.P.’s general partner will determine the amount and timing of such
distributions and have broad discretion to establish and make additions to our or Sunoco Logistics Partners L.P.’s,
as applicable, reserves or the reserves of our or Sunoco Logistics Partners L.P.’s, as applicable, operating
subsidiaries as they determine are necessary or appropriate. As a result, we and Sunoco Logistics Partners L.P. do
not have the same flexibility as corporations or other entities that do not pay dividends or that have complete
flexibility regarding the amounts they will distribute to their equity holders. Although our payment obligations to
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