Sunoco 2015 Annual Report Download - page 31

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RISKS RELATED TO OUR DEBT
References under this heading to "we," "us," and "our" mean Sunoco Logistics Partners Operations L.P.
We may not be able to obtain funding, or obtain funding on acceptable terms, to meet our future capital needs.
Global market and economic conditions have been, and continue to be, volatile. The debt and equity capital markets have
been impacted by, among other things, significant write-offs in the financial services sector and the re-pricing of credit risk in
the broadly syndicated market.
As a result, the cost of raising money in the debt and equity capital markets could be higher and the availability of funds
from those markets could be diminished if we seek access to those markets. Accordingly, we cannot be certain that additional
funding will be available, if needed and to the extent required, on acceptable terms. If additional funding is not available when
needed, or is available only on unfavorable terms, we may be unable to implement our business plan, enhance our existing
business, complete acquisitions or otherwise take advantage of business opportunities, or respond to competitive pressures, any
of which could have a material adverse effect on our revenues and results of operations.
Restrictions in our debt agreements may prevent us from engaging in some beneficial transactions or paying distributions to
unitholders.
As of December 31, 2015, our total outstanding indebtedness was $5.54 billion, excluding net unamortized fair value
adjustments, bond discounts and debt issuance costs. Our payment of principal and interest on the debt will reduce the cash
available for distribution on our units, as will our obligation to repurchase the senior notes upon the occurrence of specified
events involving a change in control of our general partner. In addition, we are prohibited by our credit facilities and the senior
notes from making cash distributions during an event of default, or if the payment of a distribution would cause an event of
default under any of our debt agreements. Our leverage and various limitations in our credit facilities and senior notes may
reduce our ability to incur additional debt, engage in some transactions, and capitalize on acquisition or other business
opportunities. Any subsequent refinancing of our current debt or any new debt could have similar or greater restrictions.
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.