Sunoco LP Announces Preferred Equity Offering

Rhea-AI Summary

Sunoco LP (NYSE: SUN) has announced a private offering of 1,000,000 Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units. This offering is part of the financing strategy for Sunoco's acquisition of Parkland Corporation.

The proceeds will be combined with two concurrent senior notes offerings totaling $1.7 billion ($850 million each for 2031 and 2034 notes) to fund the Parkland Acquisition. Prior to the acquisition's closing, the proceeds will temporarily reduce revolving credit facility borrowings.

The Series A Preferred Units include a special mandatory redemption provision at $1,000 per unit if the Parkland acquisition is not completed by May 5, 2026, or if the arrangement agreement is terminated.

Positive

• None.

Negative

• Potential dilution for existing unitholders through new preferred units issuance
• Increased debt burden with $1.7 billion in new senior notes
• Risk of mandatory redemption if acquisition fails to close by May 2026

Insights

Financial Analyst

Sunoco's $1B preferred equity offering, combined with $1.7B in notes, signals strategic financing for the major Parkland acquisition.

Sunoco LP is executing a multi-pronged financing strategy to fund its acquisition of Parkland Corporation. The company is raising capital through a private offering of 1,000,000 Series A Preferred Units alongside a concurrent notes offering of $1.7 billion in senior notes ($850M due 2031 and $850M due 2034).

This preferred equity offering represents a significant financing component that demonstrates Sunoco's structured approach to capital raising. By utilizing preferred units, the company is likely seeking to balance its debt-to-equity ratio while securing the necessary funds for the Parkland acquisition. The perpetual nature of these preferred units indicates a long-term financing strategy that provides greater flexibility than traditional debt.

The offering includes a special mandatory redemption provision if the Parkland acquisition isn't completed by May 5, 2026, providing a safeguard for investors. This prudent contingency mechanism reflects thoughtful financial planning in case the acquisition falls through.

By temporarily using proceeds to reduce revolving credit facility borrowings before the acquisition closes, Sunoco is implementing efficient cash management to minimize interest expenses during the interim period.

The independent nature of the offerings (preferred equity, notes, and the acquisition itself not being contingent on each other) provides Sunoco with flexibility in its capital raising approach and reduces execution risk, allowing each component to proceed regardless of the others' completion status.

DALLAS, Sept. 4, 2025 /PRNewswire/ -- Sunoco LP (NYSE: SUN) ("Sunoco") today announced the launch of a private offering (this "offering") of 1,000,000 of its Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units (the "Series A Preferred Units").

Sunoco intends to use the net proceeds from this offering (i) on the closing date (the "Effective Date") of Sunoco's acquisition of all of the issued and outstanding common shares of Parkland Corporation ("Parkland" and such acquisition, the "Parkland Acquisition"), together with the net proceeds of the concurrently announced private offering of its senior notes due 2031 in an aggregate principal amount of $850 million (the "2031 notes") and senior notes due 2034 in an aggregate principal amount of $850 million (the "2034 notes," and collectively with the 2031 notes, the "notes," and such offering, the "Notes Offering"), to fund a portion of the cash consideration for the Parkland Acquisition and related transaction costs and (ii) prior to the Effective Date, to temporarily reduce the borrowings outstanding under Sunoco's revolving credit facility and pay interest and fees in connection therewith. This offering is not contingent on the completion of the Parkland Acquisition or the Notes Offering, and neither the Parkland Acquisition nor the Notes Offering is conditioned on the completion of this offering.

If (i) the Parkland Acquisition has not been completed on or prior to May 5, 2026 (the "Special Mandatory Redemption Date"), or (ii) prior to the Special Mandatory Redemption Date, (a) the Arrangement Agreement, dated as of May 4, 2025, among Sunoco, Parkland and certain of their respective affiliates, is terminated or (b) Sunoco will not pursue the completion of the Parkland Acquisition or has determined in its sole discretion that the completion of the Parkland Acquisition cannot or is not reasonably likely to be satisfied by the Special Mandatory Redemption Date, the Series A Preferred Units will be subject to a special mandatory redemption at a price equal to $1,000 per Series A Preferred Unit plus, in each case, an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the Special Mandatory Redemption Date, whether or not declared.

This offering of the Series A Preferred Units has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and, unless so registered, the Series A Preferred Units may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Sunoco plans to offer and sell the Series A Preferred Units only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act.

This news release is neither an offer to sell nor a solicitation of an offer to buy the Series A Preferred Units or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Series A Preferred Units or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.

About Sunoco LP

Sunoco LP (NYSE: SUN) is an energy infrastructure and fuel distribution master limited partnership operating in over 40 U.S. states, Puerto Rico, Europe, and Mexico with an extensive network of approximately 14,000 miles of pipeline and over 100 terminals for midstream operations. Sunoco's general partner is owned by Energy Transfer LP (NYSE: ET). 

Forward-Looking Statements

This news release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law, including without limitation statements regarding this offering. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management's control. An extensive list of factors that can affect future results are discussed in Sunoco's Annual Report on Form 10-K, any subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and other documents filed from time to time with the Securities and Exchange Commission. Sunoco undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

Contacts
Scott Grischow
Treasurer, Senior Vice President – Finance
(214) 840-5660, scott.grischow@sunoco.com 

Brian Brungardt
Director – Investor Relations
(214) 840-5437, brian.brungardt@sunoco.com  

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/sunoco-lp-announces-preferred-equity-offering-302546543.html

SOURCE Sunoco LP

FAQ

What is the size of Sunoco LP's (SUN) preferred equity offering in 2025?

Sunoco LP is offering 1,000,000 Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units through a private offering.

How will Sunoco (SUN) use the proceeds from its 2025 preferred equity offering?

The proceeds will be used to fund part of the Parkland Corporation acquisition, combined with proceeds from $1.7 billion in senior notes. Before closing, proceeds will temporarily reduce revolving credit facility borrowings.

What is the redemption provision for Sunoco's (SUN) Series A Preferred Units?

The units have a special mandatory redemption at $1,000 per unit plus accumulated unpaid distributions if the Parkland acquisition isn't completed by May 5, 2026, or if the arrangement agreement is terminated.

Who can purchase Sunoco's (SUN) Series A Preferred Units?

The units are only offered to qualified institutional buyers under Rule 144A and non-U.S. persons in transactions outside the United States under Regulation S.

What is the total debt offering associated with Sunoco's (SUN) Parkland acquisition?

Sunoco is offering $1.7 billion in senior notes, consisting of $850 million due 2031 and $850 million due 2034.