DALLAS -- As the closing of 7-Eleven Inc.'s acquisition of more than 1,100 convenience stores from Sunoco LP nears, Sunoco has announced a private offering of senior notes due 2023, 2026 and 2028 in an aggregate principal amount of $1.75 billion. The company intends to use the net proceeds from the offering, together with the $3.3 billion it will receive from its c-store sale to 7-Eleven, to redeem senior notes due 2020, 2021 and 2023, pay all closing costs and taxes in connection with the 7-Eleven transaction and repay in full and terminate its existing senior secured term loan agreement, among other payments.
In what will be its biggest acquisition deal ever, Irving, Texas-based 7-Eleven in April 2017 entered into an asset purchase agreement with Sunoco. As part of the transaction, which the companies now expect to close this month, 7-Eleven will acquire 1,108 company-operated c-stores in 19 geographic regions, primarily in Texas, New York and Florida.
The deal will bring 7-Eleven across the threshold of 10,000 c-stores in the United States.
With this deal, Sunoco is shifting its focus away from retail and toward wholesale fuels distribution; however, the transaction does not include Sunoco’s APlus franchisee-operated c-stores, and Sunoco’s Aloha Petroleum business unit in Hawaii will continue to operate its integrated business model within Sunoco.
- 7-Eleven ranked No. 1 on CSP's 2017 Top 202 list of the largest c-store chains in the United States. Ahead of the 7-Eleven deal, Sunoco ranked No. 6 on the list. Click here to read "Ranking the Top 40 C-Store Chains: A Year-End Review."
Sunoco will redeem in full its 5.500% senior notes due 2020 at a call premium of 102.750% plus accrued and unpaid interest, and each of its 6.250% senior notes due 2021 and 6.375% senior notes due 2023 at a make-whole premium plus accrued and unpaid interest; repay in full and terminate its existing senior secured term loan agreement; repay a portion of the outstanding borrowings under its existing $1.5 billion revolving credit facility; pay all closing costs and taxes in connection with the 7-Eleven transaction; redeem all of its outstanding Series A Preferred Units; and fund the repurchase of a portion of its outstanding common units.
Sunoco Finance Corp., a wholly owned direct subsidiary of Sunoco, will serve as co-issuer of the notes.
Dallas-based Sunoco is a master limited partnership (MLP) that operates 1,346 c-stores and gas stations and distributes motor fuel to 7,898 c-stores, independent dealers, commercial customers and distributors located in more than 30 states. Its parent, Energy Transfer Equity LP, owns Sunoco's general partner and all of Sunoco's incentive distribution rights.