Funding Snag Threatens 7-Eleven's Acquisition of Sunoco LP

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Funding Snag Threatens 7-Eleven's Acquisition of Sunoco LP

10/16/2017
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IRVING, Texas — 7-Eleven Inc.'s $3.3-billion acquisition of Sunoco LP faces a new challenge due to a group of creditors that informed the company it plans to oppose Sunoco's attempt to change the terms of the credit pact that governs approximately $1.6 billion of bonds. Sunoco reportedly stated previously that this step is necessary to complete the sale.

These creditors are demanding more money and better protections to agree to the changes, according to a person with inside knowledge of the issue that the news outlet did not name, Bloomberg Markets reported.

Sunoco began the consent-solicitation process for $800 million of its 6.25-percent bonds that mature in 2021 and $800 million of its 6.375-percent notes that are due in 2023 on Oct. 10. The company is offering 1 percentage point in fees for the amendment, which would eliminate any requirement to have to repay the bonds because of triggering the change of control clause.

Law firm Paul Weiss Rifkind Wharton & Garrison represents a majority of bondholders in both series of notes and has informed Sunoco that it intends to negotiate better terms. This group reportedly includes 66 percent of the 2,021 noteholders and 63 percent of the creditors who own the 2,023 bonds.

Sunoco's shares fell as much as 5.2 percent the day the creditors' challenge was announced, according to the news outlet. 

Sunoco did not respond to a request for comment on the potential snag.

Total consideration for the deal to acquire 1,108 convenience stores, which was announced in April 2017, is $3.3 billion in cash, plus fuel, merchandise and other inventories. Sunoco intends to use the proceeds to repay indebtedness and for general partnership purposes, as CSNews Online reported.