Fitch: Sunoco Restructuring Plan Moderately Credit Supportive; Macro Environment Remains Challenging

CHICAGO--(Business Wire)--
Sunoco, Inc's ratings and Outlook (IDR 'BBB'; Outlook Stable) remain unchanged
following the company's announced restructuring plan, although Fitch Ratings
views the plan as supportive for the credit. Under the plan, the company will
idle its 150,000 barrels per day (bpd) Eagle Point, NJ refinery indefinitely and
shift production to its Marcus Hook and Philadelphia refineries, in the process
lifting utilization rates across its remaining Northeastern system and achieving
annual pre-tax expense reduction of $250 million. Sunoco will incur $475 million
- $550 million in pre-tax expenses in the process, most of which are non-cash
charges for the write down of the refinery's book value. Sunoco has also cut its
dividend payout in half, a move which is expected to save approximately $70
million per year in cash beginning in 2010. Both moves are expected to increase
the company's near-term liquidity.

While Fitch anticipates that headroom under Sunoco's net-debt-to-capitalization
and excess tangible net worth covenants may shrink modestly due to the
impairment of the refinery, Fitch also anticipates that significant headroom
will remain under both metrics following this action. Note that the impact of
the impairment on Sunoco's main net-debt-to-capitalization ratio will be
softened by the cash generated through the liquidation of physical inventories
at Westville (crude and refined products). At June 30, 2009, Sunoco's
net-debt-to-cap ratio was 41% versus a limit of 60%, and excess net worth over
minimum levels was $1.1 billion.

Fitch views the company's move to lower its fixed costs as a positive for the
credit, although it takes place in a challenging near-term macro-environment for
refiners. Heading into the Northern hemisphere winter, refiners continue to look
substantially oversupplied on the winter heating distillate front. According to
the latest Energy Information Administration (EIA) data, total distillate
inventories at the beginning of October came in at a very high 172 million
barrels, or 50.5 days of supply, versus last year's 123 million barrels of
supply and a five year average of approximately 133 million barrels of supply.
As a result of this overhang--as well as the need for markets to accommodate a
sizable slug of new, more efficient global refining capacity online or expected
online soon--Fitch anticipates that low utilization rates for domestic refiners
are likely to persist over the next few quarters.

Fitch's current ratings for Sunoco, Inc. are as follows:

--Long-term Issuer Default Rating (IDR) 'BBB';

--Senior unsecured debt 'BBB';

--Subordinated debentures 'BBB-';

--Commercial paper at 'F2';

--Short-term IDR at 'F2';

The Ratings Outlook is Stable.

Sunoco is one of the largest independent petroleum refiners and marketers in the
United States. The company's retail presence includes approximately 4,700
outlets along the East Coast and in the Midwest. The company is also a large
petrochemical producer, predominantly chemical intermediates, with annual sales
of approximately five billion pounds. Sunoco also operates coke-making
facilities in Virginia, Ohio, Indiana, and Brazil and currently owns
approximately 40% of Sunoco Logistics Partners L.P (SXL), including the 2% GP
stake.

Additional information is available at 'www.fitchratings.com'.

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Fitch Ratings, Chicago
Mark C. Sadeghian, CFA, 312-368-2090
Adam M. Miller, 312-368-3113
or
Media Relations:
Brian Bertsch, 212-908-0549, New York
Email: brian.bertsch@fitchratings.com
Sandro Scenga, 212-908-0278, New York
Email: sandro.scenga@fitchratings.com

Copyright Business Wire 2009