Fitch: No Ratings Impact from Sunoco's Strategic Initiative Plan

Sunoco, Inc.'s (NYSE: SUN) announcement that it intends to redeploy most of its current cash balances into a range of strategic initiatives, the largest of which include a stock buyback program and debt repurchase, is not expected to impact the company's ratings or outlook at this time.

Co-timed with its fourth quarter results, the company laid out a plan for strategic use of its cash. The largest components of the plan include a sizable share repurchase (up to 19.9% of shares outstanding, approximately $800 million); retirement of parent level debt (up to $400 million); the setup of a fund to eliminate environmental remediation liabilities ($200 million-$250 million); prefunding of future retiree medical expenses ($200 million); prefunding of pension liabilities ($80 million); and an increased dividend ($17 million). Sunoco's cash and equivalents at Dec. 31, 2011 totaled $2.06 billion, an amount more than adequate to fund these initiatives.

On July 21, 2011, Fitch downgraded the long-term Issuer Default Rating (IDR) and other ratings of Sunoco, Inc. to 'BB+' from 'BBB-' following the recent completion of the SunCoke IPO. The main catalysts for the downgrade included: reduced business diversification at Sunoco following the SunCoke spin-off and disposition of additional Sunoco refining and chemical assets; increased structural subordination of debt at the parent level to debt at Sunoco Logistics Partners L.P (SXL; rated 'BBB', with a Stable Outlook by Fitch); and failure to significantly de-lever at the Sunoco level following the spin-off. The company has nearly completed its exit from refining, with the Marcus Hook, PA refinery idled indefinitely late last year, and the Philadelphia refinery expected to be sold or idled by July 2012.

Fitch currently rates Sunoco as follows:

--Issuer Default Rating (IDR) 'BB+';
--Senior unsecured rating 'BB+';
--Senior secured revolver 'BBB-';

The Ratings Outlook is Stable.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:
--'Corporate Rating Methodology' dated Aug. 12, 2011;
--'Rating Oil Refining and Marketing Companies--Sector Credit Factors', Nov. 24, 2010;
--'Political Turmoil in North Africa and the Middle East', Feb. 25, 2011;
--'2012 Outlook--North American Refining', Dec. 16, 2011;
--Retail Filling Stations: Enhanced Value in a Downturn-- Feb. 16, 2010.

Applicable Criteria and Related Research:
Corporate Rating Methodology
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647229
Rating Oil Refining and Marketing Companies - Sector Credit Factors
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=575545
Political Turmoil in North Africa and the Middle East (Implications for North American Upstream Companies)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=608025
2012 Outlook: North American Refining
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656781
Retail Filling Stations: Enhanced Value in a Downturn?
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=500140

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