Sunoco has entered into exclusive discussions with The Carlyle Group, a global alternative asset manager, regarding the formation of joint venture involving Sunocos 330,000 bpd refinery in Philadelphia, Pennsylvania.
If a transaction is reached, Sunoco would sell its Philadelphia refinery assets in exchange for a non-operating minority interest in the joint venture, the company said.
In addition, Sunoco says it would have no ongoing capital obligations with respect to the refinery.
Carlyle would contribute cash to the joint venture, hold the majority interest and oversee day-to-day operations of the joint venture and the facility.
No other financial terms of the potential transaction were disclosed. Moreover, there are no assurances the two companies will come to agreement, Sunoco officials said.
The Carlyle Group has financial depth, broad energy sector experience, and a history of building value, said Sunoco CEO Brian P. MacDonald.
We believe having a strong partner like Carlyle with a track record of leading successful business turnarounds is necessary to preserve the facilitys future, MacDonald added. We have been encouraged by the offers of support by federal, state, local and labor officials.
We are working actively with Sunoco and other stakeholders to explore ways to keep this vital facility operating, said Rodney S. Cohen, managing director of The Carlyle Group.
The facility has been operating at a significant loss for some time, and we are exploring every avenue to create a viable plan, Cohen added. It is a heavy lift and we are not sure a solution is possible, but we are doing the work.
The USW is more than willing to work with all levels of government and any willing party who has the common goal with us to keep these East Coast refining facilities in operation, said Leo W. Gerard, international president of the United Steel Workers union.
We continue to believe their ongoing operation is crucial not only to the thousands of our members employed there but to the surrounding communities and to effectively deal with the nations fuel and energy issues, Gerard added.
In light of the discussions with Carlyle, Sunoco said it intends to extend its previously-announced timeline and operate the Philadelphia refinery through July 2012.
If a suitable transaction with Carlyle cannot be completed, the company would proceed with idling the main processing units at the refinery in August 2012.