Sunoco sells Toledo refinery to PBF
Sunoco, Inc. has reached a definitive agreement to sell its 170,000 bpd refinery in Toledo, Ohio, to Toledo Refining Co LLC, a wholly owned subsidiary of PBF Holding Co. LLC. Sunoco will sell the refinery for approximately $400 million (consisting of $200 million in cash and a $200 million two-year note). In addition, the purchase agreement includes a participation payment of up to $125 million based on the future profitability of the refinery. The buyer will also purchase the crude oil and refined product inventory attributable to the refinery which will be valued at market prices at closing.
The transaction is subject to regulatory approval and customary closing conditions, and is expected to be completed early in the first quarter of 2011.
"Selling the Toledo refinery will enable us to direct resources and management focus toward growing the logistics and retail businesses where we have competitive advantages, as well as generate cash and strengthen our balance sheet. These businesses are generating significant value today and represent strong opportunities for future growth," said Lynn L. Elsenhans, Sunoco's chairman. "We will continue to look for ways to optimize our two remaining refineries to deliver value and maintain our focus on process safety, reliability, margin capture and a competitive cost structure."
As a result of the sale of the Toledo refinery, the forthcoming Coke business separation and the continuing efforts to become more competitive, the company is finalizing its plans to adjust its overhead to match the company's revised needs and long-term business strategy. The company anticipates completing this overhead reduction process during the first quarter of 2011.
Sunoco's existing retail marketing and logistics operations in Ohio and neighboring states will not be impacted by the sale. The company will continue to supply refined products to its branded distributors through a long term off-take agreement with PBF.
The company is expected to incur pretax charges, the majority of which are non-cash, of approximately $500-$550 million related to the sale primarily in the fourth quarter of 2010. The company also expects to realize pretax gains of approximately $450 -$500 million, assuming current market prices, related to the sale of the crude oil and refined product inventory attributable to the refinery in the first quarter of 2011. Cash proceeds from the sale of this inventory, net of related payables, is expected to be approximately $200 million on a pre-tax basis, assuming current market prices.
The Toledo refinery contributed after-tax earnings of approximately $29 million for the nine months ended September 30, 2010 and reported an after-tax loss of $23 million for the nine months ended September 30, 2009.
Comments