Sunoco, Inc. has entered into exclusive discussions with The Carlyle Group, a global alternative asset manager, regarding a potential joint venture involving Sunoco’s 330,000 barrel-per-day refinery in Philadelphia.If a transaction were to go through, Sunoco would contribute its Philadelphia refinery assets in exchange for a non-operating minority interest in the joint venture. The company would also have no on-going 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.
Speaking on the potential joint venture and what it could mean to operations at the Philadelphia refinery, Sunoco’s president and chief executive officer Brian P. MacDonald said, “The Carlyle Group has financial depth, broad energy sector experience, and a history of building value. We believe having a strong partner like Carlyle with a track record of leading successful business turnarounds is necessary to preserve the facility’s future. Also, a concerted effort by all stakeholders is necessary to ensure the successful completion of this joint venture. We have been encouraged by the offers of support by federal, state, local and labor officials.”
Rodney S. Cohen, Managing Director, The Carlyle Group, said, “We are working actively with Sunoco and other stakeholders to explore ways to keep this vital facility operating. The facility has been operating at a significant loss for some time, and we are exploring every avenue to create a viable plan. It is a heavy lift and we are not sure a solution is possible, but we are doing the work.”
As a result of these on-going discussions with Carlyle, Sunoco 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.