HOUSTON, Dec 2 (Reuters) - U.S. refining company Sunoco Inc said on Thursday it plans to sell its 170,000 barrel-per-day refinery in Toledo, Ohio, to PBF Holding Co LLC for $400 million.
Sunoco also said it may delay the spin-off its Suncoke Energy unit, citing pending litigation. The separation had been expected in the first half of 2011.
The deal will give PBF and its leader, refinery buyout specialist Tom O'Malley, a foothold in the U.S. Midwest market.
The Sunoco deal consists of $200 million in cash and a $200 million two-year note and is expected to close early in the first quarter of 2011.
PBF will also purchase the crude oil and refined product inventory attributable to the refinery which will be valued at market prices at closing. Cash proceeds from the inventory sale is expected to be about $200 million, the company said.
Earlier this year, PBF gained a leading position in the U.S. East Coast market by acquiring two refineries from leading U.S. independent refiner Valero Energy Corp. PBF purchased a shuttered Valero refinery in Delaware City and a plant in Paulsboro, New Jersey.
O'Malley previously led two independent refiners: Tosco, which was sold to ConocoPhillips and Premcor, which he sold to Valero for $6.9 billion in 2005.
If the Toledo refinery exceeds certain profitability thresholds, there is a participation payment of up to $125 million.
CHARGES, GAINS
Sunoco said its will incur pretax charges, the majority of which are non-cash, of about $500 million-$550 million related to the sale primarily in the fourth quarter of 2010.
The company also expects to realize pretax gains of about $450 million-$500 million, assuming current market prices, related to the sale of the Ohio refinery's oil and product inventory.
Refiners have struggled with a collapse in U.S. refining margins as demand fell during the economic recession and left too much refining capacity.
Valero had already closed the Delaware City plant because of poor economics before PBF came along and paid $220 million for the 182,200 barrel-per-day plant.
PBF aims to reopen the refinery next spring after finishing a nine-month overhaul.
PBF agreed to pay $360 million in cash and debt for the 185,000 barrel-per-day Paulsboro plant in a deal to close by the end of the year.
In November last year, Sunoco also shuttered its 150,000 barrel-per-day Eagle Point refinery in Westville, New Jersey, which remains closed.
The Toledo refinery is the smallest of Sunoco's three operating plants. The company also has two refineries in Pennsylvania: a 178,000 barrel-per-day plant in Marcus Hook, and a 335,000 barrel-per-day refinery in Philadelphia.
Lynn Elsenhans, chairman and chief executive officer, said in a statement that the sale would allow the company to focus on growth in its logistics and retail businesses. The company operates 6,000 miles of crude oil and refined product pipelines, 41 product terminals, and more than 4,700 retail outlets.
'These businesses are generating significant value today and represent strong opportunities for future growth,' she said. (Reporting by Anna Driver and Kristen Hays in Houston; Editing by Gunna Dickson and Tim Dobbyn) Keywords: SUNOCO/ (anna.driver@thomsonreuters.com; 1 713 210 8509; Reuters Messaging: anna.driver.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Sunoco also said it may delay the spin-off its Suncoke Energy unit, citing pending litigation. The separation had been expected in the first half of 2011.
The deal will give PBF and its leader, refinery buyout specialist Tom O'Malley, a foothold in the U.S. Midwest market.
The Sunoco deal consists of $200 million in cash and a $200 million two-year note and is expected to close early in the first quarter of 2011.
PBF will also purchase the crude oil and refined product inventory attributable to the refinery which will be valued at market prices at closing. Cash proceeds from the inventory sale is expected to be about $200 million, the company said.
Earlier this year, PBF gained a leading position in the U.S. East Coast market by acquiring two refineries from leading U.S. independent refiner Valero Energy Corp. PBF purchased a shuttered Valero refinery in Delaware City and a plant in Paulsboro, New Jersey.
O'Malley previously led two independent refiners: Tosco, which was sold to ConocoPhillips and Premcor, which he sold to Valero for $6.9 billion in 2005.
If the Toledo refinery exceeds certain profitability thresholds, there is a participation payment of up to $125 million.
CHARGES, GAINS
Sunoco said its will incur pretax charges, the majority of which are non-cash, of about $500 million-$550 million related to the sale primarily in the fourth quarter of 2010.
The company also expects to realize pretax gains of about $450 million-$500 million, assuming current market prices, related to the sale of the Ohio refinery's oil and product inventory.
Refiners have struggled with a collapse in U.S. refining margins as demand fell during the economic recession and left too much refining capacity.
Valero had already closed the Delaware City plant because of poor economics before PBF came along and paid $220 million for the 182,200 barrel-per-day plant.
PBF aims to reopen the refinery next spring after finishing a nine-month overhaul.
PBF agreed to pay $360 million in cash and debt for the 185,000 barrel-per-day Paulsboro plant in a deal to close by the end of the year.
In November last year, Sunoco also shuttered its 150,000 barrel-per-day Eagle Point refinery in Westville, New Jersey, which remains closed.
The Toledo refinery is the smallest of Sunoco's three operating plants. The company also has two refineries in Pennsylvania: a 178,000 barrel-per-day plant in Marcus Hook, and a 335,000 barrel-per-day refinery in Philadelphia.
Lynn Elsenhans, chairman and chief executive officer, said in a statement that the sale would allow the company to focus on growth in its logistics and retail businesses. The company operates 6,000 miles of crude oil and refined product pipelines, 41 product terminals, and more than 4,700 retail outlets.
'These businesses are generating significant value today and represent strong opportunities for future growth,' she said. (Reporting by Anna Driver and Kristen Hays in Houston; Editing by Gunna Dickson and Tim Dobbyn) Keywords: SUNOCO/ (anna.driver@thomsonreuters.com; 1 713 210 8509; Reuters Messaging: anna.driver.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.