The Carlyle Group and Sunoco have agreed to create a joint venture (JV) called Philadelphia Energy Solutions to continue operations at the Philadelphia refinery in US, which was scheduled to be shut down in August 2012.
The Philadelphia refinery can process 330,000 barrels of oil every day into different refined products and the JV will secure fuel supply in the region and provide 10 million gallons of various fuels every day, and create new jobs to revive the refinery.
The transaction between the two companies will be finalized after clearing alls the customary conditions.
Sunoco chairman and CEO Brian P MacDonald said, "This partnership is a great example of what can happen when motivated people think creatively to solve pressing problems."
Carlyle managing director Rodney Cohen said the refinery will be a reliable and critical supplier of fuels to the regional market through its new business structure and improved crude oil sourcing.
"In addition, the refinery’s exceptional location and infrastructure will enable the joint venture to create new business opportunities related to Marcellus Shale natural gas fields," Cohen added.
"We also look forward to continuing to work with all of the relevant stakeholders — government officials, the community, environmental officials and organized labor — as we work to stabilize, strengthen and expand the refinery."
Sunoco, as per the terms of the agreement, will contribute its Philadelphia refinery assets to the JV for a non-operating minority interest where as the investment from the Carlyle Group will be used to fund future capital projects of the refinery, to upgrade facility and increase refinery’s working capital.
The Carlyle Group will be the majority owner of the JV and will administer the operations of the refinery and the JV.
Carlyle Equity Opportunity Fund and the Carlyle Energy Mezzanine Opportunities Fund will provide the capital for the investment and
JPMorgan, a risk management solutions company, will finance the working capital for the intermediate products owned by the refinery.
The financial terms of the transaction were not disclosed and the deal is expected to close in the third quarter of 2012.