Sunoco has reached an agreement to sell its polypropylene business subsidiary Sunoco Chemicals to Braskem, a producer of petrochemicals and thermoplastic resins in the Americas, for approximately $350m in cash.
The sale will include assets and inventory attributable to the polypropylene business, subject to a market-based working capital adjustment at the time of closing. The transaction is subject to regulatory approval and customary closing conditions, and is expected to close on or before March 31, 2010.
Lynn Elsenhans, chairman and CEO, said: “The sale of our polypropylene business demonstrates the company’s continued progress in realigning our portfolio of assets and improving returns on invested capital. This transaction produces value for our shareholders by monetizing a business that has not been able to meet its cost of capital and provides us with capital to redeploy for future growth in our areas of strategic focus.”
Included in the sale are Sunoco’s polypropylene manufacturing facilities in Marcus Hook, Pennsylvania; La Porte, Texas; and Neal, West Virginia, which have the combined capacity to produce approximately 2.1 billion pounds of polypropylene annually. The sale also includes Sunoco’s Research and Technology Center located in Pittsburgh, Pennsylvania.
Sunoco will retain its phenol and derivatives business, which has manufacturing assets located in Philadelphia, Pennsylvania and Haverhill, Ohio. The company expects to record a pre-tax loss on the sale in the first quarter of 2010 of approximately $185m-$195m.
Sunoco has also permanently shut down its previously idled Eagle Point refinery in Westville, New Jersey due to continuing weak demand for refined products and unfavorable market conditions. Processing units at Eagle Point were idled in early November 2009 and have now been permanently shut down.
However, refined product storage and handling operations there will continue. Sunoco is exploring options for using the site in the future, including as a potential center for biofuels production.
Ms Elsenhans, said: “Given weak industry dynamics, we are confident we are taking the right actions to improve our overall competitiveness, set the stage for investing in our strong regional brand, explore opportunities in biofuels, and provide customers with a broader choice of transportation fuel options.”