850 Jobs Saved; Hundreds More Permanent and Construction Jobs to be
Created
Significant New Capital Improvements Should Spur Economic Growth
Private Sector, Government and Labor Working Together
WASHINGTON & PHILADELPHIA--(BUSINESS WIRE)--
Global alternative asset manager The Carlyle Group L.P. (NASDAQ: CG) and
Sunoco, Inc. (NYSE: SUN) announced today that they have agreed to form
Philadelphia Energy Solutions, a joint venture that will enable the
historic Philadelphia refinery to continue operating. The refinery, the
oldest continuously operating one on the east coast, processes 330,000
barrels of oil per day into various refined products and was scheduled
for shut down in August of 2012. The joint venture is expected to save
850 jobs, secure the region's fuel supply by continuing the daily flow
of 10 million gallons of various fuels, and create 100-200 new,
permanent jobs, as well as thousands of construction jobs.
This transaction is subject to customary closing conditions. Capital for
this investment will come from the Carlyle Equity Opportunity Fund and
the Carlyle Energy Mezzanine Opportunities Fund. JPMorgan Chase (NYSE:
JPM) has agreed to provide working capital financing for intermediate
products owned by the refinery in the form of an asset-backed loan,
subject to documentation. The transaction is expected to close in the
third quarter of 2012. Financial terms were not disclosed.
Brian P. MacDonald, Sunoco's Chairman and Chief Executive Officer, said,
"This partnership is a great example of what can happen when motivated
people think creatively to solve pressing problems. The private sector,
government and labor all played important roles in getting this done.
This is the best possible outcome for everyone involved: existing jobs
will be saved, new jobs will be created and new business opportunities
will be given the chance to develop."
Under the terms of the agreement, Sunoco will contribute its
Philadelphia refinery assets to the joint venture in exchange for a
non-operating minority interest. The Carlyle Group's investment will
flow directly to the refinery's balance sheet to fund future capital
projects, facility upgrades and enhance the refinery's working capital.
Carlyle will hold the majority interest, and oversee day-to-day
operations of the joint venture and the refinery. Phil Rinaldi, who has
successfully led other refining and chemical business turnarounds, will
serve as the CEO of Philadelphia Energy Solutions.
Carlyle Managing Director Rodney Cohen said, "Together we've re-imagined
the Philadelphia refinery and its role as a critical energy hub in the
Northeast. This joint venture will keep one of the region's most
important economic engines up and running. 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. 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."
David Marchick, Carlyle's Managing Director for External Affairs, said,
"Saving this vital facility was only possible as a result of the
extraordinary leadership and laser-like focus of a number of
stakeholders, including the White House; Governor Tom Corbett and his
team; Congressman Robert Brady; Mayor Michael Nutter; and USW President
Leo Gerard. Each of these parties played an instrumental role in
ensuring that the refinery remains in operation, serving businesses and
consumers in the Northeast, as it has for more than 140 years."
Blythe Masters, Head of Global Commodities at J.P. Morgan, said, "J.P.
Morgan's comprehensive solution, which leverages our physical
commodities capabilities and substantially reduces the working capital
requirements at the Philadelphia refinery beyond the assistance provided
by traditional financing paths, demonstrates how financial institutions
with physical capabilities can prudently, yet more effectively, meet our
clients' capital needs."
Capital Improvements — Public Private Partnership
Philadelphia Energy Solutions, with economic support from The
Commonwealth of Pennsylvania, will invest in several capital intensive
projects that are critical to the long-term economic viability of the
facility. Planned improvements will help the environment through reduced
waste and emission, and reduce reliance on foreign oil supplies. The
Commonwealth will provide grants to help build a high-speed train
unloading facility at the refinery, support a major capital project and
upgrade the cracker at the refinery.
Projects include:
-
Upgrade the Catalytic Cracker: The joint
venture will upgrade and refurbish the cracker, improving reliability
and operating performance. The project will create more than 1,000
contracting jobs when the upgrade commences.
-
Build High-Speed Train Unloading Facility at
Refinery: Provide access to greater quantities of crude oil
from North America (versus imported crude), particularly high-quality,
low sulfur crude from the Bakken region in North Dakota.
-
Build Mild Hydrocracker and Hydrogen Plant:
By converting the existing middle distillate Hydrotreater into a Mild
Hydrocracker and constructing a natural gas-based hydrogen plant, the
refinery will produce a more environmentally friendly mix of refined
products. The project will create several hundred construction jobs.
The joint venture is also exploring other significant capital projects,
including the creation of new businesses based on the availability and
abundant levels of natural gas from the Marcellus Shale.
Also subject to the execution of final agreements, J.P. Morgan's
physical commodities division, J.P. Morgan Ventures Energy Corporation,
will supply the refinery with crude and non-crude feedstocks on a
just-in-time basis and will purchase refined products from the refinery
for offtake.
Pennsylvania Governor Tom Corbett said, "Today's announcement is
testament to what can be accomplished when the public and private
sectors work together toward a common goal; creating job opportunities
for current and future generations. The Commonwealth's support of this
venture in conjunction with business, labor and all levels of government
will preserve 850 direct jobs and thousands of jobs that rely on this
refinery's active operation in the Philadelphia region."
Philadelphia Mayor Michael A. Nutter said, "Philadelphia Energy
Solutions will create and maintain hundreds of skilled jobs for
Philadelphians. It is an example of the private and public sectors
working closely together to ensure this refinery, an important economic
engine of the region, continues to operate. I would like to thank all of
the partners who contributed to preserving these jobs."
U.S. Representative Robert Brady said, "This is a perfect example of how
labor, business and government can work together to get things done.
Everyone from Sunoco's Brian MacDonald to Carlyle's David Marchick and
Rodney Cohen to Leo Gerard and Jim Savage of USW, to the White House and
Governor Corbett worked as hard as they could to make this happen. The
best part of this deal is that we're not just saving 850 jobs. We're
laying the ground work for thousands of construction jobs, permanent
refinery jobs and all the other jobs related to the suppliers and
contractors who work with this plant. I couldn't be prouder than I am to
have been a part of this."
Leo W. Gerard, International President, United Steelworkers, said, "Not
only will good paying manufacturing jobs be saved, but new ones will be
created as this vital facility is improved and expanded. This project
demonstrates how all stakeholders benefit when private capital,
industry, government and labor work together for the collective benefit
of society."
Legal counsel to Carlyle were Vinson & Elkins, and Buchanan Ingersoll &
Rooney.
Credit Suisse Securities (USA) LLC served as exclusive financial advisor
to Sunoco, and Kirkland & Ellis LLP served as legal counsel.
The Carlyle Group
The Carlyle Group is a global alternative asset manager with $159
billion of assets under management in 94 active funds and 63 fund of
funds vehicles as of March 31, 2012. Carlyle invests across four
segments — Corporate Private Equity, Real Assets, Global Market
Strategies and Fund of Funds Solutions — in Africa, Asia, Australia,
Europe, the Middle East, North America and South America. Carlyle has
developed expertise in various industries, including: aerospace, defense
& government services, consumer & retail, energy, financial services,
healthcare, industrial, technology & business services,
telecommunications & media and transportation. The Carlyle Group employs
more than 1,300 people in 32 offices across six continents. www.carlyle.com
Sunoco
Sunoco is a leading logistics and retail company. The company owns the
general partner interest of Sunoco Logistics Partners L.P. (NYSE: SXL),
which consists of a 2-percent ownership interest and incentive
distribution rights, and owns a 32-percent interest in the Partnership's
limited partner units. Sunoco Logistics Partners L.P. is an owner and
operator of complementary pipeline, terminal and crude oil acquisition
and marketing assets. Sunoco also has a network of approximately 4,900
retail locations in 23 states.
J.P. Morgan Ventures Energy Corporation
J.P. Morgan Ventures Energy Corporation (JPMVEC) provides commodity risk
management solutions in both the physical and financial markets to
clients across all commodity classes (agricultural products, metals and
energy). It trades and holds physical commodities and is also a
participant in the markets for greenhouse gas allowances. The company is
based in New York, New York. JPMVEC operates as a subsidiary of JPMorgan
Chase & Co.
The United Steelworkers
The USW represents about 850,000 working men and women in Canada and the
United States in a wide variety of industries, ranging from glass making
to mining, paper, steel, tire and rubber and other manufacturing
environments, to the public sector, service and health care industries.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Those statements made in this release that are not historical facts
(including statements containing the words "believes," "plans,"
"anticipates," "expects," "estimates" and similar expressions) are
forward-looking statements intended to be covered by the safe harbor
provisions of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements
are based upon assumptions by Sunoco, Inc. ("Sunoco") concerning future
conditions, any or all of which ultimately may prove to be inaccurate,
and upon the current knowledge, beliefs and expectations of Sunoco's
management. In particular, statements in this release regarding the
Philadelphia refinery joint venture between Sunoco and The Carlyle
Group, the expected timetable for creating the joint venture, completing
the proposed capital improvements at the refinery, future financial and
operating results, benefits and synergies, future opportunities for the
Philadelphia refinery, the joint venture, and any other statements about
Sunoco, The Carlyle Group, Philadelphia Energy Solutions, or Sunoco
managements' future expectations, beliefs, goals, plans or prospects
constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are not guarantees of future performance. The reader should
not place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. Sunoco expressly
disclaims any obligation to update or alter its forward-looking
statements, whether as a result of new information, future events or
otherwise.
Forward-looking statements are inherently uncertain and involve
significant known and unknown risks and uncertainties (many of which are
beyond Sunoco's control) that could cause actual results to differ
materially from those discussed in this release. Such risks and
uncertainties include: the ability of the parties to successfully form
the proposed Philadelphia refinery joint venture and consummate the
proposed transactions; the ability to obtain any requisite regulatory
approvals; and the satisfaction of any other conditions to formation of
the joint venture and consummation of any related transactions; the
ability of the joint venture to realize anticipated synergies and cost
savings; the potential impact of announcement of the agreement to form
the joint venture (and undertake capital improvements at the
Philadelphia refinery) on relationships, including with employees,
suppliers, customers and competitors; the ability to achieve applicable
refinery financial and operating targets; national, international,
regional and local economic, competitive and regulatory conditions and
developments; the competitiveness of alternate-energy sources or product
substitutes; technological developments; and losses related to the
acquisition, disposition or impairment of assets; significant investment
or product changes and/or liability for remedial actions or assessments
under existing or future environmental regulations; capital and credit
markets conditions; inflation rates; interest rates; the political and
economic stability of oil producing nations; energy markets, including
changes in the price of certain commodities; changes in crude oil or
natural gas prices, refining and marketing margins, or other market
conditions affecting the oil and gas industry; weather conditions;
environmental conditions; business and regulatory or legal decisions;
liability resulting from pending or future litigation; the pace of
deregulation of retail natural gas and electricity and certain
agricultural products; the effects of changes in applicable accounting
rules; changes in tax, environmental and other laws and regulations
applicable to the refining business; the timing and success of business
development efforts; wars and acts of terrorism or sabotage; the outcome
of commercial negotiations; higher-than-expected costs of, or delays in,
planned development or completion of repair projects, capital projects,
acquisitions, or dispositions; operational interruptions, unforeseen
technical difficulties and/or changes in technical or operating
conditions. Unpredictable or unknown factors not discussed in this
release also could have material adverse effects on forward-looking
statements. Sunoco disclaim any intention or obligation to update any
forward looking statements as a result of developments occurring after
the date of this document.
In accordance with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, Sunoco has included in its Annual Report
on Form 10-K for the year ended December 31, 2011 and in its subsequent
Form 10-Q and Form 8-K filings, cautionary language identifying other
important factors (though not necessarily all such factors) that could
cause future outcomes to differ materially from those set forth in the
forward-looking statements. For more information concerning these
factors, see Sunoco's Securities and Exchange Commission filings,
available on Sunoco's website at www.SunocoInc.com.
The Carlyle Group
Daniel Harris (investors) +1-212-813-4527
Chris
Ullman (media) +1-202-729-5450
or
Sunoco, Inc.
Clare
McGrory (investors) +1-215-977-6764
Thomas Golembeski (media)
+1-215-977-6298
Source: The Carlyle Group and Sunoco, Inc.
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