Reuters: Private Equity: UPDATE 1-Sunoco confirms Carlyle Pa. refinery talks, extends deadline

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UPDATE 1-Sunoco confirms Carlyle Pa. refinery talks, extends deadline Apr 23rd 2012, 13:21 Mon Apr 23, 2012 9:21am EDT NEW YORK, April 23 (Reuters) - Sunoco Inc announced exclusive talks with private equity firm Carlyle Group LP on a potential joint venture to run the biggest refinery on the U.S. East Coast, saying it would delay a planned closure of the Philadelphia plant by a month. The talks with Carlyle, first reported by Reuters last week, could save the 330,000 barrel-per-day refinery from permanent closure, easing concerns that the East Coast may face a fuel shortage this summer after several major plants were shuttered. Under the terms of the deal being considered, Sunoco would put the refinery assets into the joint venture in exchange for a non-operating minority interest in the venture, it said in a statement. Carlyle would contribute cash to the joint venture, hold the majority interest and oversee day-to-day operations of the joint venture and the plant. Sunoco, which was poised to shut the plant in July if it did not find a buyer, said it would now extend that timeline until August. If a deal cannot be reached by then, it will idle the main processing units. Sunoco did not disclose any financial terms, and officials suggested they were still counting on support from national, state and local levels before sealing a deal. "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," Carlyle Group managing director Rodney S. Cohen said in the statement. Sunoco`s president and chief executive officer Brian P. MacDonald said: "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." Oil markets are closely watching to see if Sunoco finds a buyer for the plant, one of three refineries on the East Coast threatened with closure due to weak profits. It first put the plant up for sale in late 2011, but has failed to find much interest from traditional energy firms. Most Northeastern refineries are designed to run only light, sweet crude oil imported from Europe and Africa. That oil now is priced at a steep premium to other crude oils, cutting profit margins. Link this Share this Digg this Email Reprints

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