Carlyle-Sunoco JV to save Philadelphia refinery from closure


US-based alternative asset manager The Carlyle Group and Sunoco have formed a joint venture (JV), Philadelphia Energy Solutions, to save Sunoco's 330,000bpd Philadelphia refinery from scheduled closure in August 2012.

"Philadelphia Energy Solutions will also be financed by the Commonwealth of Pennsylvania, on behalf of the public sector."

The Carlyle Equity Opportunity Fund and the Carlyle Energy Mezzanine Opportunities Fund will provide the necessary investment capital for the JV, while JPMorgan Chase will finance working capital for intermediate products owned by the refinery in the form of an asset-backed loan.

Under the agreement terms, Sunoco will contribute its Philadelphia refinery assets to the joint venture in lieu for a non-operating minority interest, while Carlyle, as an active partner, will invest directly into the refinery's balance sheet.

Philadelphia Energy Solutions will also be financed by the Commonwealth of Pennsylvania, on behalf of the public sector.

The JV aims to use the money to stabilise the refinery, upgrade the catalytic cracker and construct a high-speed train unloading facility, which will allow the refinery to source more crude oil from North America, rather than imported crude.

Other planned projects at the refinery include the construction of a mild hydrocracker and a hydrogen plant.

The venture, financed both by private and public sources, will save 850 jobs and create 100 to 200 new, permanent jobs, as well as thousands of construction jobs.

Rodney Cohen, Carlyle managing director, 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.''

The transaction is likely to close in the third quarter of 2012.